Surpluses in good times are therefore needed to offset deficits in bad times and Mr Brown has pencilled in a comfortable surplus for

Surpluses in good times are therefore needed to offset deficits in bad times, and Mr Brown has pencilled in a comfortable surplus for the next five years.The "sustainable investment rule" caps borrowing overall by saying net public sector debt must be stable over the cycle at a level preferably below 40 per cent of GDP.As the Treasury puts it: "Fiscal policy is now directed firmly towards maintaining sound public finance over the medium term, based on strict rules. A Treasury guide to analysing the public finances, published alongside yesterday's pre-Budget report, contained a six-page glossary of terms.However, the basic, prudent principles of tax and spending policies are unchanged. The code for fiscal stability passed a year ago requires the Chancellor to satisfy two rules.The "golden rule" says the Government can only borrow to invest; in other words current, day-to-day spending must balance revenues over the course of the business cycle. The Government also presents the sums that will be spent on the working families tax credit as negative revenue rather than positive spending - just as the Conservatives presented privatisation revenues as negative spending rather than positive taxes.Certainly, the new presentation of the figures can make readers feel there is such a thing as too much transparency. The markets do not believe these debt repayment figures."Confusion abounds partly because there are so many summary figures.

The borrowing total can include or exclude the windfall tax revenues. These exceed the previous estimated surpluses by similar amounts.The Chancellor has stuck to far more cautious estimates than many City forecasters for future years. Some are putting the potential surpluses as high as pounds 10bn on current policies."Chancellors should not delude themselves, it's sensible to be cautious," said Geoffrey Dicks of Greenwich NatWest. But he added: "There is obviously an element of bargaining in these figures." David Owen at Dresdner Kleinwort Benson said: "There is definitely a war chest building up here. There will be a debt repayment of pounds 3.5bn this year and pounds 3bn in the two following years, and small borrowing requirements of pounds 1bn in 2002- 03 and pounds 4bn in 2003-04. This represents an improvement of pounds 6.5bn in net borrowing this year, compared with the forecasts he made in March, tapering off to an unchanged forecast for 2003-04.The surplus on the current Budget will amount to pounds 9.5bn this year rising to pounds 11bn next year and pounds 13bn in the following two years. There is no single bottom line in the public finances, but the closest thing to it is the figure for public sector net borrowing (PSNB).

Thanks to the economy's better than expected performance, Mr Brown was able to revise down his estimates of how much the Government will need to borrow. In fact, he is predicting a surplus of revenues over spending this year and for the next two before returning to a small deficit in 2002-03 and 2003-04. EVEN GORDON Brown admitted there would be a little extra in the kitty during the next few years, revising his estimates of likely government revenues compared with March's Budget. But the Chancellor was less optimistic than many outside forecasters, basing his predictions of future tax revenues on cautious assumptions. That was "Cloud-cuckoo- land", said Ms Hyde, pointing out that in a highly competitive jobs market employees could not be expected to put off extra wages now in the hope of making a gain in the future.Mr Gilligan agreed, saying there were doubts about whether the five- year qualifying period for CGT exemption would be workable, given the fact that there was a growing tendency to job-hop.There was more support for the parallel proposal for enterprise management incentives, allowing small, higher-risk companies to offer up to 10 key employees options over shares worth up to pounds 100,000 when the option was granted.This would be taxed under a "favourable" CGT regime on the sale of the shares rather than as income at the exercise of the options.There are fears that movewill be restricted to a small number of companies.Roger Trapp. The Chancellor had "given the impression of trying to do something that's workable and constructive", she added.Advisers were less optimistic about Mr Brown's hopes that the measures would encourage employees and companies to "consider investing in their future" instead of being tempted into inflationary wage rises. It would provide companies with a lot of flexibility to design schemes that suited their needs, "something that has been missing from ongoing legislation".She suggested the proposals had answered concerns about complexity by doing away with distinctions in how employees had acquired the shares.

By making the proposals less complex, they should make it easier and cheaper to administer schemes. Sarah Hyde, a tax partner with accountants Ernst & Young, said Mr Brown claimed the scheme would be "open to everyone in every firm", but it was as unclear whether it would be applied to privately owned as well as publicly quoted companies.Alex Henderson, tax partner with Arthur Andersen, was worried about possible complications and restrictions, a view echoed by Brian Gilligan, tax partner with BDO Stoy Hayward, who said there was a danger a good idea would be surrounded by so many measures designed to protect revenue that it would be almost neutralised.Sally Russell, head of employee share ownership at ProShare, the organisation that promotes wider share ownerships, saw the move as "very important". All shares held for at least five years would be exempt from income tax and capital gains tax.Businesses and their advisers were generally pleased by the move, but doubts remain about the detail, to be announced today. Under the proposals, which Mr Brown said would be open to everyone in every firm, employers would be able to grant employees shares worth up to pounds 3,000 free of income tax each year, and employees would be able to buy a further pounds 1,500 of shares out of pre-tax income. Taking that option would enable employees to have another pounds 3,000 of shares from their employer free of tax. THE GOVERNMENT is hailing the plans to encourage share ownership as creating "the most tax-advantaged all- employee share scheme ever seen in the UK". STIMULATING ENTERPRISE by encouraging larger companies to invest in smaller ones was welcomed by the Confederation of British Industry.

Stephen Byers, the Secretary of State for Trade and Industry, will today present details of the plans for corporate venturing, as the practice is known. Mr Brown said that next year's Finance Bill will contain a tax incentive under which companies that invest in small higher-risk trading companies will receive up-front corporation tax relief at 20 per cent. In addition, corporate venturers who reinvest gains made from new ventures will be able to defer payment of capital gains tax on such gains - a move that the Chancellor said would make hundreds of millions of pounds available for investment.The CBI, which tomorrow publishes with the Department of Trade and Industry and National Westminster Bank a report aimed at promoting corporate venturing, welcomed the idea, saying that it would prompt organisations to think of a technique that was much more widely adopted in the United States and elsewhere.However, Alison Bye of the organisation's small business unit pointed out that the Chancellor's proposals appeared to be limited to the acquisition of stakes in smaller businesses, whereas the report would point out how companies were taking a variety of approaches to working together.While pharmaceutical and high-technology companies were among those who said they were active in this area, others were often involved without realising that their initiatives amounted to corporate venturing.Alex Henderson, tax partner with the accountants Arthur Andersen, said the move complemented what was now a range of measures directed at growing businesses.He added he was particularly pleased with the concept of reinvestment relief from capital gains tax, saying it was likely to make the idea "more attractive for companies".Roger Trapp. This will slash the tax take from the proposed figure of pounds 1.7bn annually to pounds 1bn. He is pressing ahead with an energy tax, one of the Government's main weapons in the struggle to cut carbon dioxide emissions, providing a massive sum for energy-efficiency technology, and ring-fencing future money from petrol duty for transport investment. Mr Brown pleased the Green lobby by resisting attempts to get him to drop the energy tax, which much of Britain's heavy industry has regarded with dread. He said he now thinks the tax can cut 2bn tonnes of annual emissions from smokestack firms, rather than the 1.5bn tonnes estimated earlier this year.But Mr Brown called a halt to the fuel duty escalator, the automatic annual rise in petrol tax by 6 per cent over inflation.He delighted environmentalists by trebling the moneyavailable for energy- efficiency schemes from pounds 50m to pounds 150m."We are in general very pleased, although the devil will be in the detail of these policies," said Dr Ute Collier, head of climate change at the World Wide Fund for Nature."Mr Brown has gone a long way to meeting our concerns," said Michael Roberts, head of industry policy at the CBI.Michael McCarthy. All the money will be recycled to firms in reduced national insurance contributions.The Chancellor thinks that bringing in energy-saving schemes will produce much greater cuts in the CO2 emitted from power-station chimneys than previously thought. Environmentalists were also happy at his proposal to exempt renewable energy and the energy- efficient technology known as combined heat and power.However, he pleased industry by making significant concessions to the most energy-intensive sectors, such as steel, aluminium and cement companies.