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Darling raises National Insurance | Darling raises National Insurance |
(20 minutes later) | |
National Insurance will go up by a further 0.5p from 2011 and public sector workers face a 1% pay squeeze, Alistair Darling has announced. | |
In his final pre-Budget report before a general election, the chancellor also announced a bank bonus tax and a home boiler scrappage scheme. | |
He said he wanted to promote growth without "wrecking" recovery. | |
But the Tories accused him of having "ducked" crucial decisions to get public finances back on track. | |
Mr Darling said the public faced a choice between "two competing visions" - but he 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 | 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% | 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 said he could not spell out in detail where the spending axe might fall - because the spending review has been delayed until after a general election - but said frontline public services would be protected. | |
But also unveiled a series of belt-tightening measures including a cap public sector pay rises to 1% for two years from 2011 - angering trade unions. | |
He said contributions from the state to the pensions of teachers, local government and health workers and civil servants would be capped, saving £1bn a year. | |
And he identified saving of £5bn in five areas, including cuts to government IT and outsourcing prisons. | |
He also unveiled a one-off tax on bank bonuses over £25,000, which he said would raise £0.5bn. | |
PRE-BUDGET REPORT DOCUMENTS Documents in full [3.87MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here | |
The National Insurance announcement comes on top of plans unveiled in last year's pre-Budget report to increase the tax by 0.55 in April 2011, although the point at which National Insurance starts will be raised so that no-one earning less than £20,000 will pay it. | |
Mr Darling said tackling unemployment, which he said would continue to rise for some time, would remain 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. | 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. |