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Darling raises National Insurance | |
(20 minutes later) | |
National Insurance will go up by a further 0.5p from 2011, Chancellor Alistair Darling has announced. | |
In his final pre-Budget report before a general election, Mr Darling announced a public sector pay freeze, bank bonus tax and a home boiler srappage scheme. | |
He also announced an increase in the state pension and a package of measures to help the unemployed. | |
He said the choice facing the country was "between securing the recovery or wrecking it". | |
In last year's pre-Budget report, Mr Darling increased all National Insurance contributions by 0.5% for all employees and employers. His latest announcement comes on top of that. | |
Mr Darling was also forced to admit that the recession in the UK had been worse than he predicted last year. | |
KEY POINTS National Insurance up by a further 0.5% from April 2011Economy to shrink by worse than expected 4.75% this yearNew 50% tax on banker bonusesHousehold boiler scrappage scheme1p rise in corporation tax for small firms scrappedTax rebates for electric cars and wind turbinesBingo duty falls from 22% to 20%State pension to rise by 2.5% next yearMore help for young unemployed Economic challenges for the parties LIVE: In text and video At-a-glance: The key points | |
He said the economy would shrink by 4.75% in 2009 compared with his Budget estimate in April of 3.5% | |
And the public finances were also deeper in the red with a deficit of £178bn this year compared with the £175bn he had predicted. | And the public finances were also deeper in the red with a deficit of £178bn this year compared with the £175bn he had predicted. |
Mr Darling has been under pressure to show how Labour would halve the UK's budget deficit in four years. | Mr Darling has been under pressure to show how Labour would halve the UK's budget deficit in four years. |
He claimed government action to pump money into the economy had made a "real difference" to families and businesses. VAT will return to 17.5% on January 1 as planned, with no other changes in VAT, the chancellor confirmed. | He claimed government action to pump money into the economy had made a "real difference" to families and businesses. VAT will return to 17.5% on January 1 as planned, with no other changes in VAT, the chancellor confirmed. |
He said unemployment in the UK would keep rising for some time but said promoting employment remained a top priority for the government. | He said unemployment in the UK would keep rising for some time but said promoting employment remained a top priority for the government. |
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. | 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. |
Mr Darling also unveiled guarantees of a training or education place for every 16 and 17-year-old to be available to school-leavers again in September 2010. | Mr Darling also unveiled guarantees of a training or education place for every 16 and 17-year-old to be available to school-leavers again in September 2010. |
He also announced that a 1p increase in Corporation Tax for smaller companies is to be deferred, leaving the 2010 tax rate unchanged. | He also announced that a 1p increase in Corporation Tax for smaller companies is to be deferred, leaving the 2010 tax rate unchanged. |
GUIDE TO PRE-BUDGET REPORT Each year the chancellor delivers two reports to MPs, updating them on the state of the economy and planned fiscal changes. | GUIDE TO PRE-BUDGET REPORT Each year the chancellor delivers two reports to MPs, updating them on the state of the economy and planned fiscal changes. |
The pre-Budget report (PBR) takes place in the autumn with the Budget each spring. | The pre-Budget report (PBR) takes place in the autumn with the Budget each spring. |
This year's PBR will be Mr Darling's third since he became chancellor in June 2007 and, with an election imminent, his most important. | This year's PBR will be Mr Darling's third since he became chancellor in June 2007 and, with an election imminent, his most important. |
Nick Robinson's view Send us your comments | Nick Robinson's view Send us your comments |
The minimum number of hours those over 65 need to work to receive Working Tax Credit is also to be reduced. | The minimum number of hours those over 65 need to work to receive Working Tax Credit is also to be reduced. |
The basic state pension will rise by 2.5% in April, a real-terms increase of nearly 4%. From next year's Budget, Bingo Duty to be cut from 22% to 20%. | The basic state pension will rise by 2.5% in April, a real-terms increase of nearly 4%. From next year's Budget, Bingo Duty to be cut from 22% to 20%. |
Other green initiatives in the report included tax rebates for electric cars and wind turbines and a boiler scrappage scheme along the lines of the car scrappage scheme. | |
The chancellor's statement sets the tone for the economic debate in the run-up to the election - which must be held by next June. | The chancellor's statement sets the tone for the economic debate in the run-up to the election - which must be held by next June. |
The Lib Dems argue neither of the main parties are being honest about the spending challenges facing the next government and the extent of cuts that will be needed. | The Lib Dems argue neither of the main parties are being honest about the spending challenges facing the next government and the extent of cuts that will be needed. |