Budget Highlights

Cautious Brown Keeps Steady Hand on Tiller

If the Chancellor approached the Despatch Box with relish today, it was hardly surprising. Having amassed a war chest of £24 billion and with an economy exhibiting signs of rude good health, it would have been difficult for him to contrive a negative and wholly unpopular Budget.

Gordon Brown's favourite word, however, is prudence, and he was never going to spray money around in a bid to engender the feel-good factor, even with a possible General Election in May. He was generous on the tax treatment of families and the widening of the 10 pence tax band will be felt in 25 million pockets, but he declined to make any headline-grabbing cuts in income tax.

The Chancellor once again acknowledged the importance of small and medium-sized businesses as the engine room of the economy and he expressed his desire to stimulate competition and innovation and said that the government would continue to reward entrepreneurship.

Reforms of the VAT system were also signalled, as were measures to encourage investment in inner city areas, where he said there exists an energetic and enthusiastic workforce, together with markets that are ripe for development. Reductions in road tax will benefit the beleaguered road haulage industry.

Opposition voices were soon raised, claiming that the net tax burden on businesses is in fact increasing, that red tape remains a menace and that many of the advantages offered to businesses and investors - such as the improvements to the capital gains tax regime - have actually resulted in more complexity and expense.

Tory leader William Hague suggested that many firms are weary of acting as unpaid benefits administrators.

The Chancellor will remain comforted by confident predictions of 2.5% growth in the economy this year. That figure may be lower than last year, but it compares well to the US and it will trounce Japan. All things considered, Gordon Brown might understandably feel confident of returning to the Despatch Box in 12 months time.