Economy powering ahead, says Brown

Chancellor Gordon Brown today hailed the "longest period of sustained" economic growth in Britain's history.

Presenting his Pre-Budget Report to the Commons, Mr Brown said the country had enjoyed the longest post-war period of "continuous and sustained" growth of all the major economies.

He forecast that growth, sustained under the Government for 38 quarters would continue into the 39th and 40th quarters "and beyond".

In what is almost certain to be Mr Brown's last PBR before becoming Prime Minister, the Chancellor said the 2% inflation target would be met in 2007 and remain on target in 2008.

He promised to "drive forward the great economic mission of our time - to meet the global challenge, to unleash the potential of all British people, so the British economy out performs our competitors and delivers security, prosperity and fairness to all".

Mr Brown teased MPs at the start of his statement, saying: "This is my 10th ... and latest Pre-Budget Report and under this Government the 10th consecutive year of economic growth."

He said 10 years ago, Britain was bottom of the G7 league for national income per head but was now second only to the US.

"In no other decade has Britain's personal wealth, up 60% since 1997, grown so fast."

Growth for the first, second and third quarters was 0.7%. The forecast for 2006 was annual growth of between 2% and 2.5%.

"I can report that growth this year will surpass that figure. It is expected to be 2.75% and it will rise to between 2.75% and 3.25% next year."

Business investment was up 5.75%, exports up 6% and investment overall up 6%. Britain's growth was forecast to continue in 2007, with investment and exports forecast to rise by 5% or more.

"By mid 2007 we expect inflation to be at its 2% target and remain at target in 2008."

Mr Brown said: "Britain uniquely continues to combine recession-free growth with the longest period, a decade, of simultaneous employment growth and productivity growth."

Productivity that had averaged 1.9% before 1997 was now averaging 2.4% - moving ahead of Germany and Japan.

He said the Secretary of State for Work was today strengthening the New Deal with further measures to bring lone parents and the unemployed into jobs.

But already there was a higher proportion of the working-age population in employment than in America, Japan or the whole of the Euro area.

The tax free advantages of ISAs would continue beyond 2010 and "be made permanent," he confirmed.

"Britain will meet both its fiscal rules and meet them in this economic cycle and the next.

"We build for the future from the fundamentals of a recession-free decade of stability and growth with low inflation. This is the strongest foundation from which to address the great challenges ahead."

Mr Brown said China and India would soon capture almost half of the world's growth, increasingly competing on high skills.

"So economies like ours have no choice but to out-innovate and out-perform competitors by the excellence of our science and education, the quality of infrastructure and environment and by our flexibility as an economy and our levels of creativity and entrepreneurship."

The task was to think "long term" for the coming decade and " create a new British framework for innovation and investment".

The investment Britain must make could only be achieved in "a new era of shared responsibility and long term partnerships between the public and private sectors".

If the focus of the first decade was to replace old schools and hospitals, the new priority was "world leading investments that will move Britain sustainably ahead of our competitors" like the schools and colleges of the future.

"We have a long term choice to make - whether to commit to the essential investments and reforms that these reports recommend."

Mr Brown announced that universities would receive £60 million for applied research with commercial potential to help Britain "transform knowledge into successful products and new jobs".

He added that Professor John Bell, President of the Academy of Medical Sciences, would spearhead a new drive to identify key areas for potential medical breakthroughs.

This would be underpinned by a pooled budget of over £1 billion a year and a new fast-track procedure for priority research.

International Development Secretary Hilary Benn will establish a new partnership with charities, including the Gates Foundation, to maximise British research into tackling global poverty.

Mr Brown also outlined plans to tighten up Britain's intellectual property regime.

"The Secretary for Industry is announcing today he will tighten the penalties for copying and piracy while giving individuals new right for personal use," he said.

"And he will introduce a new fast-track protection for small companies to safeguard their trademarks."

From January 1 new tax reliefs would be introduced for film-making, the Chancellor said.

The Chancellor hailed the minimum wage, but warned: "To be effective we must ensure British workers and good British companies are not undercut by illegal rates.

"So in January we will raise the penalties for persistent illegality and to raise the standards of enforcement I am announcing a 50% increase to £9 million in the Budget to monitor and to police the minimum wage."

Turning to education and skills, Mr Brown said former CBI Director General Sir Digby Jones would be asked to "advance an agenda" on improving workplace training.

An "earn to learn" programme would enable people to gain graduate qualifications while working part time.

New "summer universities", along with work experience and coaching would be established to encourage people to stay on in education after 16.

Support would also be extended for 16 and 17-year-olds not in education or employment to help them into training and employment.

The Government would also consult on bursaries worth £2,000 to encourage children in care to go to university, Mr Brown told MPs.

And students would be able to use a volunteering scheme to get a reduction in their tuition fees.

Mr Brown said that every mother would get additional child benefit in the last months of pregnancy.

"Help should be available to all mothers expecting a child. So child benefit will be paid on that basis for every mother - additional child benefit that recognises the important role at this critical moment that child benefit can play."

The Chancellor argued that more stability was needed in funding the so-called "third sector" of charities and voluntary groups.

"I can announce that in the spending review the norm should not be one year funding but three year funding for third sector organisations."

He further announced a new £30 million fund to encourage community ownership of community assets.

Communities Secretary Ruth Kelly is to announce plans to ensure every new home is carbon zero within ten years. The vast majority of carbon zero homes will be exempt from stamp duty.

Ms Kelly would bring forward plans to ensure every home was zero carbon within ten years, said Mr Brown.

"We will be the first country ever to make this commitment," he added.

"And to accelerate the building of zero carbon homes, for a time limited period the vast majority of new zero carbon homes will be exempted from stamp duty.

"And for new homes I will consult on a new facility to undertake energy audits and offer low loans that would in time, because of low energy bills, pay for themselves."

The Chancellor underlined the Government's commitment to eliminate fuel poverty.

In addition to the basic state pension rising from next April by 3.6% and the winter allowance, the pension credit minimum guarantee will rise by £5 a week for a single person and £7.65 a week for a couple.

An expansion of the Warm Front programme will ensure an extra 300,000 pensioner and other vulnerable households have free insulation and central heating.

In a string of transport announcements, Mr Brown told the House: "While I will go ahead with an inflation rise in fuel duty from midnight tonight, of 1.25p per litre, I will not restore the fuel duty escalator and I have rejected a real terms increase in fuel duty."

He further announced a doubling of air passenger duty from February 1.

"For most journeys - over 75% of them - duty will rise from £5 to £10 - securing extra resources in the coming spending round for our priorities such as public transport and the environment."

The Chancellor said it was a priority for vehicles, which were responsible for 25% of emissions, to promote cleaner fuels through fiscal incentives.

He continued: "Today I am extending the 20p per litre discount to include the next generation of bio-diesel, a discount we will offer to all new innovative fuels as they develop.

"I am also consulting prior to a Budget decision on extending the current 40p per litre duty discount for biogas and on the level of tax discounts for company cars using high blend biofuels."

Small biofuel producers would also be relieved of requirements to register or submit returns.

Mr Brown said: "I can also announce that to incentivise the use of cleaner fuels in trains in the same way we do for cars, the tax rate for piloting rebated fuels mixed with biofuels will now be reduced from 53p to just 8p."

The Chancellor said pilot designs for schools would be introduced that "achieve a level of excellence in carbon reduction".

He went on: "Tackling climate change is an opportunity for Britain to create thousands of new jobs. And our new institute to investigate new environmental technologies will start with a budget of £550 million and I can also confirm a second enterprise capital fund focused on innovative green technologies."

Mr Brown said the Government would seek to make planning policy independent of political control.

"We will now consult on the proposal that in future, while ministers set policy guidelines, strategic decisions on location and planning permission for major infrastructure projects will be made outside of the day-to-day political control and instead by an independent planning body."

Mr Brown said the Government would set new incentives that would cut the numbers of local authority inspections.

He said new brownfield land sites designated by Government would "raise the number of new homes on surplus land to 130,000".

On the fiscal position of the economy, the Chancellor said: "Even after taking into account our new commitments on pensions, the country's public finances are on a sound and sustainable basis for the long term - and stronger than other countries.

"Before I give this year's fiscal figures, I can confirm that to fund operations in Afghanistan and Iraq and other international obligations the Secretary of Defence has been allocated an additional £600 million.

"I want to pay tribute to our armed forces and security services for their contribution to our country.

"I can also announce an additional £84 million directed to intelligence and counter terrorism.

"Our budget for security, which was just £1 billion in 2001, will now be for 2008, over £2 billion."