Howe Now Brown Cow: Gordon Wants His Budget to Lay Deep Foundations; He Has Been Reviewing the Efforts of Margaret Thatcher's First Chancellor

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Gordon Brown wants his budget to lay deep foundations; he has been reviewing the efforts of Margaret Thatcher's first chancellor

Gordon Brown is unlikely to deliver another budget in such favourable political circumstances. The honeymoon with the government is far from over; the Conservative Party remains confused, following a divisive leadership election; Labour's majority is such that radical measures can be considered without fear of Commons defeats and Tony Blair's dominance of his cabinet means any ministerial unease is unlikely to cause a stir.

The political context is thus far more helpful for Brow n than it was for Geoffrey Howe, whose 1979 budget is, in a sense, a model for the Labour chancellor. Like Howe, Brown means to lay the foundations for a long period in office for his party and to define a radical political programme as resonant as Thatcherism.

Chancellor Howe certainly had the full backing of Margaret Thatcher for a programme that institutionalised monetarism into British economic policy, but the first Conservative cabinet was more obviously divided on economic issues than Labour's is now. Many of the so-called "wets" were not only in the cabinet, but in powerful positions. Willie Whitelaw, Ian Gilmour, Jim Prior, Peter Walker, Lord Carrington and Francis Pym, were all big players in the first cabinet and were far from happy with Howe's economic policies. Also, the Tory majority was much smaller than Labour's today. Theoretically if the wets had got their act together, controversial policies could have been defeated, so Howe was taking a political risk, as well as an economic one, in embarking on the course he outlined.

Howe was also constrained by Thatcher's style of leadership. She was already beginning to take an obsessive interest in all areas of government policy, especially the economy. In that sense, too, Brown enjoys greater freedom for manoeuvre than Howe. Blair has allowed his chancellor to chair the cabinet committee on economic policy, a position traditionally used as a means for the prime minister to retain influence in this crucial area. Thatcher always chaired it. So did Major. Although there have been disagreements over policy detail between Blair and Brown (notably, before the election, over whether to propose a higher top rate of income tax), Blair's decision to vacate the chair shows his faith in Brown.

For Brown the budget represents a unique political opportunity, a chance finally to set aside the bitter memory of his failure to become leader in 1994 and to reinforce his claim as the automatic successor to Blair in the unlikely event that the position were to fall vacant. Brown's budget will not be a narrowly drawn economic statement; he will aim to display his political personality to the full.

That personality is not identical to Blair's. Although Brown is held in esteem by Labour's ultra-moderniser on welfare, Frank Field, who predicts that Brown will be a radical chancellor, comparable to Lloyd George, he is also praised by Clare Short, who is attracted by Brown's passion for addressing the disadvantaged, the unemployed, the underclass. In a recent speech to the Scottish Labour conference his theme was the urgent need to tackle poverty. In his embryonic leadership campaign in 1994, allies stressed that Brown would set out to win the support of trade union leaders. He will want to demonstrate that as well as being the "Iron Chancellor" he is the "People's Chancellor" too.

But it is the iron in his political soul that will set the framework of the budget. In some ways Brown will echo Howe, who declared that he sought to change the structure of a tax system which had been "designed to discourage innovation and punish success". Brown is now in agreement with Howe's view of the tax structure in the 1970s and will confirm next Wednesday that he will leave the top and basic rates of tax at much lower levels than Howe announced in 1979. …