Budget '97: Even the Tories had to concede he had been clever

The Chancellor's Speech

Labour MPs went off into the night, bouyed by the thought that the first Labour Budget in 18 years would make a real difference to people's lives.

"There are all those people with leaking school roofs, and women who can't go to work because they cannot afford child care, and patients on the waiting list - they are the ones who will benefit," said one Labour MP.

"Brilliant" was the word being used by Labour MPs last night to describe Gordon Brown's Budget package with the surprise sweetener of higher spending for health and education. Even senior Tory MPs conceded the Chancellor's performance had been "clever" although Michael Jack, a former Treasury minister, warned that it was "smoke and mirrors" and would mean an increase in interest rates next week.

Clapping broke out on the packed Labour benches when Mr Brown announced he was allocating an extra pounds 1.2bn for the NHS and pounds 2.3bn on education. He sat down to cheering, and order papers being waved.

Labour MPs flooded out of the chamber delighted by what they had heard. Many had expected a harsher package of higher taxes, and unrelieved pain on the middle classes who voted Labour into office four weeks ago.

They had been braced to defend the Government against the charge of betraying voters in Middle England, but in the event, were relieved that it was not as deflationary as they had feared.

Some were even mentioning the "S" word about the Chancellor. "We've made a socialist out of Gordon," said one left-wing backbencher. Another said: "We always knew he had it in him."

"It's Gordon's brilliant Budget," said Patricia Hewitt, former head of the left-leaning think tank the Institute for Public Policy Research. "It gives a long-term picture of the Britain we want to build."

Ms Hewitt, the MP for Leicester West, said raising stamp duty to 2 per cent for homes valued at more than pounds 500,000 would not affect many in her constituency - a view echoed by Helen Jackson, the MP for Sheffield Hillsborough and ministerial aide to Mo Mowlam, the Secretary of State for Northern Ireland. "The help for women will be extremely useful with the child care costs.

"There has been a lot of whittling about stamp duty but it's not going to affect many in my part of Sheffield," said Ms Jackson. It's a Budget for fairness, and inclusivity."

Tory MPs looked downcast in the chamber at the success of the Budget, as Labour MPs jeered at them: "You've gone quiet." But they were quick to pick holes in the Budget package. Nicholas Soames, the former Tory minister, welcomed the cut in Corporation Tax, but he added: "I think Gordon Brown has to be congratulated on the skilful way he presented the Budget. I think it is a clever Budget but it is only possible because of the inheritance he has had, of a golden economy, from Kenneth Clarke.

"It is also quite plain that when the Chancellor said he had no intention of raising taxes before the election, he was not telling the truth."

Mr Jack, a recently appointed Tory spokesman on health, said that the extra money for the NHS was no more than the Tories would have provided in the autumn review of public spending.

"It was cleverly presented but when you get down to the detail, it is not as glossy as it seems. It is going to mean that interest rates will go up next week. That will offset the cut in Corporation Tax.

"In that sense, it's smoke and mirrors."

The Liberal Democrats were also critical of the Budget for not increasing personal taxation, and they were ready to vote against the package when it is introduced in the Finance Bill.

Edward Davey, a Liberal Democrat spokesman, said: "We welcome the extra money for health and education but it does nothing for the current financial year. It is a great disappointment."