Edited extracts from the Chancellor's speech yesterday:
Edited extracts from the Chancellor's speech yesterday:
"In this pre-Budget report - which will address specific and immediate concerns - we will do nothing to put at risk the economic stability that has given us the lowest unemployment for 20 years, the lowest inflation for 30 years, mortgages 4 per cent - £1,000 - below the average of the previous 20 years, and a Budget discipline that has enabled us to cut borrowing and now invest more every year in hospitals, schools and public services.
And this hard-won and newly won stability now gives Britain an opportunity we can either seize or squander - the opportunity to achieve high and sustained levels of productivity growth, and so ensure long-term prosperity, not just for some but for all.
Yet every time the British economy has started to grow - as in the 1980s - Governments have taken short-term decisions on tax and spending which have put inflation, interest rates and economic stability at risk.
So Britain has a choice, the choice of the pre-Budget report, is that we build economic strength by investing and through tax incentives encouraging a new generation of entrepreneurs. We take no risks with stability. Our choice is to lock in stability by prudently cutting debt and debt interest payments to keep inflation and interest rates low.
The risk for Britain would be to cut investment in education and our infrastructure and perpetuate decades of neglect and undermine our economy.
This pre-Budget report makes a different choice: to move forward with our three-year spending plans that will double public investment - from education and health, to transport, policing and the environment - and by continuing to cut both debt interest and unemployment, combining public spending with targeted tax cuts to do more for pensioners and give families the lowest direct tax burden for 30 years.
This pre-Budget statement sets out a balanced approach. First, stability and prudence to keep interest rates low. Second, tackling under-investment and then, when it is affordable to do so, targeted tax cuts for the nation's priorities. Long-term prosperity for all is our objective, achieving in this decade full employment, higher education for the majority of young people, sustained improvements in our public services and with an end to child and pensioner poverty, we want to see all citizens sharing in rising prosperity.
And long-term prosperity for all depends upon us reaching American levels of productivity growth - and on removing the barriers - by tackling under-investment, skill deficiencies, resistance to new technology and restrictive practices wherever they arise; building a stronger enterprise culture open to all.
I am determined not to make short-term decisions based on short-term factors. Having cut capital-gains tax from 40p to 10p for long-term investment, I now propose an even further widening of the scope of the 10p rate - to non-trading companies and to venture-capital companies.
To assist the upgrading of listed buildings that are central to community life, I can also announce that today we are also asking the European Commission to reduce VAT from 17.5 per cent to 5 per cent for repairs to churches.
I have one further proposal for a special tax relief. The Government will investigate a new tax incentive and a spending measure to develop, cut the costs for and ensure the supply of anti-TB, anti-malaria and anti-Aids drugs - drugs, that could save lives, that are tragically still unavailable in the poorest countries, but drugs that have the potential that must now be realised to reduce avoidable suffering and unacceptable deaths.
I turn to pre-Budget measures to meet our goal of full employment. We are going to consult on introducing a new service that will help redundant workers move quickly into new jobs, investigate how with tax-free, and in some cases, free adult learning, we can help upgrade fast-changing workplace skills.
In the Budget I forecast this year's current surplus at £14 billion. I now forecast it to be £16.6 billion. In the years from 2001/2 onwards, the current surpluses are forecast to be £16 billion, £14 billion, £8 billion and £8 billion - figures that will ensure we remain on course to balance the current Budget over the economic cycle, even on the most cautious of cases.
The decision to use proceeds from the Spectrum auction to reduce debt and to use this year's surplus for repayment of debt now make possible a substantial reduction in debt to keep interest rates low.
We are not only well placed to deal with the inevitable ups and downs of the economic cycle, but we have the best platform possible for years for sustained long-term growth.
Because of this virtuous circle, lower unemployment has brought savings in social security which, compared with the Budget, provide an additional £1.5 billion next year, and £2 and £2.5 billion in future.
Soon, as a result of cutting these debt payments, we will be able to spend 50 per cent more on our schools than we do on debt interest.
And this prudence also allows us now to match public spending increases by tax cuts targeted on the country's priorities, including making reforms in the tax treatment of transport and the environment. I recognise and I understand the very genuine concerns that motorists and hauliers have.
On top of the duty freeze - budgeted for in our fiscal arithmetic - the first of the proposals I will consult upon would itself involve an additional expenditure of as much as an extra £1 billion and help promote substantial benefit to the environment.
I propose at that cost of £560 million a freeze in excise duties, an across-the-board duty freeze on all fuels that would initially last until April 2002. And if the oil price remains high between now and then I can tell the House there would be a duty freeze for a further year.
It is now time to make this cleaner fuel available in every petrol station of the UK and to make the use of this fuel which requires no change in any car cheaper for everyone.
I propose to cut the excise duty for ultra low-sulphur petrol so that it replaces unleaded petrol in every petrol station in Britain and at a lower excise duty. On 1 October we reduced the duty on ultra low-sulphur petrol by 1p a litre. I propose that from Budget 2001 a further reduction of 2p a litre - making a cut of 3p in total on all ultra low-sulphur petrol.
I propose also from Budget day to match the cut in low-sulphur petrol with a 3p cut in excise duties in ultra low-sulphur diesel, which will go to all diesel duties. I expect ultra low-sulphur diesel and petrol to account for 100 per cent of the market next year.
For all the cars which still use lead replacement petrol, I propose from Budget day to end the differential and cut the excise duty by 2p per litre.
I propose support for scrapping or converting older lorries with a £100 million investment fund, including help for buying the new lorries that meet the highest technological and environment standards and support for the introduction of logistics and computerisation.
We intend to introduce a British disc under which non-British companies and lorries pay their share to Britain for using Britain's roads.
I now propose to bring forward a reform for vehicle excise duty for lorries that will radically cut rates for larger lorries that have traditionally high licence fees.
Vehicle excise duty rate for lorries will also be cut, giving the average trucker a saving of £715 a year and the cuts are the equivalent to 3p off the price of diesel for the haulage industry.
Our priority in the coming Budget is the new children's tax credit, a tax cut for families. My aim is to increase the family tax cut to £10 a week, in total a £520-a-year tax cut, increasing families' incomes.
Our aim for pensions' reform is both to end pensioners' poverty and to ensure that all pensioners share the rising prosperity in the nation.
It is now time to raise pensioner incomes by a tax-and-benefit reform that will have, as its foundation, the basic state pension, and will have as its essential building block - like the working families tax credit - a new and generous pension credit. For the first time a single pensioner is guaranteed at least £100-a-week. And for couples a rise from £106.60 in 1997 to £154. While pensions will rise with inflation, the new pension credit will itself rise in line with earnings every year. The pensioners' tax allowance will be set at April 2003 at an even higher level - £6,560 for the single pensioner before tax is paid - and for the next parliament we propose the pensioners' tax allowance will also rise in line with earnings.
As we move to this new and better system, the Social Security Secretary and I have decided that the transitional arrangements should ensure that over the next two years, pensioner incomes should rise faster than inflation and indeed faster than earnings.
From next April we propose that for the single pensioner there should be a cash increase of £5-a-week, for a married couple a rise of £8-a-week.
The following year we can also guarantee the pension will rise above prices. There will be a cash increase of £3 for single pensioners and £4.80 for married couples. For pensions, £2.6 billion more - more than the link with earnings would give - each year, on top of more for health, education, transport, policing and public services.
The transitional arrangements to our new pension reform will not start next year, but can start this year, indeed they will start this week.
I can confirm that cheques are being sent out from Monday that will be paid to every pensioner household in Britain.
The winter allowance will not be paid at £150 this year. Nor will it be abolished. For this year specially - the first year of the transitional arrangements - it will be paid not at £150, but at £200 for every pensioner household - free of tax."Reuse content