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Budget 2007

Building Britain’s long-term future

Prosperity and fairness for families

This year's Budget sets out increases in spending on public services; increases education spending to its highest ever levels; reforms the tax system to reward work, support families with children, and take 600,000 pensioners out of income tax.

For a more detailed analysis visit HM Treasury's website by clicking HERE

 Key announcements

·       Further support for families, by increasing the child element of the Child Tax Credit by £150 a year, over and above the commitment to increase it in line with earnings to the end of this Parliament. This raises the child element to £2,080 a year lifting 200,000 children out of poverty;

·      Increasing the threshold for the Working Tax Credit by £1,200 to £6,420 to improve work incentives;

·      So almost £2 billion extra is being invested in tax credits in this Budget;

·      Child Benefit will rise in three stages to £20 per week increasing faster than inflation. Child Benefit which was £575 a year in 1997 will by 2010 be over £1,000;

·      Education spending will rise to £90 billion by 2010-11 the highest ever level, increasing UK education spending from 4.7 per cent of GDP in 1997 to 5.6 per cent by 2010-11;

·      An increase in pensioner tax allowances taking 600,000 pensioners out of paying income tax;

·      The basic rate of income tax cut from 22 pence to 20 pence from April 2008 with the 10 pence starting rate removed;

·      Simplifying the tax system by aligning the upper earnings limit for national insurance with the higher rate threshold and over indexing both to avoid people losing out

·      The headline corporate tax rate will be cut from 30 per cent to 28 per cent from April 2008 together with other significant reforms to the corporate tax system;

·      Measures to encourage energy efficiency and tackle climate change including an increase in fuel duty rates from 1 October 2007; and increasing Vehicle Excise Duty on the most polluting cars, while cutting it for the less polluting;

·      Extending the Financial Assistance scheme from its present budget of £2 billion to a total of £8 billion so that every one of the 125,000 workers will now receive help. Reporting later this year we will investigate, in full, the assets within the affected schemes and how we can use them further to support affected pensions.

·       An updated economic forecast, which shows that the UK economy is stable and growing, and that the Government is meeting its strict fiscal rules for sound public finances over the economic cycle;