Pre-Budget report: key points of Darling's speech

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Indy Politics

Chancellor Alistair Darling said: "I am confident that the UK economy will start growing by the turn of the year."

The main points of the his speech:



SPENDING

* Spending Review ruled out, with the Government sticking to its spending plans for next year.

* £5 billion to be saved from spending programmes, including cutting back on major IT projects, reforming legal aid and outsourcing inefficient prisons.

* State contributions to public service pensions for teachers, councils, NHS and the civil service to be capped by 2012, saving £1 billion a year.

* Senior civil service pay bill to be cut by up to £100 million over three years and any new government appointment over £150,000 and all bonuses over £50,000 to require Treasury approval.

* All public sector pay settlements capped at 1% for two years from 2011, while recognising the special circumstances of the armed forces.

* Current spending growth to fall to an average of 0.8% a year between 2011 and 2015, meaning cuts to some budgets and some programmes stopped altogether.

* Extra £2.5 billion to be set aside next year for military operations in Afghanistan.

* Minimum real-terms increases in spending on front line NHS and schools guaranteed for two years from 2011, and free school meals extended to 500,000 primary school children.





BANKS

* The Chancellor has decided against a windfall tax on banks, but if they pay substantial rewards to staff they will pay a one-off levy of 50% on any bonus above £25,000.

* The one-off bonus levy is expected to yield £550 million, which will pay for measures to help the young and older unemployed back into work.



ECONOMY

* Public sector net borrowing forecast to be £178 billion this year and £176 billion next year, higher than Budget forecasts. Net borrowing falls to £140 billion, £117 billion and reaches £96 billion in 2013/14, before falling to £82 billion in 2014/15. As share of GDP, borrowing will be 12.6% this year, 12% next year, then 9.1%, 7.1%, 5.5% in 2013/14 and falls to 4.4% in 2014/15.

* The first half of this year saw a sharper economic deterioration than had been expected in the UK. Over the year, the UK economy expected to contract by 4.75% with a return to growth in the fourth quarter.

* Next year, UK growth forecast to be between 1% and 1.5%, as said at the Budget. Budget forecast of growth of 3.5% in 2011 and 2012 remains unchanged, but not dependent as much on the financial sector.

* Consumer inflation will rise from 1.5% to around 3% early next year before falling back.

* Revenues from stamp duty and income tax are sharply down. But banks are in a much more stable situation, meaning the provision for any potential impact on the public finances revised down from £50 billion to around £10 billion.



TAXATION

* VAT will return to 17.5% on 1 January as planned, but there are no other changes in VAT.

* From next year's Budget, Bingo Duty to be cut from 22% to 20%.

* 10% Corporation Tax rate to be introduced on income which arises from patents in the UK.

* Employer pension contributions to be included in definition of tax income relating to pensions tax relief for those earning over £130,000.

* Individual Inheritance Tax allowance to be frozen at £325,000 for the next year.

* In April 2012, the point at which people start paying 40% income tax to be frozen for one year, hitting those earning more than £43,000.

* £5 million allocated to help ex-service personnel set up their own businesses.

* All employer, employee and self-employed rates of National Insurance to rise by a further 0.5% from April 2011. Starting point from which NI is payable to be raised so that no-one earning less than £20,000 will pay any more in contributions.



ENVIRONMENT

* Government to double its commitment and finance four carbon capture and storage demonstration projects.

* An extra £200 million to be released from April to help with energy efficiency, with an extra 75,000 households helped by the Warm Front scheme.

* New scrappage scheme to help up to 125,000 homes replace inefficient boilers, and changes to be made to the Climate Change Levy, company car tax and fuel benefit charge.

* From April, people with a home wind turbine or solar panels who send power back to the National Grid to receive an average tax-free payment of £900 a year and electric cars to be exempted from company car tax for five years, with a 100% first year capital allowance for electric vans.



EMPLOYMENT

* Support for mortgage interest payments for the unemployed to be extended for a further six months.

* Unemployment in the UK will keep rising for some time and promoting employment remains a top priority for the Government.

* Guarantees of a place for every 16 and 17 year-old in education or training to be available to school-leavers again in September 2010.

* From next month, no-one under 24 needs to be unemployed for longer than six months - down from the current 12 months - before being guaranteed work or training.

* Government to offer financial support for 10,000 under-graduates from poor backgrounds to take up internships in industry and the professions.

* £5 million allocated to help ex-service personnel set up their own businesses.



BENEFITS

* Government to guarantee that anyone in work will always be better off than they were on benefits, with extra cash help from the Government if needed.

* Minimum number of hours those over 65 need to work to receive Working Tax Credit to be reduced.

* Basic state pension will rise by 2.5% in April, a real-terms increase of nearly 4%.

* Other benefits linked to inflation, such as Child Benefit, will rise by 1.5% in April.



BUSINESS

* Go-ahead given for rail electrification between Liverpool, Manchester and Preston.

* Super-fast broadband to be extended to 90% of population by the end of 2017, funded by 50p-a-month duty on landlines.

* The Time To Pay scheme allowing firms to spread tax payments will be extended for as long as needed. Empty property relief threshold to be extended so that 70% of all empty properties will be exempt.

* Increase in Corporation Tax for smaller companies is to be deferred, leaving the 2010 tax rate unchanged.

* Enterprise Finance Guarantee scheme for bank loans to small businesses to be extended for a further 12 months, guaranteeing a further £500 million of loans.

* Strategic Investment Fund to support hi-tech projects given £200 million boost.



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