The corridors of power...
Gordon Brown, unlike all his predecessors as chancellor, does not disappear into purdah weeks ahead of his Budgets. He has put an end to the almost manic secrecy that surrounded these events.
It is thanks to his openness and ‘careless leaks’ from the Inland Revenue, that we know the main thrust of his Budget proposals on April 17.
Business, large and small, will almost certainly benefit. Mr Brown is expected to hand big business £1.1bn in tax breaks. These include £350m in corporate tax cuts, £150m from cuts when they sell ‘substantial shareholdings’, and £600m through the introduction of tax credits on R&D investment.
More than half a million small businesses are expected to benefit from a simpler VAT system. But Mr Brown is – or should be – hemmed in by Labour’s election pledge not to touch income tax rate. However the PM has hinted taxes will have to rise to give the NHS a boost. To get round this pledge and raise the money, Brown could increase VAT or raise NI contributions.
Meanwhile, events in the Middle East may force Brown to revise his plans to increase VAT on petrol. But if Brown goes ahead, he fears the fuel giants would put their increases on after the Budget – and blame the government.
Since no Brown budget would be complete without a stealth tax, it is expected company car drivers could face a 16% tax increase on petrol bills.
None of this is being achieved without severe strains on ministers. David Blunkett and Geoffrey Hoon, have been fighting for more cash. Blunkett has made no secret of his requirements for more resources to tackle crime.
And Mr Hoon has complained the MoD is so short of money, it is raiding next year’s budget to meet this year’s requirements.
Blair and Brown are said to be furious these differences have come out into the open.
That is why they are considering going back into purdah until April 17.
But it is probably too late for that now.