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EDITIONS
 Wednesday, 17 April, 2002, 17:26 GMT 18:26 UK
New Labour, Old Labour
Chancellor Gordon Brown
Brown has shifted New Labour's ground

If Labour backbenchers had been told the day after the 1997 election that, five years on, their government would be boasting about taxing people's pay packets they would have laughed.

Old Labour warhorses would have dismissed such a claim as far too optimistic.

Old Labour stalwarts may be tempted to herald the return of their dominance

And New Labour newcomers would have rejected it, insisting the party had put its old, election-losing tax and spend ways behind it for good.

Both sides would probably have agreed, however, that if such a thing did ever happen it would represent a major failure of government policy.

Yet that is precisely what the chancellor delivered in his sixth, watershed Budget.

Political gamble

He stuck to his two election promises not to increase the basic rate of income tax - but National Insurance contributions are still a levy on income.

And his 1% increase on both workers' and bosses' contributions amount to one of the biggest political gambles of any government for many years.

Tory leader Iain Duncan Smith
Duncan Smith slammed wasted years
In both 1997 and 2001, Labour attempted to convince voters that it could "save the NHS" and other public services through good economic management.

And every time the chancellor delivered a Budget he pledged vast tranches of new money to the public services.

At the same time he quietly increased the overall tax burden through so-called stealth taxes - but still the public services did not get better.

Now, after five years all that has been cast aside and, to many eyes, the government has returned to its Old Labour roots.

Worst job

And many of those MPs sitting behind Mr Brown were clearly delighted by this apparent conversion even though they had, it was claimed, been ordered not to look too gleeful.

Liberal Democrat leader Charles Kennedy, whose party has been advocating hypothecated tax increases for years, was particularly pleased that Mr Brown had finally taken his advice.

Privately he may be less than delighted that his Unique Selling Point has been demolished.

Iain Duncan Smith, in one of his best performances in what must be the worst job of the year, hit a nerve when he spoke of the government's wasted opportunities.

"They had it all," he declared, but in just five years they had frittered all their advantages away.

He also insisted that Labour had broken its election pledges not to raise income tax.

Electoral consequences

It is certainly the case that, under this Budget, middle earners, in particular, are being ordered to pay more tax to be poured directly into the health service, which most agree is in almost permanent crisis.

This may not be Denis Healey's squeezing the rich "until the pips squeak", but it could be enough to send shockwaves through Middle England.

The huge gamble for the government is that real, measurable and identifiable improvements in the day to day operation of the NHS must be experienced by ordinary voters before the next election.

If they are not then the electoral consequences are predictable.

Also, while Old Labour stalwarts may be tempted to herald the return of their dominance - the truth is that New Labour has not really changed its spots.

Old Labour would have squeezed the rich because that was, ideologically, the right thing to do.

New Labour has done something similar through pragmatism and necessity.

Hidden surprises

And elsewhere, through its approach to business, the City, the jobless and in a host of other policies, Tony and Gordon are as New Labour as ever they were.

As ever, there will be hidden surprises in the chancellor's package which will not emerge until the infamous red book has been trawled through with a fine tooth comb.

And, had it not been for the tax rises, his boost for bingo players and small breweries would have given him some snappy, positive headlines.

"Brown's booze and bingo budget" leaps to mind.

Similarly his decision to freeze petrol duty and car tax and introduce a "Brit disk" for lorries would have grabbed the attention.

But it is the shift in direction of geological proportions that will mark this Budget and which will, ultimately, decide the government's future fortunes.


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See also:

16 Apr 02 | Business
17 Apr 02 | Politics
17 Apr 02 | Politics
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