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Brown's big Budget

Viewpoint - Gordon Brown's last Budget fired the first shot in the race for Number 10, with an eye on the Green vote, says Graham Kean.

Following Gordon Brown's final Budget, it is interesting to see who the winners and losers are.

Certainly small businesses faired poorly, with their tax rate raised from 20p to 22p.

This will have an impact on the engineering sector. Prior to the Budget, the EEF (Engineering Employers Federation) called for a reduced tax burden, together with simplifying the current, complex system.

It is debatable whether the EEF can feel happy with the government's response.

However, it was pleasing to see the focus on continuing to improve the UK's relatively poor productivity performance in relation to other countries.

The raising of the research tax credit by an extra £100M was positive, allied to the announcement that public investment in science would rise by 25% to £6.3bn by 2010.

Another important step was the development of an asset management strategy for each government department. This builds on what we have known for years - that there is a lot to be gained from tackling what is, for many departments, the second biggest line of cost after staff. It should bring added impetus to the Gershon and Lyons reviews and lead to some real action. The key to success will be the effective engagement with the private sector.

The increase in investment in schools, hospitals, security and defence, and infrastructure from £43bn this year to £60bn in 2012, although less than had been expected, reinforces the government's commitment to the public sector.

The decision to allow zero carbon homes up to £500,000 exemption from stamp duty raises some interesting questions. Why only new build? And at what cost to developers? If this is a sign of things to come, then we should view it as a catalyst for increased activity among engineers, developers and builders to bring forward products that will meet the anticipated demand for zero carbon homes.

Taken to its logical conclusion, one wonders if, demand for housing aside, this move has the potential to suppress prices for traditional housing stock as the public seems unwilling to pay a premium for enhanced environmental performance.

chancellor also announced an examination of Land Remediation Tax Relief and whether to extend it to Japanese Knotweed. This is to be welcomed given the costs involved in clearing sites of this plant. The consultation, which will end on 14 June, will also cover long-term derelict land.

The overriding sense is that the Brown years end with the economy in reasonable shape but public nances less so. The reality is that the chancellor has not released extra money to fund increased public spending with the growth rate of public spending at 2% in real terms, down from 5% over the past ve years.

In essence the Budget was designed to make a political, not an economic, impact and was aimed at spiking the guns of the Conservatives. Brown has ed the st salvo in the race to not only replace Tony Blair, but also win the keys to Number 10 at the next election.

Graham Kean is sector leader for government, EC Harris

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