A visionary display by the Chancellor - if only it had been the speech of a prime minister

I'm not sure he used the phrase 'wealth creation', but every line of his speech was devoted to it

The sweep and vision of the pre-budget report delivered by the Chancellor of the Exchequer, Gordon Brown, was remarkable. Political commentators who decode Mr Brown's every sentence to show that he is really criticising the Prime Minister are missing the main point. Financial experts who cavil at Mr Brown's forecasts for Government borrowing, even though Britain's deficit is the lowest of the advanced economies, are stuck in meaningless calculations.

The sweep and vision of the pre-budget report delivered by the Chancellor of the Exchequer, Gordon Brown, was remarkable. Political commentators who decode Mr Brown's every sentence to show that he is really criticising the Prime Minister are missing the main point. Financial experts who cavil at Mr Brown's forecasts for Government borrowing, even though Britain's deficit is the lowest of the advanced economies, are stuck in meaningless calculations.

The big question is how to prepare for changes in the world economy that are as significant as any in the past 200 years. More and more, British suppliers of goods and services find that they now face global competition for the first time - but equally, there is no reason why they cannot seize the initiative if they want and go and sell overseas. More competition, but at the same time more markets opening up, and also more specialisation.

Most striking is the growth of economies such as China, India, Russia, Brazil and Mexico. China will shortly, for instance, be the third largest economy in the world. The emergence of these powerful industrial nations poses both an opportunity and a threat. As their living standards improve, their demand for goods and services - which Britain can supply - will rise. But equally, competition from these new industrial giants will destroy fresh areas of British industry. This process didn't come to an end when we lost shipbuilding, coal-mining, much of our steel capacity and parts of our motor industry. It goes on at an accelerating pace.

This is Mr Brown's starting point. He looks forward 10 years. I don't believe any chancellor before has set his plans in such a long perspective. Unfortunately, the main lines of what he believes the Government's response should be are obscured by the sheer number and detail of his proposals. But in essence, what the Chancellor is saying is this.

In the first place, it is still possible to expand the capacity of the British economy by increasing the number of people at work. In the 19th century, Western Europe and North America did this by moving people off the land and into factories. And that is broadly what China, India, Russia, Brazil and Mexico are doing today. But where do we look? Mr Brown's answer is lone parents, people drawing incapacity benefit who could do some paid work, unemployed people who think that the sort of jobs they could find wouldn't leave them any better off when the loss of income supplements is taken into account, and members of ethnic communities whose participation in economic activity is relatively low. For each of these groups, Mr Brown proposes incentives and programmes of various kinds.

Second, argues Mr Brown, this expanding workforce has to become more effective. Low productivity is Britain's greatest economic weakness. We have the highest proportion of unskilled workers of any major European country. In future, says Mr Brown, every adult who has missed out at school will have the funds and the opportunity to acquire skills. This is the single most important, near-term objective that the Chancellor announced. Nonetheless, the Government cannot wave a magic wand. While it can provide encouragement and training schemes, two further things have to happen. Unskilled workers must want to improve themselves. Employers must be willing to co-operate.

Third, to replace the jobs that will inevitably be lost to global competition, Britain must invest much more in science, both at universities and companies. Because it is easy for chancellors to utter pieties along these lines, I hope Mr Brown's proposals will get a very thorough examination and response from the research communities. Is the promised £2.5bn investment in science over the next 10 years enough? Can the tax system be adjusted to provide more incentive for research and development? Are there barriers to the formation of university spin-off companies that should be removed? Should progress in raising business research and development be benchmarked in some way?

Fourth, entrepreneurs are required. Doing the science, getting on with research and pushing forward with development isn't enough. Encouraging people to start new businesses is crucial. American rates of business creation and success are far ahead of ours. That is partly why the American economy is so resilient. Here, though, there is not so much that government can do. Yes, promote the virtues of enterprise, introduce studies of entrepreneurship into schools, reduce regulation where possible, give tax breaks to investors. All these things Mr Brown intends to do. But then, I'm afraid, we must wait and see.

Fifth, and most controversially, Mr Brown argues that family policy has to be part of the response. No previous chancellor has ranged so widely in searching for ways of increasing national wealth. He takes on board the revolution in the structure of families as women have entered the workforce and marriage patterns have altered. While 50 years ago, less than a third of married women were working, today over two thirds of two-parent families have two earners. At the same time, as we have seen, there is an ongoing revolution in the way the world economy is organised. Mr Brown is seeking to acknowledge the former while preparing for the latter. As he put it: "The successful economies and societies of the next 20 years will also invest in the potential of all children, and transform the way parents are enabled to balance work and family life".

In Mr Brown's mind, what this means is that parents should be able to stay at home longer when their child is born and have the means to do so, and that parents should enjoy more flexibility in the workplace when their child is young. This is both right and difficult. What it means for employers is that their most productive and creative staff - who are the 25 to 45-year age group - will often be away. This must mean a short-term productivity loss. It may even be a bit like France's introduction of the 35-hour week - a virtuous policy which creates lots of problems.

Thus, a budget statement by the Chancellor of the Exchequer has concerned itself with the details of working hours and family life. Mr Brown spent more minutes of his speech on such matters than he did on the Government's borrowing requirement. In theory, he runs the risk of travelling so far from base that he neglects his central responsibilities. He can be far-sighted about the 10-year prospect and yet be blown off course in a few months' time. After all, the dollar is plunging and domestic house prices are volatile.

Yet Mr Brown thinks, acts and speaks as a statesman should. I am not sure that he used the phrase "wealth creation" yesterday, but every line of his speech was devoted to that purpose. His insight is that all of society is engaged in the process and can either aid it or hinder it. His difficulty is that government can only make the framework, it cannot do the job.

My verdict: a magnificent pre-budget report when you look behind the detail. My problem: that Mr Brown isn't prime minister.