British Chancellor of the Exchequer Gordon Brown delivered a politically astute budget yesterday aimed not just at keeping the Labour Party in power but at securing his claim to its leadership.
He tabled a broadly neutral budget aimed specifically at groups such as pensioners and first-time home-buyers. But he raised taxes from businesses to pay for it so that he could not be charged with simply serving up pre-election bribes.
The Labour Party's focus groups must have told Mr Brown that pensioners were unimpressed by his party's reluctance to let them share in economic buoyancy. The £200 refund on council tax which he announced is well above even optimistic forecasts and free local bus travel will be particularly welcome. Mr Brown has also been careful, this time around, not to afflict those on fixed incomes with big hikes in indirect taxes. A modest increase on cigarettes, just 1p on a pint of beer and nothing on spirits and petrol were the order of the day.
Yesterday's budget was Mr Brown's ninth and perhaps his last. He made great play of the fact that the British economy is enjoying its longest period of economic growth since records began in 1701. Indeed, the economy is in good shape. Unemployment is running at 2.6 per cent, its lowest point in 30 years. Inflation for 2005 is predicted to be just 1.75 per cent and economic growth, according to Mr Brown, is 3.1 per cent, higher than that achieved by the other big economies in the G7 group.
Mr Brown is the second longest-serving chancellor in the last 100 years. He is very astute but also very lucky. The British economy is performing well despite huge borrowings, a pensions timebomb and a manufacturing base that is in serious decline. But it has been helped greatly by sustained weakness of the dollar which, for years, has kept sterling's value higher than the economic performance justifies. Tax increases may be necessary sooner rather than later.
Mr Brown however would put it all down to his skill in running the economy. And if economic management is to be a cornerstone of Labour's election strategy then the chancellor's status in the party can only rise.
This will be an opportunity for his supporters to argue again how much better it would be if Mr Brown was running the country and not just the economy. Mr Brown does not want another term as chancellor and makes no secret of his ambition to move next door to Number 10. Mr Blair, wants him in neither No 10 nor No 11 Downing Street but in the Foreign Office. It is a titanic gloves-off struggle which the coming general election may resolve once and for all.