PBR – At a Glance
THE Chancellor has delivered the 2008 pre-Budget report amid a background of economic instability.
This has been his first opportunity since the banking crisis to say how the UK economy is likely to perform, and how the crisis might affect the public finances.
Widely regarded as one of the most important in recent years, Mr Darling outlined plans which are intended to keep the UK economy stable and said he would be “taking action to protect and support people and businesses now”.
Key points included:
• VAT will be cut from 17.5% to 15% for 13 months in a bid to get consumers spending again.
• Top rate tax will rise to 45% and all National Insurance contributions will go up 0.5% from 2011.
• Around £3bn of capital spending has been brought forward from 2010-11 to this year to help stimulate the economy and safeguard jobs.
• Mr Darling said the government would inject an extra £20bn into the economy, or 1% of GDP, funded in part by an extra £5bn in efficiency savings.
• The UK’s growth rate will be between minus 0.75% and minus 1.25%, down from from the 2.5% forecast in March – the biggest ever revision on record.
• Mr Darling says small businesses will have a temporary increase in tax relief thresholds for empty properties – a welcome move after some firms threatened to knock down buildings to avoid the charge.
• Government to add 50p for each £1 saved for £8m low paid people.
• Reposession should be the “last resort” for mortgage lenders, the chancellor told MPs – adding that there should be three months’ grace for those struggling with payments.
• This year’s increase in the income tax personal allowance of £120 a year for basic rate taxpayers will be made permanent and increased to £145 in April, helping 22 million basic rate taxpayers – another 500,000 households not just this year but for good.
• Increase deferred in small companies tax rate and £1bn for a temporary Small Business Finance Scheme.
• Extra £150m to help insulate 60,000 more homes.
• Alcohol, tobacco and petrol taxes will be raised to offset the VAT cut.
• UK net debt will remain below that of many countries, the Chancellor says. Doing nothing would create a “deeper and longer recession”, MPs are told.
• An extra £15m for free debt advice to help ease the burden on homeowners who are facing financial difficulty.
• Setting up a new Lending Panel to monitor lending bringing together government, lending groups, Bank of England and more.
• Government will consider using statutory powers to lower energy bills.
• Government borrowing will more than double to £78bn this year and £118bn next year, before starting to come down.
