Analysis
LAST March, one distinguished commentator described Gordon Brown's 10th Budget speech as reminiscent of a Soviet commissar laying out the next five-year plan for tractor production. This week, Lord Turnbull, until 2005 Britain's top civil servant, described this Chancellor's way with political power as "sheer Stalinist ruthlessness".

Oh how the Westminster village chuckled at the mandarin's revenge. Even brooding Mr Brown saw the funny side, it seems. At the start of this Budget speech, he paid tribute to civil servants who had helped pull the package together. Should I be calling you "comrades", he wondered out loud.

The man who has run the Treasury longer than anyone since Gladstone - and much of the rest of the New Labour mission besides - is no Stalin. But he is, instinctively, intent on having the last word. He trails David Cameron by 15 points in the latest Guardian poll. If that widening trend is to be reversed, he knew his final Budget would have to be, as the advance billing had it, a "big" one.

And so it has proved, at least as far as the headline measures are concerned. There had been some talk of lower business taxes. But 2p off mainstream corporation tax, together with Mr Brown's final flourish - 2p off the basic rate of income tax as well, from next April - looked, for an moment or two, like the biggest electoral bribe in years.

It is not, as the details of the Budget red book quickly demonstrated. Indeed, before he got to his surprise tax cuts, the Chancellor had admitted as much - warning the overall impact on the public finances would be "broadly neutral". How come? Well he is giving a lot away to business and individuals, nearly £17bn by 2009/10. But by simplifying tax rates and abolishing a series of reliefs and allowances, he is also clawing more than £14bn back.

On business tax, thanks to a three-step rise in the small companies rate of corporation tax from 19% to 22% by 2009 and a minor blizzard of new rules, the overall giveaway by 2009/10 comes to just £95m. On income tax, thanks mainly to the abolition of the 10p starting rate (though not on savings income or capital gains), the net cut in the Treasury's projected revenues is a more substantial £2.45bn.

Most of that shortfall will be paid for by higher green taxes and a crackdown on reliefs on empty commercial property. Overall, this Budget gives away a net £525m in 2007/08 but will be clawing back £125m net by 2009/10. Small change indeed, compared with the instant headlines that will be generated, especially by that 2p cut in the basic rate of income tax.

The politics are cunning too, as we have come to expect from Mr Brown, the master tactician. The income tax changes - especially the loss of the 10p starting rate; its replacement with higher allowances for the over 65s and over 75s and increased child and working tax credits; and the alignment, at taxable earnings of £43,000, of the threshold when the 40p higher rate kicks in with the point where the 11p national insurance charge becomes 1p (introduced by Mr Brown in his 2002 Budget to help fund the NHS) - make it almost impossible, without some serious number crunching, to clearly identify individual winners and losers.

But the big 2p income tax carrot comes next April. Any downside will emerge fully only in 2009 when the overall package is implemented. This week's Tory pledge of a 3p cut in corporation tax has been trumped. David Cameron's proposed third fiscal rule - sharing the proceeds of growth between tax cuts and more public spending - has been usurped. Gordon Brown, Prime Minister by this summer, we must assume, could not be creating a window of opportunity through which to seek a fresh Westminister mandate by summer next year, could he?

Fresh battle lines have even been laid for the Holyrood elections, now just six weeks away. Mr Brown made it clear he has had to downgrade his forecasts for the state of the public finances yet again in this Budget, mainly because lower levels of production and higher costs in the North Sea are undermining tax revenues.

They are down from an expected £13bn this year to £8bn, he said. And for each succeeding year, he added, revenues will be cut by a further £4bn a year. Expect that news to be drummed out, day in day out, between now and May 3, accompanied by an exhaustive list of the SNP's new spending commitments.

But the bigger Labour target, by far, as far as the SNP is concerned, is its commitment to replace council tax with a 3p surcharge on all rates of income tax in Scotland. The nationalist leadership claim it is still a local income tax. Expect a propaganda blitz from the incumbent claiming: Labour wants to cut your income tax by 2p, but the SNP wants to raise it by 3p.

Gordon Brown's 11th Budget offered some indications of future spending plans through to 2010/11, when the latest comprehensive spending review is unveiled this summer. Additional spending on the NHS and education (in England), couched in cash terms in the actual speech, was designed to look as generous as possible. The Barnett consequentials for Scotland add up to £1.8bn over the three years from 2008/09.

But the increase in overall spending is going to rise by only 2% a year in real terms, around half the rate of growth since the tough spending plans, inherited from the Tories, were finally abandoned in 1999. A number of core Whitehall departments, including work and pensions and the Treasury itself, will see their budgets shrink in real terms. The bonanza is clearly over. And the full extent of the backlash, from public sector unions and others, is yet to be felt.

In terms of the Brown legacy, there seems little reason to deviate from the Institute for Fiscal Studies judgment, in its green Budget in January. Gordon Brown will leave the public finances stronger than he found them a decade ago. But he will have presided over a smaller improvement than has been seen in most other industrial countries.

The Chancellor now claims to have met his golden rule - that over the cycle total government spending should be met in its entirety out of tax revenues - by £11bn. He contrasts that achievement with the shortfalls over the previous two cycles, when the Tories were in charge: of £140bn and £240bn respectively. But, of course, Mr Brown has met his target only by playing around with the timing of the latest cycle.

That said, he can point to national income per head that has taken Britain from the seventh out of seven in the G7 in 1996, to second to the United States now. Growth is expected to continue at between 2.5% and 3% through to 2009. CPI inflation will fall towards its target 2% over the rest of this year. While overall tax will flatline at just over 38% of GDP right through to the start of the next decade, just short of the high point reached by Margaret Thatcher in the early 1980s.

He leaves the Treasury with most of the major decisions on tax and spend right through to 2011 already taken. When he moves next door, he will still be, in a very real sense, First Lord of the Treasury.

It is a kind of shortened five-year plan, though he is no Stalin. But if he is to claw back David Cameron's lead and remain Prime Minister into a fourth Labour term, he now has to sell a largely neutral Budget as one of the big transformational fiscal packages of modern times.