Chancellor of the Exchequers Budget statement
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Issued 22 April 2009
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Deputy Speaker, today’s Budget will continue to help people through
this global recession, and prepare Britain for the opportunities of the
Firstly, there will be help now to get
people back into work quickly, and support businesses and homeowners
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
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
The impact is being felt in every continent, country and
When the world economy was plunged into deep crisis in the
response, both nationally and internationally, was too little and too
This failure to act turned a serious downturn into a
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
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
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
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
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
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
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,
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
In the Pre-Budget Report, I announced a range of measures to
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
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,
tax credits can see an automatic increase to compensate for the loss of
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
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 ½ 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
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
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
But because of the progress we have made, here and
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
The position here, as in every country, deteriorated in the
In the last few months, world trade fell at the sharpest rate
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 ½ 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
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
benefit of lower prices, and the substantial recovery measures put in
place, I am forecasting growth of 1 ¼ 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
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
in Britain’s science base by 88 per cent in real terms over the last
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 ½ per cent from then on.
To account for the impact of the global shock, I have further
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 ¾ 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
way, to confirm that the inflation target remains unchanged at 2 per
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
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
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
In the UK, the claimant count increased in February by
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
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
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
All the evidence shows that the longer people are out of work,
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
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
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
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
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
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
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
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
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
The Government has taken action to encourage an increase in
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
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
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
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
have taken up the option to defer their tax bills. I will continue this
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
payments of this year’s up-rating of business rates.
But today I want to do more to help firms with cash flow
Many viable companies face temporary difficulties because of
the shortage of credit.
So today I am extending the help which allows loss-making
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
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
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
Friend the Secretary of State for Business will announce details
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
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
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
support to families, but it does come at an added cost to the
Many countries have also intervened to strengthen their
My public finances forecasts today include a provisional
the potential cost of this – totalling 3 ½ 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
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
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
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
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
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
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
It will stabilise and then begin to fall in
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
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,
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
It is important that everyone is encouraged
to save for their retirement – and we will continue to support them to
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 ½ 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
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
These allowances are worth twice as much as those of
I have now decided to fully withdraw the benefit of that
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
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
There will be an increase in tobacco duty of 2 per cent from
Taken together, these measures will raise over £6bn by 2012 –
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
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
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
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
61 major hospital schemes, 140 new schools and improved transport
links, including the modernisation of the West Coast main
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
levels to 2012, as we prepare for the Olympic games in
After this, public sector net investment will be at 1 ¼ per
cent of GDP by 2013-14, still twice as high as in 1997.
Indeed, the efficiency savings we are making will help us
money to continue to support investment that everyone in our country
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
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
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
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
It will also propose action to reduce the impact of the
financial firms; protect and support consumers; improve efficiency and
competition in financial markets; as well as strengthening regulators’
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
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
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
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
I want other industries to invest too.
Businesses already benefit significantly from an annual
investment allowance which was announced two years
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
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
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
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
Next, Mr Deputy Speaker, Government can and
should do more to buttress the strength and capability we need for our
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
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
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
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
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
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
I want to lift the barriers – through £525m of new financial
over the next two years for off-shore wind, funded through the
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
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
ensure we can produce power from these sources without damaging the
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,
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 will help protect our planet and secure the country’s
The measures I have announced underline our vision for
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
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
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,
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
For those with severe disabilities, it will be an extra £200
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
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
Earlier this month, pensioners on modest incomes got the
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
pensioners can be confident that their pensions will rise in real
Last year, because of the steep increase in
energy prices, I brought in a one-off increase in the Winter Fuel
Energy prices are now expected to come down.
But to help pensioners even more, I intend to maintain this
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 ½ 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
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
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
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
But we have confidence in Britain’s future and in our
You can grow your way out of recession. You cannot cut your
We have made our choice.
To help people now.
To build Britain’s future.
And I commend this Budget to the House.
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Article Published/Sorted/Amended on Scopulus 2009-04-23 11:00:19 in Tax Articles