1998 United Kingdom budget
The 1998 United Kingdom budget (sometimes referred to as the Prudence with a purpose budget and officially titled New Ambitions for Britain) was delivered by Gordon Brown, the Chancellor of the Exchequer, to the House of Commons on 17 March 1998. It was the second budget to be presented by Brown following Labour's 1997 general election win, and sought to maintain the broad public support given to Labour in 1997 by announcing measures that would appeal to those who had voted the party into office. One of the key features of the 1998 budget was the Working Families Tax Credit, a benefit that could be claimed by families on low income. Brown also announced tax cuts for businesses, the launch of a £50m rural transport fund, and committed to taxing child benefit at a future date. Overview Titled New Ambitions for Britain, and with "prudence as a purpose" as its narrative, Brown's 1998 budget sought to strike a careful balance between maintaining Labour's broad appeal among the Middle England demographic who had voted for the party the previous year, thus helping Tony Blair to become prime minister, while offering help to those on low incomes. His statement set out to achieve four objectives—stability, enterprise, welfare reform and strong public services. He told the House of Commons: "For decades, under Governments of both parties, the great economic strengths of our country have been undermined by deep-seated structural weaknesses—instability, under-investment, unemployment." He hoped to address this with a long-term plan for economic growth and success. He reported that the five-year plan to reduce the UK's deficit announced in his 1997 budget was being achieved at a faster rate than had been forecast, with the UK national debt having come down by £17bn, or 2% of national income, since July 1997. He expressed a need for caution, and said that he would "lock in this fiscal tightening" for 1998–99. As a consequence, borrowing, which the previous government had planned to be £19bn for 1998, was now forecast to be £5bn for 1998, a little under £4bn for 1999, and was expected to be in balance by 2000. On economic growth, Brown said it was dependent on "what happens to wage inflation over the coming year. It would be the worst of short-termism to pay ourselves more today at the cost of higher interest rates, fewer jobs and slower growth tomorrow. All of us must therefore show greater responsibility." He suggested wage inflation would slow growth from 2.5% to 2% in 1998, and similarly predicted percentage figures of between one and three quarters and two and a quarter for 1999, and between two and a quarter and two and three quarters for 2000. " Key points Advance Corporation Tax abolished from April 1999 Corporation Tax for larger companies cut by 1% to 30% from April 1999; corporation tax can also be paid in instalments Capital Gains Tax for investors holding non-business assets who invest for 10 years cut from 40% to 24% Capital Gains