Pre-Budget Report in brief
The Chancellor Gordon Brown today gave his Pre-Budget Report statement to the House of Commons.
This set out his account of Britain’s economic trends and the Government’s spending plans.
Headline news is the decision to freeze the level of fuel duty, increase the length of maternity leave – which will also be transferable to fathers – and provide workplace based training for those without key skills.
As always, the detail is key. politics.co.uk takes a look in brief at the crucial announcements and statements across the spectrum.
The Economy
– Growth will be three and a quarter per cent, which is in line with the Chancellor’s prediction of between three and a three and a half per cent.
– Inflation is one and a quarter per cent. It will rise to one and three quarter per cent next year and two per cent the year after.
– British business investment will rise by five and three quarter per cent this year and next by between four and a half to five per cent.
– Domestic demand, which has been growing by four per cent this year, is expected to be between three and three and a half per cent next year.
– Consumption is expected to grow by three and a quarter per cent this year and between two and a quarter and two and a half per cent next year.
– Growth is projected for 2005 at three to three and a half per cent.
Mr Brown also told the House that since 1997:
– Britain has 1.2 million additional homeowners
– Mortgage rates are lower than in any seven-year period since 1970s,
– Employment is higher than in any seven-year period since records began.
Efficiency savings
Mr Brown announced:
– savings of £2 billion in procurement
– an additional one third of a billion savings in NHS drugs procurement
– £21 billion efficiency saving in public services including the relocation of 1,230 MOD jobs, 2,300 DWP jobs, 600 ONS jobs, 220 Revenue and Customs jobs to the regions.
– A total of 20,000 jobs relocated to regions by 2010.
Public Spending
– Public spending to rise to £579 billions in 2007-8 to £606 billions in 2008-9 and then to £634 billions in 2009-10.
– Borrowing is at £35 billion, which is lower than the £37.5 billion predicted by the Chancellor in the Budget. At same point in economic cycle ten years ago borrowing was £90 billion.
– Cash figures for net borrowing is projected to fall to £34 billion to £33 billion to £29 billion, £28 billion, £24 billion and £22 billion.
– Britain’s deficit is 2.9 per cent compared to Germany (3.9 per cent) America (4.4 per cent) Japan (6.6 per cent).
– In Britain debt is 33.4 per cent of national income, compared to France (48 per cent), America (55 per cent), Germany (85 per cent). The Chancellor predicts Britain’s debt to rise to 35 per cent, 36 per cent, 36 per cent and 37 per cent. This keeps it below his target of 40 per cent.
Science
The Chancellor announced the following measures to build on the 10 year science framework:
– pilot a matched funding scheme to help universities build up resources through new endowments
– Establish an industry led science forum
– The Northern RDAs will promote ‘Science cities’ for North. These will be Manchester, Newcastle and York.
Business
The Chancellor will:
– Introduce measures to improve trade with India and China.
– Legislate for tax relief for renovation of empty business premises
– Remove barriers preventing high net worth investors from investing in small business
– Align tax treatment of leasing with other forms of finance
– Ask the development agencies to provide tailored coaching and support for business start-ups
– Provide detailed guidance to schools on the content of enterprise lessons
– Reform inspection regimes
Labour market
Measures included:
– an extension to in work credit
– £40 a week return to week bonus for lone parents
– £40 a week return to work credit allied to rehabilitation help for those on incapacity benefit
– Locating employment advisers in GP surgeries
– £30 million more to expand New Deal for disabled people.
– Raising the national minimum income guarantee to £258 for single earner couple with one child and to £199 to lone parents with one child.
– addressing unemployment among ethnic minorities
Energy and Fuel
– £20 million, managed by the Carbon Trust, to increase innovation in energy efficient technologies.
– Continued freeze in fuel duty due to oil prices rises
Pensions and Savings
– £1 billion to reduce the pressure on council tax
– pensions credit to rise faster than inflation by average earnings
– Consultation on extending tax free advantages for first £7000 of savings – first £3000 for the cash component – saved in Individual Savings Accounts until 2009.
– Extension to the Savings Gateway – where Government matches savings by low-income families – to a wider range of income groups.
– Banks and Government have agreed to work together to reduce by half the numbers without bank accounts, which currently stands at two million
– Support for not-for-profit lenders
– Consultation on extending the Child Trust Fund so that at age seven the Government provides another £250 for every child and £500 for the poorest children.
Training
– Roll out to whole country of a National Employer Training Programme.
– Funds to be made available for every employer to make an offer to every employee without skills of time off, free training provision.
– Every adult without skills to be offered a skills check up, including free training to achieve level two qualifications.
– an additional £10 a week learning allowance will be piloted.
Childcare
Under the plans, the Government will:
– Make paid maternity leave transferable from mothers to fathers for the first time.
– Put £285 million into extending paid maternity leave from six months to nine months with the goal of extending it to twelve months.
– Consult on the right of parents of older children to request flexible working
– From April 2007 extend free nursery education to 15 hours a week with the long-term goal of extending it to 20 hours a week.
– Provide additional resources to schools so they can open from 8am to 8pm
– Increase the childcare tax credit so it covers 80 per cent of childcare costs
– Increase the numbers of children’s centres to 3500 by 2010, providing on million new childcare places
– Further increases in child benefit.
