Chancellor Gordon Brown has warned his colleagues about making unfunded tax cuts, which he said would bring about a return to the “bad old days”.

The announcement, the first since the birth of his son James, is regarded by political commentators as a broadside against Stephen Byers, the ex-transport minister.

Byers has protested strongly about the increasing number of people being caught by inheritance tax because of the worth of their property.

But in an article in the ‘Financial Times’ the Chancellor wrote that “no political party will be trusted if it promises stability in one breath and unfunded tax cuts in the next.”

He continued: “To go down the route of short-term gestures on tax would be exactly the wrong way to address long-term policy issues.”