Goodbye, Stalin. Hello, Tommy Cooper. Gordon Brown’s eleventh and almost certainly last Budget speech did not lack parliamentary theatre or policy innovation. His announcement of a 2p in the pound cut in income tax (as of next year, alas) left friend and foe wondering how he had done it. In truth, it has been achieved by a rebalancing and reconfiguration of the tax system rather than an immense gesture of generosity — and generosity is never quite the right word: it is your money that may or may not be returned to you. At a minimum, however, this was an imaginative way for Mr Brown to end his tenure.

The most eye-catching aspect of this speech was, of course, the changes made to personal taxation. The Chancellor was right to seek to make the overall structure more straightforward by reducing the numbers of bands from three to two and to end a longstanding anomaly or “kink” in the tax system under which the ceilings for the start of top-rate income tax and national insurance were misaligned. By raising each of these to £43,000 he has, in effect, reversed the process by which ever increasing numbers of citizens were being levied at the highest rate of income tax. The bad news is that these people will be charged national insurance up to a higher figure. Meanwhile, there is a trade-off between the abolition of the 10p income tax rate (introduced by a G. Brown in 1997) and the benign result of reducing the basic rate of income tax from 22p to 20p. It is possible that while most taxpayers will benefit, some will be poorer for the changes.

If such a distinct class of losers emerges, then Mr Brown’s replacement should focus future relief on such taxpayers. All of Britain needs relief from what has become an excessive amount of tax taken by the Treasury. It would be churlish, nevertheless, not to recognise that the Chancellor has sent a positive signal on taxation. It is to be hoped that this is not an isolated move but one that he will encourage the next occupant of the Treasury to repeat regularly.

Mr Brown made welcome overtures towards some in the business community. On the face of it, his plan to cut the headline rate of corporation tax, while reforming the reliefs that companies can claim, is more favourable to larger businesses than is the alternative scheme put forward by the Opposition at the weekend. The broader theatre of taxes on major enterprise remains, though, more complicated than is desirable. It would be worse if the Lyons report ideas on supplementary business rates were accepted.

The Treasury should also be mindful of the impact that these measures might have for smaller businesses. The increase in the small company tax rate from 19 per cent to 22 per cent is harsh. The argument that the effect will be offset by a more benign investment allowance is dubious. There are years when smaller companies are in no position to undertake such investment, irrespective of the tax advantages of doing so. The motive, furthermore, appears to be that a clutch of people are “cheating” the Inland Revenue by disguising individual income as business earnings. That there might be sharp practice about is undeniable. Yet the Government has to avoid a mindset in which all entrepreneurial activity is seen to be a “scam”, and punishes, for example, an innocent owner of a small restaurant.

Mr Brown’s announcements on spending were delivered with rather less fanfare than those on taxation. The overall figures for public spending amount to an overdue squeeze that will force many Whitehall departments to cut their cloth far more carefully. The proportion of state spending to national income will begin to fall, and by a notable amount, if the growth projections prove accurate. Within these numbers, the Chancellor has provided cash that should ease short-term financial management in the NHS and make it easier for city academy schools to be more creative. He has also recognised the extraordinary challenges that the Ministry of Defence is facing funding operations in Afghanistan, Iraq and elsewhere and he has allocated an essential increase to the intelligence services.

In many ways, this was an appropriate Budget to serve as Mr Brown’s swansong. His macro-economic performance has been, as he was entitled to boast yesterday, the most impressive part of his record, while his enthusiasm for economic micromanagement remains the most irritating element of his legacy. Only this Chancellor could concoct a substantial simplification of the personal tax system while leaving experts in this field, never mind the humble layman, in a state of incomprehension as to what he had actually done. He will not just have established the whole of public spending for years to come by the time he quits the Treasury, but much of what will be raised in taxation in that period as well. If Mr Brown is to be coupled with a figure from Soviet times, then it might be Aleksei Stakhanov, not “Uncle Joe”, who is the more apt comparison.

This was also, suitably for this Chancellor, a Budget saturated in political strategy and no small amount of cunning. It has left open the possibility of a general election in the spring or autumn of next year if that suits him as well as the more conventional date of May/June 2009. The Conservatives have been swift to point out that these measures barely alleviate the total tax burden, but the headline income tax cut will surely command public attention. For all his difficulties of late, including distinctly uninspiring opinion poll ratings, Mr Brown remains a formidable politician who should never be underestimated.

Whether this package will come to be seen as a step change in approach is uncertain. But the Chancellor has displayed unexpected intellectual and political flexibility alongside admirable boldness and that should bode well for him as he assumes the post of prime minister. Britain needs to be a low-tax and lower-state-spending economy and society in an increasingly competitive world but also one with a government that acts assertively to promote meritocracy and pioneer mutual tolerance and protect the weakest. This was, in a curious way, the most “Blairite” of the many Budgets that Mr Brown has offered. It is in his interests to ensure that he builds on the best of Blairism once he has finally succeeded his old friend, colleague and rival in 10 Downing Street.