Brown gives carrots for enterprise and takes a stick to benefit fraud

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Gordon Brown unveiled a wide range of measures to boost business and enterprise yesterday, coupled with a new crackdown on benefit fraud, and initiatives to help the elderly and badly off.

Gordon Brown unveiled a wide range of measures to boost business and enterprise yesterday, coupled with a new crackdown on benefit fraud, and initiatives to help the elderly and badly off.

Declaring that the time had come for Britain to leave behind "the sterile, century-long conflict between enterprise and fairness", the Chancellor laced his pre-Budget report with tax breaks for entrepreneurs and concessions for the most vulnerable in society.

The centrepiece of Mr Brown's measures to bolster the entrepreneurial spirit was a reform of the capital gains tax regime to stimulate investment in start-up companies.

There was also a significant boost to employee share-ownership in the form of a scheme exempting £7,500-worth of shares from income and capital gains taxes, provided they were held for more than five years.

That scheme will run alongside the enterprise management incentive that Mr Brown unveiled earlier this month, offering tax breaks to executives in start-up companies employing fewer than 10 people.

The Chancellor also announced a new corporate venturing initiative designed to allow large companies to invest in small business with the benefit of tax breaks.

But against a backdrop of stronger-than-expected economic growth and a current budget surplus for this year forecast at £9.5bn, the Chancellor also produced a few rabbits out of the hat.

All pensioners over 75 will be eligible for free television licences from next autumn - a saving of £101 per household, at an overall cost of £300m - and the annual £100 winter fuel allowance for pensioner households is being made permanent.

Measures to stimulate employment and extend educational opportunities also figured highly in the pre-Budget report. The Government's New Deal is being extended to all those aged over 25; lone parents will be able to train for jobs while receiving income support; and 10,000 more college-based childcare places are being created.

The Chancellor also unveiled a national jobs telephone line "to match the jobs without workers to the workers without jobs", saying that a return to full employment was no longer a dream or a possibility but could become one of the country's proudest achievements in the next decade.

But there was also a renewed clampdown on fraudulent benefit claimants. Mr Brown announced that Lord Grabiner QC is to head a task force made up of five government departments that will look at increasing fines for fraud and forcing those suspected of being part of the "hidden economy" to sign on for benefit every day.

In the field of education, a further 50,000 college places will be created for IT skills courses; the number of pupils taking "entrepreneurship" courses will be doubled to 200,000; and the school refurbishment programme, funded by the windfall tax, will be trebled to cover 15,000 schools.

The business community welcomed the Chancellor's package of measures: the Confederation of British Industry described the pre-Budget report as "prudent and business-friendly".

There was relief among energy-intensive users that the Chancellor had listened to pleas to scale down the Government's climate change levy, which will take effect in 2002. The tax will now raise £1bn, rather than the £1.7bn originally planned, and high users of energy will be eligible for rebates of up to 80 per cent, instead of 50 per cent.

There was also good news for hauliers and motorists in the form of a promised reduction in petrol and derv duties. Instead of the automatic annual 6 per cent real-terms increase in duties, the level of increase will be decided Budget by Budget, and any monies raised will be ring-fenced for roads and public transport.

This process of hypothecating taxes is being extended to the National Health Service, which is to receive tax receipts from an increase in tobacco duties. A 5 per cent increase in real terms will yield £300m a year for the NHS.

As part of the clampdown on tobacco smuggling, Mr Brown has also accepted the recommendations of a task force led by Martin Taylor: higher fines, new scanning equipment at ports and special markings on cigarette packs.

The Chancellor also announced measures to relieve child poverty and further unify the tax and benefit system to help low-income families. He said the target was to take nearly one million children out of poverty by the end of the next decade. To achieve that, the longer-term aim is to integrate children's tax credit with the child elements of the working families tax credit and income support to produce a single child credit paid directly to the main carer.

Among other surprise announcements, the Chancellor warned of a clampdown on offshore betting, starting with a strengthening of the ban on advertising by offshore bookmakers in the UK.

Mr Brown also announced changes to the airport departure tax, which is levied at £10 for passengers flying to EU destinations and £20 on all other flights. As a result of heavy lobbying by no-frills airlines, there will be reduced rates for lower-cost flights.

Savings and charitable giving will also be encouraged. More than 2.5 million individuals, including 1.5 million pensioners, will pay up to £150 less tax as a result of a cut in the tax on savings income, from 20p to 10p on the first £1,500 of income.

Among a range of initiatives to encourage charitable giving, tax relief will apply to any donation under the gift aid scheme, while the maximum limit of £1,200 under the payroll giving scheme has been scrapped.