- guardian.co.uk, Friday November 10 2000 02.47 GMT
Andrew Dilnot, head of the Institute for Fiscal Studies, said: "These are very, very substantial changes. It really is a dramatic change... I can't think of any economic measure giving such a large group of the population gains on this scale in 20 years of tax and benefits policy."
To quell anger over last year's 75p a week rise in the state pension, the chancellor unveiled concessions to the elderly worth a total of £2.6bn. While refusing to bow to calls for restoration of the link between the state pension and earnings, Mr Brown announced an above-inflation rise in the state pension from next April which will be worth £5 to single pensioners and £8 to couples, with a further increase of £3 and £4.80 the following year.
On top of these rises, he also increased this winter's fuel allowance from £150 to £200 and gave a major boost to the incomes of poor pensioners by increasing the minimum income guarantee - the government's top up to the state pension - from £78.45 to £92.15, and to £140.55 for couples. Mr Dilnot said the overall impact of the package was to boost the household incomes of the poorest pensioners by over 8% next year and by more in future years, a truly enormous increase. "That's a key part of what this government has done to the redistribution of income in this country and it will be important and interesting over the next few years to see what it does to the lifestyles of pensioners.
"If something like this does not impact on their diet and heating then I think we can be pretty sure that redistribution through money is not the way forward."
The IFS's analysis takes no account of the extra cash to be channelled to pensioners through the government's new pensioner credit, designed to help those with small occupational pensions who at the moment get no help beyond the basic state pension. Mr Dilnot said he had reservations about the perverse retirement incentives it might introduce to the tax and benefits system.
On the concessions made to hauliers, farmers and motorists, the IFS estimated that most of the gains from cutting duty on clean fuel would go to the rural rich. Rural households in the top 40% of the distribution of income see their budgets boosted by around 0.3%. By contrast, poor urban households gain less than 0.1%. However, the poor benefit disproportionately from proposed reductions in vehicle excise duty for cars with smaller engines. The poorest 10% of the urban population will gain just over 0.1% of household income while the poorest 10% of the rural population will be over 0.3% better off.
The IFS's Zoe Smith said vehicle excise duty changes might encourage people to switch to smaller, cleaner cars but the incentive was small in comparison to the cost of buying a car. Mr Brown's measures essentially made motoring cheaper which would harm the environment, she said.
The speech in full
Part 1: the economy
Part 2: the fiscal stance
Part 3: families and pensioners
