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EDITIONS
 Wednesday, 17 April, 2002, 14:12 GMT 15:12 UK
Brown prepares for crucial Budget
Gordon Brown
Gordon Brown: Plans backed by ministerial colleagues

Chancellor Gordon Brown is expected to increase taxes to pay for better public services when he unveils his Budget later on Wednesday.

Mr Brown has left Number 11 Downing Street to make his way to the House of Commons to deliver what many regard as the most important budget of his political career.

Earlier, his plans gained the backing of ministerial colleagues who drummed the Cabinet table in support during a 30 minute preview in Downing Street.

Main Budget tips
Tax rises through national insurance
Fuel tax freeze
�2bn to boost the take-home pay of low-paid workers
Rise in stamp duty

But the widely expected package of tax increases to fund more spending on public services has led to the Conservatives warning of a return to old Labour "tax and spend".

They claim the government's extra millions for the NHS will be wasted without wholesale reform - a message echoed by the Confederation of British Industry.

Health spending

Mr Brown's Budget speech, which starts shortly after 1530 BST, comes as a government-commissioned report says spending on healthcare must more than double to �184bn a year over the next two decades.

The prime minister's spokesman said that in addition to outlining the main themes, Mr Brown underlined to the Cabinet that economic stability could not be risked "whatever difficult decisions that would entail".

The prime minister and chancellor had been "working very, very closely on the Budget", the spokesman said.

Shadow chancellor Michael Howard told BBC Radio 4's Today programme that Labour had already raised taxes by an average of �1,600 per person.

Michael Howard
Mr Howard forecasts "more talk and more taxes, but no change"
The Tories also criticise the publication of the Wanless report on NHS funding just hours before the Budget, accusing Mr Brown of stifling debate.

Reports have suggested tax increases could total between �5bn and �10bn, which could largely come from National Insurance.

The Liberal Democrats say public services do need more money.

But the party argues the government should have fought the election on a tax raising platform.

Petrol 'freeze'

Many of Mr Brown's plans have been leaked to the media in the run up to the Budget, as ministers attempt to cushion the blow of potential tax increases for middle income voters.

As a middle income earner, a hike in NI will hit my family very severely

John B, UK



Labour has promised not to raise the rate of income tax, so any direct impact on pay packets is expected to fall on national insurance payments.

Mr Brown may decide to phase the tax increases in over several years, avoiding a sudden increase in April.

With world oil prices rising, he is also expected to freeze petrol duty for a second year running.

Consumer spending

Smokers and drinkers might suffer, with up to 20p expected to go on a packet of 20 cigarettes.

Some economists have said Mr Brown may choose instead to put 1% on VAT rates, but this would not be a popular move with business, or with traditional Labour supporters.

Experts have also warned that a large tax rise - of �7bn or more - could put the brakes on the consumer spending boom that has been driving the UK economy.

Mr Brown is expected to make up to �2bn available to boost the take-home pay of low-paid workers.

A new child tax credit would boost the incomes of people who stay at home to look after children.

This year's Budget is particularly important as the government will, in July, fix its spending plans for the next three years.

Health report

The NHS review was written by former NatWest chief executive Derek Wanless.

The Wanless Report says Britain must spend 7.1% more in real terms each year on health over the next five years, with more rises up to 2022.

In general, the report backs the government view that extra healthcare investment should be funded by general taxation but must go alongside reform.

Mr Howard branded the timing of its publication a "disgrace".

Mr Brown's "idea of a debate is to start it in the morning and shut it down in the afternoon", said Mr Howard.

  WATCH/LISTEN
  ON THIS STORY
  The BBC's Rory Cellan-Jones
"Most tax payers will face a bigger bill"
  The BBC's Andrew Marr
"The NHS means more to Labour than anything else"
Budget 2002 Live
Budget - as it happens

 VOTE RESULTS
Would you pay more tax to fund the NHS?

Yes
News image 38.79% 

No
News image 61.21% 

14319 Votes Cast

Results are indicative and may not reflect public opinion


Gordon Brown's budget on Wednesday is one of the most keenly anticipated for years - by both sides, writes BBC Political Editor Andrew Marr.
Brown's big gamble


Key stories

Analysis

QUIZ

BUDGET DIARIES

AUDIO VIDEO

TALKING POINT
See also:

17 Apr 02 | Education
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