This was quite simply another Budget - an emergency Budget - just 10 weeks after the last one. The emergency was not financial but political.
The revolt over the scrapping of the 10p tax band was so serious that ministers feared defeat in the Commons - a defeat which would have led to calls for the prime minister to quit. In addition, Gordon Brown feared being the first Labour leader to lose a by-election to the Tories in two decades.
Thus, the chancellor has brought forward an expensive package, paid for by extra borrowing and which helps millions of people who were not losers from the scrapping of the 10p rate.
There are perfectly good economic arguments for:
- helping hard-hit families at a time of economic insecurity
- extending borrowing to pay for it when times are tough
and
- increasing tax allowances as the most efficient and least bureaucratic way to help the 10p tax losers
Those arguments did not persuade the chancellor 10 weeks ago. Only a political emergency has been enough to do that.
A pre-by-election tax giveaway paid for by increased government borrowing. That was the chancellor's announcement in what amounts to a mini Budget.
It is designed, once and for all, to kill the 10p row and to wrong foot the Tories since they have called for help for the 10p losers and to help those struggling as the credit crunch bites.
Labour MPs are happier than they have been for weeks and the Tories, for the first time in a long time, look wrong footed.
Stand by for the announcement of the Treasury's 10p tax repair. The word from Whitehall is that it will be "significant", "costly" and will "fix the political problem".
The chancellor's been determined to come up with a package that does not involve individual payments to individually identified losers, does not fall apart under scrutiny and which can be presented as a long-term policy rather than a short-term fix. He has also insisted that he will not unveil his plans in full until all the details are worked out ie in his pre-Budget report in the autumn.
Long term, Alistair Darling knows he needs to re-establish Labour's narrative of helping "the many not the few" with a strategy of help for the poorest - via winter fuel payments, the minimum wage and even, possibly, changes to tax allowances.
Today's statement is being described as a "ground clearing" job so that the list of bills the PM will unveil tomorrow get a hearing.
PS. When listening to arguments about gainers and losers, bear in the mind the following:
The Treasury estimates that 5.3million people lost as a result of the abolition of the 10p tax rate.
When the prime minister claimed recently that the figure "came down as a result of the Budget 2007 to 4.3m, it is now going down again to 3.8m" (Sky News, 5 May 2008) he was taking into account other measures in the last two Budgets such as the rise in winter fuel allowance and the planned up-rating of tax credits and child benefit".
The Treasury states that "for households that are worse off, the average loss is about £2 per week" and the "maximum amount any single individual could be worse off by is £232 per year (£4.46 per week).
UPDATE, 03:30PM: It is to be increases in tax allowances which will affect pay packets from September and will be paid for by greater borrowing.
He is not "the special one". He is not as charismatic as his predecessor. He faces persistent rumours about his long-term future. A crucial test next week will help determine how events unfold. Gordon Brown had a lot to talk about to Avram Grant last night when they met at a Downing Street reception.
Earlier that day Team Brown's head coach, Ed Balls, had declared that there were great similarities between the ups and downs of leadership in sport and politics. Of course, unlike Chelsea, Brown's team did not even come second in their recent contest and their real focus is on trying to reverse the damage done by a spate of own goals. Today, Labour's team manager will debate tactics and strategy with his squad of cabinet players. In particular, they will consider a plan to compensate some of the losers from the scrapping of the 10p tax rate.
Whilst Avram Grant is hoping to raise a trophy, to bask in the cheers, and to keep his job, Gordon Brown's more limited ambition is to stop the crowd booing. Today may be the first test of whether he can pull that off.
The PM met another grizzled veteran of the nausea-inducing rollercoaster of the beautiful game's fickle fortune, Roy Hodgson of Fulham, last night. Perhaps his advice on how to avoid relegation was more appropriate.
