Early Budget Expected
Chancellor Gordon Brown is reported to be preparing his emergency budget a month earlier than expected; on June 10th. It is also thought to be the most radical welfare Budget since the
war.
In an interview with The Observer newspaper Mr Brown reveals he has
already started a fundamental review of public spending to be completed in time
to allow him to implement a three-year spending plan from 1998 which would allow
increases in priority areas.
He promised a bill releasing £5 billion from
council house sales to kick-start a massive new social housing programme.
Mr Brown also foreshadowed immediate changes to capital gains tax and
corporation tax to encourage more long-term share ownership and higher
investment and budget changes to taxation to encourage investment.
Mr Brown hinted that the controversial plans for a windfall levy on excess
profits of privatised utilities will include British Telecom.
The "windfall tax" on privatised utilities is a bid to raise enough money to finance schemes to get 250,000 people off the unemployment register and back to work. And while income tax rises have been ruled out Mr Brown may consider increasing Government revenue by raising taxes on mortgages or Company tax.
One tax that will be cut is VAT of domestic fuel - which Labour have pledged to cut from 8% to 5%.
The newspaper report suggests that the Chancellor and the Prime Minister want the Government to maintain its momentum after what most observers agree has been a fast start since the election. Mr Brown took only four days after becoming Chancellor to give the Bank of England freedom to set interest rates.
A June 10th date for the budget would only be five weeks after taking office - which is still longer than the four weeks it took Denis Healey took to deliver his first radical Budget in 1974.
But that was criticised by many as "not being properly thought through" - a trap Mr Brown will want to avoid.
The Treasury said, "The date is still under discussion. No decision has yet been made." A spokesman added that an announcement would be made early next week.
An emergency Budget was promised by Labour in its manifesto "within two months" of taking office. Originally, the favoured date was thought to be July 1. A number of important financial meetings appear to have ruled out late June as a possibility.
BBC Economics Correspondent Anthony Browne discusses Gordon Brown's options in
the first Labour Budget for 18 years.
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