12.32pm – Gordon stands up to deliver speech.
We’re in the UK’s longest period of sustained growth. Long term prosperity is only secured if we make the right decisions.
My Budget choice is to lock in stability and strike balance of tax cuts and investment. At all times putting families first.
Inflation has been less than 3% for the past three years. Today it stands at 1.6%. Expected to be 1.75% and 2% from 2006 onwards.
Domestic demand at 3.25% this year. Expect investment to rise 4.25% this year.
Budget forecasts of 3% plus growth were dismissed by critics. Growth for 2004 was as forcast at 3.1%, Brown confirms.
In pre-Budget growth, Brown likened his 49 consecutive quarters to Arsenal FC. Unlike them, he can claim a 50th success. Budget forecast is continued growth for the next four quarters.
Key to success is low inflation and low interest growth. In the last eight years interest rates have averaged 5.3% – half the rate of the 1980s. Mortgage rates also halved. Inflation has been the lowest for 30 years,
Employment now the highest ever. UK has best combination of low inflation, high employment and rising living conditions: 157,000 more self employed, 300,000 more new businesses.
2.1m jobs created since 1997. Every week 125,000 people find new jobs – and almost 4,000 new business are started.
New Deal will be extended to focus on jobs and skills.
Building on 40% employment of lone parents, £2,000 incentive for return to work.
Based on decision to bring down national debt, which stands at 34% today – lowest of all competitor companies. Interest repayments at £4bn this year.
To build on that fiscal discipline, £14bn of asset disposals have been identified and will be sold this year; 1,500 civil service jobs to be relocated.
First £2bn of Gershon efficiency savings and £2bn of procurement savings coming through, Will hold to £21bn in savings targeted by Sir Peter, to go further would endanger front line deliver.
£34bn this year and £32bn next. “In every year our figures meet the Masstricht criteria”.
No plans for Treasury to carry out euro assessment this year.
Will meet the Golden Rule (balancing spending over course of an economic cycle) with £16bn borrowing this year, £6bn next, £1bn the year after and £12bn in 2008.
War in Iraq £4.9bn, with an extra £400m set aside for defence spending this year.
Competitive threat from developing countries. Britain’s economy cannot be built on a low-skills economy. Neglect damaged Britain’s prosperity.
A shared national purpose to be built to meet the economic challenge. Remove unnecessary barriers to public enterprise.
Budget sets out how UK can lead the way to removing these barriers. The Enterprise Challenge is to enhance flexibility and tackle regulatory concerns while meeting standards required for a successful economy.
Hampton report reaffirms need for minimum wage. But recommends lessening of inspections with a risk-based approach and a “light and limited approach” where risk is low. Government will legislate to implement Hampton recommendations.
Legislation to streamline inspection bodies. HSE to absorb five agencies. Insolvency Service to take over DTI company investigations unit.
Tougher penalties for companies breaking the rules. The government accepts recommendations of Arculus report and will set targets for government departments to reduce the buden of regulation on business. Reduction of regulatory inspectorates.
The Inland Revenue and Customs will consult on a single tax account and a single point of contact for corporation tax and VAT.
VAT flat rate scheme to be extended.
Guidelines will be introduced to reduce the “gold-plating” of European regulations.
Innovation and science
New National Energy Research network to be established with public and
R&D tax credit extended. Resarch contracts guaranteed to SMEs.
New design centre to be established in Newcastle.
Time limit for commercial property purchases: £300m set aside to drive forward local regeneration through property incentives.
Support for creative industries, including new support scheme for film industry.
Corporation and CGT tax rates frozen.
Air passenger tax, IPT, climate change and aggregate rates frozen.
Car tax rates frozen.
Beer and wine duty increased with inflation, cider and spirit duties frozen.
For the third time, fuel duty increase frozen – but only until September.
No vehichle increase for duty on small and medium carts.
Anti-avodiance measures to target
New starting threshold doubled to £120,000
Inheritance Tax starting points raised to £275,000 from April, rising to £285,000 and then £300,000 in subsequent years. “94% of estates will pay no inheritance tax,” the Chancellor claimed.
ISA maximum raised to £7,000 a year.
Decided to stick with rates announced in PBR. £1bn saved will be directed into family tax credits. Children’s Tax Credit with rise 13% in three years, going up to £63 for first child and £111 for two children.
Effective income threshold for family with two children receiving CTC will start at £22,000.
“That is a family tax credit that does most to support low and middle income families with children,” the Chancellor said.
Proposals involve a modest fiscal tightening to preserve prudence. The approach will be sustained.
Confirmed public sector spending increases for 2007/07 in the following areas: police £3.5bn, Transport £2.4bn, Defence £2.6bn, Education £12bn and health £23bn.
A new start for children
Maternity leave increased to 1 year and new schemes for early education. VAT to be refunded to local authorities for spending on children’s services.
Rebuilding programme announced for primary school buildings and £1.7bn spending announced for IT in primary schools. Overall spending per pupil will rise to £1,000.
Financial support announced for education until the age of 18. Those in full education or training will get £75 maintenance allowance.
Apprenticeships and college training to be encouraged with time off for employees. £1.5bn renewal programme for further education colleges.
Hospital charges abolished.
Pensioners’ Council Tax refund
Increased from £50 announced in PBR to £200.
“A budget for Britain’s families and pensioners! I commend it to this house.”
Chancellor sits down at 13.20pm – four minutes shorter than Disraeli’s shortest Budget speech ever.