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Budget2000 Wednesday, 22 March, 2000, 08:16 GMT
Analysis: Brown's Budget tightrope
By BBC News Online's political correspondent Nick Assinder

Chancellor Gordon Brown turned political tightrope walker with his pre-election Budget that pushed many of the right buttons for Labour voters.

He attempted to walk the fine line between prudence and giveaway with a package that poured cash into health, education and transport but still promised to keep a tight rein on the economy.

He offered significant boosts to families, pensioners and the unemployed and he moved to create a booming enterprise economy. He even gave motorists a break.

But his "prudence for a purpose" budget failed to promise a significant reduction in the overall tax burden over the next few years which ministers have been forced to admit has increased under Labour.

And he resisted the temptation to cut income tax further than the one penny reduction which comes on stream in April.

That led to Tory claims that, like previous Labour governments, this was a high tax, high spend administration.

Industrial woes

Mr Brown had faced a sharp political dilemma - whether to boost spending on the public services, as demanded by core Labour voters and union bosses, or cut taxes to keep middle England happy.

The package also came against the background of serious industrial woes brought about by the strong pound and fears that too much loosening of the purse strings would boost inflation and see the Bank of England increasing interest rates, pushing sterling even higher.

And, of course, it comes probably just a year before the next general election.

As a result, the chancellor was painfully aware the fortunes of the Labour party lay to a large degree in his hands.

In the end he moved firmly down the path of increased spending, using 4bn of his massive 12bn surplus to boost spending on health and education where the government has been facing mounting criticism for failing to live up to its promises.

The cash came without big tax increases this year, thanks to rises such as the abolition of Miras and the married couples' allowance which were introduced in the last budget and which will hit voters in April.

He had also saved cash with a 2bn annual reduction in social security spending thanks to falling unemployment.

Like a mugger

The package delighted Labour MPs who are desperate to regain ground with disillusioned core supporters.

But it led to immediate claims by Tory leader William Hague that he had raised taxes by stealth and would continue to do so.

He accused the chancellor of habitually failing to announce all the measures of his annual package in the Commons and slipping the bad news out behind the scenes.

"The chancellor is like a mugger who grabs your money then expects you to thank him for giving you your bus fare to get home."

The main aim of the package, however, was to put the government on sound election footing.

The key issue he was facing was to persuade voters that Labour will live up to its pre-1997 election promises to invest in public services and keep the economy sound.

There are real fears amongst Labour MPs and traditional supporters that ministers were set to fail and a cash boost was needed to get them back on target.

Most backbenchers see the Budget as a major step in the right direction although a number still believe he could have done more.

Tax weapon

The prime minister is taking the attack forward with a Commons statement mapping out details of the increased NHS spending.

That is a clear sign of how central he believes the Budget is to his election campaign which is well and truly underway.

While Mr Brown may have done much to re-engage with core Labour voters, he has left the Tories with a powerful weapon over taxation.

In the Commons, Mr Hague ridiculed the prime minister's press spokesman after he was forced to admit that the tax burden had increased during Labour's reign.

And later, shadow ministers said the official figures contained in the famous budget "red book" showed there would be only a small reduction in that burden over coming years.

And that opens up the possibility of a strong campaign on taxation from the Tories in the run-up to the next election.

But it also raises the prospect that, if he can meet his public service targets, the chancellor may yet use one more budget to offer tax cuts just before the general election.

See also:

21 Mar 00 | Budget2000
21 Mar 00 | Budget2000
21 Mar 00 | Budget2000
21 Mar 00 | Budget2000
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