Alistair Darling was accused yesterday of having a “pre-election budget without an election”. This is not quite accurate. What he really produced was half a pre-election budget precisely because the election had been abandoned. The measures he announced in the House of Commons would scarcely have been enough to stir an apathetic voter from the sofa to cast a ballot in November. This was a statement which looked as if it had something material removed at the last minute, to be stored away for a polling day which will arrive later than expected. The result was that Mr Darling often sounded as if he was offering a rebuttal to the Conservative Party rather than setting out a clear course for this Government.

It is a reasonable assumption that an income tax cut was in the offing. Rates and thresholds are due to fall next year although other changes mean that the impact of this move will be immodestly modest. If the Chancellor intended to cut the basic rate from the 20 per cent already announced for next April, then he should have stuck with that strategy. The country wants and needs a reduction in tax and it would have been more principled to proceed.

The actual measures on tax which were set out have advantages and disadvantages. It was shrewd to acknowledge the discontent on inheritance tax although the scheme that Mr Darling favours benefits only those who are married (or in civil partnerships) or were married when their partner died. Everyone else — single persons, couples in long-term cohabitation and divorcees who have not wed again — will be no better off. This explains why the cost of these changes are much lower than the Conservative blueprint.

In order to finance even this proposal, though, Mr Darling has been obliged to find money from those involved in private equity, despite his previous assurances that he would not act with undue haste against this sector. His principal device for this is a reform in capital gains tax which will hit not only private equity but smaller businesses which were intent on expansion but will have suddenly found that this is now less attractive. It would be profoundly mistaken to increase the tax burden on such people and betrays an ignorance of the “enterprise” that Gordon Brown has often lauded but not consistently supported.

Most of this statement, nevertheless, involved public spending rather than taxation. It cannot be emphasised enough that what are being called a tight set of numbers — even “cuts” — are just a slowing of the rate of growth in expenditure to a level which is lower than during the recent bonanza for the public services but which is hardly a draconian initiative by historic standards. The legacy of this profligate spending is that, while growth has usually been higher than most independent forecasters anticipated in recent years, so has public borrowing. An economy predicted to expand by 3 per cent this year should see the Treasury coffers awash with revenues. In a sense they are, but this surplus has been lost to inefficient public spending.

The principal challenge for Mr Darling in the next two years is to increase the productivity and efficiency of the public services so that spending comes in under budget and the scope for cutting taxes is created. This will only be realised if he has the consistent backing of the Prime Minister. The Chancellor can afford one major parliamentary speech where the most interesting aspect of the text is what is missing. If he proceeds in this manner, it will be Labour MPs who disappear.