The telephone calls to Treasury officials started early on Sunday morning, calling them back to Whitehall for an emergency rewrite of the Pre-Budget Report.

Under Gordon Brown, last-minute changes to the Budget were so common that officials could guarantee there would be numerous late nights.

But towards the end of last week, many officials were smugly looking forward to a relatively quiet weekend. Alistair Darling’s first big speech was nearly complete and there appeared to be no pressure to add the last-minute ideas for which the former Chancellor was famous. This was partly because the Comprehensive Spending Review had been completed for most departments months before, and there was little room for manoeuvre.

Only the settlements for Health and Education were finalised in the last few weeks, and leaks were already appearing saying there would be large increases in spending over the next three years. This was made possible in part by the Treasury squirrelling money back in a rainy-day fund and the adoption of more optimistic estimates for economic growth and company tax receipts. In addition, the Treasury added back £2 billion in capital spending for health in 2010 that had been cut out of earlier plans by Gordon Brown in his March Budget — a switch not mentioned by Mr Darling in his Tuesday speech.

The Pre-Budget Report (PBR) element of Tuesday’s set-piece was also largely complete late last week, with the non-domicile and aviation tax moves included. There were rumours that Mr Darling would adopt election-friendly proposals such as cutting stamp duty and possibly even income tax. While it is difficult to be absolutely sure what was in original drafts of the PBR, it is understood that inheritance tax did not feature. For many Labour members, inheritance tax is a part of a core belief in redistributing income, and no changes were planned.

But when Gordon Brown received polling data from marginal constituencies on Saturday afternoon, everything changed. The Prime Minister shelved plans for an election and a decision was made to change the direction of the PBR. With no election, Labour could neuter the opposition by pinching the very policies that had given the Tories a poll bounce in marginal seats.

The Chancellor and officials spent long hours on Sunday rewriting his speech. This process continued through much of Monday. Out went stamp duty and other tax cuts; in came inheritance tax. Mr Darling’s first Pre-Budget Report speech was initially designed to pave the way for an election. Two days of hurried changes reflected the shifting sands of the political events in which it was set.

Winners and losers Who gains from the Chancellor’s proposals?

Winners

— Well-off married couples who do not plan well - they will now be able to double-up their inheritance tax allowances without making special arrangements

— Low-income lone parent families - gain from tax credit changes

— Owners of second homes selling up - lower capital gains tax bills

— People who realise quick capital gains on business assets before generous reliefs end in six months

Losers

— Non-domiciled foreigners living in UK, who face tax crackdown

— Business owners, including private equity, who don’t cash out assets in next six months

Source: Institute for Fiscal Studies

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