Showing posts with label chancellor of the exchequer. Show all posts
Showing posts with label chancellor of the exchequer. Show all posts

Wednesday, 22 April 2009

Budget 2009: Nick Clegg’s Budget response


Nick Clegg's response to Alistair Darling's Budget in full.

Mr Speaker, the economic crisis is unprecedented in many ways - its scale, its speed, its reach. So people are looking for something bold and distinctive from this government.

Think back to the great Budgets of our history. The People's Budget of 1909, the first pension, the first social insurance. Labour's post-war Budgets, building a new nation from the rubble of war.

What made these Budgets great was their ambition, and their coherent vision for a different future.

That is what we needed today, in the aftermath of this generation's disaster. The worst of times demand the best of Budgets.

So what did we get today?

Today we got a mish-mash of recycled announcements from a government skilled in raising false hopes but incompetent in delivering practical help.

The Chancellor had a choice: he could have used this Budget to get practical help to the millions of people struggling in this recession.

He could have given a People's Budget for the 21st century. Instead we got a politician's Budget, desperately rushing around picking up half-baked ideas to save the skin of this failing government.

This Budget is a political supermarket sweep, a trolley full of random promises, without even a hint of a plan or any real likelihood the promises ever going to be put into practice.

Mr Speaker, the growth predictions in this Budget also stoke up false hopes.
The economy will grow by 1.25% next year and 3.5% from 2011?
£15bn can be shaved from public spending without cancelling a single Whitehall project?

Given the lamentable failure of this government to get its own predictions right, people will be asking what kind of fantasy world does the Labour Party live in these days? And if he gets the figures wrong again, particularly the growth predictions, there will be even greater pain necessary to get the government accounts in order in future years.

The economic crash is not the result of a few minor mistakes. Patchwork repairs won't fix it. We need to do things differently.

And - though it barely warrants a mention in this Budget - that will need to start with a different kind of banking system.

Just because this is off the front pages today, that doesn't mean the problems are solved. Businesses still aren't getting loans. Banks are still in a mess.

The problems have to be sorted - we need a banking system where no bank is too big to fail, where high street banks take no unnecessary risks with other peoples money, and where risky casino investment banking is cut loose to fail when things go wrong.

But, Mr Speaker, the biggest disappointment in this Budget is its failure to sort out Britain's unfair tax system.

To put money into people's pockets to help them make it through this recession.
Britain's taxes are still too heavy on those who can least afford it.

And too easy to avoid for those who know how.

That's how this Government, and I think the Conservatives, seem to want it.
We are the only party who will do things differently, and get practical help through lower taxes to people who are really struggling.

This week, we explained how it is possible - even in a recession - to cut most earners' Income Tax bills by £700 by raising the Income Tax threshold to £10,000 for everyone.

If we take aggressive action to clamp down on all the loopholes and exemptions that benefit the richest people and biggest businesses.

The Government has today finally accepted that one of the most unfair loopholes - the doubling of tax relief on pension contributions from highest earners compared to people on ordinary incomes - should be changed.

But they have only tinkered with the loophole today, removing the benefit from only the tiny minority earning more than £150k. Like his other tokenistic measures applying to highest earners, it will raise very little money - according to his own red book only £200 million - whilst leaving the really big loopholes like the lower 18% tax on capital gains in place, which in effect serves as a massive subsidy for the very rich, when we should be doing everything we can for people who really need help.

Our proposals would ensure that 4 million of the lowest paid no longer have to pay any income tax at all.

Our proposals would put fairness and transparency back into this government's woefully unfair and complex tax system, and I urge the government, even at this late stage, to take our ideas up.

It isn't too late to sort out Labour's failed fiscal stimulus, either. There should have been proposals in this Budget to end the pointless VAT cut and replace it with a stimulus package that actually works.

Billions have already been poured down the drain, but if the Chancellor stopped the VAT cut now he would still have £8.5bn to better spend elsewhere. Just imagine what could be done with that money - creating thousands of real jobs, as well as laying the foundations for a different, greener economy. Insulating 2 million homes and every school and hospital in the country. Building new council houses. Upgrading public transport with new train carriages and re-opening railway lines and stations.

For every minute that goes by, £22,000 is wasted on the VAT cut. And every minute that goes by, someone else in Britain loses their job. It isn't too late to turn things around. Cancel the VAT cut, put the money into green jobs, and we'll have a quicker recovery and a stronger country.

Mr Speaker, this mish-mash Budget includes a litany of missed opportunities.
It has failed to do anything to help the poorest pensioners who receive pension credits on the absurd assumption that they're making a 10% return on their savings. The treasury is robbing pensioners of their rightful entitlements at a time when savers everywhere are being hit hard.

I've lost count of the number of government announcements on housing - we have yet another one today - yet fewer new affordable homes are being built than ever, young people still can't get a foot on the housing ladder, and the government persists with its deeply misguided policy of subsidising people to take on new debt in a falling housing market.

And then there's the huge dilemma of how balance and discipline can be restored to the government's finances in future.

Today's figures of projected national debt will cast a shadow over future generations.
One thing is more important than anything else when it comes to the public finances: growth.

Without growth there'll be no money anywhere to pay off the nations' debt.
And that means we must not pull the rug out from under the British economy just as it's struggling to get up off the floor.

So the Conservatives are just plain wrong to propose slashing Budgets immediately.
That would be an act of economic masochism.

But Labour are wrong, too, to commit right now to big Budget cuts in April of next year - the biggest fiscal contraction in the OECD - when we have no idea what the economy will look like then. No idea whether cuts would kill off growth just as it gets going.

Remember, this time last year the Chancellor said that the economy would be growing by 2.5% today, and yet it's now predicted to shrink by 3.5% this year.

Six months ago he said the recession would be over on July 1. The Chancellor may fancy himself as the new Mystic Meg, but he should get out of the predictions game.

We don't know where the economy is going: so we simply must keep our options open until growth is restored when we will need to face difficult choices.
That's the only honest approach.

The Chancellor should adopt an honest approach on spending, too. He's trying to pretend that £15bn can be stripped from public spending without anyone noticing. But talk of pain-free efficiency savings are a joke.

We all remember Gershon. All it proved is you can move money from one column to another and call it a saving.

The Liberal Democrats would do things differently. We would take big choices about what government should and shouldn't do in the medium term, once growth has kicked in again.

Asking difficult questions: Is the 50% target for university students either necessary or affordable? What is our international military role and how much should we spend on it? Are exceedingly generous pension entitlements for well paid public servants fair and affordable?

We need a national debate about what the state can and cannot afford in the future, not with Whitehall salami slicing today.

That is the responsible way - the honest way - to reduce spending in the years ahead and avoid painful higher taxes.

Mr Speaker, this Budget could have been a great Budget. It could have set a new direction, a new course for Britain, out of recession and towards a stronger future.

A new, fair, transparent tax regime. A better banking system. Green jobs, green infrastructure for a sustainable economic future. A new era of openness from government about what the public purse can sustain. A new era of responsible, lean government that improves people's lives.

Today was an opportunity to deliver practical help. But Labour is out of ideas, and out of steam. Today they have condemned us to years of unemployment and decades of debt. The country deserves something different.

Britain cannot afford another five years of Labour


This is a Dishonest Budget. From tonight, Britain’s families are facing higher taxes to pay for Labour's Debt Crisis.

After a decade of economic mistakes, Gordon Brown is saddling this country with over £1 trillion of debt.

Britain cannot afford another five years of Labour.

The Budget revealed today: tax rises of £1000 on every family in Britain; tax rises on everyone earning over £19,000; tax rises on all new jobs; higher taxes for motorists and responsible drinkers.

The Labour Government was also forced to admit that Britain faces:

  • The longest recession since the war
  • The fastest rise in unemployment on record
  • Every child born already owing £22,500 in national debt
  • A national debt that will double to £1.4 trillion

Like all Labour governments in history, New Labour has run out of money.

If the Conservatives had given this Budget, we would have got a grip on government spending, and used the savings from cutting waste to introduce real help now for families and pensioners:

  • Freezing council tax for two years, worth over £200 for the typical family
  • Abolishing income tax on savings for all basic rate taxpayers, worth up to £7,200 a year
  • Raising the income tax threshold for pensioners, worth up to £400 a year
  • Help for the unemployed to upskill and reskill during the recession - and tax breaks for companies who create new jobs

Conservatives will tackle Labour’s Debt Crisis and deliver economic change for Britain.

Read David Cameron's response to the Budget

Find out more about our plans for the economy

Budget: "clean coal" money is "counter-productive and wasteful"


In today's Budget, the Chancellor is expected to announce government funding for so-called "clean coal" projects - which the Green Party says would be "a waste of money, and counter-productive in terms of both cutting emissions and creating jobs."

Recently the Department for Energy and Climate Change said the global market from carbon capture and storage (CCS) on coal-fired stations could be worth £2.4 billion a year to the UK by 2030, creating over 50,000 jobs.

But the Green Party says that:

* Investment in wind energy instead of "clean coal" could generate four times as many jobs, ten years sooner.
* A nationwide energy-conservation programme could generate almost three times as many jobs as "clean coal" - while reducing energy demand to such a level that the new coal-fired power stations would not be necessary.

Professor John Whitelegg, the Green Party's spokesperson on sustainable development, said today:

"If CCS works, and if it proves economically viable, it's still the wrong technology. We're facing a recession as well as a climate crisis, and we need a lot of jobs urgently."

"The promised 50,000 jobs in CCS by 2030 are far too few, far too late. On the other hand, if we generated the same proportion of our electricity from windfarms as Denmark does, and at the rate of growth Denmark has achieved, we'd create about 200,000 jobs by 2020. We could start doing this tomorrow and achieve the emissions reduction and the job-creation we need much faster than with so-called 'clean coal.'"

"And if we bring every home in the UK up to the proper energy-saving standards, this alone could create 137,000 jobs. Do that, and we'll save so much energy we wouldn't need coal-fired stations anyway."

The Greens argue that comparative studies have always shown renewable energy sustains far more jobs per megawatt than coal. Professor Whitelegg added: "And we'd be dependent on imported energy just as we are now, and vulnerable to potential price fluctuations and disruption as we have been with oil. We need to leave that coal in the ground and invest heavily in energy-conservation and renewables."

"We know how to achieve a very low-carbon economy through jobs-rich green energy policies, so why on earth should we tinker with jobs-poor unproven technology that keeps us dependent on fossil fuels?"

(DH) NHS makes budget efficiencies


The Department of Health is contributing £2.3bn in additional savings, as part of £5bn efficiencies in spending across the public sector in 2010/11, announced by the Chancellor of the Exchequer today.

The Department's revenue budget for 2010-11 is adjusted from £104.6bn to £102.3bn, but spending will nevertheless rise by 18% in this Spending Review period 2007/08 - 2010/11.

The NHS, alongside other public services is making these savings in response to the current economic conditions, and to implement Lord Ara Darzi's vision of high quality, efficient services as set out in his review of the NHS - High Quality Care for All.

Health Secretary Alan Johnson said:

"Better quality, safe health care goes hand in hand with better value for money. Getting it right first time for patients means better care, but also better value for money as it avoids costly follow ups to put mistakes right. For example, our drive to reduce healthcare associated infections has improved the experience of thousands of patients and has saved the NHS £75 million in the last year.

"As well as providing health care and support to those that need it at this crucial time, the NHS is also well placed to help the country through the economic downturn as a major contributor to the overall economy and the country's largest employer."

Building upon the NHS's proven track record in delivering efficiency savings and its strong financial foundations, these savings will be delivered by a package of measures, which include:

* Delivering savings as part of the Treasury led Public Value Programme - a programme which looks to making efficiencies across the public service - which will enable the NHS to unlock savings of £500m by:

* building on the success of the first year of the World Class Commissioning programme - which is delivering more strategic and long term planning of local health services;

* extending and refining the Payment by Results tariff - where hospitals are paid for the work they do - to reward and drive both better quality and better efficiency; and

* rolling out new guidance and driving efficiency improvements in making better use of the existing NHS estate eg by introducing new benchmarking measures.

Increased efficiencies delivered by all these measures mean that the tariff prices paid for NHS work carried out will be built upon efficiency growth of 3.5 % in 2010/11, compared to 3% in 2009/10.

* Implementation of the Operational Efficiency Programme recommendations, ensuring that support services are cost effective, particularly on collaborative procurement, through the new Commercial Operating Model and on back office functions by building on savings already delivered through NHS organisations sharing back office functions, including payroll, finance and HR.

* Ensuring that all central Department of Health and Strategic Health Authority held budgets are robust and deliver rigorously on value for money.

Money allocated to Primary Care Trusts in December 2008 to commission local health services for 2009/10, 2010/11 will not be affected. The NHS will benefit from an uplift of 5.5% for front-line services in each of these two years, enabling the health service to continue to drive improvements and seek better value for money for the taxpayer. Also as set out in December 2008, the NHS will also be able to spend up to £800m of its accumulated £1.7bn surplus over these years for the benefit of patients.

In addition, the Department will release back to HM Treasury its centrally held contingency. This contingency was created at the time of the 2007 Comprehensive Spending Review to provide a buffer against potential cost pressures and financial turbulence. However, the excellent financial management in the NHS - with a surplus of over £ 1.7bn in 2008/09 - mean these centrally held contingencies can now be safely returned.

(DECC) UK sets World's first carbon budgets


Chancellor delivers new support for low carbon industries

The UK today became the first country in the world to bind itself into an ambitious long-term framework to limit its greenhouse gas emissions.

Announcing the UK's first three 'carbon budgets' alongside his fiscal Budget, the Chancellor also set out new measures designed to help low carbon industries capitalise on the opportunities presented by the UK's legally binding target to cut greenhouse gas emissions to at least 80% below 1990 levels by 2050.

The Chancellor today announced:

* Legally binding carbon budgets for the first three five-year periods 2008-2012, 2013-2017 and 2018-2022.

* A revised target to reduce emissions to at least 34% below 1990 emissions by 2018-22.

* Aim to meet the carbon budgets announced today through domestic action alone, and consistent with this, setting a zero limit in the non-traded sector on offsetting through international credits for the first budget period.

* Commitment to tighten the budget after Copenhagen this December, once we have a global climate change agreement.

Energy and Climate Change Secretary Ed Miliband said:

"Meeting carbon budgets will require emission reductions across the whole UK economy. We are on course to meet the first carbon budget, a 22% cut by the end of 2012 compared to 1990. The package of measures set out by the Chancellor today is good for the environment, good for jobs and good for energy consumers, helping ensure that Britain's recovery and long term future is low carbon and secure."

The UK's carbon budgets will be met through collective action across Government. All departments will be involved in delivering the carbon budgets, through formulating policies to reduce emissions and through reducing emissions from the public sector estate.

Key departments and the Devolved Administrations will work with DECC to set out our proposals and policies for meeting these carbon budgets. These will be published in an Energy and Climate Change Strategy this summer.

INVESTING IN LOW CARBON BRITAIN

The Chancellor today announced new support for low carbon industries ranging from energy efficiency and renewables through to carbon capture and storage.

Today's budget provides more than £1.4bn of extra targeted support in the low carbon sector.

These measures together with announcements made since last autumn will enable an additional £10.4bn of low carbon investment over the next three years.

Tomorrow the Government will set this out in "Investing in a Low Carbon Britain", which will build on Low Carbon Industrial Strategy: A Vision, which was published this March.

Summary of new support announced in the Budget today for new green industries:

CARBON CAPTURE AND STORAGE

Plans to fund up to four Carbon Capture and Storage (CCS) demonstration projects to help drive this technology to commercial viability. This represents the biggest global contribution of any country in developing this technology.

Climate Change and Energy Secretary Ed Miliband will make an oral statement in Parliament tomorrow (Thursday 23 April) outlining in more detail the UK's plans for CCS technology and coal.

SUPPORT FOR ENERGY COMPANIES THROUGH THE CREDIT CRUNCH

UK renewable and energy projects stand to benefit from up to £4 billion of new capital from the European Investment Bank (EIB) through direct lending to energy projects and intermediated lending to banks. The Government will bring together the EIB, banks and developers, to ensure this new framework lending and other products deliver rapid and sustained investment for UK renewable energy. The Government believes that this initiative can bring forward £1bn worth of consented small and medium sized UK renewables projects to deployment.

RENEWABLES AND LOW CARBON INDUSTRIES

As required under the Energy Act before any change in ROCs banding, we are launching a review into the support for offshore wind under the Renewables Obligation (RO). If the review confirms the evidence we have been provided with, we propose to provide even more incentive to offshore wind in the form of two renewable obligation certificates (ROCs). This builds on the recent uplift to 1.5 ROCs. The additional support is worth up to £3.5 bn over the lifetime of the projects.

Government is allocating £405m of targeted support for priority sectors. This funding will provide support for close-to-market innovation through, for example, the Environmental Transformation Fund (ETF), and support for mature industry through a range of delivery mechanisms such as the Grant for Business Investment (GBI).

Over the next two years there will be £70 million for decentralised small-scale and community low-carbon energy, including £45 million for small-scale renewable electricity and heat, primarily through the Low Carbon Buildings Programme, and £25 million for at least 10 community heating schemes. This will create jobs and growth now, and develop the low carbon supply chain and industry for the upturn and meet our 2020 renewables targets and energy goals.

ENERGY EFFICIENCY

We will invest an additional £65m over the next year to achieve a step change in the energy efficiency of schools, hospitals and other public sector organisations. All public sector organisations will be eligible to apply for interest-free loans to install energy efficiency technologies as well as some advice to drive projects forward.

There will be an additional £100m of interest-free energy efficiency loans for small and medium businesses over the next two years. This will help save around 140,000 tCO2 and save businesses £23m.

We will seek European Commission approval to extend an exemption from payment of the Climate Change Levy (CCL) for electricity exports from Combined Heat and Power (CHP) out to 2023 (it is currently exempt to 2013). This could help bring forward an additional £2.5bn of investment in CHP.

OIL AND GAS

Oil and gas remain important parts of Britain's energy mix. The Government will be introducing a "Field Allowance" for new small and technically-challenged oil and gas fields which should encourage continued investment in the UK Continental Shelf.

The confirmation that cushion gas will be eligible for plant and machinery capital allowances means that a necessary cost of doing business will be recognised in the tax regime. This should remove a material deterrent to investment in additional gas storage capacity and thus improve security of gas supply and result in lower and/or less volatile gas prices.

(HMT) Budget statement to the House of Commons, delivered by the Rt hon Alistair Darling MP, Chancellor of the Exchequer, Wednesday 22 April 2009


Mr Deputy Speaker, today's Budget will continue to help people through this global recession, and prepare Britain for the opportunities of the future.

Firstly, there will be help now to get people back into work quickly, and support businesses and homeowners facing problems.

Secondly, there will be measures to support investment in the growth and green industries of the future - while, as the recovery takes hold, ensure our public finances are sustainable.

We will protect investment in schools, hospitals and other key public services - and we will work to rebuild our financial services.

Taken together, this Budget will build on the strengths of the British economy and its people, speed the recovery, providing jobs and spreading prosperity.

In all of these decisions, we have been guided by our core values of fairness and opportunity - and our determination to invest and grow our way out of recession.

Mr Deputy Speaker, today's Budget will take Britain through the most serious global economic turmoil for over 60 years.

The impact is being felt in every continent, country and community.

When the world economy was plunged into deep crisis in the 1930s, the response, both nationally and internationally, was too little and too late.

This failure to act turned a serious downturn into a prolonged depression.

We will not repeat those mistakes again.

This time, we and other countries, have worked to avoid them.

Across the globe, we have seen decisive action by national governments, and internationally too.

This action, taken promptly and decisively, gives us good grounds for confidence.

Mr Deputy Speaker, today's Budget builds on the substantial help for people and businesses in the Pre-Budget Report in November.

It builds on the steps we have taken to recapitalise and restore confidence in our financial institutions.

And it builds on the outcome of the G20 Summit in London this month, when the world's leading economies came together to agree unprecedented co-ordinated action to speed global recovery.

The action already taken here, and internationally, and the measures I will announce today, mean that I expect the economy to start growing again towards the end of the year.

I am also confident that, as the global economy recovers to double in size over the next 20 years, Britain can, and will be, a world leader.

This Budget will help make sure we seize this opportunity.

Mr Deputy Speaker, as I told the House in November, we and other countries have been battling against a succession of shocks which have hit the world economy.

At the end of 2007, problems in international mortgage markets began to put a damaging squeeze on credit.

In early 2008, we also saw dramatic volatility in many commodities prices, adding to uncertainty and putting pressure on growth.

Last autumn, the dramatic failure of one of the top investment banks in America - Lehman Brothers - shattered already fragile confidence and brought the international financial system to its knees.

Since then, an extraordinary international financial crisis has fed into the wider economy, causing a steep and widespread world recession.

A crisis that started in the developed economies has spread to emerging and developing countries.

Industrial production has fallen and unemployment is rising - by 5 million in the US alone.

In the last few months, world trade fell - and while our exports are down 14 per cent, exports in Germany are down 21 per cent, in China 26 per cent, and in Japan 45 per cent.

For the first time since the Second World War, the world economy is expected to contract this year.

Mr Deputy Speaker, the last few months have seen considerable economic uncertainty.

And that has fully justified the action we, and other countries, have taken to support business and people.

Since the autumn, we have put the banks on a stronger footing, cleaning up their balance sheets, and helping boost bank lending.

As a result, banks will be able to lend billions of pounds more this year and next, to homebuyers and businesses.

Getting credit flowing again is the essential precondition to economic recovery.

In the Pre-Budget Report, I announced a range of measures to help the country through the recession, putting £20bn back into the economy.

This help is coming through now - from an income tax cut, and a VAT reduction which will continue until December.

There is increased support for pensioners, as well as investment in vital public services and accelerated capital projects - protecting thousands of jobs.

And because of the reforms we have made to the welfare system since 1997, this comes on top of extra help when families need it most.

I understand the anxiety behind calls to support those whose wages have fallen.

This is exactly the support our flexible system can - and is - already offering.

As shorter working weeks or irregular patterns reduce wages, those on tax credits can see an automatic increase to compensate for the loss of income.

In March, for example, 355,000 families were receiving on average £35 a week more support through tax credits.

Demonstrating how our welfare system automatically helps people when they need it most.

Mr Deputy Speaker, fiscal support has been complemented with sharp reductions in interest rates by central banks around the world.

The Bank of England interest rate is now down to half a per cent, the lowest it has ever been.

This has reduced the cost of mortgages and loans.

The average saving, since October, for the 4-1/2 million families with tracker mortgages is over £230 a month.

And we have now given the Bank of England new means to support the flow of credit and put money into the economy.

Inflation has come down which means people's income will go further.

Taken together, the total policy support for the UK economy is expected to protect up to half a million jobs.

Other governments across the world have been doing the same.

The total amount of fiscal support, across the G20, will amount to over 5 trillion dollars.

Mr Deputy Speaker, there's also been unprecedented co-ordinated action at an international level.

The G20 group of economies came together - first in November and then in London earlier this month - to fight this global recession.

We agreed to take whatever further measures are necessary to deliver the IMF forecast of global growth of over 2 per cent by the end of next year.

In total, the G20 agreed over one trillion dollars of additional support for the world economy.

Mr Deputy Speaker, there are no quick fixes. No overnight solutions.

But because of the progress we have made, here and internationally, we can begin to restore confidence, save jobs, and bring the world economy more quickly out of recession.

Now we must make sure we deliver on these agreements - starting at the meeting of world finance ministers in Washington this week.

And I want the next meeting of EU finance ministers to be focused on rebuilding growth in Europe, based on the foundations laid by the G20.

We also need a clear path to recovery - both fiscally and by investing to build Britain's future.

Mr Deputy Speaker, the UK went into this global recession with employment at an all-time high, inflation, public debt and interest rates at low levels.

But no country can insulate itself from this worldwide downturn.

The position here, as in every country, deteriorated in the autumn.

In the last few months, world trade fell at the sharpest rate since 1945.

As an open economy, the world's sixth biggest exporter of goods and the second largest exporter of services, we are affected by the collapse in demand in other countries.

The unexpected severity of the recession has led the IMF to downgrade its own forecasts for the world economy three times since October.

We, as well as other countries as diverse as Japan and France, India and the US, have reduced our growth estimates.

Mr Deputy Speaker, the UK economy contracted by 1.6 per cent in the last quarter of 2008.

For the first quarter of this year, I expect the economy will again contract by a similar amount.

And my forecast for GDP growth for the year as a whole will be -3-1/2 per cent - in line with other independent forecasts.

But because of our underlying strength, the measures we are taking, domestically and internationally, I expect to see growth resume towards the end of the year.

The IMF forecasts published today confirm the problems that all countries will face this year.

But they also show that the British economy will suffer less than Germany, less than Japan, less than Italy, and less than the euro area as a whole this year.

The British economy is diverse, flexible and resilient - which is why we can be confident in recovery.

Next year, because of the pick up in world demand, the continuing benefit of lower prices, and the substantial recovery measures put in place, I am forecasting growth of 1-1/4 per cent in 2010.

In future, the sources of our growth will be more varied - and we need to ensure we play to our country's strengths.

It will increasingly come from an expansion in investment by businesses in the industries of the future, such as low-carbon, advanced manufacturing and communications.

These industries, together, are as important to the British economy as the financial services sector.

That is why it has been so important that we have increased investment in Britain's science base by 88 per cent in real terms over the last ten years.

Growth will also be driven by the opportunities to export as the global economy doubles in size in the next two decades.

From 2011, I am forecasting that the economy will continue to recover, with growth of 3-1/2 per cent from then on.

To account for the impact of the global shock, I have further adjusted trend output - or the productive potential of the economy.

But in future years, the economy will recover towards a trend rate of growth of around 2-3/4 per cent.

Inflation is expected to continue coming down sharply, reaching 1 per cent by the end of this year.

I am today writing to the Governor of the Bank of England, in the usual way, to confirm that the inflation target remains unchanged at 2 per cent.

Retail Price Index inflation is forecast to remain negative, falling to -3 per cent by September, before moving back above zero next year.

Mr Deputy Speaker, the deepening global recession has had an impact on the public finances, here and in every country across the world.

In this Budget, I will set out steps to ensure they are on a sustainable path.

And due to the measures that I will announce today, the current deficit is expected to halve within four years.

But before I turn to that, I want to set out the additional help we will give to people and businesses to get through the recession - and build towards recovery.

Mr Deputy Speaker, we know, from previous recessions, that people's greatest fears are the loss of their job and their family home.

All over the world, as the economy slows, unemployment is rising.

In the UK, the claimant count increased in February by 137,000.

Today's figure shows that in March it went up by 74,000 - taking the total claimant unemployment rate to 4.5 per cent.

It is not in any Government's power to prevent all job losses.

And even when the recovery is under way, it will take time for unemployment to start falling.

But Governments must give people targeted help to find a new job as quickly as possible - and, where necessary, to gain the new skills which will allow them to do this.

This is not just morally the right thing to do but economically essential.
All the evidence shows that the longer people are out of work, the more difficult it becomes for them to re-enter the labour market.

So today I will announce steps to ensure short-term job loss does not turn into a lifetime on benefits.

Mr Deputy Speaker, the core of the Government's approach is the Job Centre Plus network.

Its tailored help has almost halved the average time people spend out of work compared to previous recessions.

Even in the tough economic conditions since November, it has helped over a million people move into new employment.

Mr Deputy Speaker, I am determined that this support can continue to be given to people who lose their jobs.

In November, I increased the resources for Job Centre Plus and the New Deal by £1.3bn.

I can announce today an additional £1.7bn of funding so that everyone can receive high-quality support.

Most people, even now, continue to find work within a matter of weeks.

But we need to step up help to those who have greater difficulty in re-entering the labour market.

So there will be additional support for people who have been out of work for 12 months through the Flexible New Deal.

I am also determined that we do even more to protect young people from the damaging impact of long-term unemployment.

The alternative is a return to the days when a whole generation of young people found themselves abandoned to a future on the scrapheap.

We will not repeat that mistake.

So I want to offer a guarantee. From January, everyone under the age of 25, who has been out of work for 12 months, will be offered a job or a place in training.

Those in work will receive a wage.

Those in training will receive additional money on top of their benefits.

To provide these extra opportunities, we are working with employers to create or support as many as 250,000 jobs.

This will include delivering local services, traineeships in social care, and other high demand sectors - as well as jobs for people of all ages in particularly badly hit communities.

Mr Deputy Speaker, I also want to do more to help people gain the crucial skills that will be needed in the future.

So, as part of my guarantee to young people, I will spend over £260m of new money, for training and subsidies to help them get the skills or experience needed in sectors with strong future demand.

We will also be providing extra investment, to ensure we deliver on our guarantee that every 16 and 17 year old who wants to stay in education or training can do so.

To deliver this for the next two years, I am providing a further £250m this year and £400m in 2010-11.

This will enable an additional 54,000 places, in sixth forms and further education colleges, for students in the next academic year.

For this and other measures, there will be consequential provisions, where appropriate, for Scotland, Wales and Northern Ireland.

Mr Deputy Speaker, I will shortly set out long-term measures in housing and for business to build the recovery.

But I first want to set out how we can offer more support now in these areas.

One of the biggest fears when people lose their jobs, is that they, and their family, will also lose their homes.

I want to do more to reduce the number of repossessions.

Last year, I increased and extended the Support for Mortgage Interest scheme, which covers mortgage interest payments for people who have lost their jobs.

Today I can announce that I will maintain the higher level of support for a further 6 months to help homeowners as they look for a new job.

That is in addition to the scheme to help people stay in their homes if their income falls.

The housing market is also being held back by a lack of mortgage credit.

The Government has taken action to encourage an increase in mortgage lending - and this year, the major UK banks will increase the availability of mortgages by around £20bn.

To build on this, today I can announce the introduction, following state aid approval, of the scheme to guarantee securities backed by mortgages - which will help to ease the flow of mortgage finance.

Mr Deputy Speaker, the recession and the credit crunch have made it much harder for people to take their first step up the housing ladder.

This is not just difficult for those involved - but also undermines the entire housing market.

So, to help, I have decided to extend the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year.

Sixty per cent of residential properties will continue to be exempt - encouraging modest and middle income homebuyers.

I can also announce an £80m extension to HomeBuy Direct - the Government shared equity mortgage scheme, which has already received interest from over 32,000 people since September.

Altogether, additional support for those who lose their jobs and new help for people to get on the housing ladder.

Mr Deputy Speaker, in November I announced a series of measures to help businesses now.

Over 100,000 businesses, which employ well over half a million people, have taken up the option to defer their tax bills. I will continue this help.

Some 800,000 smaller companies will benefit from the delay in the increase in corporation tax.

And last month, I announced that we would allow companies to spread out payments of this year's up-rating of business rates.

But today I want to do more to help firms with cash flow problems.

Many viable companies face temporary difficulties because of the shortage of credit.

So today I am extending the help which allows loss-making companies to reclaim taxes on profits made in the last three years.

This help, which will lead on average to repayments worth £4,000 each year, will now be available for two years until November 2010.

Well over 100,000 businesses will have their full current losses wiped out.

And today I can also announce additional targeted support for companies' cash-flow, with a top-up trade credit insurance scheme.

This will match private sector trade credit insurance provision if insurers reduce their cover to any business operating in the UK.

I also want to help the UK's automotive industry, which has been one of the British success stories of the last decade.

But the loss of consumer confidence and credit crunch has led to a sharp fall in vehicle sales around the world.

In order to help the car industry and retail trade, I can announce that a scrappage scheme will be implemented next month.

It will provide motorists with a £2,000 discount on new vehicles bought when they trade in cars over ten years old.

It will be a time-limited scheme until March 2010. My Right Honourable Friend the Secretary of State for Business will announce details shortly.

Mr Deputy Speaker, we have made our choice to help those who have lost their jobs find work quickly and, if needed, to learn skills.

We are acting decisively to prevent a new generation of young people becoming a lost generation.

We are offering real support to homeowners - and to business - through this unprecedented economic crisis.

We could have decided to do nothing. But we chose to act.

By doing so we have not just protected people but we will also reduce the length and severity of the recession, lessening the impact on our public finances in the medium term.

Mr Deputy Speaker, I now turn to the public finances and the action I will take to put them on a sustainable footing in the medium and long-term.

As I told the House in November, tax revenues were falling.

The financial sector, which provided 27 per cent of corporate tax revenues, was already badly hit.

But since then, with the recession spreading across almost every sector, the wider tax-take has also come down sharply.

Corporation tax and income tax revenues have fallen. The problems in the housing market have led to a dramatic reduction in stamp duty.

In the UK, tax as a share of GDP is 1.2 percentage points lower now than it was a year ago.

Here and across the world, tax revenues are down and will take some years to come back up.

At the same time, our reformed welfare state is rightly providing support to families, but it does come at an added cost to the exchequer.

Many countries have also intervened to strengthen their banking systems.

My public finances forecasts today include a provisional estimate for the potential cost of this - totalling 3-1/2 per cent of GDP.

Mr Deputy Speaker, around the world, fiscal deficits and government debt have been rising sharply to levels not seen since the Second World War.

This is a response to an unprecedented financial crisis and a deep and widespread global recession.

Allowing borrowing to rise - protecting services, helping people and businesses - is the right thing to do.

The alternative, to take money out of the economy now, as some have suggested, would damage key public services, create more unemployment, lengthen the downturn and lead, in the end, to higher, not lower debt.

This Government, and others, have learnt from the historic economic mistakes of the interwar period, that countries cannot deflate their way out of recession.

Mr Deputy Speaker, taken together, my Budget measures today represent a fiscal easing of about half a percent of GDP this year - followed by a tightening of 0.8 per cent of GDP per year until 2013-14.

I believe this is a sensible pathway to sustainable public finances.

It will mean, as I have said, that the budget deficit will be halved in the next four years.

At this stage, when there is so much uncertainty, to do so quicker would prevent us helping people now, choke off the recovery, and stop us investing for the future.

Many countries, as a result of their action to support the economy, have seen higher deficits.

In the US, for example, the Congressional Budget Office expects their deficit to be 13 per cent of GDP in 2009, 10 per cent in 2010, and even in 2019, the deficit will be above 5 per cent.

Our own figures for public sector net borrowing will be £175bn this year, or some 12.4 per cent of GDP.

From 2010, as the economy starts to recover, and the measures announced in November and today take effect, borrowing will fall to £173bn, then £140bn, £118bn and £97bn.

As a share of GDP, our borrowing will be 11.9 per cent of GDP next year, and then, as we move towards balance, 9.1 per cent in 2011-12, then 7.2 per cent and 5.5 per cent in 2013-14.

Mr Deputy Speaker, this downturn will inevitably mean sharp increases in national debt relative to GDP.

UK net debt, which includes the cost of stabilising the banking system, will, as a share of GDP, increase from 59 per cent this year, to 68 per cent next, 74 per cent in 2011-12, 78 per cent and 79 per cent in 2013-14.

It will stabilise and then begin to fall in 2015-16.

In countries across the world, because of this economic crisis, it will take longer for deficits to come back into balance.

Because of the steps we are taking, I expect the underlying current budget deficit to come back into balance two years later.

Mr Deputy Speaker, we need to help people now, to maintain key public services, invest for the future, while keeping the public finances on a sustainable footing.

Indeed, this is the best way to drive up economic growth, which, in turn, is the best way to bring down borrowing and rebalance the public finances.

We must do this within a time-scale that does not damage the recovery.

This will require tough decisions, but I am determined that they will be fair decisions.

Mr Deputy Speaker, it cannot be fair that those who should pay tax, are allowed to avoid it.

Over the last decade, we have taken a number of measures, which have reduced tax evasion and avoidance - on average reducing avoidance by over £1bn a year.

I intend to build on this today. We have identified loopholes and schemes, which, when closed, will result in £1bn of extra revenue over the next 3 years.

Mr Deputy Speaker, in this Budget there will be new measures, to help pensioners and savers on middle and modest incomes.

It is important that everyone is encouraged to save for their retirement - and we will continue to support them to do so.

But I intend to address the anomaly which sees a tiny proportion at the top taking a large slice of the help we give people to save.

It is difficult to justify how a quarter of all the money the country spends on pensions tax relief goes, as now, to the top 1-1/2 per cent of pension savers.

So from April 2011, I will restrict pension tax relief for those with incomes over £150,000 so it is gradually tapered to the same 20 per cent rate the majority of people receive.

We will consult on implementation. I am introducing measures from today to prevent forestalling.

Again only affecting those with incomes over £150,000.

Mr Deputy Speaker, I am not proposing to increase taxes on income for this year.

However, as the economy recovers and wages start to grow again, it is right that we take additional steps.

I believe that it is fair that those who have gained the most should contribute more.

Only those with incomes over £100,000 a year - or 2 per cent of the population - will be affected.

In November, I announced a new rate of income tax of 45 per cent on incomes above £150,000 - the top one per cent of taxpayers.

In order to help pay for additional support for people now, I have decided that the new rate will be 50 per cent, and will come in from next April - a year earlier.

In November, I also announced that I was reducing personal allowances for the very highest earners with incomes over £100,000.

These allowances are worth twice as much as those of basic-rate taxpayers.

I have now decided to fully withdraw the benefit of that allowance for those with incomes over £100,000 from next April.

Mr Deputy Speaker, these measures are necessary to build our recovery and secure our country's economic future.

Along with other measures, including for landfill, company cars and gaming, I can also announce the following.

I will continue to monitor oil prices, but I expect that fuel duty will increase by 2 pence per litre in September, and then by 1 penny a litre above indexation each April for the next four years.

Alcohol duties will go up by 2 per cent from midnight tonight.

There will be an increase in tobacco duty of 2 per cent from 6pm tonight.

Taken together, these measures will raise over £6bn by 2012 - to secure Britain's economic future and to provide help for people now when they need it most.

Mr Deputy Speaker, the importance of our public services, on which we all depend, becomes even clearer during difficult times.

We have made our choice to continue investing in our public services which underpin the health and strength of our nation now and in the future.

In the last ten years, this investment has seen an extra 40,000 doctors, 41,000 teachers and over 70,000 nurses.

But just as every family is looking closely at their own budget - to ensure they get best value for money - so should the Government.

Since 2004, the Government has identified and made £26.5 billion in efficiency savings, while continuing to invest to improve schools, hospitals and other public services.

In November, I announced plans to find an additional £5bn of efficiency savings in 2010-11, on top of a total of £30bn in this spending review period.

Mr Deputy Speaker, some have argued that we should cut public services immediately, rather than invest and grow our way out of the recession.

That would be the wrong thing to do.

I can confirm that we are able to secure these savings that year, while increasing investment, as planned, for local health services by over 5 per cent and for schools by over 4 per cent.

Yesterday, we published the reports of the five independent reviews I set up last year.

They have identified extra efficiencies from 2011 which rise to a further £9bn of additional savings a year by 2013-14.

They include efficiencies in public sector back-office functions and IT, improved procurement, and better collaboration and innovation at the local level.

This will allows us to protect front line public services, while keeping current spending growth, in real terms, at an average of 0.7 per cent a year from 2011-12 onwards.

Mr Deputy Speaker, capital spending is equally important to the future of our country.

Over the last five years, this investment has transformed services with 61 major hospital schemes, 140 new schools and improved transport links, including the modernisation of the West Coast main line.

It is essential to help create jobs, boost the recovery and deliver economic success in the long term.

I intend that capital investment will continue at historically high levels to 2012, as we prepare for the Olympic games in Britain.

After this, public sector net investment will be at 1-1/4 per cent of GDP by 2013-14, still twice as high as in 1997.

Indeed, the efficiency savings we are making will help us direct more money to continue to support investment that everyone in our country depends on.

The Government has set itself a central goal of realising up to £16 billion of property and other asset sales in the three years from 2011-12, with proceeds raised being used for new capital investment.

Mr Deputy Speaker, as a result of the measures I have announced today I can afford to make investments in the future of Britain.

These funds will be invested now, to help ensure we seize the opportunities that will come from a world economy expected to double in size.

I have announced today £3bn extra support to help people find work quickly, with a new guarantee for the young.

There will also be £1bn to help us combat climate change, by supporting low carbon industries and green collar jobs.

There is close to £1bn to help homeowners, meet future housing supply and allow the construction industry to recover quickly.

And there is £2.5bn for business, to encourage investment in the industries and high-paid high-skilled jobs of the future.

Sectors such as advanced manufacturing, the creative industries and low-carbon technologies.

All essential if we are to prepare for the future.

Mr Deputy Speaker, a successful economy needs a strong financial sector.

We don't want to throw away the many advantages that have come from our position as a world centre for finance.

I intend that we retain that position. Hundreds of thousands of jobs across the country depend on it.

We need to build trust in the banking system, and harness the strengths of the financial services sector for the benefit of society

Crucial to this is financial regulation.

I will shortly publish a Treasury paper with my recommendations for wide-ranging reform.

They will propose action to reform corporate governance and remuneration at banks to avoid undue risk taking.

To improve regulation of capital and liquidity so banks do not over-extend themselves.

To increase transparency, to achieve a single set of accounting rules - so that we can see the risks banks are taking.

And to regulate all important institutions including hedge funds.

It will also propose action to reduce the impact of the failure of financial firms; protect and support consumers; improve efficiency and competition in financial markets; as well as strengthening regulators' powers.

And all these steps will, in turn, complement the G20 agreement to restore trust in the global financial system.

Mr Deputy Speaker, strengthening the banking system is crucial to the recovery and to the economy.

But the strength of our economy, and health of our society, also depends on meeting long-term demand for housing.

I have two measures to help achieve this.

First, we want to work with the industry to tackle the restraints, which house-builders have told me, could prevent them from acting now to increase housing supply.

This will give construction firms more certainty and help them meet housing demand more effectively.

Second, lack of finance now is affecting house builders and preventing the long-term investment that we need.

So today I can announce £500m of extra financial support.

It will kick-start building on housing projects, stalled because of the credit crunch, delivering thousands of new homes.

As part of this support, we are providing £100m for local authorities to build new energy-efficient housing.

I have one further announcement to make about housing for a particular group.

The whole country is united in admiration for the courage and professionalism of our Armed Forces.

I want to ensure this admiration is reflected in the quality of their accommodation.

I am bringing forward £50m to accelerate the modernisation programme for this housing to ensure this happens.

Let me turn, next, to the targeted help for business, which will build on the strengths of our economy.

A sustained and strong recovery depends on companies, of all sizes, making the most of new global opportunities.

Mr Deputy Speaker, a competitive exchange rate will help exporters.

It is also vital for our recovery that Britain and other countries remain open to free trade.

So it is essential that the Export Credits Guarantee Department gives business the support they need.

I intend to report back later this year on how this support can be improved.

Next, I have a number of proposals to encourage investment.

There is, at the moment, less incentive to explore and extract oil from the North Sea.

So I am bringing forward incentives to encourage smaller fields to be brought into production, which could lead to an extra two billion barrels of oil and gas that would otherwise remain under the North Sea.

They will also remove fiscal barriers so the North Sea can become a hub for energy of the future - gas storage, carbon capture and off-shore wind. I want to say more about this later.

I want other industries to invest too.

Businesses already benefit significantly from an annual £50,000 investment allowance which was announced two years ago.

I want to go further to promote investment now.

So for this year, I will double the main capital allowance rate to 40 per cent.

This will encourage firms to bring forward investment, in particular those companies in the growth sectors that will deliver the rewarding jobs of the future.

It will mean enhanced tax relief to support investment of £50 billion this year.

Including £10bn of investment in the vitally important communications sector.

Mr Deputy Speaker, it is vital to ensure the entire country and economy benefits from the digital age.

So I am allocating extra funding for digital investment, to help to extend the broadband network to almost every community.

This will allow us to deliver the vision set out in the Digital Britain report - making sure everyone can benefit from this communications revolution and create thousands more skilled jobs.

Next, Mr Deputy Speaker, Government can and should do more to buttress the strength and capability we need for our economic future.

On Monday, the Government published a new industrial framework, whose aim is to remove the barriers holding back innovative and fast-growing companies - and to help markets work better.

To support this industrial activity and strategy, I can announce the creation of a new £750m Strategic Investment Fund to help the country seize the opportunities ahead.

This new fund will provide financial support, focusing on emerging technologies and regionally important sectors in, for example, advanced manufacturing, digital and biotechnology.

It will encourage exports, support inward investment, promote research and development and harness commercially our world-class science base.

And it will complement the two new City Region Pilots, in Manchester and Leeds, which will also have a major role in promoting economic investment.

Mr Deputy Speaker, green technology will be one of the great growth sectors in the world economy.

In preparing for the future, Britain's economic recovery must be sustainable and protect the environment.

These efforts also have the potential to create thousands of hi-tech businesses and hundreds of thousands of high-skilled jobs.

Climate change is one of the biggest challenges our world faces - and Britain is setting the lead.

We are ahead of every other major developed country in progress against our Kyoto targets.

And today, I am presenting the world's first ever carbon budget, which commits Britain to cut carbon emission by 34 per cent by 2020.

These budgets give industry the certainty needed to developed and use low carbon technology - cutting emissions, creating new businesses and jobs.

They are a landmark step, which point the way to the vital decisions which must be made at the Copenhagen Climate Change Summit later this year.

Mr Deputy Speaker, saving energy is the easiest and cheapest way to cut carbon emissions - and also saves people and business money.

Over the last 12 months, we have helped around one million homes improve central heating or insulation.

Today I can announce £435m of extra support to deliver energy efficiency measures - for homes, businesses and public buildings.

Mr Deputy Speaker, as well as saving energy, we need cleaner energy.

We must build on Britain's status as the world leader in offshore wind power generation.

The credit squeeze is holding back major offshore wind projects.

I want to lift the barriers - through £525m of new financial support over the next two years for off-shore wind, funded through the renewables obligation.

The potential is enormous. I am confident that this will lead to major projects getting the go-ahead quickly, providing enough electricity to meet the needs of up to 3m households.

We need to support all forms of renewable energy.

I can also announce that renewable and other energy projects in the UK stand to benefit from up to £4bn of new capital from the European Investment Bank.

Mr Deputy Speaker, coal, oil and gas will continue to be a major source of energy for the foreseeable future.

Clean technologies, such as Carbon Capture and Storage, are vital to ensure we can produce power from these sources without damaging the environment

I am determined that this country's research and technological expertise is used to make us world-leaders in this area too.

So I can announce that a new funding mechanism will be used to finance at least two, and up to four, demonstration projects.

Mr Deputy Speaker, the new generation of power plants could be even more efficient by using the heat produced in the generation of power.

To encourage the use of Combined Heat and Power technology, I will exempt those projects from the Climate Change Levy from 2013 - bringing forward over £2.5 billion in investment.

I can also announce that, through £405m of new funding, we will also encourage low carbon energy and advanced green manufacturing in Britain - to drive the application of new technology and invest in small scale projects.

In particular, this will help us strengthen the supply chain right across these sectors, and build on the expertise we already have in this country.

Mr Deputy Speaker, on the back of the discovery of oil and gas in the North Sea, we became a world leader in every aspect of oil technology and the industry.

I am determined that we will replicate this success across the renewable energy and low carbon sectors.

The steps we are taking today will help make sure we meet this ambition.

This will help protect our planet and secure the country's economic future.

The measures I have announced underline our vision for Britain.

They offer support for people when they need it, but also hope for the future.

They put in place the vital building blocks for recovery and economic long-term success.

And everything we have done - whether supporting families now, maintaining investment in our public services and putting the nation's finances on a sustainable path - is based on our values of fairness and opportunity.

Even in this time of global economic difficulty, we are determined to continue building a fairer society.

Mr Deputy Speaker, in November I provided help for families and pensioners. Today I want to do more.

22 million people on middle incomes have seen their income tax go down this month.

There is help for millions of families too - with child tax credit up by £75 from this month - and the increase in child benefit paid early.

Today I can announce additional targeted measures.

The Government is determined to eradicate child poverty. So, first, I can announce that, from April next year, the child element of the Child Tax Credit will increase by £20.

Second, children with disabilities need extra help to make the most of their potential.

So we will add an extra £100 a year to their Child Trust Fund.

For those with severe disabilities, it will be an extra £200 each year.

Third, I can announce an increase in statutory redundancy pay from £350 to £380 a week.

Mr Deputy Speaker, increasingly grandparents play a big role in family life and in looking after their grandchildren.

To reflect this, we will, for the first time, ensure these caring responsibilities for grandparents of working age will count towards their entitlement for the basic state pension.

I also want to announce further help for pensioners and savers.

Earlier this month, pensioners on modest incomes got the biggest ever increase in pension credit while the basic state pension increased by £4.55 a week.

I want to re-affirm today our commitment to increase the basic state pension by at least 2.5 per cent.

So if RPI inflation this September is below zero, as we expect, pensioners can be confident that their pensions will rise in real terms.

Last year, because of the steep increase in energy prices, I brought in a one-off increase in the Winter Fuel Allowance.

Energy prices are now expected to come down.

But to help pensioners even more, I intend to maintain this allowance at the higher level for another year - worth £250 for over 60s and £400 for over 80s.

Mr Deputy Speaker, the fall in interest rates has been a welcome benefit to the economy and millions of homeowners whose mortgage costs have come down.

But this has also reduced the amount of interest paid out on savings - and has particularly hit pensioners who rely on this extra money.

There are over 5-1/2 million pensioner households who have modest savings, of less than £10,000. I want to help them.

For over a decade, the capital disregard on Pension Credit has been at £6,000 or below.

It means savings above this level reduce the amount of help households get through Pension Credit.

I believe it is now time to increase these limits, which will help compensate modest-income pensioners, with limited savings.

So from November 2009, the limit will be raised to £10,000.

This will benefit over half a million pensioners on modest incomes, who will gain by an average of £4 per week.

Mr Deputy Speaker, I have one other announcement to make on savings.

Tax-free ISAs have been a great success. 18m people have taken them out, saving in them almost £290bn.

Since they were introduced 10 years ago, the annual limit has only been increased once, and now stands at £7,200.

I want to go further. To help savers on the tenth anniversary of ISAs, I intend to increase the total annual limits to £10,200, of which £5,100 can be saved in cash.

This new limit will be introduced this year for those aged 50 or over, and will come in next year for everyone else.

Fair and targeted help for grandparents and pensioners - and to tackle child poverty.

Encouraging people to save - now and in the future.

Mr Deputy Speaker, every country has been hit by this global recession.

But we have confidence in Britain's future and in our country's strength.

You can grow your way out of recession. You cannot cut your way out.

We have made our choice.

To help people now.

To build Britain's future.

And I commend this Budget to the House.

ENDS

(HMT) Protecting Tax Revenues


Today the Chancellor announces a series of measures to protect the tax system from abuse and ensure that all individuals and businesses pay their fair share of tax.

The Government is determined to continue to challenge tax evasion and avoidance, which undermine fiscal stability, damage the delivery of policy objectives, impose significant costs on society and shift a greater burden of tax onto ordinary taxpayers.

This Budget includes measures to tackle evasion, including the publication of the names of deliberate tax defaulters and an offshore disclosure opportunity, and targeted anti-avoidance measures as a proportionate response to those who seek to avoid paying their fair share.

The Government has also been leading international efforts to tackle tax havens and tax evasion through its Presidency of the G20. This will deliver improved transparency and exchange of tax information between jurisdictions and important new commitments from a wide range of countries.

Budget includes a package of measures which raise over £1 billion during the period 2009-10 to 2011-12, and protect a further £3 billion per year of tax receipts by 2010-11 from erosion by tax evasion and avoidance.

DETAILS

Offshore disclosure

Please see Press Notice 1 for further details of a New Disclosure Opportunity (NDO) for offshore bank account holders.

Publication of names of serious tax defaulters

Please see Press Notice 1 for further details of the publication by HMRC of the names of deliberate tax defaulters.

New reporting requirements for tax defaulters

A small minority of tax defaulters put significant tax revenues at risk. The Government today announces that those who have incurred a penalty for the deliberate understatement of tax of at least £5,000 will be required to provide more information on their tax affairs for up to five years to ensure they have proper systems to be able to make a correct tax return and allow HMRC to monitor future compliance.

Accountability of senior accounting officers

The Government today announces a measure to establish a statutory requirement for senior accounting officers of major corporates to certify personally that adequate controls to prepare accurate tax computations are in place.

Developing the disclosure of avoidance schemes regime

Disclosure of Tax Avoidance Schemes (DOTAS) is an important part of the tax framework giving HMRC early warning of avoidance schemes. HMRC will begin discussions with interested parties with a view to extending the 'hallmarks' used to identify avoidance schemes, to ensure they continue to bear down on avoidance, and revising the penalty regime to introduce tougher sanctions for the non compliant.

Tacking avoidance of tax on disguised interest and transfers of income streams

Following consultation the Government today announces the introduction of principles-based legislation to counter avoidance in two areas involving financial products, in response to continued attempts at abuse. Specifically, the legislation will prevent schemes designed to avoid tax on interest received and schemes seeking to side-step existing anti-avoidance legislation on the sale of income streams.

Proposals to counter avoidance using financial products

The Government today announces a measure to counter avoidance schemes involving the use of convertible securities within a group to create accounting asymmetries and the creation of artificial losses on loans and derivatives.

Foreign exchange targeted anti-avoidance rule

The Government today announces a targeted anti-avoidance rule to stop the use of tax avoidance schemes that seek to exploit the foreign exchange tax matching rules. Exchange gains or losses on borrowings or currency derivatives will only be disregarded for tax purposes if they do not arise from tax avoidance arrangements.

Exploitation of the double tax relief and manufactured overseas dividend rules

The Government today announces measures to clarify the rules that provide relief for UK tax against foreign tax payable on foreign income (double taxation relief); and the rules dealing with manufactured overseas dividends. These changes, effective from today

* prevent a deduction for foreign tax on the receipt of a Manufactured Overseas Dividend by a company, where the economic cost of the foreign tax has not been borne by the company;

* ensure that banks always take a reasonable proportion of their funding costs into account in the calculation of double taxation relief.

The changes will also put beyond doubt:

* that any receipts that are in substance trade income will be taxed accordingly. Banks and other financial institutions will be unable to gain a tax advantage by fragmenting parts of their trade into investment companies; and

* that double taxation relief will be given net of any repayments of foreign tax, whether made to the original payer or otherwise.

Countering abuse in the corporate intangible fixed asset regime

The Government today announces a measure to clarify the intangible fixed assets regime rules by confirming that goodwill is treated as intended. Effective from today, the legislation will confirm that for the purposes of the corporate intangible regime, goodwill includes internally-generated goodwill. It also confirms that all goodwill is created in the course of carrying on the business in question and is subject to rules determining whether goodwill is treated as created on or after 1 April 2002.

Ensuring tax and National Insurance paid on lease premiums

The Government today announces a measure to prevent tax avoidance where an employee or director of a company is provided with living accommodation through the payment of a lease premium rather than a full market rent for the use of the property. From today, those who take out new leases using a lease premium will pay tax and National insurance contributions as if the full market rent had been paid.

North Sea Fiscal Regime: Preventing Accelerated Decommissioning Relief

The Government announces a measure that changes the North Sea fiscal regime to ensure companies cannot access tax relief for decommissioning oil and gas infrastructure years in advance of the decommissioning activity actually being carried out. As originally intended, tax relief for this expenditure will only be incurred when decommissioning work is actually carried out.

Spotlight on selected avoidance schemes

The Government announces today that HMRC will shortly publish a Spotlight giving notice of selected avoidance schemes that are thought to be ineffective to discourage potential users. HMRC will challenge these schemes when encountered.

Structured foreign exchange arrangements

The Government announces today the publication of a technical note in the summer. The note will set out the issues and potential approaches to certain structured financial arrangements (often described as overhedging or underhedging) that, although not undertaken for tax avoidance, seek to pass on to the Exchequer, through tax relief, commercial risk that would otherwise be borne by groups on such transactions. The Government believes that the economic risks should be shared between the Exchequer and business as Parliament intended.

Alcohol Fraud Strategy

The Government today announces the renewal of its strategy for protecting honest businesses and addressing tax losses through alcohol fraud. 'Tackling Alcohol Fraud' is a programme of change for implementation in stages through 2009/10, including:

* strengthening the operational response to alcohol fraud, establishing new alcohol anti-fraud teams as part of a centrally coordinated effort to detect, disrupt and dismantle organised criminal networks and illicit supply chains;

* legislating where necessary to make life tougher for criminals and easier for honest businesses to compete; and,

* working closely with legitimate businesses in the continuing fight against alcohol fraud.

(HMT) Budget 2009 for London


Today, the Chancellor has announced a package of measures to help business, families, and pensioners in these unprecedented economic times. These include:

* Support for business, including by extending the enhanced loss relief for an additional year and expanding HMRC's Business Payment Support Service, increasing capital allowances for new investment to 40 per cent for one year, and establishing a £750 million Strategic Investment Fund to support advanced industrial projects of strategic importance.

* An additional £1.7 billion will be set aside for the Department for Work and Pensions over the next two years to ensure Jobcentre Plus and Flexible New Deal capacity is in place to respond effectively to rising unemployment and additional support for the long term unemployed, building on the extra support now available to those unemployed for over 6 months. The package will offer a guaranteed job, training or placement to 18-24 years olds who have been unemployed for 12 months. In February 2009, there were over 48,000 people aged 18-24 claiming Jobseeker's Allowance in London.

* An additional payment of £100 to households with someone aged 80 or over and £50 to households with someone aged 60 or over, to be paid alongside the Winter Fuel Payment in 2009-10. In London, this will benefit 840,000 households, of which 200,000 households contain someone aged 80 or over.

* A £600 million fund to unlock stalled housing sites and provide a kick-start to house-building to deliver up to an additional 10,000 homes in England. As part of this, to stimulate housing development in London, funding will be made available to local authorities in the region for construction of new social homes to higher energy efficiency standards.

* £275 million over the next two years for energy and resource efficiency in business, public buildings and households. For London this package will mean that energy efficiency is improved in: 20,000 homes; an estimated 500 public buildings, including schools and hospitals; and through an estimated 350 loans to businesses.

This April, the Government has also introduced changes to tax and benefits that mean that:

* Over 2.6 million basic rate tax payers in London will be £145 better off;
* Increases to the child element of Child Tax Credit of £75 above indexation will benefit around 510,000 families in London;
* The introduction of the new £190 health in pregnancy grant will benefit the estimated 125,000 mothers to be in London this year; and
* The 5% increase in the basic State Pension, along with the £60 payment made at the beginning of the year, mean that London's 900,000 pensioners will be better off.

The Pre Budget report announced changes to help the economy. And these are now delivering. For London, 12,660 businesses have benefited from being able to spread payments of tax, and the enterprise finance guarantee scheme has ensured that viable SME's continue to access finance they require in London.

The Pre Budget Report also announced that £3 billion of capital expenditure would be brought forward to 2008/9 and 2009/10. Already this has meant that in London:
- 2500 homes have received grants under the Warm Front programme to improve energy efficiency;
- 52 higher education institutions have benefited from further investment; and
- 3900 homes have been improved under the decent homes programme.

Quotes:

Tony McNulty, Regional Minister for London said

"The focus of today's Budget on jobs and support for businesses is welcome news for London. The Government will not abandon individuals and businesses during these tough economic times. The boost to jobs announced today will help ensure that communities in London do not suffer the scarring effects of long-term unemployment felt in previous recessions. Making investments available for important sectors will help London to grow its way out of the recession and be well-placed to seize the economic opportunities of the upturn when it comes."

Yvette Cooper, Chief Secretary to the Treasury, said

"This Budget is about jobs in London, helping people and businesses right now. It also prepares London for the recovery - encouraging business investment, developing a low carbon economy and promoting a fairer society. "

Darling must listen to the Green Party ... his expert advisors seem to


Braced for the usual spin and greenwash that Greens have learned to expect from the Chancellor on Budget day, the Green Party today points to the Sustainable Development Commission's own advice - which is remarkably close to the Green Party's.

Ahead of last November's Budget, the Greens presented a costed £30bn plan for investment in the new green economy, and estimated that this would create half a million jobs at a conservative estimate.

Now the government's own environmental watchdog, the Sustainable Development Commission (SDC), has called for a similar £30bn package - and estimated it would create £800,000 jobs.

In March this year, SDC chairman Sir Jonathan Porritt told journalists that British politicians were "in a state of cognitive dissonance" over the ecological crisis - but that Green Party has been right all along.

Sir Jonathan said then:

"Every single one of the issues that the Green Party has been campaigning on for the last 35 years is getting worse and worse, which means that people should no longer put off the day when they accept that the future is either Green or not at all."

"Government is scared and lacks commitment"

Today's the Green Party's executive's policy coordinator Brian Heatley said:

"We would like to see this £30bn invested in insulating buildings, solar energy and other renewables, upgrading the electricity grid, public transport (but not electric cars) and green skills training."

"It's not just us calling for this sort of massive green investment programme, it's the government's very own expert advisors. To completely ignore such considered advice exposes the cynical and shallow politics of appointing and creating such a body in the first place."

"The government is both scared to spend the money and insufficiently committed to the Green agenda."

"The UK can afford this. Most of this is investment, creating a return like energy savings, and it is OK to borrow to invest. And the new jobs will increase the tax take, and reduce money wasted on jobseekers allowance."

He concluded: "The Chancellor's failure to listen to his own Sustainable Development Commission is shocking, irresponsible and costing Britain huge numbers of jobs."

Monday, 30 March 2009

(HMT) Dunfermline Building Society


The Chancellor of the Exchequer and the Governor of the Bank of England have today announced a resolution for the Dunfermline Building Society that protects depositors, and provides a more stable and secure future for the society's members.

It is business as usual for all customers. Dunfermline's deposit business will continue to operate normally. Branches and telephone banking will continue to open during their normal hours and customers can deposit and withdraw their money in the usual ways. Savers can be assured that their money is safe. Loan and mortgage customers can continue to contact Dunfermline in the usual way and should continue to make repayments as normal. All of Dunfermline's staff have been transferred to Nationwide.

Under the Banking Act 2009, Dunfermline's retail and wholesale deposits, branches, head office and originated residential mortgages (other than social housing loans and related deposits) have been transferred to Nationwide. This follows a competitive process conducted by the Bank of England over the weekend of 28-29 March under the Special Resolution Regime provisions of the Banking Act 2009.

Dunfermline's social housing portfolio has been placed into a bridge bank, wholly owned by the Bank of England. This will allow the Bank of England and the Treasury to determine the best outcome for this part of Dunfermline's business and underlines the Government's commitment to maintaining the availability of lending to Registered Social Landlords.
The Government is talking to a number of people, including the Scottish Government, about securing a long-term future for the social housing book.
A court order was made earlier today to place the remainder of Dunfermline's business into the Building Society Special Administration Process (BSSAP) and to appoint KPMG as the administrator. This part of the business includes commercial loans, acquired residential mortgages, subordinated debt and most treasury assets.

When considering the appropriate action to take, the Treasury took account of the scale of future losses faced by the society, the additional capital that would be required, and its very limited capacity to service new capital given its historically low level of profitability. It concluded that an injection of funds by the taxpayer would not be likely to provide value for money and would not provide a sustainable and lasting solution to the problems faced by the society

On 28 March 2009, following the required consultation with the Treasury and the Bank of England, the Financial Services Authority (FSA) found that the general conditions for entry into the Banking Act Special Resolution Regime were satisfied in the case of Dunfermline Building Society. The Bank of England, having consulted the FSA and Treasury, considered the overall package offered by Nationwide to best meet the objectives of the Special Resolution Regime and the Treasury provided consent for the use of public money.

Today's announcement also demonstrates the Government's support for the wider mutuals sector and the important role that mutuals play in communities throughout the country.