Green Budget: Brown helps poor, and warns the rest

Gordon Brown yesterday gave pensioners, lone parents and the unemployed a surprise down-payment on Labour's One Nation pledges. With backbench critics delighted, Anthony Bevins and Diane Coyle examine the Chancellor's first pre-Budget statement.

Winter heating help for pensioners, a 10-fold increase in childcare places for lone parents, and a half-price bus and rail fare scheme for young people helped into work or training under Labour's New Deal jobs programme yesterday delivered a much-needed morale-boost for Labour ministers and MPs.

The Chancellor of the Exchequer said at the end of a Commons statement outlining consultative plans for next spring's Budget: "This is a Government that keeps its promises and is prepared to take action where action needs to be taken."

Following a spate of announcements and media speculation that the Treasury was planning a slash-and-burn policy for some of the fundamentals of the welfare state, Labour MPs greeted the good news with spontaneous cheers of relief. There was even a congratulatory pat on the arm from Tony Blair.

The statement was greeted warmly by business, too, pleased by the tough stance on government finances and a surprise cut in corporation tax. But business leaders tempered their reaction by warning that the tax change would cost industry billions of pounds in the first instance.

The political heart of the statement offered the switch of a European Union payments dividend of pounds 400m to help pensioners with winter fuel bills; an extra pounds 20 for every pensioner household this winter and next winter, with pounds 50 extra for the 2 million pensioner households on income support. But there was more for the poorest pensioners - a promise of action to encourage the other 1 million pensioner households who do not claim their income support, about pounds 15 a week, to take up their benefit entitlement.

For lone parents, Gordon Brown extended the welfare-to-work programme from those with school-age children to all lone parents and, to meet backbench criticism, every single parent coming on to benefit from April will be offered help to find work. The big surprise, however, was on child care. Harriet Harman, Secretary of State for Social Security, will today give details of a pounds 300m lottery-funded programme to set up as many as 30,000 new out-of-school clubs for nearly 1 million children of lone-parent families.

Mr Brown also announced the go-ahead for detailed work on a tax-credit system, and a new national insurance structure for the low paid, intended to eradicate the poverty trap deterrent to work under which some people lose more than a pounds 1 for every extra pounds 1 they earn.

Mr Brown warned that there would be no relaxation of Treasury disciplines on the economic front. "We must all be long-termists now," he said. "The reforms we are introducing will take time. But it is in no one's interest if today's pay rise threatens to become tomorrow's mortgage rise."

Peter Lilley, the shadow Chancellor, prompted Labour jeers, and Tory cheers, when he welcomed the good economic news of the statement, which he told the House, was the "golden economic legacy which we bequeathed this government". But he also said Mr Brown was offering little comfort for the typical home-owning family who faced pounds 650-a-year higher bills from increased interest charges, a cut in mortgage tax relief and extra burdens on pension funds.

The Liberal Democrat Treasury spokes-man, Malcolm Bruce, said later: "Budgets should involve both income and expenditure, but this is the Polo mint Budget, with a hole in the middle where the extra spending on schools and hospitals ought to be."

The business and financial markets gave the Chancellor's statement a favourable reaction, with a wide welcome for a surprise announcement of a further cut in the corporation tax rate, along with abolition of advance corporation tax from 1 April 1999. However, there was great concern about how much a switch to quarterly payment of corporate taxes would cost business during the transition period. Apart from that worry, Mr Brown's performance got good reviews beyond Westminster and Whitehall. In the City, the updated forecasts for the economy and the public finances were seen as an exercise in deliberate caution.

Susan Sarandon described David Bowie as
peopleSusan Sarandon reveals more on her David Bowie romance
Arsenal supporters gather for a recent ‘fan party’ in New Jersey
sportDidier Drogba returns to Chelsea on one-year deal
Arts and Entertainment
The Secret Cinema performance of Back to the Future has been cancelled again
Have you tried new the Independent Digital Edition apps?
ebookA unique anthology of reporting and analysis of a crucial period of history
Life and Style
Balmain's autumn/winter 2014 campaign, shot by Mario Sorrenti and featuring Binx Walton, Cara Delevingne, Jourdan Dunn, Ysaunny Brito, Issa Lish and Kayla Scott
fashionHow Olivier Rousteing is revitalising the house of Balmain
Arts and Entertainment
Christian Grey cradles Ana in the Fifty Shades of Grey film
filmFifty Shades of Grey trailer provokes moral outrage in US
BBC broadcaster and presenter Evan Davis, who will be taking over from Jeremy Paxman on Newsnight
peopleForget Paxman - what will Evan Davis be like on Newsnight?
Life and Style
fashionCustomer complained about the visibly protruding ribs
The new dawn heralded by George Osborne has yet to rise
voicesJames Moore: As the Tories rub their hands together, the average voter will be asking why they're not getting a piece of the action
Dejan Lovren celebrates scoring for Southampton although the goal was later credited to Adam Lallana
newsComedy club forced to apologise as maggots eating a dead pigeon fall out of air-conditioning
Arts and Entertainment
Jo Brand says she's mellowed a lot
tvJo Brand says shows encourage people to laugh at the vulnerable
Life and Style
People may feel that they're procrastinating by watching TV in the evening
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Senior Risk Manager - Banking - London - £650

£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...

Commercial Litigation Associate

Highly Attractive Package: Austen Lloyd: CITY - COMMERCIAL LITIGATION - GLOBAL...

Systems Manager - Dynamics AX

£65000 - £75000 per annum + Benefits: Progressive Recruitment: The client is a...

Service Delivery Manager (Software Development, Testing)

£40000 - £45000 per annum: Ashdown Group: A well-established software house ba...

Day In a Page

Evan Davis: The BBC’s wolf in sheep’s clothing to take over at Newsnight

The BBC’s wolf in sheep’s clothing

What will Evan Davis be like on Newsnight?
Finding the names for America’s shame: What happens to the immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert?

Finding the names for America’s shame

The immigrants crossing the US-Mexico border without documents who never make it past the Arizona desert
Inside a church for Born Again Christians: Speaking to God in a Manchester multiplex

Inside a church for Born Again Christians

As Britain's Anglican church struggles to establish its modern identity, one branch of Christianity is booming
Rihanna, Kim Kardashian and me: How Olivier Rousteing is revitalising the house of Balmain

Olivier Rousteing is revitalising the house of Balmain

Parisian couturier Pierre Balmain made his name dressing the mid-century jet set. Today, Olivier Rousteing – heir to the house Pierre built – is celebrating their 21st-century equivalents. The result? Nothing short of Balmania
Cancer, cardiac arrest, HIV and homelessness - and he's only 39

Incredible survival story of David Tovey

Tovey went from cooking for the Queen to rifling through bins for his supper. His is a startling story of endurance against the odds – and of a social safety net failing at every turn
Backhanders, bribery and abuses of power have soared in China as economy surges

Bribery and abuses of power soar in China

The bribery is fuelled by the surge in China's economy but the rules of corruption are subtle and unspoken, finds Evan Osnos, as he learns the dark arts from a master
Commonwealth Games 2014: Highland terriers stole the show at the opening ceremony

Highland terriers steal the show at opening ceremony

Gillian Orr explores why a dog loved by film stars and presidents is finally having its day
German art world rocked as artists use renowned fat sculpture to distil schnapps

Brewing the fat from artwork angers widow of sculptor

Part of Joseph Beuys' 1982 sculpture 'Fettecke' used to distil schnapps
BBC's The Secret History of Our Streets reveals a fascinating window into Britain's past

BBC takes viewers back down memory lane

The Secret History of Our Streets, which returns with three films looking at Scottish streets, is the inverse of Benefits Street - delivering warmth instead of cynicism
Joe, film review: Nicolas Cage delivers an astonishing performance in low budget drama

Nicolas Cage shines in low-budget drama Joe

Cage plays an ex-con in David Gordon Green's independent drama, which has been adapted from a novel by Larry Brown
How to make your own gourmet ice lollies, granitas, slushy cocktails and frozen yoghurt

Make your own ice lollies and frozen yoghurt

Think outside the cool box for this summer's tempting frozen treats
Ford Fiesta is UK's most popular car of all-time, with sales topping 4.1 million since 1976

Fiesta is UK's most popular car of all-time

Sales have topped 4.1 million since 1976. To celebrate this milestone, four Independent writers recall their Fiestas with pride
10 best reed diffusers

Heaven scent: 10 best reed diffusers

Keep your rooms smelling summery and fresh with one of these subtle but distinctive home fragrances that’ll last you months
Commonwealth Games 2014: Female boxers set to compete for first time

Female boxers set to compete at Commonwealth Games for first time

There’s no favourites and with no headguards anything could happen
Five things we’ve learned so far about Manchester United under Louis van Gaal

Five things we’ve learned so far about United under Van Gaal

It’s impossible to avoid the impression that the Dutch manager is playing to the gallery a little