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Monday, November 8, 1999 Published at 15:00 GMT

Business: The Economy

Brown sets out spending plans

Boosting enterprise will continue to dominate the Budget agenda

UK Chancellor Gordon Brown will outline how he plans to bear down on public spending while bringing in new measures to boost enterprise when he gives his pre-Budget report on Tuesday afternoon.

Pre-Budget Statement
The statement is made to MPs in November to give a taste of what is to come in the Budget the following March.

He has already presented his report to the Cabinet - and the Prime Minister, Tony Blair, commended it, saying Mr Brown had done an "excellent job".

Mr Blair said: "The key to the whole of the pre-Budget report and the Queen's Speech is enterprise for all, fairness for all."

Key elements will include measures to raise productivity in British business, to get more people into work, to increase the numbers of people in further education, and to reduce child poverty by 50% within 10 years.

Mr Brown - who has just been appointed chairman of Labour's committee overseeing the next general election campaign - is in an enviable position. Inflation is low and relatively stable, and growth is stronger than had been forecast.

Stephen Byers: "Fiscal discipline has put us in a strong position"
He has stated time and again that there will be no spending spree, even though the recent recovery in the UK economy has produced a big surplus in the current year instead of the £4.5bn deficit forecast in his last Budget.

Some economists have predicted a surplus of as much as £12bn, which has already prompted suggestions that the chancellor is accumulating a "war chest" to fund a spending spree in the run-up to the next election.

Mr Brown is expected to focus on enterprise, looking at new ways to boost Britain's competitiveness.

He will give further details of tax incentives to encourage the development of small companies, and Inland Revenue telephone advice lines to help reduce the burdens on business are said to be in the pipeline.

The planning laws are also under the spotlight as a report has identified them as a major obstacle to productivity and entrepreneurship in the UK.

Tight rein

[ image: Gordon Brown: Chancellor in an enviable position]
Gordon Brown: Chancellor in an enviable position
Addressing the Confederation of British Industry conference last weekend, both Mr Brown and the Prime Minister, Tony Blair, stressed that there would be no "give-away" Budget.

Mr Brown said he would not be tempted into making the "mistakes of the 1980s" and relax fiscal discipline just as the economy was beginning to grow.

The BBC's Rory Cellan-Jones: " Gordon Brown may well be feeling lucky today"
Slow world growth this time last year meant that there were few worries about the UK economy overheating. Now, however, growth has picked up and inflationary pressures are in evidence in the UK, Europe and the US.

As a result, interest rates are on an upward trend and, if the "iron chancellor's" steely words are to be believed, there is no chance of the Budget heralding a relaxation of the strict discipline the government is trying to impose on the economy.

Dear prudence

Since coming to power two years ago, the Labour government has cut public borrowing by an unprecedented £30bn and given independence to the Bank of England to determine interest rates, with a brief to remain close to a 2.5% target rate of inflation.

[ image: There have been calls for the petrol 'escalator' tax to be scrapped]
There have been calls for the petrol 'escalator' tax to be scrapped
Indications from the Treasury suggest we shall see more of the same discipline next March, and the Institute of Directors pre-Budget submission to the chancellor urges him in the same direction.

Having said that, Mr Brown has been significantly more redistributive than he has been given credit for - as he put it in last year's pre-Budget report "taking a number of steps to create a fairer society".

More money has been going into health and education, while initiatives have been undertaken to clamp down on tax evasion. So he could well introduce further schemes for redistributing wealth.

He could also change his mind over some of the more unpopular existing tax measures. Automatic above-inflation increases in the duty on fuel - intended to help cut greenhouse gas emissions - could well be changed.

Petrol has become so expensive in the UK that there has been mounting opposition from industry, saying the policy is crippling Britain's competitiveness.

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