Budget 1999: The Chancellor's Speech - `The fairer Britain is, then the more prosperous we will all be'
These are the edited highlights of the Chancellor's speech yesterday
Wednesday 10 March 1999
With this, the last Budget of the 20th century, we also leave behind the century-long sterile conflicts between governments of the left that have too often undervalued enterprise and wealth creation, and governments of the right, too often indifferent to public services and fairness.
This is a Budget built on the central idea that our future depends on enterprise and fairness together. The more enterprising Britain is, the more wealth we create, the higher our standard of public services and our standard of living can be - not just for the few but for all of us.
The fairer Britain is, the more open Britain is to the talents of all, from whatever class or background, the more enterprising and prosperous all of Britain will be. Because enterprise and fairness are founded on securing sound economic fundamentals, this Budget locks in monetary and fiscal stability for the long term.
Because enterprise and fairness depend on modern public services, we are not only providing the pounds 40bn extra we promised to health and education but today I will announce more money and more capital investment in schools, hospitals, transport and fighting crime.
And this Budget implements far-reaching tax reform that will deliver a better deal for enterprise, a better deal for families, a better deal for work. Because for too long the tax system has undervalued entrepreneurship and investment, we will cut taxes on enterprise.
And we will champion the needs of small business and introduce a new competition policy and a new computer strategy for Britain. Because for too long the tax system has undervalued the family, failing to reward those who take on the most important responsibility of all - bringing up children - we will cut taxes for families, helping parents when they need help most.
To recognise the contribution to our country of our senior citizens, this Budget will increase the income of all our pensioners.
And because for too long governments have taken too much in taxes from people who work hard but are not wealthy, this Budget now reforms tax and benefits and delivers tax cuts that reward work and make work pay for everyone in Britain. So in a better deal for Britain that puts work, enterprise and families first, this Budget will cut tax rates and at the same time boost public investment - and it will do both at the right time for the British economy.
TWO YEARS ago Britain faced the threat of rapidly rising inflation. So our first priority, and our continuing obligation, has been and is to build a solid foundation of economic stability ...
Our forecast is for inflation of 2.5 per cent this year, next year and the year after. For the first time in our generation, Britain can look forward to sustained low inflation.
In our first week in government, we made the Bank of England independent, freeing monetary policy from the politically driven control that in the last economic cycle led to 15 per cent interest rates for an entire year and interest rates at 10 per cent or over for four years.
Now, because together we are steering a course of stability, long-term interest rates have come down from over 7 per cent in May 1997 to 4.5 per cent - our lowest long term interest rates in over 40 years.
And, after five interest-rate cuts in five months, saving the typical homeowner around pounds 900 a year on their mortgage, Britain now has the lowest mortgage rates in 33 years.
All of this has happened against a background of great uncertainties in the global economy. One quarter of the world is now in recession. World growth has been cut in half. World export growth has fallen even faster. And, as a result of failures in many of East Asia's economies, our exports to them have fallen by 50 per cent or more. And this year, as trade imbalances worsen, and threats of protectionism grow, it will be even more important to hold to our course of stability.
Britain, with other G7 nations, has rightly assumed a leadership role to address the root causes and contain the spread of future global crises. The storms may come again. But because of what we have done, our economy is now better prepared to weather them.
With public investment set to rise and interest rates coming down, both at precisely the right time in the economic cycle, Britain's fiscal and monetary policies - often at odds in previous economic cycles - are now working together to promote growth with low inflation.
I can confirm our growth estimate for 1999 of 1 per cent to 1.5 per cent ... followed by stronger growth - in 2000 of 2.25 per cent to 2.75 per cent and then in 2001 of 2.75 per cent to 3.25 per cent. Despite world conditions, more men and women are in jobs than at any time in our history, and unemployment in the last year has been at its lowest rate for 20 years.
Since May 1997, youth unemployment has fallen by 57 per cent , and long- term unemployment has been cut in half. And because more lone parents are now in work, the numbers claiming out-of-work benefit - rising for 30 years, over 1 million when we took office - have now fallen by nearly 100,000.
As we entered office we inherited a budget deficit of pounds 28bn ... In our first year the deficit was reduced by pounds 19bn. In my Budget last year, I promised we would reduce the deficit further. As a result of our prudence, our first two years' spending is pounds 2bn lower than the spending plans we inherited. This year, the Budget will be in surplus. The current surplus this year is forecast to be pounds 4bn. And public-sector net borrowing will be in surplus by pounds 1bn.
I am determined to continue locking in this fiscal tightening for the years to come so that we continue to meet our fiscal rules and so deliver sound public finances.
I have had to offset the impact of slower world growth on our corporate tax revenues, and lower indirect tax revenues. But, as a result of sound economic management, debt-interest payments next year have been cut by pounds 2.5bn from their previous forecast, and in total by pounds 4bn over the next three years.
Because less of our social security budget is being wasted on paying for past failures in employment policy, social security spending as a whole has not been rising as in previous years. And over the next three years social security spending including unemployment - even after adjusting for the economic cycle - is set to be significantly lower than previously forecast, freeing resources for new help for families and pensioners.
At the time of the Comprehensive Spending Review there were those who said we could not afford the pounds 40bn for new investment in health and education and still meet our fiscal rules. I can report that the entire pounds 40bn investment in health and in education will be fully delivered and will be delivered fully within our fiscal rules.
Not only that, but still meeting the test of fiscal prudence I will today allocate from our Capital Modernisation Fund even more investment for hospitals and schools.
And still meeting the test of fiscal prudence, I will be able to afford tax cuts to reward work, encourage enterprise and strengthen the family. Even after all the measures in today's Budget, next year's current surplus is expected to be pounds 1bn higher than previously forecast - and pounds 1bn more in 2000-2001.
For the coming five years the current surpluses are forecast to be - successively - pounds 2bn, pounds 4bn, pounds 8bn, pounds 9bn and pounds 11bn. In line with our golden rule, even under our most cautious assumptions, we are balancing the current budget over the economic cycle.
And for the first time in a generation we are eliminating the current structural deficit. We are also meeting the second fiscal rule, that of sustainable investment, a prudent ratio of debt to national income.
Debt as a proportion of national income has already fallen from the 44 per cent we inherited to under 41 per cent this year, and it will fall below 40 per cent to 39.5 per cent next year, then to 38 per cent , then to 37 per cent in 2001-2002. Britain's fiscal position is ... on the soundest possible footing for the future.
For the coming five years, the estimated current Budget surplus totals plus pounds 34bn - in contrast with the last government's deficit over the last economic cycle of minus pounds 149bn and the last government's doubling of the national debt ...
I am also able, with my Budget measures today, to boost purchasing power over the next three years by pounds 6bn at exactly the right time for the economy. Even after these measures take effect, public-sector net borrowing will be lower than previously forecast in each of the next three years - at pounds 3bn in the coming year, and then pounds 3bn, pounds 1bn, pounds 3bn and pounds 4bn in the years after.
And for those who take a special interest in European issues - in particular the Maastricht Treaty- I can confirm that Britain is well within the Maastricht criteria.
I have often told this House that our prudence is for a purpose. And so I am now able to announce a new boost to purchasing power of pounds 6bn over the next three years as a result of my Budget measures: - net tax cuts of pounds 4bn targeted to working families - and on top of that, for families and public spending, more than pounds 2bn of additional public investments.
And I will also today announce major allocations from our pounds 2.5bn Capital Modernisation Fund, adding more resources to the extra pounds 40bn we have already committed to invest in health and education over the next three years ...
TO THOSE who argue that getting interest rates and inflation down is enough, I say that stability is the essential foundation but it is only the foundation. We must build on that foundation a modern knowledge-based economy.
Britain must make a quantum leap in skills, innovation, competition, information technology and small business. So today, we bring forward seven major reforms for a new enterprise economy open to all.
First, tax cuts for business. So that more businesses - large and small - will invest, grow and prosper, so that the many and not just the few will have the chance of starting businesses, we today cut business taxes, and introduce a special enterprise management incentive scheme to reward the risk-takers ...
I confirm that from 1 April we will further reduce the main rate of corporation tax from 31p to 30p, the lowest rate in the history of British corporation tax, the lowest rate of any major country in Europe and the lowest rate of any major industrialised country anywhere ...
When we came into government, small companies tax was 23p ...From April this year the rate will be 20p - 350,000 companies will benefit. But I want to do more by creating an even lower rate that will give new incentives for men and women to start their own business and work their way up ... I announce today a new starting tax rate for small business of 10p in the pound. Every company making profits up to pounds 50,000 will benefit.
The legislation will ensure that the beneficiaries are genuinely those who take risks. And 85 per cent of the firms gaining from the new 10p tax rate have fewer than 10 employees - the very firms we most want to see grow, the very firms whose growth will create the greatest number of new jobs.
This is the lowest starting rate for small businesses in the entire history of UK corporation tax.
Where we inherited business tax rates of 33p and 23p, the rates will now be 30p, 20p and 10p, and I give to all companies - large and small - an assurance not just for a year but for the rest of this Parliament: there will be no return to the higher tax rates of the previous Parliament ...
I recognise the difficulties faced by manufacturing as a result of global instability and the strong pound. And so I will set aside an additional pounds 325m to allow small and medium sized companies to write off 40 per cent of all they invest in the coming year.
In other areas I am extending the tax allowance for new films made in Britain. And the shipping industry has put to me the case for enhanced training incentives and for a lower rate ring-fenced tonnage tax ...
Second, I propose a tax reform that will reward risk and stimulate new enterprise at the cutting edge of technology. I want to recruit, motivate and reward Britain's risk-takers, the innovators capable of creating wealth and jobs ...
In the past, share-option schemes, subsidised by the taxpayer, have rewarded those already at the top whose risks are low and rewards already high ... Tomorrow I will publish details of a very different kind of targeted tax cut for those who are prepared to move from secure jobs and venture their time and effort to create wealth for our country.
The new enterprise management incentive will allow the award of equity worth up to pounds 100,000 for success in building up the new path-breaking companies our economy needs.
Our capital gains tax reforms reward committed long-term investment. For the first time, Britain now has a long-term rate of only 10 per cent ... For all individuals, from April, the first pounds 7,100 will be free of capital gains tax. This measure will exempt 10,000 more people from capital gains tax altogether. Britain now has the lowest long-term rate of capital gains tax with the most generous threshold in its history.
I now turn to the rate and threshold for inheritance tax. The rate will be unchanged and fewer people will pay the tax as I raise the threshold by pounds 8,000 to pounds 231,000: 97 per cent of estates will now be exempt.
Third, targeted tax cuts and public investment to put Britain and British enterprise at the forefront of innovation. I propose a new R&D tax credit which will give new business and small business - the biggest source of innovative ideas - cash help to research and develop their innovations even before they make their first profits.
At a cost of pounds 150m a year, this targeted tax cut will underwrite almost one-third of research and development costs for small business. Britain now has one of the best incentives for innovation anywhere in the industrialised world.
Scientific innovation is a prime catalyst of growth ...The seedbed is basic science. I can announce a pounds 100m new investment in university science laboratories and equipment, part of our pounds 1bn upgrading of British science.
To transform British inventions into British-made products, I propose a 30 per cent increase to pounds 65m in the budget of our University Challenge Fund.
To encourage large companies to invest venture capital in innovative small companies we will tomorrow publish proposals for a new corporate tax incentive.
To ensure the necessary flow of finance to high-risk companies, I am allocating pounds 20m for start-up funding for high-tech venture capital funds.
Fourth, a new competition policy for Britain.
The sharpest spur to enterprise, the ingredient too often missing in our country today, is competition ...And it is time for more competition and lower prices in basic essentials like the utilities, financial services, indeed the whole range of consumer goods, where too often British people are paying far more than they should for what they need to buy. It is wholly unacceptable that consumer goods can still cost up to twice as much in Britain as in America.
Tomorrow so that competition will be encouraged for the long-term needs of the economy and consumers, the Secretary of State for Trade and Industry plans to set out a new competition policy for Britain. With the setting aside of 20 per cent extra resources, the Office of Fair Trading will now be charged with a pro-active remit to root out cartels and restrictive behaviour. Obstructing investigations will be a criminal offence. Wherever there is monopoly power we will open the way to competition ... Britain will have the most open competition policy the country has seen.
Fifth, to match our small business tax cuts with a new champion for small business in government, we will simplify help for small businesses and establish, for the first time in our country, a single Small Business Service, devoted entirely to the needs of small business.
This one-stop, open-door service - the Small Business Service - will have new resources to offer loan guarantees, support innovation, advise on electronic commerce and deliver, for the first time, an automated payroll service to help new small companies starting out ...
Sixth, to open Britain's economy to the enterprise of all, we propose employee shares for all ... Employees will be able, for the first time, to buy shares in their own companies from their pre-tax income. Every employer will be able to match, tax-free, what each employee buys.
This will be the most tax-advantaged all-employee share ownership scheme Britain has ever had ...
Seventh: New targeted tax cuts and public investment to equip all our companies and all our people for the newest and most decisive economic challenge of the 21st century - mastering information technologies, from the PC to the Internet, from e-mail to e-commerce.
This industry is the great driver of world economic growth today. And Britain can no longer afford to lag behind America. So today, we allocate an additional pounds 500m from our Capital Modernisation Fund to launch a pounds 1.7bn computers-for-all initiative ... Our target is a national network of 1,000 computer learning centres, one for every community in Britain. They will be in schools, colleges, libraries, in Internet cafes and on the high street ...
Our targets for the new economy are ambitious. Within three years, 1 million small businesses able to benefit from e-commerce, 32,000 schools connected to the Internet, with 370,000 teachers computer-trained, new help worth pounds 20m making it possible for more teachers to have computers for home use ...
Anyone left out of the new knowledge revolution will be left behind in the new knowledge economy. So we will pioneer a system under which local partnerships will be able to loan computers and software in the new century the way local libraries have loaned books in the last century ...
The tax system will offer further incentives to upgrade old skills and learn new ones. From this year, a million men and women will start to receive pounds 150 to set up their own Individual Learning Accounts - putting the power to plan and prepare for their own careers in their own hands. In this Budget we expand Individual Learning Accounts and open up tax- free learning in computers, in basic skills and advanced skills, to millions more. We will legislate so that employers will be able to contribute tax- free to the new Individual Learning Accounts. Employees will also pay no tax on such payments ...
And this Budget will go further, offering not just tax cuts but discounts for learning. Any adult with an Individual Learning Account will be able to claim a discount of 20 per cent , an additional grant of up to pounds 100, on the cost of their learning ...
This century, Britain has achieved universal free education for children. This Budget introduces the opportunity for universal education at every age, lifelong learning so everyone will have the chance to succeed in the new economy.
AS BRITAIN works to lead in the new economy we must resolve to lead in respecting the environment. Our target is to reduce greenhouse emissions by 12.5 per cent by 2010. And today I will announce a programme of measures that will cut carbon pollution by 3 million tonnes.
My first proposal alone will reduce carbon pollution by 1.5 million tonnes ... We will now ... introduce a levy on business use of energy from April 2001. And it will be brought in, after further consultation with industry, on a revenue neutral basis, with no overall increase in the burden of taxation on business. Because we intend at the same time to cut the main rate of employers' national insurance contributions from 12.2 per cent to 11.7 per cent .
We also intend to set significantly lower rates of tax for energy intensive sectors that improve their energy efficiency ... We will also allocate an extra pounds 50m to encourage business to invest in the new environmental technologies and in renewable fuels.
In line with the fuel escalator first introduced by the previous government at 5 per cent above inflation and now 6 per cent , petrol duty will rise from 6pm today.
Vehicle excise duty for smaller cars will, from 1 June this year, be cut by pounds 55 - the first cut in the licence fee in 50 years. Other cars' rates are only increased in line with inflation.
I will freeze vehicle excise duties for 98 per cent of all lorries, and for lorries and buses with clean engines I am cutting the licence fee by up to pounds 1,000 ... I will maintain the favourable tax treatment for cleaner diesel ...
Further, to reduce pollution, employees will from this year be able for the first time to secure tax-free the benefits from employer-run or employer-subsidised buses, car-sharing schemes and other environmentally friendly means of transport to work.
Last year we set up a new rural transport fund. To build on its success in extending the range of public transport services in rural communities we will now increase funding for the next two years by 20 per cent to pounds 120m.
To reduce the amount of waste going to landfill, the landfill tax, pounds 10 per tonne in 1999, will, in future, rise by pounds 1 per tonne per year.
Taking into account all these tax changes and all the changes I have yet to announce there will be a net tax cut of pounds 4bn in this Budget.
CHILDREN ARE 20 per cent of the British people but 100 per cent of Britain's future. To build that future, this Budget provides a better deal for families and children ...
For the last third of this century, families with children have been losers in the tax system. Their tax burden has risen by nearly 20 per cent under successive governments ... It is time to reform the tax and benefit system to strengthen the family by putting children first.
What is today called the married couple's allowance is in fact neither restricted to marriage, nor restricted to couples, nor is it strictly an allowance. It is in fact a tax credit paid at the same flat rate to married couples, single parents and unmarried parents living together ...
We will replace the married couple's allowance with a new family tax cut that will increase the amount that goes to help families with children. This children's tax credit will give more - not less - help to families at the time they need it most, when they have their children and when their children are growing up.
Today's pensioner couples will retain the married couple's allowance. And couples without children or whose children have grown up will benefit from other changes ...
The married couple's allowance is now worth pounds 190 to married couples. The children's tax credit, the tax cut for families, to be introduced from April 2001, will be worth pounds 416, and as a result the typical family with children will be over pounds 200 a year better off ... Under my proposals the tax burden on the typical family will fall to the lowest level for 25 years.
I will introduce similar improvements in income support and the working families tax credit. In the Budget last year I set down the two principles that govern my approach: that we must substantially increase support for families with children and we must do so in the fairest way. It is in fulfilment of these two principles that the children's tax credit will be tapered away for the higher earning family where there is a top-rate taxpayer. In the light of this reform, my Budget decision is that child benefit will not be taxed for taxpayers on the basic rate - or the top rate.
When we came to power child benefit for the first child was pounds 11.45 a week. Next month it will rise to pounds 14.40 a week. It has risen by 25 per cent since we came to Government - an increase of pounds 150 a year.
I now propose a further increase in child benefit, well above the rate of inflation. It will rise next April to pounds 15 a week for the first child, pounds 780 a year. I will also raise the rate for the second and further children to pounds 10 a week. Support for children will be twice as high at the end of this Parliament as it was at the beginning. With the children's tax credit added to child benefit, families who were receiving pounds 11 a week in 1997 for their first child will be receiving pounds 23...
Taking all our reforms together the maximum support for the first child will be pounds 40 a week, pounds 2,000 a year for families when they need it most. Every child in the country in every family will get more - not less - support under this system, support ranging from pounds 780 a year to pounds 2,000 ...
Our long-term goal is to bring together the different strands of our support for children in the working families tax credit, in income support and in our children's tax credit and create an integrated and seamless system of child financial support paid to the mother, building on the foundation of universal child benefit ...
I have also considered the alternative case that has been advocated, for a transferable tax allowance for mothers who stay at home.
The better deal for mothers who stay at home is what we are doing from October this year - the working families tax credit. A family with two children on pounds 15,000 a year where the mother stays at home, would have received nothing under the old system of family credit. Transferable tax allowances would give them pounds 997. Under the working families tax credit they will receive pounds 1,460. Where both parents need to work, we need to do more to help them balance the demands of making a living and having children. With a million new childcare places now being created and from October our new childcare tax credit set at a maximum of pounds 70 for one child and pounds 105 for two children, Britain has a national childcare strategy for the first time in our history.
From December 1999 all parents will be entitled to three months' unpaid leave for each child. But currently up to 15 per cent of working mothers- to-be are not entitled to any maternity pay. This is wrong.
Today's Budget will ensure that all mothers in work earning pounds 30 a week or more - 95 per cent of all women in work - are entitled to maternity pay and to 18 weeks of maternity pay. This is family-friendly employment in action.
Every year a quarter of a million children, even at the minute they are born, are born into poverty. This too is wrong. Our Sure Start programme for the under threes, beginning next month, will ensure that the full resources of health visitors, primary care and schools are there to give every young child a better chance. Today I can announce a new Sure Start maternity grant for the new born offering more help to parents in return for parents meeting their responsibilities. Help amounting to pounds 200 will be conditional, linked to keeping appointments for child health advice and child health check-ups. When we came into power, one child in every three in our country was in poverty. With our measures today 700,000 children are being lifted out of poverty. Families with children are better off ...
TODAY I announce new measures to help all pensioners ...
This government created a minimum income guarantee for pensioners. Today I can confirm that next April this minimum income guarantee will be increased not just in line with prices but in line with earnings. As a result of the changes we are making, the minimum income guarantee for the single pensioner will be pounds 78 a week, nearly pounds 500 a year higher than when this government came to office.
Pensioner couples will have a minimum income guarantee of over pounds 121 a week, nearly pounds 800 higher a year than in 1997.
As a result of the measures already taken - our cut in VAT on fuel with tougher regulation and the winter allowance - pensioners are saving pounds 108 on their fuel bills and the poorest pensioners are saving pounds 140 ... The winter allowance is currently paid to all 8 million elderly households at pounds 20. I have decided to raise it - to pounds 100 - for all 8 million elderly households ...
And I have a further improvement, a tax cut for the elderly. I am announcing a reform that will ensure that a total of 7 million elderly men and women will now be outside the income tax system ...
Single pensioners will not pay any tax until they have an income of pounds 5,720. Older pensioner couples who both use their personal allowances to the full will now not pay tax until they have incomes above pounds 15,000 ...In total, two-thirds of pensioners will not have to pay income tax.
Taken together the measures I have already announced add up to an additional pounds 3bn, a better deal for the elderly that makes the typical pensioner household pounds 240 a year better off.
To help pay for this, from today excise duty on tobacco will rise by the normal escalator, 5 per cent above inflation ... I have decided to freeze the duty on spirits, on beer and on wine at its current level. There will be no tax rise on alcohol this side of the millennium ...
I have decided to make no change to stamp duty on property sales up to pounds 250,000. For property sales above that, the rates will be raised by 0.5 per cent from next Tuesday. Ninety six per cent of home sales are unaffected.
A Britain of strong families is also a Britain of strong communities. Each year 1.2 million people give of their time in voluntary work. Millions more give money to our national charities. The Prime Minister has rightly called for our age to become a `giving age'.
I want us to mark the Millennium in the best way, by making the year 2000 the giving year. In the last Budget we introduced Millennium Gift Aid. For every pounds 100 a British citizen donates to Third World causes before the end of the year 2000, the Government will contribute pounds 30 ...
Today in our consultation document on tax and charities, we propose extending the tax advantages of Millennium Gift Aid. We propose that every charity, national and international, should be able to benefit from this new tax relief.
We propose in future for every pounds 100 a British citizen donates to any charity, the Government will contribute pounds 30. Instead of charity seen in the old way, the rich bestowing favours on the poor, I want a democracy of giving, where all those who can, help all those who can't.
Most fundamentally the tax reforms of this Budget provide a better deal for the hard-working majority - a ladder of opportunity for those who want to work their way up ... a fundamental guarantee that work will pay.
Our reforms in national insurance will give employers an overall tax cut of pounds 1.5bn and employees an overall tax cut on work of pounds 2.5bn- an average of pounds 130 per year per employee.
This April, as I implement the report by Martin Taylor, I am abolishing the perverse tax on work, the entry fee every employee has to pay simply to be part of the national insurance system.
From this tax cut on work worth over pounds 1.4bn a year, every one of 20 million employees will gain pounds 69 a year. Over two financial years, I will further align the starting point with that of income tax so that no one will have to pay either national insurance or income tax for the first pounds 87 of their weekly earnings. From this tax cut on work worth pounds 1.8bn a year, every employee will gain pounds 99 a year. From April 2001 therefore, the lower limit for employees, self-employed and employers' national insurance will be harmonised at pounds 87 a week.
As with the lower earnings limit which is rising faster than inflation, the upper limit will rise to pounds 575 and to complete our reforms we will also align employers national insurance and income tax in the treatment of benefits in kind.
I also propose to extend to the self-employed, national insurance rights to the full maternity allowance. Again, to implement the recommendations of the Taylor report, we will align national insurance arrangements for the self-employed closer to those of employees: reducing the unfair entry fee from pounds 6.35 a week to pounds 2, and setting the class four threshold at the same point as the personal income tax allowance. But I will set contributions at ... 7 per cent in contrast with the 10 per cent employees pay.
Two hundred and thirty thousand young people are already benefiting from the New Deal. Now we must bring in those young unemployed who, for whatever reason, have yet to join. I say to them, this will be our New Deal for 1999: better provision but tougher conditions. Our responsibility is to offer training and intensive coaching. In return their responsibility is to come into the New Deal, get the skills and prepare to take up a job.
To help lone parents make the transition into jobs, benefits will continue when they first start work. For them and others, the working families tax credit will make work pay more than benefits.
Every working family will be guaranteed a minimum income, to be introduced in October not at the previously announced rate of pounds 190 a week but at pounds 200 a week, more than pounds 10,000 a year. No income tax will be paid until earnings reach pounds 235 a week. This is a tax cut available to 1.4 million families helping 3 million children. I now propose that over time we extend this principle.
The old tax system set a personal allowance that failed to ensure that work paid, and also made thousands pay tax even as they were forced to claim benefits .... targeted tax cuts and credits. No one who is in work should, in future, have to go to the benefits office to receive a living income.
We start in this Budget with a minimum income guarantee. A new deal, for over 50s returning to work. Nearly 30 per cent of men over 50 are outside the labour force, twice as many as 20 years ago. We need their talents. For those unemployed for six months or more, we will create a new employment credit which will guarantee a minimum income of pounds 9,000 a year, for their first year back in full-time work ...
Successive governments have lowered mortgage tax relief from 40 per cent to 10 per cent of interest costs and frozen the limits at the first pounds 30,000 of a mortgage. Today the allowance is worth an average of pounds 2.50 a week. In the last year mortgage rates have come down significantly and I now recognise that there is a consensus across this House to complete the phasing out of Miras. As we do so we will ensure that families are better off.
We said in our manifesto that we would introduce a 10p starting rate of income tax for individuals when it was prudent to do so ... It will take effect in April 1999, a 10p starting rate on the first pounds 1,500 of income, the lowest starting rate of tax since 1962 ... People will see it in their pay packets in May. Nearly 2 million people will see their income tax bills cut in half, and take home 90 pence of every pound they earn.
The new income tax structure will this year be 10p, 23p and 40p. And income tax allowances, income limits and tax thresholds will rise as usual in line with inflation.
The tax rates on savings will remain unchanged. So this is a Budget with a 10p starting rate of income tax. A 10p starting rate of small business tax, a 10p long term rate for capital gains tax.
The maximum small business tax is now down to 20p and corporate tax for big companies down to 30p. The tax cuts I have made today are tax cuts for a purpose, tax cuts that encourage work and make work pay, that help all middle and lower income families, tax cuts for the many and not just the few and at the best time for the economy.
I can confirm that the share of tax in national income will fall next year. And the tax burden on the typical family with children will fall below 20 per cent for the first time in 20 years.
ON TOP of the pounds 40bn extra we are already investing in education and health, we will today allocate increased resources for our key public services ...
We are allocating an additional pounds 170m for crime prevention in areas where crime is highest. The Home Secretary will make a detailed statement to the House. For public transport, in addition to the rural transport fund, we will make a further allocation to be announced by the Deputy Prime Minister.
For Northern Ireland, today we allocate additional capital spending of pounds 50m, for Wales of pounds 80m, for Scotland of pounds 165m ...
The pounds 19bn extra we are already providing for education will finance smaller class sizes, more nursery education, better pay for better teachers, our drive to improve literacy and numeracy - and we will help 700,000 more young people to go on to further and higher education. But, so that every child will have that chance, we need specific and targeted help for our inner-city schools. For upgrading their technology, the Secretary of State for Education will receive an additional pounds 100m.
W are able this month to make another extra and larger allocation for school books: pounds 2,000 to every school in every constituency in every part of the country, immediate new resources of pounds 60m for a total of 10 million new books in all.
I turn to the NHS: pounds 21bn extra money is making possible the largest hospital building programme since the war: a pounds 1bn investment in modern technology in the health service; the recruitment of 7,000 new doctors; 15,000 more nurses; and a fair pay award for nurses.
The Government's new programme, NHS Direct, is a proven success. And later this week the Secretary of State for Health will announce detailed proposals not only to extend it to all of the country by the end of next year, but to carry NHS Direct right into communities - with a network of health centres and drop-in centres where people can get immediate advice about treatment ...
To enhance in every part of the United Kingdom the health care that people most urgently require we today make an additional and immediate cash allocation, to be spent in the next 12 months, for the upgrading of every single accident and emergency unit which needs it.
For this and other improvements which the Secretaries of State for Health, and Scotland, Wales, and Northern Ireland will announce, I am providing for the NHS almost half a billion pounds of extra investment today. Throughout the public services, more than a pounds 1bn of additional new investment, on top of the pounds 2bn I have allocated to families and pensioners ...
I have a final announcement.
We promised to get inflation and interest rates under control, to sort out the public finances, to make this the Government of economic competence and we have. We promised to invest billions more in health and education and we have. We promised we would cut youth unemployment and we have.
And I can confirm to the House that, while rebuilding our public services, our prudence in office also enables us to hold to our pledge made at the election not to raise the basic rate of income tax.
In fact, to reward work and ensure working families are better off, I will match the new 10p starting rate of income tax this April with a cut from next April in the basic rate of income tax to 22p, the lowest basic rate of tax for 70 years - and under this government.
Today's Budget is a better deal for work, a better deal for the family, a better deal for business - for a Britain now united around values of fairness and enterprise, and I commend this Budget not just to the House but to the country.
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