It was not an exotically radical Budget. It was prudent, managerial, responsible. And that made it a brilliant opening Budget, because it described precisely what this government intends to be about. It looked and felt like they (meaning Gordon Brown and Tony Blair) utterly meant it, and it left the opposition with nowhere to go.
Let's look at that point first, since it says so much. How can the Conservatives attack this Budget? It is a Budget for business, because it invites medium and larger businesses to invest, invites foreign capital to invest. It seeks to signal a warmth towards small businesses. In capital neon letters Mr Brown keyed out yesterday a message that he intended to balance the windfall tax, and the removal of advance dividend tax, with investment stimuli. Of course the Tories can protest at the windfall tax, but to little avail.
And what about the Lib Dems? Their education spending promise looks a mite by-the-by when set alongside an actual commitment to invest pounds 1.3bn capital in school buildings, plus an immediate pounds 1bn investment in standards and quality, never mind the allocation of a chunk of the reserves that should prevent the annual health funding anguish next winter.
It's even difficult for The Independent to start picking holes. Our view has long been that the windfall, since it was being levied, should be distributed as much to education and training of the next generation as to the present long-term unemployed. On that issue, Mr Brown more than satisfied: he made it clear that his objective was to spend that money - "the people's money", which is not a bad rubric to carry with you in power - on promoting "hard work and self-improvement". In other words, real layabouts who don't want to take advantage of the opportunities offered by Tony's New Model Army will find themselves left behind. This money is, should be, for those who are willing to use it. Our view is simple: if you must levy a windfall like this, then make sure every penny is spent in a way that counts, for the long term.
On the core economic issues, Mr Brown was as responsible - as "Iron" - as any realistic liberal economist could conceivably expect. He promised inflation control, with conviction. He promised to use our good growth fortunes to tackle the deficit, which is when it matters. Maybe he could have done a little more to tackle consumer spending, but in truth it is now the Governor of the Bank of England who has the primary responsibility there. Cutting corporation tax was a neat coup - but even cleverer to hold off the next Budget to spring next year, duck under this year's spending round, and use the contingency to tackle the immediate spending pressures. That leaves departmental ministers time and room to work out priorities.
Caveats? Well, naturally. Cutting VAT on fuel is not exactly a green measure, and it is frankly as kind to well-off people as the poor and elderly. Also, increasing petrol tax (already very high in the UK) is not the real answer; providing incentives to clean up emissions from lorries and buses is actually more environmentally potent. Green taxes such as petrol tax hikes are great for the Treasury, and barely relevant to our breathed air. In truth, there is very little green about the Budget at all, other than a rhetorical ambition to be good. As Mr Brown knows, being green and political at the same time is a smart trick that no one has quite yet pulled off. At least, he should be given a chance to try.
The Chancellor was also utterly right to emphasise the importance of slowing down runaway house price inflation. This cannot be repeated often enough: housing cost imbalances are one of the most peculiar and destructive forces in British society and in our economy, and changing that should be a fundamental long-term aim of any truly radical government. It looks as if Mr Brown agrees. But raising stamp duty is not really the way to slow down absurdly accelerating house price inflation in the wealthier pockets of Britain. The best way is to remove mortgage interest tax relief altogether.
But too big a bite on Middle England was no doubt too much. So those wanting to buy high-value homes - like a certain famous address in Islington - will have to shell out more than the rest. So be it: the hit is relatively minor, and at least the Chancellor has speeded up the removal of mortgage tax relief.
A lot of important detail remains to be disclosed from this Budget. Mr Blunkett (self-evidently emerging as one of the big political figures of this government) will make a statement today that is central to developing the theme of long-term skills improvement. Will the childcare army make any economic and social difference, or will it merely prove to be a gesture? But no one should miss a core message in this Budget. Labour promised something, and it has done exactly that. The Conservatives paid a high price for saying one thing and doing another. Mr Blair, and his heavy- jawed but cheerfully confident friend, seem determined to say what they mean and do what they say. If they're lucky, it might even succeed.Reuse content