Brown's No 10 Budget: Chancellor draws up battle lines with Cameron

Gordon Brown eagerly drew the battle lines for a general election between him and David Cameron yesterday as he unveiled a Budget that was heavy on politics but light on economics.

Presenting his tenth, and possibly last, Budget, the undisputed prime minister-in-waiting contrasted his plans to invest more in public services, notably education, with Mr Cameron's goal of cutting taxes.

Mr Brown deliberately expanded pet projects opposed by the Tories to highlight his dividing lines with them - the climate change levy on business, the child tax credit, child trust funds for new-born babies and the "new deal" for the jobless.

Mr Brown set out his personal long-term priorities by announcing an ambitious goal of raising average spending on each child in state schools from £5,000 a year to the £8,000 a year enjoyed by those educated in the private sector. Although falling school rolls will make that it easier than it looks, it could still take 15 years or more to achieve.

He boosted capital investment in schools from £5.6bn to £8bn over the next five years to improve computer systems and buildings. A further £440m will be paid direct to school heads - worth £190,000 for the average secondary school. He hailed "a Budget for Britain's future to secure fairness for each child by investing in every child". He also sought to derail Mr Cameron's campaign to win the green vote. A shake-up of road tax will see new owners of the most polluting 4x4s and other "gas guzzlers" pay a new top rate of £210 a year, while drivers with cleaner engines will have their duty cut from £75 to £40 and those with the "greenest" vehicles will pay nothing.

Even Mr Brown's jokes were aimed at Mr Cameron - and the Tories saw his desire to match spending in private schools as a sign he will remind voters of the Tory leader's Eton education.

Facing Mr Brown across the dispatch box for the first time, Mr Cameron described his rival as a "fossil-fuel chancellor" in a carbon-conscious world and "an analog politician in a digital age."

Rehearsing his own election pitch, the Tory leader said: "What we've got is a chancellor who has taxed too much, borrowed too much and is the roadblock to reform. He is a politician completely stuck in the past."

The Tories pledged to support the £440m boost for schools but Mr Brown drew some blood when they could not say whether they shared his goal of closing the spending gap between state and privately-educated pupils.

Theresa Villiers, the Tories' shadow Chief Treasury Secretary, said that was "not the answer" and her party would spend less on education than Labour -remarks seized on by Labour as evidence of Tory public spending cuts.

To protect frontline spending on health and education, the Chancellor signalled a tough settlement for other departments in next year's review of government spending in which they will be expected to cut administrative costs. There will be a squeeze on public sector pay and £30bn of asset sales to help balance the books.

Mr Brown chose to ignore the cash crisis at some hospitals by virtually ignoring the National Health Service. Another notable absence was a repeat of last year's £200 cushion to reduce the council tax bills for over-65s, while green groups noted the absence of measures to reduce the damage caused by air travel.

Sir Menzies Campbell, the Liberal Democrat leader, described the Budget as a missed opportunity. "He could have tackled the unfair tax system. He could have made the environment a priority. He could have faced up to the pensions crisis. He could have addressed the problem of personal debt. He has declined to do any of these. This is a legacy from which it will be difficult for him to escape," he said.

In a neutral Budget, Mr Brown boasted that under his stewardship the economy had seen an unprecedented 10th year of consecutive growth. However, the City was left scrabbling for clues about Mr Brown's tax and spending plans after it became clear that it did little to alter either his forecasts for either economic growth or public spending.

"In economic terms, this was one of the least significant Budgets in living memory," said Roger Bootle, economic adviser to the accountants Deloitte."This was a political Budget and a piece of parliamentary theatre, rather than an exercise in economic management."

One economist pointed out that the Chancellor focused on all the "Es", environment, education, employment and energy, except one - the economy.

"Who needs a cabinet, when you've got Gordon Brown?" asked Douglas McWilliams, chief executive of the City analysts CEBR. "At times, the speech covered policies one might expect to be announced by the Foreign Secretary, Jack Straw, or another of his ministerial colleagues. But what was lacking from today's performance was much economics."

Mr Brown left his growth forecast year unchanged at 2.25 per cent - after last year's 13-year low of 1.7 per cent. He also stuck with his upbeat forecasts for 3 per cent growth in 2007 and 2008.

He added £2bn to his borrowing plans for the coming financial year but took that back by cutting £1bn off each of the following years. He claimed he would meet his "golden rule" on the public finances by £16bn.

Economists challenged the figures, saying they were based on over-optimistic forecasts for both growth and tax revenues. Peter Spencer, an adviser to the Ernst & Young ITEM Club economic model, said the Budget report showed the Treasury had cuts its receipts forecast by 7.5 per cent since the 2005 Budget.

Mr Spencer said: "He simply has not the £16bn margin that he claims. These figures are far too optimistic. The leeway is non-existent and he is relying on cyclical adjustments to get himself out of trouble."

He added that the acceleration in growth could not come from consumers, who face a burden of debt and higher energy and council tax bills.

Michael Saunders, chief UK economist at Citigroup, said the Budget left unanswered key questions about the medium-term outlook. He said the new figures showed real spending growth slowing to 3 per cent in the coming year, followed by 2.6 per cent in 2007/08 and to 2 per cent after that.

"The Budget did not get us any closer to an answer to the key challenge - how can the Labour Government achieve its social aims while sticking to the Budget numbers, which indicate a sharp slowdown in real public spending growth," he said.

"If those spending numbers from 2008 onwards are implemented without improvements in public sector efficiency and cost control, then the result will be a marked deterioration in public services."

* Treasury Budget site

* Chancellor's Statement in full

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
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
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Scrum Master - Southampton, Hampshire - Excellent Package

£40000 - £60000 per annum + Excellent benefits: Deerfoot IT Resources Limited:...

Senior Scrum Master - Hampshire - £47k

£47000 per annum + Excellent benefits: Deerfoot IT Resources Limited: Key skil...

Geography Teacher

£110 - £200 per day + pension and childcare: Randstad Education Maidstone: Geo...

KS1 Teacher

£110 - £120 per annum + TBA: Randstad Education Reading: KS1 Teacher needed fo...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice