27/11/2001

Brown delivers a positive pre-budget report

Chancellor Gordon Brown has delivered his annual pre-budget report which saw increased focus on the idea of building a stronger Britain in the face of an uncertain world.

Confident that the economy would meet this year’s economic growth target of between 2.25 and 2.75 per cent, the Chancellor announced an extra £1 billion for the NHS in addition to a boost for armed forces, in the form of an extra £100 million. The intelligence services and the Metropolitan Police are to benefit from increases of £20 and £30 million respectively, to help fight the war against terrorism both at home and abroad.

The business sector is to see a reform of capital gains tax, now set at 20 per cent for business assets held for a year and 10 per cent for those held at two. The 10p corporation tax band has been extended, and a research and development tax credit, to be included in the next Budget. A ‘flat rate’ VAT system will also give small businesses savings in the region of £1,000 each year.

Pensioners will receive increases in the region of £100, with a guaranteed winter allowance of £200 for the duration of the current parliament. Elderly individuals with savings who are often ineligible for benefits may also avail of a new ‘pensioner credit’ scheme to support their income.

Speaking of the need to overcome the current downturn in the global economy, Mr Brown emphasised the necessity of giving innovation free rein, but even before he revealed his speech, the Chancellor was criticised as serving up “the same old story” by Shadow Chancellor Michael Howard, who added: “Every year to makes these promises and every year he breaks them.”

Labour’s “over-complex tax system” has also come under fire from the Liberal Democrats, with Treasury spokesperson Matthew Taylor saying he wanted to see Gordon Brown refrain from adding any more complications.

Gordon Brown introduced the concept of the pre-budget report in 1997 as a measure that would give a glimpse of some of the tactics to be contained in the following year’s Budget. The statement is designed to help to reduce uncertainty for the business sector, as the Government updates its economic forecasts and launches new policy initiatives.

The next stage in the process is the publication of the Treasury review, to be issued shortly after Gordon Brown’s report. (CL)

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