The Last or Not – The 2007 Budget (Impact in Scotland)

The consensus seems to be that the poorest will be slightly worse off, paying for tax cuts for the rest, but the experts have yet to work out the full effects of Gordon Brown’s last Budget.

And leaving them puzzled is the greatest achievement of this Budget. While they fret over their computers the rest of us can enjoy Gordon Brown’s final piece of theatre in announcing the 2p cut in the basic rate of tax to 20p in the pound, just as he was about to sit down.

Before then there was much that concerned Scotland, when he was speaking as Chancellor of the Exchequer of the United Kingdom, and much that didn’t, when he was speaking as finance minister of the not yet devolved English executive. The headlines on Thursday morning will mix these up. Announcements on education and health, for example, will be presented as applying to everyone, but, as he said, these were only about England and the Scottish Executive will make its own announcements on these matters.

Poorer working Scottish families may be affected badly by the abolition of the 10% tax rate, justified by increases in working tax credits. But not everybody who could be entitled claims working tax credit. The scheme is complicated and expensive to run and the government department concerned is having its budget cut. So there may be less encouragement to apply and some of the jobs lost could be in Scotland.

Take heart, unemployed Scots are promised 10,000 jobs under a new partnership with supermarkets and other big retailers. Let’s hope these lead to careers and not drudgery.

Cutting corporation tax from 30% to 28% could encourage more inward investment to the UK and so more jobs. How many can be persuaded to come to Scotland? The fear in Holyrood must be that most foreign investment will locate in the already over-heated south east of England. A variable rate could have changed that, but would not have been in character with the Treasury’s controlling instincts. Besides, Holyrood already has personal income tax varying powers it doesn’t use.

Scottish universities and businesses could do well in a £100 million competition for converting scientific breakthroughs into commercially successful jobs. Importantly for Scottish industry, the overall tax rate for North Sea oil companies and duty on whisky are unchanged

Grants for insulation and central heating should help pensioners in old expensive homes, but it will probably take further concessions before fuel poverty is turned round by windmills on every rooftop.

Gordon Brown is the first Chancellor to know which Budget would be his last. Yet, until the end there was no flourish, no theatre. There was no capping off ten on the whole successful years, beyond the usual recitation of positive statistics – countered with other statistics by David Cameron, when his turn came – and when it did he wasted his opportunity.

Teasingly, Gordon Brown reminded us that William Gladstone had been both Prime Minister and Chancellor. The joke was enjoyed by Tony Blair. Or perhaps he was laughing at something else, pointed out by Ming Campbell, that he might not go after all?

Either way, this might not have been Gordon Brown’s last Budget.

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