Danny Alexander MP

Downing Street has backed Danny Alexander over his comments on Britain's credit rating, saying what matters most for the Government is "having the right policies in place".

The Chief Secretary to the Treasury this morning hinted at the possibility of Britain losing its AAA status, claiming the credit rating was not the "be-all and end-all".

"What matters is have we got the right policy mix for the country to get people back into work, to support economic growth, to deal with the huge problems in our public finances?" he told the Today programme.

"The credit agencies reflect on those things and the ratings they give are a reflection of the credibility of that mix."

The Prime Minister’s spokesman supported Mr Alexander’s comments, insisting what mattered was that the Government was tackling the deficit.

“I think the point the Chief Secretary was making is that credit ratings agencies have a role to play, but what they do is that they make judgements on credit ratings," he said.

"What matters for the Government is having the right policies in place. Clearly, an important part of that is having a credible policy for reducing the deficit."

Shadow chief secretary to the Treasury, Rachel Reeves, said Mr Alexander's comments "suggest Ministers are worried about more bad news from the rating agencies".

"Instead of a change in rhetoric the country needs a change of course and a plan for jobs and growth," she added.

Danny Alexander is to clamp down on loopholes that allow civil servants to avoid paying the full rate of income tax.

An official investigation found that 2,000 senior civil servants earning more than £58,200 avoided paying the full rate of tax by being employed ‘off payroll’, though service companies or employment agencies rather than directly.

Details were revealed in a letter from Mr Alexander to the Chancellor George Osborne, seen by BBC Newsnight. Mr Alexander said: “The sheer scale of off-payroll engagements across government, and the length and size of these contracts, suggests that the scope for artificial tax minimisation may be greater than previously understood.

Mr Alexander is to force any official who has been employed for more than six months on more than £220 a day to become full staff members.

Ed Balls has blasted Wednesday's Budget as being "one of the most unpopular, unfair and flawed Budgets in decades".

The Shadow Chancellor added that the Budget was not just "bad politics but bad economics" but also a "missed opportunity".

His remarks come as Danny Alexander defended the Budget as one for "people who work hard, play by the rules and are under pressure".

In an interview with The Times, the Chief Secretary to the Treasury said he was "happy" with the decision to lower the top rate of tax from 50p to 45p, and added he he "absolutely no idea" how many Cabinet ministers would benefit from the change.

Mr Alexander said he was are some people "might react against" the move to freeze tax allowances for pensioners, but insisted the move was part of an overall "positive change" for the elderly in the UK.