9 December 2009
In the Pre Budget Report, the Chancellor set out our three-point plan to:
1) secure the recovery and go for growth
2) take tough choices necessary to halve the deficit in four years
3) protect vital frontline public services
After the worst economic crisis in 60 years, and a deep and painful recession, it is vital that Government’s actions are decisive. That way, we reject the decade of low-growth and austerity the Conservatives offer, and set out instead how we can have a richer and fairer country, built on thriving industry and first class public services.
Today Labour shows we have both the values and the experience to get this right. We extend support to those still coping with the effects of recession and announce new measures for growth. And we make tough choices on tax and spend that allow us to halve the deficit while protecting our top priorities: the NHS, Schools, Childcare and Police.
Our actions will not be painless, but nor will they be reckless. This is a balanced package that is the best economic approach for long term stability and above all, fair, in line with Labour values.
The Conservatives would give unfunded and unfair tax cuts to the wealthiest – including a giveaway of £200,000 to each of the 3,000 wealthiest estates. And they would hit the mainstream majority hard to pay for these tax cuts – scrapping Labour’s patient guarantees, including a guarantee for patients suspected of cancer to see a specialist within two weeks. Scrapping the Child Trust Fund for those on incomes as little as £16,000 and cutting Child Tax Credits for those on modest incomes.
The Tory proposals to start cutting now and to cut deeper are dangerous. Their plans risk choking off the recovery before its secured. Yet they refuse to come clean on how fast they would cut. But if they halved the deficit in 3 years instead of 4, they would need to find a further £26 billion – equivalent to over half the schools budget or a VAT rise of 5.5p. They are not being straight with the British public. In 1992 they promised no new taxes before an election – and then hit middle Britain with 22 tax rises once they got in.
Summary of Key Measures
Secure Recovery & Go For Growth
Today, Labour has shown it is the only party in British politics that puts securing the recovery first and introduces new measures to stimulate economic growth
· We will continue support to keep people in work and in their homes by:
§ Guaranteeing every young person out of work for more than six months with a job, training or college place; and a new Better Off in Work Credit to make work pay
§ A freeze on the standard interest rate for Support for Mortgage Interest Payments (SMI) for a further 6 months to help those who have lost a job or income stay in their homes
§ National rollout of the Money Guidance scheme to give financial advice to over 1 million financially excluded in the 12 months from March 2010
· We will continue support to businesses manage tough times by:
§ continued support for the economy and continued efforts to get lending flowing again such as Customer Charters at RBS and Lloyds which improve lending to SME’s
§ extend the Enterprise Finance Guarantee scheme until March 201, worth another £500 million of loan guarantees to SMEs, on top of the £1 billion 8,800 SMEs to date; extend HMRC’s Time To Pay scheme that allows firms to defer tax if needed;
§ new help for Mutuals and for Islamic Finance
· And we announce new measures that “go for growth”:
§ Supporting small businesses by freezing small business corporation tax at 21% and launching the Growth Capital Fund for SMEs which will give them new access to finance
§ A new £400 million “green growth” package that will create new industries and new jobs by including money for infrastructure, offshore wind, carbon capture and storage and electric transport. This also means more money for Warm Front and a new Boiler Scrappage scheme where people can trade in energy inefficient boilers and get £300 off the cost of a new green version
Halve the Deficit in Four Years
Today Labour has shown it is the only party in British politics with a proper plan to halve the deficit as opposed to the reckless and evasive position of the Conservative Party. The Chancellor announced:
§ A tax rise package that is fair, meaning that combined with the last Budget and PBR over half the additional revenue raised comes from the wealthiest 2% of people
o A one off payroll tax on bank bonuses to deter bumper bonuses
o A freeze on the Inheritance Tax threshold at £325,000;
o 1/2 p rise in employer and employee national insurance contributions, with higher earners paying more too
§ A spending cut package that has been carefully worked through
o A below inflation pay settlement across all public sector workers and reform to public sector pensions
o A series of tough programme measures to tighten our belts such as reforming legal aid, scaling back government support to students from wealthier families, and cracking down on fraud and error in access to social housing
o New efficiency savings from Monday’s Smarter Government command paper of £11bn annually by 2012/13, on top of the £26.5bn already saved since the Gershon Review in 2004 including cutting quangos, and marketing and consultancy budgets
§ The introduction of the Fiscal Responsibility Act which requires Government to halve the deficit in four years
Protect Public Services
Today, Labour has shown it is the only party in British politics deeply committed to protecting frontline public services by announcing that even in tough times, we will protect in real terms:
§ investment in the NHS frontline in the next 3 years
§ investment in Sure Start in the next 3 years
§ investment in frontline schools in the next 3 years
§ investment in the police which will ensure that the number of police can be protected over the next 3 years
and we will commit whatever funds are required for the war in Afghanistan and fulfil our ambitions on overseas aid.
To listen to or read the Chancellor’s speech in full, or for more detail on the report, go to the Pre Budget Report microsite at: http://prebudget.treasury.gov.uk/
Fri, Dec 11, 2009
business & economy