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| Darling raises National Insurance | Darling raises National Insurance |
| (40 minutes later) | |
| National Insurance will go up by 0.5% more than previously planned from 2011 and public sector workers face a 1% pay cap, Alistair Darling has announced. | National Insurance will go up by 0.5% more than previously planned from 2011 and public sector workers face a 1% pay cap, 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 Conservatives accused him of putting off tough decisions on spending because of the coming election. | But the Conservatives accused him of putting off tough decisions on spending because of the coming election. |
| The party said there would be tax and interest rate rises if Labour won the election as a result. | The party said there would be tax and interest rate rises if Labour won the election as a result. |
| But a senior Conservative source told the BBC they would not oppose the bank bonus tax - even though they believe there were serious questions about how easy it would be for banks to find ways of avoiding it. | But a senior Conservative source told the BBC they would not oppose the bank bonus tax - even though they believe there were serious questions about how easy it would be for banks to find ways of avoiding it. |
| He said the increase in National Insurance contributions - which is on top of existing plans for a 0.5% rise - was the announcement the Tories would work hardest to avoid because it was "a tax on the many and not the few". | He said the increase in National Insurance contributions - which is on top of existing plans for a 0.5% rise - was the announcement the Tories would work hardest to avoid because it was "a tax on the many and not the few". |
| Spending cuts | Spending cuts |
| In his speech, 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." | In his speech, 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". |
| 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 Live: Reaction and analysis At-a-glance: The key points class="" href="/2/hi/uk_news/england/gloucestershire/8404744.stm">Pointers for election fight | |
| 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%. |
| 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 deficit in four years. | Mr Darling has been under pressure to show how Labour would halve the 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. |
| BBC political editor Nick Robinson said Alistair Darling "promised gains now and pain later - after the election to be precise" adding that "much more pain remains hidden deep inside his budget calculations which imply huge cuts in many government departments". | BBC political editor Nick Robinson said Alistair Darling "promised gains now and pain later - after the election to be precise" adding that "much more pain remains hidden deep inside his budget calculations which imply huge cuts in many government departments". |
| 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 |
| In his speech lasting just over 50 minutes, Mr Darling unveiled a series of belt-tightening measures including a cap on public sector pay rises of 1% for two years from 2011 - sparking trade union anger. | In his speech lasting just over 50 minutes, Mr Darling unveiled a series of belt-tightening measures including a cap on public sector pay rises of 1% for two years from 2011 - sparking trade union anger. |
| Mr Darling said contributions from the state to the pensions of teachers, local government and health workers and civil servants would also be capped, saving £1bn a year. | Mr Darling said contributions from the state to the pensions of teachers, local government and health workers and civil servants would also be capped, saving £1bn a year. |
| TUC general secretary Brendan Barber, who broadly welcomed much of the chancellor's statement, said: "Public sector workers - many of whom are low paid - should not have to pay the price for a crash they did nothing to cause." | TUC general secretary Brendan Barber, who broadly welcomed much of the chancellor's statement, said: "Public sector workers - many of whom are low paid - should not have to pay the price for a crash they did nothing to cause." |
| In his pre-Budget report Mr Darling identified savings of £5bn in five areas, including cuts to government IT and "outsourcing" prisons. | In his pre-Budget report Mr Darling identified savings 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, to be paid by the banks rather than individuals, which he said would raise £550m. | He also unveiled a one-off tax on bank bonuses over £25,000, to be paid by the banks rather than individuals, which he said would raise £550m. |
| The National Insurance announcement will hit about 10 million workers. According to Treasury estimates, someone earning £30,000 will be £90 a year worse off and someone on £40,000 will be £190 worse off, while someone earning £10,000 a year will be £110 better off. | The National Insurance announcement will hit about 10 million workers. According to Treasury estimates, someone earning £30,000 will be £90 a year worse off and someone on £40,000 will be £190 worse off, while someone earning £10,000 a year will be £110 better off. |
| Mr Darling said the changes would raise £3bn a year. | Mr Darling said the changes would raise £3bn a year. |
| No one will ever believe a word they say on the economy again George Osborne, shadow chancellor Diplomats face £13m perks squeeze Boiler scrappage scheme unveiled Q&A: What it means to you | No one will ever believe a word they say on the economy again George Osborne, shadow chancellor Diplomats face £13m perks squeeze Boiler scrappage scheme unveiled Q&A: What it means to you |
| The move was immediately attacked by the CBI business organisation as an "extra tax on jobs" which would harm the UK's recovery. | The move was immediately attacked by the CBI business organisation as an "extra tax on jobs" which would harm the UK's recovery. |
| The chancellor also said he was freezing income tax thresholds, with an additional 70,000 people due to become higher-rate taxpayers. | The chancellor also said he was freezing income tax thresholds, with an additional 70,000 people due to become higher-rate taxpayers. |
| Sterling weakened and the price of UK government bonds both weakened slightly following Mr Darling's statement. | Sterling weakened and the price of UK government bonds both weakened slightly following Mr Darling's statement. |
| But BBC business editor Robert Peston said there was little cause for alarm: "The UK is neither closer or further from losing its AAA credit rating, or suffering a sterling crisis, or being unable to borrow from international investors." | But BBC business editor Robert Peston said there was little cause for alarm: "The UK is neither closer or further from losing its AAA credit rating, or suffering a sterling crisis, or being unable to borrow from international investors." |
| In his speech, Mr Darling told MPs unemployment would continue to rise for some time, but stressed that 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 that tackling it would remain the government's top priority. |
| 'Bingo and boilers' | 'Bingo and boilers' |
| He said that 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. | He said that 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. |
| 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 basic state pension will rise by 2.5% in April. From next year's Budget, Bingo duty is to be cut from 22% to 20%. | The basic state pension will rise by 2.5% in April. From next year's Budget, Bingo duty is to be cut from 22% to 20%. |
| 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 is Mr Darling's third since he became chancellor in June 2007. | This year's PBR is Mr Darling's third since he became chancellor in June 2007. |
| Nick Robinson's view Send us your comments | Nick Robinson's view Send us your comments |
| 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. |
| 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." |
| Scrap Trident | Scrap Trident |
| 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." |
| SNP Treasury spokesman Stuart Hosie said: "Instead of slashing the Scottish government's budget by £500m, the Chancellor should have announced he was scrapping Trident - saving £100m and ridding Scotland of this obscene weapon of mass destruction." | SNP Treasury spokesman Stuart Hosie said: "Instead of slashing the Scottish government's budget by £500m, the Chancellor should have announced he was scrapping Trident - saving £100m and ridding Scotland of this obscene weapon of mass destruction." |
| Elfyn Llwyd, of Plaid Cymru, said the National Insurance increase "may well become a tax on jobs". | Elfyn Llwyd, of Plaid Cymru, said the National Insurance increase "may well become a tax on jobs". |