Gordon Brown promised to raise investment in Britain's state schools to the
levels enjoyed in the private sector today as he used his tenth Budget to
lay out his vision for the day when he hopes to inherit the keys to No 10.
The Chancellor announced a range of measures on the environment, skills and
education that he said would entrench economic stability and allow the UK to
remain globally competitive. He also announced £200 million of public money
to help prepare British athletes for the 2012 London Olympics.
But with his hands tied by relatively slow economic growth and high public
sector borrowing, the Chancellor was forced to pull a few rabbits from his
hat as he promised billions of pounds in extra investment for schools -
expenditure that had already been largely flagged.
"Most of all this is a Budget for Britain’s future to secure fairness for
each child and invest in every child," Mr Brown said.
The Chancellor was mostly silent on other key public services, allowing David
Cameron - making his first Budget reply as leader of the Opposition - to
point out that Mr Brown had not even mentioned the National Health Service
in his 61-minute Budget speech.
"Billions raised, billions spent, no idea where the money’s gone. With a
record like that the Chancellor should be running for treasurer of the
Labour Party," Mr Cameron quipped.
Mr Brown said that annual investment in education would rise from £5.65
billion to £8 billion over the next five years. He also promised an extra
£440 million to go direct to school heads - an average of £190,000 per
secondary school. There will also be a drive to recruit 3,000 new science
teachers.
There was some bad news for drivers of gas-guzzling 4x4s with a new £210 top
rate of road tax for the most polluting vehicles as he sought to establish
his green credentials. But air passenger tax remains unchanged and fuel duty
will be frozen until September 1.
Stephen Joseph, director of Transport 2000, said: "The Chancellor has
listened to environmentalists but only with half an ear. The increase in tax
on gas guzzlers is derisory and will hardly pay for the new paperwork.
"Drivers of big cars and ‘Chelsea tractors’ have got off lightly. This is
a Budget that will see salesmen in 4x4 showrooms rubbing their hands in glee."
Mr Brown said that he would finance his plans with a £30 billion sell-off of
public assets and and a new efficiency drive across Whitehall. Despite the
extra money announced for schools, the overall package represents only a
slight fiscal tightening over the coming financial year.
On vehicle excise duty, Mr Brown announced that drivers with cleaner engines
would have their road tax cut to just £40 while the "greenest"
cars would pay nothing at all.
The new top rate of vehicle excise duty of £210 will hit the most polluting
new cars - affecting 1 per cent of vehicles on the road. But Mr Brown said
the number of motorists paying the lower rate of £100 or less would increase
from 300,000 to three million.
Mr Brown also put 9p on 20 cigarettes, 4p on a bottle of wine and 1p on a pint
of beer. Duty on whisky, other spirits and cider will be frozen. And he
added: "In anticipation of World Cup success this summer, I am freezing
duty on champagne ... and on British sparkling wine."
After revising growth forecasts down in a pre-Budget report last December, Mr
Brown stuck to his main economic forecasts, although there was an increase
in public sector borrowing next year. He told MPs that growth remained on
target at 2.0 to 2.5 per cent this year and would pick up to between 2.75
and 3.25 per cent in 2007 and 2008.
Inflation was also on target, he added, as it had been since Labour came to
power in 1997, and public investment in education, research and science
would help entrench long-term economic stability.
"The British economy is strong and strengthening," Mr Brown said,
pointing out that British economic growth had survived successive shocks
including the economic crisis in Asia, the dotcom crash, recession in the
US, house-price inflation and the recent oil shock.
The UK economy grew by just 1.8 per cent in 2005, its weakest pace in 13
years. But a revival in consumer spending and the recovery of both the
housing and share markets have helped restore confidence and Mr Brown said
GDP growth reached 2 per cent in the last quarter of the year. Treasury
coffers have also been given a boost by a windfall tax on oil companies.
Some of that money will be spent on funding Britain's military operations in
Iraq and Afghanistan, for which Mr Brown allocated an extra £800 million for
next year. That means that by the end of the next year the cost of the two
operations will have exceeded £5 billion, far above original estimates.
The growth slowdown had raised questions about Mr Brown's ability to meet his "golden
rule" - that spending does not exceed tax revenue over the course of a
complete economic cycle. Economists maintain that the rule has only been met
because of a change in the calculation of the dates of the cycle and argue
that taxes will eventually have to rise by around £10 billion.
But Mr Brown said that the golden rule would be met in this cycle by more than
£16 billion pounds and the government was "well placed" to
meet the rule in the next cycle also.
The personal tax allowance will be raised from £4,895 to £5,035. Child tax
credit for a family with two children will be worth up to £88 a week in
2009. Child benefit will rise to £17.45 from April 10.
In his Budget reply, Mr Cameron said the public finances were "in a mess"
with public sector net borrowing of £37 billion this year and the economy
growing more slowly than those of the US, Canada, Spain and other countries.
The Conservative leader added: "There are two central facts which tell us
the real story of this Budget.
"First the tax burden is now at its highest ever level in the history of
this country - higher than when Denis Healey made the pips squeak, higher
than when Ramsay MacDonald was sitting where the Prime Minister is sitting
now."
Brown Buzzwords
Education - 31
Public - 18
Growth - 17
Cut - 17
Inflation - 16
British - 16
Science - 14
Environment - 13
Families - 12
Raise - 9
Higher - 9
Health - 6
Parents - 3
Prudent - 2
