A sweetener for Middle England

CHRIS FISHER, EDP Political Editor As the chancellor Gordon Brown considered the reactions to his budget, he had good reason to conclude that his eleventh and final budget had been something of a political triumph.

CHRIS FISHER, EDP Political Editor

As the chancellor Gordon Brown considered the reactions to it yesterday, he had good reason to conclude that his eleventh and final budget had been something of a political triumph.

There were no crowds of happy electors chanting “More! More!” But the good headlines had outweighed the bad. “Reasons 2p cheerful”, said the Sun. “No 10 this way”, said a Mirror headline alongside a picture of the chancellor walking from 11 Downing Street towards No 10. Even the Labour-hating Daily Mail came up with nothing worse than “What Gord giveth, Gord taketh away”.

With his final flourish of a 2p cut in the basic rate of income tax, Mr Brown showed both a sensitivity to the attitudes of Middle England and a readiness to engage in surprise and even theatricality that will help him to win a general election and thereby stay in No 10 for more than a couple of years.

More lightness of touch, and willingness to laugh at himself, should have been shown in response to the 'Stalinist' allegations from earlier in the week. But at a stroke he put a spring back into the step of Labour MPs. And he managed to wrongfoot the Tories - largely by pinching a few of their ideas.

The Conservative claim that it all adds up to a “tax con not a tax cut” has a large element of truth in it. But in the case of budgets, first impressions can be the most powerful. The headlines today may well be less favourable than those of yesterday, but they will also have less prominence. This is a fact of political and media life, and it gives chancellors a big advantage. Mr Brown went for 2p tax cuts headlines, and had considerable success in getting them. The mood at Westminster has been changed - and any remaining chance that the chancellor will face a heavyweight challenge over the succession to Tony Blair seems to have disappeared.

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It will be interesting to see if the opinion polls move back a bit towards Labour over the next few days. Maybe they won't. Maybe the electorate will quickly see beyond the 2p move and understand that the budget story is essentially one of giving with one hand and taking with the other.

To be fair, he did not portray the budget as an example of the 'give away' kind. Indeed, he told the Commons that “this is not the time for a fiscal loosening, and the changes I make today will be broadly neutral for the public finances”.

About 80pc of households will be made better off or no worse off by the budget. The other 20pc will lose, and they will include (because of the abolition of the 10p income tax rate) single people earning only £6,000-£17,000 a year and not qualifying for tax credits. But there was little sign of embarrassment or unrest amongst Labour MPs yesterday.

The 2p announcement was a dramatic and possibly effective way of signing off as chancellor and simultaneously polishing his credentials as the prime minister-in-waiting.

When he began at the Treasury in 1997 the basic rate of income tax was 23pc and the top rate 40pc. And the decision to move to a 20pc-40pc structure came despite colossal increases in public spending in the past 10 years. Spending on education has risen from £29bn in 1997 to £60bn this year, and is set to increase to £74bn in 2010. Spending on the NHS has gone up from £33bn in 1996-97 to over £81bn this year, and is due to increase to £89.7bn next year.

One of the strongest indictments of Mr Brown is that all this increased “investment” was not properly tied to reform, and that consequently the improvement in “output” or quality of service bears little relation to the expansion in resources. In other words, much of the money has been wasted, and Mr Brown must carry most of the blame for that.

On the other hand, we have had a decade or more of low inflation and interest rates and sustained economic growth at a solid rate. He must have been getting something right, and it would be churlish not to acknowledge that.

It does not follow, however, that he is right for the job of prime minister. He and the Brownites do tend to act in a tribal or clannish manner, and those who incur his displeasure can expect to be banished to a mental Siberia. Yesterday he announced on radio that he doesn't bear grudges. Yes, and the Pope is a Protestant.

The budget has regenerated speculation about an 'early' general election next year. The 2p tax cut, which won't take effect until April 2008, might well assist Mr Brown in that respect. But this idea should be treated with great caution because he is a very cautious political operator. (The 2p move was out of character.)

He has also had to wait a long time for the promotion he is about to get. Do you think he'll opt for an early election unless he's 100pc sure he'll win it - and won't be kicked out of No 10 only a year after getting the keys? I don't.