Gordon Brown, the chancellor, should have raised income tax rather than reducing it in Tuesday's Budget if he was concerned about the long-term health of the public finances, according to a leading economic forecasting group. The National Institute of Economic and Social Research believes that the Budget has made an already unsustainable path for the public finances even worse. But the Treasury believes that the institute is unduly pessimistic, in part because it is too downbeat about the economy's growth outlook....more

POLITICS
Taxpayers reap the benefit of government underspend
The chancellor's ability this week to give back some of the higher taxes he had planned stems in large measure from the government's own underspending. In Labour's first year in office, departments from defence to education and employment, and from trade and industry to agriculture underspent - along, most notably, with social security....more

TAX
Consultants warn on VAT changes
Changes to value added tax could cost financial institutions that outsource so-called "back office" services up to £200m a year, according to management consultants serving some of the UK's biggest companies. The impact of the changes, announced in the Budget, is to put VAT on credit management services provided to financial institutions - typically outsourced credit and debit card services provided to banks....more

PFI
Labour committed to £84bn of contracts
The government is committed to almost £84bn of revenue spending under the private finance initiative - contracts it will be unable to break without penalties. The Budget Red Book expects PFI to produce some £11bn of new investment in the three years from April, similar to the £11.25bn expected over the three-year period to 2000-01 covered by last year's Budget....more

DUTY
N Ireland trucks chase cheap fuel
The Budget's increase in excise duty has led to an exodus of Northern Ireland hauliers to the Irish Republic where diesel is almost a third cheaper. The 6p a litre increase that came into effect yesterday means diesel is now about 20p less at filling stations in the south, where there were huge queues of truckers from Northern Ireland. In the Republic, diesel is I£0.53 (62p) a litre, the pre-Budget price in Ulster....more

POLITICS
Lib Dems claim Blair misled Commons
Tony Blair, the prime minister, misled MPs over the impact of the Budget, the Liberal Democrats claimed yesterday, citing analysis by the independent House of Commons library. Malcolm Bruce, the party's Treasury spokesman, said the figures proved that the prime minister's claims that the Budget would cut taxes for every family were "lies"....more

PENSIONS
Reform 'may do enormous damage'
The government's pension plans will fail to achieve the lasting consensus that it seeks, Frank Field, the former minister for welfare reform, said yesterday. Given the government's unwillingness to extend compulsory pension saving, large numbers of people would continue to depend upon means-tested benefits, Mr Field warned. In addition, many people would have a positive incentive not to save for old age....more