£20bn may not be enough to save economy, warns Darling

Alistair Darling warned last night that he will "almost certainly" have to inject yet more money into the economy to steer Britain out of recession. The Chancellor admitted that his £20bn spending package may not be enough to rescue the country from the financial crisis.

Gordon Brown insisted yesterday that New Labour remained alive, as he prepared to unveil a Queen's Speech containing radical reforms for the economy, welfare and policing. But a poll published today shows the Conservatives are consolidating a double-digit lead over Labour.

The Prime Minister, compared by Lord Mandelson to a "Moses figure" who would lead the country out of recession, dismissed claims that he had presided over a return to Old Labour after ditching Tony Blair's long-held promise not to increase income tax. Speaking to the annual Progress conference in London, he said: "This is the biggest New Labour project of all – to give people confidence and hope that we can build through this downturn into a better economy and society. It will mean not a slowing down of reform, but only a stepping up in the pace of reform."

The Queen's Speech on Wednesday is expected to contain legislation focusing on the economy, as well as a beefed-up policing Bill with new powers to tackle binge-drinking, and controversial measures to force single parents back to work.

However an Ipsos-Mori poll for The Observer put the Tories on 43 per cent, 11 points ahead of Labour. Voters were unconvinced that the Chancellor's £20bn package would improve their financial prospects or make them spend more.

And in an interview with the newspaper, Mr Darling said more measures could be needed as soon as next spring's Budget: "You'd be very foolish indeed to say, 'Well, that's the job done.' You know this is something that needs constant attention."

Lord Mandelson yesterday warned that it was impossible to say when Britain would recover from the economic crisis. "No one can foretell how short or long, how painful or painless, the recession is going to be," the Secretary of State for Business told The Guardian. Heaping praise on Mr Brown, he said: "People really do look to him like some Moses figure who is going to lead them away from this economic mess to the promised land."

In his pre-Budget report, Mr Darling announced a new 45 per cent top rate of income tax from 2010-11, triggering claims that this heralded the death of New Labour.

Lord Mandelson is understood to have held talks with senior Blairites about an official role in Government.