ref date:16 Jul 1997 (ECON)
More budgetary analysis
Edinburgh doctors were very pleased with the extra £1200m for the NHS
and say they are hopeful it will stop many of the closures or limited services
they were forced to offer under the Tory government.
The money for schools has been squeezed very hard under the Tories and
whilst shiney new railway stations were built for privatization, schools
country wide rooted where they stood. This will now begin to change.
Schools will still have to submit bids to get their most pressing work done,
but at least it is a step forwards.
Mr Brown found these new resources without breaking his main pre-election
pledges - no rise in main income tax rates or to breach the Tory spending
totals for this year and next.
However, can the new Labour chancellor (and Scotsman) actually make more people
invest in the future and reduce some consumption, or will a spending boom lead to the Bank of England raising interest rates?
By scrapping tax credit for advance corporation tax (ACT) Mr Brown hopes
to force companies to spend less on dividends and put more money into investment for the future, however, many smaller companies, that pay a great deal of
corporation tax instead of mainstream Income tax when directors declare
dividens will be sorely hurt. They will now have to pay employees and employers
NI and social security thereby saving the Treasury a very useful £5400m a year.
The cut in corporation tax by 2% will be welcome however.
The City of London was not sure what to do about the budget, but the chancellor said he'd like to see prices being realistic: "The markets need the froth blown off current prices and if this Budget achieves that so much the better".