Budget 1999: A Chancellor who positively revels in being an old- fashioned spender
Donald Macintyre writes political sketches for The Independent, having been Jerusalem correspondent since 2004, covering Israel and the Occupied Territories, as well as travelling for the paper to Iraq, Turkey, Jordan, Libya and Egypt. As Political Editor and then Chief Political Commentator, he previously covered the John Major and early Tony Blair era. He has written for the Daily Express, Sunday Times, Times and Sunday Telegraph, and Sunday Correspondent. He is the author of Mandelson and the Making of New Labour (2000).
Wednesday 10 March 1999
We had been ready for the new 10p starting rate, but not the 1p cut in the standard rate. We hadn't known that the new forecasts of unemployment- driven social security spending had been reduced by pounds 8bn - allowing the Chancellor to find the money for what was, when all was said and done, a Budget as populist as it was redistributive.
And as with the content, so with the performance. For a Chancellor whose public demeanour is positively austere, this was an unusually flamboyant performance. He teased his audience, he promised to ensure that the cost of alcohol would not go up before the millennium, and he skewered William Hague and Francis Maude by reminding us of their past words on two of the most potentially controversial elements - abolition of both the married couples' allowance, and mortgage interest relief.
On these last two points he has clearly got his way. Part of Brown's acumen as a chancellor, not for the first time, has been to see how easily some old-fashioned Treasury orthodoxy can be made to sit with left-of- centre redistribution.
Abolition of mortgage interest tax relief is, of course, easy to present as a left-wing squeeze on the middle classes; in fact it was Ken Clarke who started to whittle it away to something worth only about pounds 200 a year. During the Tory years it was not only Treasury orthodoxy but a target of some quite right-wing members of the Tory party, who thought it a perk too far and a distortion of the housing market, which it was.
Nigel Lawson, a chancellor whom Brown resembles in confidence and authority, as well as in a dislike of unnecessary tax breaks, would certainly have liked to abolish it. That it was preserved for so long was a function of Margaret Thatcher being, in truth, less of a Thatcherite than many of her followers, and insisting that the state had a duty to subsidise the marital home.
Similarly with the married couples' allowance. It is easy to understand that Tony Blair might have been a little nervous about the presentational problems it could cause in Daily Mail land. But it has become, as Gordon Brown pointed out with some vigour yesterday, a much more meaningless break than its propagandists would ever admit, and has appeared all the more of an anomaly since Lawson established independent taxation for men and women.
Independent taxation was one of the obstacles, however, to another widely predicted change which didn't in fact happen yesterday. The problem was that the non-working wife of a millionaire company chairman would still be able to claim it, while a hard-working middle-class woman who earned enough to be just above the higher rate of tax would not. But it was never entirely beyond the wit of the Treasury to find a way of taking the spouse's earnings into account, and Brown showed every sign of thinking that it could be done. Nor was there anything inherently socialist about doling out a benefit to those for whom, as Jilly Cooper once memorably said, it is worth a bottle or two extra of Sainsbury's champagne a week.
But this should not detract from what was an unexpectedly swashbuckling budget for the mid-term. So fast and furious came the spending and tax- cutting promises, that you hardly had time to notice when the Chancellor tore up competition policy by announcing a new, all-powerful agency that will henceforth, just as the Bank of England did on interest rates, relieve the Secretary of State for Trade and Industry from most quasi-judicial decisions on mergers.
The Labour backbenchers were ecstatic about many of the announcements - perhaps most of all for announcing a quadrupling of the pensioners' winter allowance. But in fact this was a Budget which, perhaps more than any previous one, encapsulated Gordon Brown's driving idea - that it is possible to combine a passion for social justice with as much enthusiasm as the most ardent Thatcherites ever had for enterprise and entrepreneurship.
The milk and honey may not yet flow quite as lavishly as the Chancellor implied. The assumptions on which his increased freedom for manoeuvre depend require the industrialised countries not to slip into a global economic crisis.
And the Budget itself was a mite less generous than the Chancellor made it look yesterday: indirect taxes will go up; the 1p standard rate cut is not till next year; the 20p rate goes up to 23p and then back to 22p when the 10p rate comes in next year. Nevertheless it was a bravura performance by a Chancellor who knows that his resolute resistance in the first two years in office to all the temptations to which previous Labour governments had been prey, is starting to reap its reward. So expansive was his performance, that you might almost think there were an election or four in the air. I count one local, two national and one European myself.
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