British Chancellor of the Exchequer, Mr Gordon Brown yesterday stunned Tory and Labour MPs alike when he capped his "budget for work, the family and for business" with a 1p cut in the basic rate of tax.

Having already delighted Labour MPs by announcing that the new 10p tax rate on the first £1,500 of income would take effect from next month, the Chancellor rounded-off a bravura performance by dropping his base rate sensation, declaring "the lowest rate of tax for 70 years, and under this government".

The headline-grabbing announcement brought immediate comparisons with the presentational priorities of previous Tory budget statements.

And a package of measures directed at the young, families with children, pensioners, and people over 50 returning to work had commentators describing the "Iron Chancellor" as everyone's "flexible friend".

But the Conservative leader, Mr William Hague, rounded on Mr Brown for glossing over the fact that he had also abolished the 20p tax band.

Branding Mr Brown "the pickpocket Chancellor", Mr Hague claimed yesterday's budget would raise taxes in the next year by £1.6 billion sterling (€2.37 billion), while the total increase as a result of Mr Brown's three budgets since 1997 was £8.9 billion.

To cheers from Tory MPs, Mr Hague said: "He is the pickpocket chancellor who shakes your hand with a smile after he has stealthily removed your wallet . . . He is the man you meet in the pub who says `lend us a fiver and I'll buy you a drink' . . . the pickpocket chancellor aided and abetted by his next door neighbour, the artful dodger."

The Liberal Democrats accused Mr Brown of putting "gimmickry and complexity before fairness and simplicity". Treasury spokesman, Mr Malcolm Bruce said: "It is astonishing he has found money to cut the basic rate of tax next year, but has not committed any new money for schools and hospitals. In our view, 1p off tax cannot be a greater priority than putting right the years of neglect of our public services under the Tories."

The party's leader, Mr Paddy Ashdown, said while Labour MPs thought yesterday's measures would help them in upcoming elections, the amounts going to the NHS, education authorities and the police would provide only "cold comfort". Mr Ashdown said: "It is strong on good intentions but I fear weak on most of the policies necessary to deliver."

It is a truism that successful budget statements on the day can look markedly different after detailed inspection and analysis of the "Red Book" detail.

But on the day the Chancellor did his best to delight a range of key political and social interests - from his announcement of a national network of 1,000 computer learning centres to equip Britain for "the information age" to his assurance to those MPs seeking it that Britain was "well within" the Maastricht criteria for joining the European single currency.

Mr Brown set the government's inflation target for this year, and the two years following, at 2.5 per cent. He predicted growth in 1999 of 1 per cent to 1.5 per cent; in the year 2000 of 2.5 per cent to 2.75 per cent; and in 2001 of 2.75 per cent to 3.25 per cent.

As expected, the Chancellor hit the middle classes, confirming that mortgage tax relief would finally be abolished from April 2000 - although this was balanced by his announcement of a new family tax credit worth £200 a year.

Equally as expected, Mr Brown shied away from a decision to tax child benefit for higher earners. Instead he announced an increase to £15 a week for the first child, and £10 a week for subsequent children.

The Chancellor's package for business included a 1p cut in the rate of corporation tax and a similar cut in company tax, which will benefit some 350,000 companies.

His "green" package included a 6 per cent increase in petrol duty, changes in company car taxation and the introduction of an energy tax on business in 2001.

Cigarette smokers faced a fresh crackdown, with 17.5p on a packet of 20.

But with a distinctly New Labour feel for popular opinion, Mr Brown probably raised his biggest cheer of the day when he announced there would be no increases in duty on alcohol "this side of the millennium".