Plain English 2008 budget
Below you can read our version of the 2008 budget speech without the waffle (you can view the government's budget summary here). We couldn't find a transcript of the actual speech for this year.
In 2007 the British economy grew by 3%. I expect our growth will be in:
- 2008 1.75% to 2.25%;
- 2009 2.25% to 2.75%; and
- 2010 2.5% to 3%.
I expect inflation to rise during 2008 but expect it to return to our 2% target in 2009. I am writing to the Governor of the Bank of England to confirm that the inflation target is 2% using the Consumer Price Index.
Government spending rules
Our rules are:
- That over the economic cycle our spending will be covered by the money we raise from taxes.
- That the money we borrow for investment in the infrastructure, schools, hospitals and so on will not be more than we can afford to repay.
Our borrowing next year will be £43 thousand million (£43 billion) and then in the following years it will fall to £38 billion, £32 billion, £27 billion and £23 billion by 2012/13.
I expect public sector investment less asset sales (such as land and buildings) to be £33 billion next year rising to £37 billion in 2010.
We will spend an extra £2 billion supporting our front line troops including £900 million on military equipment.
All our departments have published plans which will produce savings of £30 billion a year from 2010/11.
Low income families
From October 2009 we will change the rules for Housing and Council Tax Benefit so that working parents are better off than those just on benefits. A working family with one child will be up to £17 a week better off. Child benefit for the first child will go up to £20 a week from April 2009.
I will increase the child element of Child Tax Credit by inflation plus £50 for low and middle income families from April 2009. We will spend an extra £125 million over the next three years helping those who need most help.
From April 2008 the ISA limits are increasing to £7,200 (including £3,600 in cash ISAs).
The Government will launch the Saving Gateway nationally which will be available to savers in 2010. Up to 8 million people on lower incomes will be offered incentives to save in it.
Business taxes, reliefs and help
The main corporation tax rate will fall from 30% to 28% in April. The new capital gains tax rate also starts in April but 90% of businesses and investors will still pay at 10%.
An extra £60 million will be available through the Small Firms Loan Guarantee Scheme this year. And the scheme will include both small and medium firms.
The limit for Enterprise Investment Scheme investment tax relief is being increased from £400,000 to £500,000.
The employee share limit for tax relief under the Enterprise Management Incentive Scheme is being increased from £100,000 to £120,000.
I will also introduce a capital fund starting with £12.5 million to encourage women to start businesses.
And I will give small and medium firms better access to Government contracts and help their cash flow.
From April people who live in the UK but pay tax in other countries will pay a reasonable amount of UK tax once they have lived here for seven years. But we will not charge UK tax on overseas income or gains that are not brought to the UK.
The Secretary of State for Children, Schools and Families will invest an extra £200 million in our education system. This is to bring forward to 2011 the Government’s plan to have at least 70% of pupils get 5 A* - C GCSEs including English and Maths.
We will commit an extra £10 million over the next five years towards a £30 million Enthuse Science Fund.
And I can announce an extra £60 million over the next three years to teach people the skills they need to get jobs.
By 2010 we will be spending over £6 thousand million (6 billion) a year supporting British science and new ideas.
Road pricing could reduce congestion so I am setting aside money to develop the technology we need for it.
We have used shared ownership and shared equity schemes to help 95,000 families get new homes. We will spend £8 billion on new, affordable and social housing over the next three years providing another 70,000 homes each year by 2010/11.
From April key workers, such as teachers and nurses, and first time buyers will be able to borrow from shared equity schemes as long as they can afford half of the price of their new home. Stamp duty will not apply until buyers own 80% of the equity in their home.
I want to see flexible and affordable long-term fixed rate mortgages of up to 25 years.
40,000 new homes are being built and we have found sites for another 70,000.
We will use our £800 million environment fund to pay for clean technologies in developing countries and help them adapt to climate change.
There will be £26 million available next year for a Green Homes Service to help people cut their fuel bills and carbon emissions.
Plane duty will be increased by 10% in the second year of operation.
From April 2009 Vehicle Excise Duty will change to encourage manufactures to produce cleaner cars. New bands will encourage drivers to choose them.
From April 2010 there will be a rate for new cars based on their carbon emissions. Cars that emit less than 130 grams a kilometre will pay no car tax in the first year. A higher rate will be applied to the most polluting cars.
We must encourage sustainable biofuels so I am replacing the biofuel duty differential with the Renewable Transport Fuel Obligation. I am also changing capital allowances for business cars to encourage the use of cleaner cars.
The duty on tobacco will rise from 6pm today putting prices up by 11p on a packet of 20 cigarettes and 4p on five cigars. We will continue the 5% VAT rate on products to help smokers give up their habit.
The duty on alcohol will rise by inflation plus 6%. Prices will go up on:
- a pint of beer by 4p;
- a litre of cider by 3p;
- a bottle of wine by 14p; and
- a bottle of spirits by 55p.
Alcohol duties will rise by inflation plus 2% each year for the next four years.
We will allow charities to claim gift aid at the current 22% rate despite the income tax basic rate falling to 20% in April.
I will raise the winter fuel payment for over 60s to £250 and for the over 80s to £400.