Byline: PAUL JOHNSON
YOU HAVE to hand it to Gordon Brown - he is a formidable politician.
When Tony Blair tells me 'We are lucky to have Gordon', he is telling the strict truth - if by 'we' you mean the Labour Government.
This is Brown's third Budget, Labour has been in power for nearly two years and we still have not had a major financial crisis.
That has never happened under a Labour government before. Better than that, while a quarter of the world is in deep recession and most of Europe is struggling, Britain has managed to keep itself out of trouble.
The overall news is good. Unemployment is going down. More British people have jobs than ever before in our history.
Inflation has stabilised at 2.5 pc and is unlikely to go higher. As recently as the Eighties it was as high as 21 pc.
In those days we had 15 pc interest rates.
When Brown took over, rates were still 7 pc. They are now down to 5.5 pc and long-term interest rates, at 4.5 pc, are the lowest for 40 years. That is bad news for savers but good for homebuyers, industry and the economy as a whole, A budget deficit of [pounds sterling]28 billion has been transformed into a surplus, which means a welcome cut in interest payments. We are heading for a series of surpluses, peaking at [pounds sterling]11 billion in five years. Whereas debt doubled under the luckless John Major, it is now down as a proportion of national income from 44 pc to 37 pc.
These are solid improvements in our position and they testify to the wisdom of Gordon Brown in handing over much of his responsibility to the Bank of England - whose Governor, Eddie George, is emerging as a financial wizard.
Boast In his new Budget, Brown claims that he has struck the right balance between promoting enterprise and wealth-creation on the one hand, and being fair to the poor on the other. This is not an empty boast, either.
He has now got corporation tax down to 30 pc for all firms and to 20 pc for small business - indeed, the smallest start at only 10p in the pound.
These are the lowest figures in Europe.
This success is accompanied by a variety of helpful measures, such as [pounds sterling]150 million tax credits for research and development, an extra [pounds sterling]100 million for business studies in universities, targeted tax cuts for industry, a new competition policy, lower starting rates for capital gains tax, raised thresholds for inheritance tax, cuts in National Insurance contributions and tax-free employee share schemes.
All of these moves should encourage both savings and investment.
On the fairness front, Brown introduces the new 10 pc rate for the lowest-paid and promises to cut the standard rate next year.
It was a splendid moment for Brown to be able to announce that 10 pc was now the starting rate on income tax, corporation tax and capital gains tax. I noticed that Tony Blair flashed his famous smile at that point in the speech - and no wonder.
Why, then, do I call Brown a formidable politician, rather than an outstanding statesman? There are four reasons.
First, although Brown says he is cutting taxation, he has actually increased it by at least [pounds sterling]20 billion a year. His 'taxation by stealth' policy is the real key to his financial juggling. It means that, over a period, he can pump an extra [pounds sterling]40 billion into education, health and other public services and still report a budget surplus.
Indeed, he was able to increase public sector spending still more yesterday: a pro-gramme of free computers for schools, more for hospitals, more for pensioners and more for children. But don't be deceived - we are already, or soon will be, paying for all of it. …