The ten ages of Gordon Brown

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Nowadays he holds the top job as Prime Minister but if you can summon up an image of Gordon Brown in your mind, it is usually of him holding up that red dispatch box for the cameras on Budget day. So for a couple of minutes let's reminisce when Gordon still lived next door at Number 11

He did it for 10 years and a lot changed over that time. In fact the red box itself was replaced for his very first budget in 1997, possibly a clue in itself that the Chancellor was going to do things his way.

He was not slow to ring the changes either, in May 1997 the Government gave the Bank independence to set monetary policy by deciding the level of interest rates to meet the Government's inflation target. Giving the Bank of England independence and the power to set interest rates is easy to take for granted now but it was an incredibly audacious thing to do at the time.

Setting up the Monetary Policy Committee at the Bank of England, has since proved one of Brown's more notable successes and it played a significant part in keeping interest rates and inflation in check over his decade at the Treasury.

On the face of it Brown largely achieved what he set out to do. His aim was to provide a stable economy with sustained growth and a departure from what he saw as the 'boom and bust' era under the Conservatives.

Low unemployment, low inflation and interest rates that thankfully don't send blood pressure readings into orbit, are largely things we have come to expect in recent years. But back in 1997 when after a landslide Election victory Brown took up the reins at the Treasury, fears were rife of an economic mis-management from a recklessly spending Labour government.

There was talk of rising inflation and a string of national newspapers warned housebuyers to expect mortgage rates of 12% within a year and rising thereafter.

Anyone who locked into a 9pc, five year fixed mortgage back in 1997 are still probably spitting feathers now but at the time it may have seemed the prudent thing to do.

Which brings us neatly on the the subject of 'prudence', undeniably the Chancellor's favourite word and one that sums him up more accurately than any other.

He will always be remembered as the 'prudent Chancellor'. Many Labour ministers have tried and failed to argue for more money for spending for their respective departments and walked away empty handed.

So synonymous with 'prudence' was the Chancellor that spread betting agencies would offer spreads on how many times he used the word in his Budget speeches.

Unemployment

In 1994, talk of getting back to full employment was derided as a pipe dream. But in January 2005, the rate of those out-of-work and claiming benefits fell to 2.6%, the lowest since 2.5% was recorded in April 1975.

Brown's achievement was that he was able to drive unemployment down without triggering a massive surge in inflation or risking the economic meltdown seen during Nigel Lawson's tenure as Chancellor in the mid 1980s.

The New Deal

The central focus of Brown's policy on employment was the The New Deal. It encouraged companies to take on subsidised New Deal staff.

The Chancellor also introduced a tax credit system backed by the minimum wage designed to make work pay and encourage people, including single parents to take less well paid jobs without losing out.

The Windfall Tax

The New Deal was in large part financed by a windfall tax on the profits of the privatised utilities firms. In effect the Chancellor cracked down on the exorbitant profits made by former State owned utilities and redistributed this money through the New Deal.

The Windfall Tax was one of the few genuinely popular taxes any Chancellor has ever introduced. While big business may not have been happy; the bulk of the electorate undoubtedly was.

But before we get carried away singing Gordon Brown's praises, let's try and put his achievements over 10 years in perspective. The Windfall Tax proved popular but it was a one-off and not something that could really be repeated.

Furthermore the downward trend on unemployment actually started in 1993 under the last Conservative government.

As for inflation, the UK was not alone in keeping the headline rate down. The effects of globalisation have driven prices lower in many western economies.

And while the income tax fears of the higher UK earners have not materialised, tax increases elsewhere, (which have largely gone unnoticed) make up for that.

Take inheritance tax. House prices have risen by 179% in the past ten years, compared with just an 85% increase in the IHT threshold. The reason for such a wide disparity between the figures is that the IHT threshold is only increased in line with retail price inflation - not property prices. Currently 1.5 million homeowners are subject to IHT and figures from HBOS suggest this will nearly triple to 4.2 million properties by 2020. What the Chancellor gives with one hand, he invariably takes back with the other.

Pensions

Perhaps Brown's biggest failure during his time at the Treasury was in dealing with the ever-ticking pensions time-bomb.

Like a string of Chancellors before him, Gordon Brown has been confronted with the fact that people are living longer but are failing to save sufficiently for their retirement. To make matters worse, State pension rises are still not linked to earnings. The future looks bleak for those who have under-funded pensions and solutions are few and far between. Stakeholder pensions failed to attract the masses expected and disallowing residential property within a personal pension in the 2006 Budget was not deemed hugely helpful either.

The pension crisis will reach critical point over the next two decades but Brown will be long gone from the Treasury and possibly from government by then and the headaches will be for another Chancellor.