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Gordon Brown today promised tax cuts to boost growth in the economy as he sought to draw clear dividing lines between Labour and the Tories over tax and spending.
Speaking ahead of next Monday's critical pre-budget report, the prime minister said there would have to be "fiscal expansion" to help hard-pressed families and businesses.
The prime minister's spokesman confirmed afterwards that there would be measures to help small businesses affected by bank lending in Monday's announcement.
During today's prime minister's question time, Brown insisted that only his party would "help families through difficult times".
That a reference to David Cameron's announcement yesterday that the Tories had now abandoned their commitment to match Labour's spending plans.
In a bitter exchange in the Commons, Brown accused the Tory leader of "refusing to act" to help struggling families and businesses.
Cameron hit back, reiterating his warning that tax cuts now would lead to future tax rises.
"Taxes will have to rise. Isn't that true?" Cameron demanded.
Brown said: "There will have to be a fiscal expansion to help small businesses … The party opposite oppose that."
The prime minister accused the Conservatives of being the "do-nothing party" and warned that their policies would harm the British economy.
Cameron retorted: "On this side of the house we have made our choice. It's called spending restraint."
Brown said: "Let me explain to you the difference between monetary and fiscal policy … Everybody in every continent around the world is saying monetary policy is not enough.
"That's why we need to use fiscal policy. That's real help for families now," he said, accusing the Conservative leader of "setting himself against families".
"Real help will mean fiscal expansion to make that possible," Brown said.
Cameron asked the prime minister if he would support plans to establish new institutions to underwrite lending to ensure borrowers could get the help they need.
Brown said the government had already taken decisive action, which had been opposed by the Tories.
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