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Budget2000 Wednesday, 22 March, 2000, 04:12 GMT
Brown's 'bountiful' Budget
Gordon Brown on the steps of 11 Downing Street
Gordon Brown: "Prudent for a stronger, fairer Britain"
By BBC News Online's Iain Rodger

Gordon Brown's problem in his fourth Budget was how to pave the way for victory in the next general election without wrecking the buoyant economy.
Budget essentials
2bn extra on health
1bn extra on education
50 increase in winter fuel payment for the elderly
Minimum income guarantee for single pensioner raised to 82
Petrol up 2p a litre
Packet of 20 cigarettes up 25p
Pint of beer up 1p
Bottle of wine up 4p
Stamp duty raised on property purchases over 250,000
Help for small businesses with e-commerce
His solution was ingenious.

Having been very cautious with taxpayers' money, he was sitting on an embarrassment of riches he could have lavished on a vote-chasing round of spending, enthralling the Labour backbenches.

But with inflation already looming on the horizon, he knew he could have no spending spree without causing dismay in the City and forcing the Bank of England to push up interest rates.

So what did he do? He indicated to the City he was keeping a tight rein on the economy for the time being while promising huge public spending later.

How did it go down? In the City, analysts welcomed a "prudent" Budget (and the London stock market picked up sharply as the speech progressed), while elsewhere unions heaped praise on an apparently "bountiful" Budget.

Neat work Mr Brown.

Health and education

Most of the extra spending now is going into the government's priority areas of health and education, with 2bn and 1bn respectively from this April.

This is a bountiful Budget

Rodney Bickerstaffe, Unison
The Prime Minister, Tony Blair, is to tell MPs on Wednesday how the NHS money will be spent, with the prospect of recruiting and training up to 10,000 more nurses.

There is 285m for tackling crime and 280m for modernising Britain's transport systems.

New measures were announced to help get the unemployed into work, and children and pensioners in poverty were targeted with extra allowances.

Fuel and alcohol duties are up mainly in line with inflation, although spirits remain on hold for the third year running.

We are determined not to make the old British mistakes of paying ourselves too much today at the cost of higher interest rates and fewer jobs tomorrow

Gordon Brown
Tobacco goes up rather more - 5% on top of inflation - generating extra revenues earmarked for health service spending. There are also new anti-smuggling measures.

Capital gains tax reforms have been introduced to encourage enterprise, and there is help for small businesses to buy IT equipment to boost e-commerce.

Housing market

Stamp duty has gone up on property purchases over 250,000, which the Treasury says amount to only 5% of residential transactions in the UK.
Health and education boost
2,800 per household spent on NHS by 2004
30,000 to 50,000 each for 3,500 secondary schools
18,000 primary schools to receive 3,000 to 9,000 for literacy and numeracy
In a bid to help choke off the house price boom in the South-East, the rate for 250,000 to 499,999 rises from 2.5% to 3% and for over 500,000 from 3.5% TO 4%.

On the environment, there is encouragement to use cleaner vehicles, with a graduated system of vehicle excise duty favouring low emissions.

Other developments include consultation on reforms to betting duty to take into account online gambling and the effects of bookmakers moving offshore.

Air passenger duty on economy flights in much of Europe will be cut from 10 to 5 in April 2001, and the tax will be abolished on flights from airports in the Scottish Highlands and Islands.

Widely tipped but not included were a cut in stamp duty on share purchases, relief for internet start-ups facing ruinous tax and National Insurance charges on share option pay-outs, and an extension of the 10% starting rate of income tax from 1,500 to 2,000.

Tory response

For the Conservatives, William Hague said the "stealth tax" chancellor was like a mugger who asked to be thanked.
William Hague: "Stealth tax chancellor"
He claimed that 4.5bn in tax rises would be heading the public's way in the next few months.

Mr Hague also took Labour to task over its record on public services, saying: "The waiting list to get on the waiting lists is longer and class sizes have actually increased.

"The chancellor boasts of tax cuts but he has given with one hand and taken away much more with the other."

Full picture

A full analysis of the Budget will emerge over the next few days.

As Roger Bootle (economic adviser to Deloitte & Touche and one of BBC News Online's Budget experts) put it, Mr Brown is the master of the "smoke and mirrors" announcement.

For the moment, he appears to have broadly satisfied both those in favour of belt-tightening and those calling for more spending.

Only close examination of the detailed documents released after the speech will reveal the complete picture, and budgets have a tendency to look quite different once the echoes of backbench cheers have subsided.

 WATCH/LISTEN
 ON THIS STORY
The BBC's Robin Oakley reports
"Labour MPs loved it"

Talking PointTALKING POINT
Brown's Budget
How was it for you?
See also:

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