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Darling raises National Insurance | Darling raises National Insurance |
(9 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. | 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. | 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. | 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. | But the Tories accused him of having "ducked" crucial decisions to get public finances back on track. |
Mr Darling said "fairness" was the cornerstone of his plans, telling MPs: "Those on modest incomes are protected. Those on middle incomes will pay more depending on their earnings. The biggest burden will fall on those with the broadest shoulders." | Mr Darling said "fairness" was the cornerstone of his plans, telling MPs: "Those on modest incomes are protected. Those on middle incomes will pay more depending on their earnings. The biggest burden will fall on those with the broadest shoulders." |
And in a foretaste of the looming general election battle, he said the choice was between going for growth or putting the recovery at risk - a choice between "two competing visions". | And in a foretaste of the looming general election battle, he said the choice was between going for growth or putting the recovery at risk - a choice between "two competing visions". |
Spending cuts | Spending cuts |
But he was also forced to admit that the recession in the UK had been worse than he predicted last year. | But he was also forced to admit that the recession in the UK had been worse than he predicted last year. |
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%. |
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 href="/2/hi/uk_news/politics/8403127.stm">Live: Reaction and analysis At-a-glance: The key points | |
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. | 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. |
In his speech lasting just over 50 minutes Mr Darling also unveiled a series of belt-tightening measures including a cap on public sector pay rises of 1% for two years from 2011 - angering trade unions. | In his speech lasting just over 50 minutes Mr Darling also unveiled a series of belt-tightening measures including a cap on public sector pay rises of 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. | 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. | And he identified saving of £5bn in five areas, including cuts to government IT and outsourcing prisons. |
'Tax on jobs' | 'Tax on jobs' |
He also unveiled a one-off tax on bank bonuses over £25,000, which he said would raise £0.5bn. | He also unveiled a one-off tax on bank bonuses over £25,000, which he said would raise £0.5bn. |
The National Insurance announcement comes on top of plans unveiled in last year's pre-Budget report to increase the tax by 0.5% 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. | The National Insurance announcement comes on top of plans unveiled in last year's pre-Budget report to increase the tax by 0.5% 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. |
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 | 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 |
Mr Darling said the changes would raise £3bn a year. | Mr Darling said the changes would raise £3bn a year. |
The move was immediately attacked by the CBI as an "extra tax on jobs" which would harm the UK's recovery. | The move was immediately attacked by the CBI as an "extra tax on jobs" which would harm the UK's recovery. |
In his speech, Mr Darling told MPs unemployment would continue to rise for some time, but stressed tackling it would remain the government's top priority. | In his speech, Mr Darling told MPs unemployment would continue to rise for some time, but stressed tackling it would remain the government's top priority. |
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. |
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. |
'Bingo and boilers' | 'Bingo and boilers' |
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%. |
Mr Darling also unveiled an extension of free school meals to more primary school children from low income families in England - and earned a cheer from Labour MP by announcing a crackdown on tax avoidance and evasion including the use of offshore tax havens. | Mr Darling also unveiled an extension of free school meals to more primary school children from low income families in England - and earned a cheer from Labour MP by announcing a crackdown on tax avoidance and evasion including the use of offshore tax havens. |
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 |
He also announced a freeze in the £325,000 inheritance tax allowance. | He also announced a freeze in the £325,000 inheritance tax allowance. |
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. | 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. |
Shadow chancellor George Osborne attacked the credibility of Labour's figures, telling MPs: "They have lost all moral authority to govern today." | Shadow chancellor George Osborne attacked the credibility of Labour's figures, telling MPs: "They have lost all moral authority to govern today." |
"Every family in the country is going to be forced to pay for years for this prime minister's mistakes." | "Every family in the country is going to be forced to pay for years for this prime minister's mistakes." |
He added: "No one will ever believe a word they say on the economy again." | He added: "No one will ever believe a word they say on the economy again." |
Lib Dem treasury spokesman Vincent Cable said it was clear from Mr Darling's statement that the UK's economic position was "still very grave". | Lib Dem treasury spokesman Vincent Cable said it was clear from Mr Darling's statement that the UK's economic position was "still very grave". |
He said: "What we needed was a national economic plan and what we have got is an election manifesto." | He said: "What we needed was a national economic plan and what we have got is an election manifesto." |
He told MPs he welcomed "small" initiatives such as help for young people and environmental issues but joked: "This is a good Budget for bingo and boilers." | He told MPs he welcomed "small" initiatives such as help for young people and environmental issues but joked: "This is a good Budget for bingo and boilers." |
He said the government had been "over-dependent for its revenues on the fickle fortunes of the banking industry". | He said the government had been "over-dependent for its revenues on the fickle fortunes of the banking industry". |