THOSE of us who were waiting for Labour's popularity to be punctured in its first Budget for 18 years have been disabused by Chancellor Gordon Brown.

Yes, he did put taxes up in an oblique fashion, but the pill was coated with tons of sugar - enough to make his "People's Budget" tag stick.

For keeping firmly to the party's election pledges to hit the "fat cat" privatised utilities with a windfall tax - no sorrow, there, from consumers - he dished out dividends across the country.

For low income groups, pensioners especially, he delivered his promised cut on VAT on fuel and power. Bills will fall by £90.

And there were billions more for schools, hospitals and - with a stick as well as a carrot - getting the young unemployed off welfare and into work.

There was a boost, too, for single mums, with £200million for childcare schemes that will enable many to find jobs - a plan that could pay for itself as those in work come off state benefits.

Even business generally - small firms as well as large - benefited as Mr Brown cut corporation tax. The only real carp came from the City - that he had not been tough enough tax-wise on consumer spending to stop the booming economy from over-heating.

Now, it looks like the Bank of England, given a free hand earlier by the Chancellor, will nudge up interest rates to brake the spending surge.

Was this a canny move to extend the government's honeymoon with the voters - that of not putting up consumer taxes as much as was feared and letting the newly-independent Bank take the blame for the extra squeeze that will follow?

Yet, though mortgage rates may rise along with home-ownership already being made £10 a month dearer by the five per cent cut in mortgage interest tax relief, the housing market is unlikely to be knocked back - especially as Mr Brown limited the flagged-up increases in stamp duty to property sales above £250,000.

The ex-Tory voters of Middle England who converted to New Labour are not likely to complain too much when the other things they hold dear - their children's schools, their hospitals, their grannies on small incomes, their job-seeking teenagers and the firms they work for are all being given a boost. The fly-in-the-ointment that the Tories will seize on is the Chancellor's £5billion raid on pension funds, with the abolition of tax credits paid to them. It may reduce the value of the funds - though many are awash with sufficient surpluses to absorb the impact on the value of pensions - but the pain of this hidden tax increase is numbed because it does not take large sums directly out of people's pockets.

As for the familiar Budget increases - drink, tobacco, petrol and road tax - the "health" and "green" aspects on these taxes as well as the in-line-with-inflation limit on many of them all tend reduce the grumble-factor.

And as a first Labour Budget for nearly two decades - and as a debut for a young inexperienced Chancellor - there was hardly a foot put wrong. The honeymoon goes on - and the government's opponents must be wondering just when it will end.

Converted for the new archive on 14 July 2000. Some images and formatting may have been lost in the conversion.