The chancellor announced he would be taking further action over small business banking - having already referred the issue to the Competition Commission after the highly critical Cruickshank Report was published.

Banking reforms

More competition to drive down costs to the consumer Banking services available through post offices

He said the report estimated that more competition could reduce banking costs and charges by up to 10%, or �3bn to �5bn a year.

The government will be legislating to ensure that the money transmission system - through which cheques and credit card transfers are made and people have access to cash dispensers - is open to new competition.

Joint venture

Mr Brown also said he would be asking the banks and post offices to work together to offer banking services to people who currently do not have bank accounts.

He said there were big savings to be made from using banking services: "Using a bank facility and not the cash economy just to pay gas and electricity bills could save families �50 a year."

On this point, Tim Sweeney, director general of the British Bankers Association, said: "It is sad to see the chancellor making policy in haste on the basis of a report which we believe to be flawed and on which we have not had time to comment.

"The major banks have already made a commitment to delivering basic bank accounts and many are already doing so."

Much had been said in the media before the Budget about rural communities losing their local banking facilities as the major banks restructure to save costs, and about the effect on poorer people of being denied bank accounts.

Individual Savings Accounts

Isas

�7000 investment limit extended for a year

In response to lobbying over Isas - the investment schemes Labour introduced to replace Peps and Tessas - Mr Brown said he would be holding the maximum amount which could be invested in any one year at �7000.

It had been due to reduce to �5000 from 5 April, and this has been deferred to 2001-02.

There is also to be a review of how well Isas are operating, starting this April. It will look at problems arising since they were introduced and whether the rules should be made more flexible.

Bond market

To the delight of the City of London, the chancellor introduced some changes to affect competitiveness in the international bond markets.

He said he was abolishing the withholding tax (i.e. a tax deducted at source) on interest paid on international bonds, with effect from April 2001.

There will be a "simpler and less burdensome" way of providing information to the Inland Revenue.

He also said there would be legislation concerning how information was exchanged nationally and internationally on tax evasion and avoidance and double taxation issues.