Jobs and education
- The number of civil servants in London is to be reduced by one third over the long term, with 15,000 posts relocated within the next five years to help to save 11 billion. One thousand civil servants in the Ministry of Justice will be moved out of London, saving 41 million.
It has taken only a year, but at last Alistair Darling has given some details on how he plans to slash Government costs. In the Budget of last April, the Chancellor promised efficiency savings on public sector back-office functions, with speculation pointing to a 30 per cent reduction in office space. Todays plan to relocate staff from expensive sites in the capital goes some way to clawing back costs.
- Consultation on reform of employers right to make people retire at 65, which examines options including scrapping the default retirement age, raising it or giving employees stronger rights.
Related LinksExtra 270m to fund studentsThis is a phoney Budget. Bring on the real oneNuclear and wind power at heart of BudgetMultimediaLIVE: analysis by our economic and money team LIVE: deconstruct the Budget with our experts- Guarantee to provide a job or training to 18 to 24-year-olds out of work for more than six months will run until March 2012, instead of ending in March 2011.
Youth unemployment was expected to be high up on the agenda in todays Budget. Lower-than-forecast numbers of people claiming benefits 1.6 million means that the Government has more money to play with. However, behind the headline figures, the situation is dire. The economically inactive, people neither employed nor unemployed, stands at a record high of 8.16 million, suggesting that more young people are staying in education rather than face the dole. Unless the economy strengthens, a fresh wave of young unemployed could hit the market and destabilise recovery.
- Government to set up a 35 million University Enterprise Capital Fund to support innovation and spin-out companies.
- To make available 270 million in 2010-11 to fund extra an extra 20,000 university places in areas such as science, technology, engineering and maths as part of a University Modernisation Fund.
- The 2.5 billion cost of training young people and extra university places will be partly funded from the tax on bankers bonuses.
Housing
- A new stamp duty holiday will be introduced for properties of up to 250,000, from midnight, to be funded through an increase in stamp duty from 4 per cent to 5 per cent on properties worth 1 million or more from April next year.
There was much jeering from the Opposition when this was announced, with David Cameron claiming the Tories proposed raising the threshold on stamp duty to homes worth more than 250,000 three years ago. The boost, worth up to 2,500 for first-time buyers, will help a still fragile housing market still struggling against banks reluctance to provide mortgages as well as a poor supply of houses for sale.
- From October 2011, the most expensive properties across the country will be excluded from the Housing Benefit calculation in each area to save 250 million a year.
Family finances and pensions
- One million people will be provided with bank accounts over the next five years. Since 2003, the number of people without a bank account has fallen from 3.75 million to 1.75 million, but many are still without this basic function, where they can receive their wages, benefits and their pension.
- Higher winter fuel payment will be guaranteed for another year, to be paid by closing tax loopholes.
- Inheritance tax threshold will be frozen for four years.
- To extend tax credit system for people aged over 60. People will have to work less minimum hours to qualify for tax credits.
- The annual ISA limit will rise from 7,200 to 10,200, of which half can be saved in cash, from next month. ISA limits will increase annually in line with inflation.
- Parents of one and two-year-olds to receive 4-a-week increase in child tax credit from 2012.
Business
- RBS and Lloyds must provide 94 billion in new business loans, half of which must be provided to small to medium-sized businesses.
Considering that Britains banks have had 850 billion in funding from taxpayers and through government liquidity schemes, according to the National Audit Office, lending money to the countrys struggling businesses seems the least they could do.
- A credit adjudicator service to be set up to help SMEs to deal with complaints and examine lending decisions to determine whether they are fair.
- The Government will set UK Finance for Growth to help to expand the financial sector. The FSA to speed up the licensing process for new banks.
- Commits to G20-approved levy on banks.
After introducing the 50 per cent tax on bonuses exceeding 25,000 in the Pre-Budget Report, Mr Darling held back from doling out another bashing to banks today. Instead, the Chancellor will wait to see whether he can secure the backing of his G20 counterparts at a meeting next month for an international levy on banks a total contrast to the Tories pledge to introduce a levy unilaterally, if other countries choose not to.
- 50 per cent tax on bonuses in excess of 25,000 introduced in the Pre-Budget Report has raised 2 billion.
The proceeds from the controversial tax has raised nearly four times more than the Treasury"s initial estimate of 550 million, and will be used to help to fund the 2.5 billion programme to support the young unemployed and university investment.
- Business rates will be cut for one year from October.
- The computer games sector in Britain will receive investment. Will also set up a 35 million University Enterprise Capital Fund.
- To introduce a 50p tax on landlines to fund superfast broadband rollout for 90 per cent of the country by 2017.
- To double the annual investment allowance to 100,000. The main rate of capital gains tax will not increase.
- Entrepreneurs relief for capital gains tax to be increased to 2 million.
- 15 per cent more of government contracts will go to small to medium-sized businesses, many of which count the central government as one of their key clients.
- The Time to Pay scheme for tax payments from SMEs will be extended for the whole of the next parliament.
- Pledges that the Government will pay 80 per cent of invoices from small business within five days.
Environment
- Government to set up a new green investment bank, which will control 2 billion of equity, to fund a low-carbon economy. Half the cost will come from asset sales, including the Channel Tunnel Rail Link, with the rest matched by private investment.
- To provide an extra 60 million to fund offshore wind farms.
Taxes
- 2.5p rise in fuel duty to be staggered. Will increase it by 1p in April, 1p in October with the remainder in January, at which point the Government expects inflation to be in line with the Bank of England"s target of 2 per cent.
This is a bit of a sop. The 2.5p rise on fuel duty is one of Mr Darlings least popular measures, but if he had scrapped it, it would have meant a loss of 1.1 billion in revenue. Spinning its introduction out until January will do little to appease drivers who are paying high prices for fuel.
- Confirms 50 per cent rate of income tax will come in April for people earning more than 150,000.
- To continue the drive to prevent tax evasion and avoidance. Will sign tax information agreements with Domnica, Grenada and Belize.
This was a high point of todays Budget speech, bearing in mind the Lord Ashcroft, the Torys non-dom Belize-based deputy chairman. Mr Darling said that the agreement with the three countries would be signed within the next few days, joking that this was quicker than the ten years it took Mr Cameron to learn of the peers tax status.
- Duty on cider will rise 10 per cent above inflation.
A big surprise but Mr Darling said that cider had been undertaxed for some time in comparison with other alcoholic drinks.
- Duty on alcohol and tobacco will rise by 1 per cent above inflation from Sunday, then 2 per cent above inflation for two years from 2013.
- Tobacco duty will increase by 1 per cent above inflation and by 2 per cent each year until 2014.
- Confirms 0.5 per cent increase in National Insurance for people earning more than 20,000, which will come into effect from April next year.
Economy
- Expects to undershoot his 178 billion target by 11 billion this year, to 167 billion or 11.8 per cent of GDP.
Public finance figures released last week flagged up that the Government would undershoot its forecast, after borrowing reached 131 billion for the year to February. However, the countrys total debt is a huge 857 billion.
- Borrowing will fall to 163 billion next year, which is equal to 11.1 per cent of GDP. It will then fall to 131 billion in 2011-12, or 8.5 per cent of GDP. Borrowing will then decline to 110 billion, or 6.8 per cent of GDP, to 89 billion in 2013-14, equal to 5.2 per cent of GDP and to 74 billion in 2014-15 at 4 per cent of GDP.
- Confirms GDP growth of between 1 per cent and 1.5 per cent for this year but has revised down forecasts for next year from between 3.25 per cent and 3.75 per cent to between 3 per cent and 3.75 per cent.
- Net debt as a share of GDP will reach 54 per cent this year. It will then increase to 75 per cent by the end of the forecast period in 2014-15 and will then begin to fall.
Public finances
- Public sector pay rises will be held at 1 per cent for two years from 2011.
- Budget plans will raise an extra 19 billion to reduce borrowing.
- The Government will provide 100 million to repair roads and a further 285 million to fix motorways.
- The Government will go ahead with plans to sell the Tote in the summer as part of plans to pull in 16 billion from asset sales.
- Government finalising options on the sale of the Dartford Crossing.
- An extra 4 billion will be used to fund operations in Afghanistan.
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