Overall, a strong package

The Pre-Budget Report was a bit like Budget day, but with fewer real rabbits from the hat. The Chancellor did well to set out not only the giveaways but how it would be paid for. There were also well-judged measures for businesses, on the environment, for families and for pensioners. I still wonder just how much impact the VAT cut will really have. But it will hopefully give people confidence in the run-up to Christmas, alongside rises in pensions and child benefit. And nobody can now repeat the Tory rubbish about a tax bombshell. For George Osborne, it was a shrill shrieking response suggesting more concern about pre-rehearsed slogans than the economy. His days must surely be numbered.

Stimulating times

Today's Pre-Budget Report is expected to see two flagship measures: a 2.5% cut in VAT and plans for a higher rate tax increase in 2010. The latter is intended to reassure people that the former will be funded and will not hit them, for the most part.

I wonder what the impact of these measures will really be. The VAT cut - advocated by Kenneth Clarke on Saturday - will reduce average household bills by a tenner a week, which is not unwelcome. But at a time when major stores are typically cutting 20-30% off their prices in unprecedented pre-Christmas sales, will the VAT cut be enough? I'm not always taken by Jon Cruddas's prescriptions, but his suggestion that all basic rate taxpayers get sent a cheque for £500 could have a more dramatic and targeted impact at similar cost.

As for the tax rise on those earning upwards of £150,000, it will not raise much money and will not really impact much on those having to pay it. But what is the message that it sends? I hope that Brown and Darling are right that in these post-Obama times, and such a rise is politically acceptable to middle England. The concern about raising higher rates in the past - when some lobbied for higher rates above £100k - was the fact that far more people believed they might earn such sums than ever had a realistic prospect of doing so, but £150k may be high enough to allay such fears.

Nevertheless, the government needs to be very clear about who will pay and what they pay; media reports erroneously make out that people pay 45% on their whole income rather than on sums in addition to the £150k. More importantly, the Chancellor will need to say more today about where else the money is coming from; he must not give the Tories ammunition to claim there are hidden taxes to come.

That said, the Tories' attitude to the crisis is utterly bizarre and a recipe for wholesale depression. One might debate the government's methods, but they are producing plausible policies. The same cannot be said for their do-nothing opponents.

No strings attached

So it was a boring budget, as the minister with a reputation for being a 'safe pair of hands' emerged with his reputation intact. Forgive me as a non-driver if I don't get worked up about showroom taxes on gaz guzzlers; even as a drinker, I doubt that 14p on a bottle will bring an end to my Rioja-drinking habits. So boring was the budget that even the columnists had little interesting to say this morning. But this didn't stop Alice Miles. In the absence of much else to write about, she used her Times column to recall the days when Gordon Brown used to keep budgets secret from the Prime Minister (and much of the cabinet). But she was picked a bad example when she claimed

Mr Brown not only told the ministers the amount they were getting, he would publish a slew of targets telling them what to prioritise, and even directly order them how to spend it - he told David Blunkett, for instance, in March 2000 that the extra £1 billion for schools was to be sent directly to head teachers, bypassing local education authorities.

Not true. In fact, the direct funding was devised by David Blunkett and some of us who worked with him precisely to avoid all of the education spending being tied up in Treasury targets. Brown took a lot of persuading initially, though the 'direct grants' were to become a popular feature of later budgets (and a similar budget was introduced, at Blunkett's behest, for school capital). Indeed it was Brown's and John Prescott's opposition that prevented Tony Blair and Charles Clarke from moving to a national funding formula for schools that would bypass local authorities. And, in 2006, there was a return to form, when the Treasury started to link increases in what became known as the School Standards Grant to poverty indicators. The result has been that the one grant that benefited schools in every part of the country (and every constituency) has lost its simplicity and popularity. As Brown 2008 embraces reform and independence for schools, he should restore the simplicity of this direct funding, and use other resources to target the poorest schools. Better still, he could move to a national formula and funding agency for all secondary schools.

A measured approach to drinking

Last week, we were chastisted for drinking mineral water. This week it is the turn of alcoholic drink. Dame Jacqueline Wilson, the children's author, has publicised a survey showing (horror of horrors) that 71% of parents allow their teenage children a drink at home. The Local Government Association is trying to mix increased flexibility for village pubs to open a bit later with the binge drinking that existed in inner cities long before the licensing laws changed. And the Chancellor apparently wants to tax us wine drinkers further (while presumably not raising the duty on Scotch whisky again). Tim Hames gets to the heart of the middle class wine drinking debate in the Times. But with all of these stories, there is a common thread.

Parents who allow their teenagers a glass of wine with dinner or a half of lager with a meal are acting responsibly; they are introducing them to alcohol in a measured way (those who are banned are surely more likely to binge when they are outside the home). Those who allow twelve year-olds to drink unlimited booze are not. Equally, the local that opens until midnight on a Friday and Saturday, and until two in the morning on New Year's Eve, without having to justify itself to bossy bureaucrats and magistrates at every turn, is not the same as an inner city bar offering unlimited cheap booze to young people.

It is high time this debate acquired a sense of proportion: the horrors predicted by the Daily Mail have not occurred since the licensing laws were relaxed; the fact that a wholesale cafe culture may not have either might have more to do with the weather than the law (though smokers have been forced into one!). So, if Alastair Darling really wants to cut middle class drinking rather than simply raising revenue, here's a thought: cut the duty on half-bottles of wine, which are nearly impossible to get in this country so that people can have a glass of wine midweek without feeling the need to open a whole bottle. That will both stimulate demand and supply for half bottles (the only company I found with a half-decent selection recently was Laithwaites) and cut middle class drinking. At the same time, let us praise not condemn parents who encourage responsible drinking and pubs that use the new licensing laws sensibly, as well as excoriating those who don't. When we do, we might have a sensible debate on drinking.

That vision thing (2)

Yesterday's pre-budget report and CSR announcement were necessary and good politics. Being accused of being a magpie and stealing Tory clothes is not a charge to keep the PM or the Chancellor up at night. (Nor is David Cameron's accusation at PMQs today that Gordon Brown 'looks phoney': the colour scheme for pots and kettles springs to mind.) In education, there is more money for primary school building and a new raft of targets which require minimum achievements in both English and Maths at each stage. So far, so sensible. But, Gordon should study two comment pieces in this morning's papers. Jonathan Freedland sets Brown his main task in the months ahead.

From now on, the Brown administration needs to do less politics and more governing....One minister tells friends that the trouble with the Brown team is that they are obsessed with politics, never able to resist a neat manoeuvre here, a little jab there. The PM needs to prove them wrong, getting on with the quiet, steady business of running the country well.....A year from now and we shall be in the run-up to the 2009 election. He has 12 months in which to think and act big, not play catch-up with the Conservative party. This was the Gordon Brown we waited for. Now we want to see him.

And, although it may be a little tongue in cheek given its source, Danny Finkelstein makes a good point about the Year Zero tendencies of some Brownites. The public think of 1997 as when the new Labour government was elected, not 2007. Ministers need to remind people of what has been achieved and learned, and build on those achievements and lessons, as well as promoting new ideas and borrowing from the Tories.