Budget news in brief

New aircraft carriers to provide 10,000 jobs

The recession has been good for the Royal Navy. The Government's policy of trying to spend its way out of the economic downturn means that the building of two aircraft carriers is now certain to go ahead, at a cost of £4bn, despite previous reservations about the military budget.

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HMS Queen Elizabeth and HMS Prince of Wales will either create or underpin more than 10,000 jobs in Glasgow, Rosyth, Portsmouth and Barrow-in-Furness – which happens to be in the Defence Secretary John Hutton's constituency. The Navy is believed to have received private assurances that the two carriers are no longer in danger.

But Britain still has not signed the contracts to buy the F-35 Lightning II or Joint Strike Fighter from Lockheed Martin of the US – the warplanes which will fly from the carriers. Although BAE Systems is involved in the project, the cynical view in Whitehall is that these orders will not have any significant impact on jobs or votes in the UK and are thus not seen as a priority. At the end, however, this may mean further delays to the carriers actually taking part in the defence of the realm.

Hence, the date on which the two vessels enter service may slip from the projected timescale of 2014 and 2016. This is being put down to the "usual slippage" which tends to take place with any large-scale defence procurement. The carriers' progress will be closely watched by senior officers in the Army and the RAF, who had criticised the original commission of the vessels – angry that such a sizeable portion of defence spending would go on ships when there was such an acute demand for funding the counter-insurgency mission in Afghanistan.

Chancellor's U-turn on taxing aircraft

The tax on flying is being reformed, Mr Darling announced – but not in the way which he had hinted at last year, and which green campaigners had been calling for.

In the previous pre-Budget report the Chancellor had indicated he would switch flight tax from individual passengers – Air Passenger Duty (APD) – to aircraft. A tax on planes themselves is regarded as a much greener measure, as it includes freight aircraft, and acts as a strong incentive to airlines to fill every seat.

Yesterday, Mr Darling scrapped his plans for an aircraft tax and stuck with APD – which is being changed. While he acknowledged that the idea of a "tax per plane" had commanded cross-party support, he said he believed the proposal could "harm the aviation industry at a time when it's facing huge problems".

Instead, he said, passenger duty, currently split into two bands, long-haul and short-haul, would, from November 2009, be structured around four distance bands, set at intervals of 2,000 miles from London. It would ensure that those who travelled further and had a larger environmental impact would bear more of the cost, he said.

This cut no ice with a number of green organisations. "We welcomed last year's announcement of the tax on flights, and today we condemn its cancellation," said Tim Jones, policy officer at the World Development Movement. "The Chancellor has succumbed to lobbying by elements of the aviation industry, such as freight, who will now continue to pay no aviation tax at all. The aviation industry will continue to pay no tax on fuel or VAT; this effectively represents a subsidy from British taxpayers of £10bn a year."