Future generations will be the best judge of the Budget

There is a wider constituency which does not vote: our trading partners, our flora and fauna, and our children's children

This evening we will all be making those little personal calculations about the Budget - how much more we will be paying for petrol or booze, whether we gain or lose from the income tax changes. Tomorrow the papers will be full of macro-economic calculations - what are the implications for interest rates and economic growth, for government borrowing, or for future public spending. But before all that hits us, let's just think about some other tests that might be applied, tests of things vastly more important than the price of a bottle of whisky or the future profile of the PSBR.

Try these three: the implications of the Budget for Britain's role in the world economy; for the environment; and for fairness between different generations. For government financial policies should not be framed just to try to satisfy existing voters. There is a wider constituency which does not vote in British elections, but which has a profound interest in what our government does: the countries with whom we trade and have investment links; the creatures and plants on our island and beyond; and our children, our children's children and the generations of the unborn.

The importance of the first of these, in particular the people in countries that have investments here and in which we ourselves have investments, is recognised by Gordon Brown. He would argue that in a global economy the job of government is to think globally, rather than nationally, when framing a budget. We live in a world of gigantic capital flows, in which money and the know-how behind that money will flow anywhere in the globe. His view is that what these international investors want most of all is stability, so the first job of government is to provide that.

Getting relations right with the international investment community is particularly important for the UK. Most people know that we have been very successful at attracting foreign investment: Nissan, Toyota and so on. It is much less widely appreciated that the stock of investments we own abroad is even larger than the foreign-owned stock here. As a result we have a large net income from investments - the second largest in fact, after Japan, in the world. We seem to have a comparative advantage in the craft of managing international investments.

So the test for the Chancellor today is not just the narrow one of whether his measures are approved by the world's financial markets or the multinational corporations. It is the broader test of whether they are in tune with a world in which capital and people can move much more freely than ever before in human history. The simple question is whether we continue to attract foreign capital, and any fall-off in the inflow would certainly be cause for concern. The more subtle one is whether the Budget recognises that globalisation takes many forms, including attracting foreign nationals to base themselves in Britain. One particular concern is whether our tax laws, currently favourable towards resident non-nationals, may be skewed too far against them.

Now the implications of the Budget towards the environment. Tax and spending changes have, over a generation or so, an enormous impact on the environment. The transformation of the British countryside, from the wheat fields of East Anglia to the Sitka spruce plantations of Scotland, have been driven by tax breaks. Government-inspired changes in turn affect wildlife: not just the creatures who live here, but the birds that visit our shores and the fish that swim in our seas. Some recent changes (for example, the switch from coal to gas in generating power) have great environmental advantages. Britain looks like being one of a tiny handful of countries that will be producing less carbon dioxide emissions in the year 2000 than they were in 1990. Virtually all the "environmentally correct" countries have worse records on this most vital issue.

But there is much more we can and should do, and this means some tough choices. Voters and pressure groups concern themselves with a few high- profile issues and can be satisfied relatively easily. But there are fewer votes in measures that will hurt people now but limit climatic change in 30 years' time. Taxing company cars and parking places or switching some money into, say, better bicycle ways or public transport has much less impact than pricing all energy properly. The Chancellor sets off on the wrong foot here with the cut in VAT on home fuel. The key test is whether the Budget's impact on the environment is tokenism, or whether it is prepared to upset people now in order to improve environmental conditions far into the future.

This leads to the third test: will public finance take into account the interests not just of present voters, but of future ones? Left to themselves, human beings can be astonishingly far-sighted. Our public parks were planned and paid for by people who would never live to see them in their full glory. One of the most powerful human drives seems to be the desire of parents not just to bring up and support children through their education, but also to leave something to them when they die.

Public finance, alas, does not work like that, for governments all over the world have built up enormous debts that will have to be redeemed in higher taxation by children and the unborn. In Continental Europe the problem is particularly grave because of the unfunded pension liabilities, which will have to be paid by a smaller group of workers; but even in the UK we should be paying back national debt now, while we can afford to do so, as well as encouraging people to save more.

So there is a third test: are we running our finances in a way that is fair to future citizens? There is a string of specific questions here. For example, we need to test government financial policy on education: are we investing enough in our children, and demanding high enough standards from them? Does tax policy help cement the family unit? Does it help people save? Are the big taxation and spending policies resulting in unsustainable national debts?

None of this is easy; none of this is immediate. It is difficult to become overly worried about the interests of a Japanese multinational, a migrant bird, or a child who will not be born for another five years. And so I am afraid that you will not see these big questions tackled in much depth tomorrow in that fog of war which will follow what is certainly a very important political event. But if the financial policies of this government are to matter at all a generation from now, they will matter because of their sensitivity to big issues such as globalisation, the environment and intergenerational fairness - and not because of what they do to the price of a bottle of booze.