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Budget 2001 Thursday, 8 March, 2001, 18:41 GMT
Lynne Jones: Budget 'dull but unifying'
Lynne Jones is the Labour MP for Birmingham Selly Oak. She is vice-chair of the left-wing Campaign Group of MPs.
By Lynne Jones MP

There was nothing unexpected in the Budget. Most of the measures had been well trailed, either by the chancellor himself or by academic commentators.


Even if Gordon Brown's speech was dull as ditchwater, the government will succeed in uniting Labour activists in the fight ahead

The Institute for Fiscal Studies correctly predicted that there would be 3-4bn extra to spend due to buoyant tax revenues and government underspending.

While this was no pre-election bonanza, the priority of investment in public services over tax cuts has been clearly laid out and will be the single most important issue over which the election will be fought.

The chancellor even managed to massage his spending plans to give credibility to the charges that the Conservatives would make cuts of 16bn. Thus, even if Gordon Brown's speech was dull as ditchwater, the government will succeed in uniting Labour activists in the fight ahead.

The extra for parental leave and childcare is very welcome. The increase in the minimum wage is an added bonus.


The extra money available would have been better spent on further increasing universal benefits like child benefit and the state pension

Nevertheless, it is a pity that the chancellor did not use the healthy state of the public finances to restructure and simplify the tax and benefits system.

Raising personal tax allowances to take the lowest earners out of tax has a similar redistributive effect to widening the 10p tax band, but is simpler and carries less red tape.

Likewise, tax credits for families and pensioners extend means-testing and are complex both to administer and understand. They perpetuate incentives to earn more and save, particularly when interacting with the housing benefit system - a serious problem that did not even get a mention.

Look kindly on councils

The extra money available would have been better spent on further increasing universal benefits like child benefit and the state pension.

A new flat-rate housing allowance could take people out of means-tested benefits, not draw them in.


The government needs to be bolder on environmental policy

Less means-testing would do far more to reverse the decline in saving than tax breaks which simply result in savings being transferred into the most tax-efficient vehicle. The extension of the 7000 annual tax-free ISA allowance will cost almost 3bn and would be much better spent on pensions.

My other criticisms concern inadequate spending on public infrastructure and services other than health and education.

The government needs to look more kindly on local authorities struggling with inadequate budgets for social services and to give assurances that capital spending - on housing and public transport, for example - will reach the levels needed in the minimum amount of time, taking labour supply into account.

The reliance on private finance is wasteful especially when government debt is falling well below Maastricht criteria.

If local democracy is to be salvaged from its present parlous state, there will need to be more local accountability for spending decisions.

Increased local tax-raising powers could be offset by a restructuring of VAT, largely reversing the increase the Tories used to make the council tax more palatable.

Virtuous circle drawn by Labour

On the subject of VAT, the chancellor has tinkered at the edges rather than follow the more radical approach suggested by Lord Rogers to remove the tax advantages of new build compared with renovation. This is a pity.


This government realises that our economic well-being depends on investment in new technologies and the skills of our workforce

The government also needs to be bolder on environmental policy. Following the retreat on fuel duty, we need to make the case for congestion charging and motorway tolls once there are good public transport alternatives.

Finally, a bit more praise. Unlike its predecessor, this government realises that our economic well-being depends on investment in new technologies and the skills of our workforce.

The government's own spending on science has increased significantly and the chancellor is listening to business calls for measures to encourage private sector spending on research and development and the recruitment of maths and science teachers.

The resulting long-term prospects of low inflation combined with economic growth should reduce pressure on interest rates leading to the more competitive exchange rate so desperately needed by manufacturing - a virtuous circle engineered by a Labour government.


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31 Oct 00 | UK Politics
20 May 99 | UK Politics
10 May 99 | UK Politics
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