21/03/2012 Budget

It is 11.30am on Wednesday, 21st March. It is Budget Day. This is

the scene above Downing Street. We have live coverage as the

Chancellor prepares to open the red box. Stand by for some bold moves,

we're told on taxation and plenty of debate on how to revive the

British economy. I suppose there is probably one

dominant question today beyond the detail on tax and spending and

borrowing, how will this Budget get the economy growing more strongly?

That's the question. George Osborne will unveil his measure in about an

hour's time. Lots them, it has to be said, have been widely trailed

and he said that he wants to target help at those people on low and

middle incomes. Let's look in Downing Street because we are

expecting the Chancellor to appear on the steps of Number Eleven in

the traditional pre-Budget scene any moment really. So we will be

there for when that happens and he will be flanked, of course, by

Danny Alexander and the other key treasury ministers as they make

their way to the Palace of Westminster on this Budget Day. So

back in Downing Street in just a few seconds time. Of course, we

will have live live coverage of the speech and of Labour's response.

Before that at noon, it is Wednesday, we will have Prime

Minister's Questions and to guide us throughout we will have our own

experts with me in the studio and more besides.

I am outside Parliament talking to politicians of all stripes. Getting

their assessment of the big Budget announcements and how the

Chancellor's statement will affect the political landscape.

I'm I'm on the factory floor at Pashley Cycles in Stratford-Upon-

Avon and I will be finding out what local businesses want to hear in

today's Budget. On on a trading floor in the City,

gauging the reaction from the stock, the bon and currency -- bond and

Here is a pledge, we will have coverage and we will have the best

analysis. With me is the BBC's political editor, Nick Robinson.

Our economics editor, Stephanie Flanders and our business editor,

Robert Peston. More from you in a few minutes. Earlier this morning,

the Business Secretary, Vince Cable, was at a -- who has had a lot to

stay about the Budget and what he would like to see, he was telling

us on his way to Parliament, his party's priority was to help those

on on lower incomes. The Liberal Democrats have pushed

very hard to lift low earners out of tax and help hard-pressed middle

income families. That's our priority. The Budget has to be

judged against the extent to which it contributes to Britain's

recovery from this dreadful economic crisis.

It will be interested to judge the Budget by what some of Mr Cable's

apparent demands were in the last few weeks. Ed Miliband the Labour

leader on his way to Parliament telling us for him it was about

jobs and growth. The Government's economic plan is

failing. What we need today is action to get jobs and growth

moving in this country and what the Chancellor must do is ensure that

any money he can raise from those at the top is spend on helping

millions of ordinary families who are struggling to get by. It would

be the wrong priority to cut taxes for the richest people in Britain

earning over �150,000 a year in a top rate of tax, income tax cut.

Ed Miliband with thoughts before he Nick Robinson is with me. Nick, I

ask you about the main thrust of the Budget and what we are

expecting, maybe we can keep an eye on Number Eleven Downing Street to

see what is going on there because the door will open in a minute or

so. We will keep an eye on that, Nick. What will be the big theme?

Well, it would be tempting for the Chancellor to stand up and I say,

"I refer members to the announcements made in the media

some hours ago." The Prime Minister uses that formula when he is asked

the same question. There is a lot of detail about how he pays for the

tax cuts that we have heard of, personal tax allowance, top rate of

tax tax, where he gets the money from in order to be able to do that.

He will want to present it as a series of tax cuts who help people

who work hard and earn, but he will say that more money is being spent

on people in the mid-ling and people -- middle and people in the

top. Labour will say every pound is a pound you could have spent on

someone else even if you managed to get the money to pay from other

rich battle. How much of a battle has it been? On a lot of the stuff

they agree. On the personal tax allowance which gives you more

money before you pay income tax, the Tories and the Lib Dems have

different ways, but they agree that is a good route. On the top rate of

tax, George Osborne wanted to do it because he promised the Lib Dems

are not keen, but they never stuck their heels in. What they were

fighting about what is what what they got back in return. How if you

are the the Tories do we patch it up in a way that looks like it will

help growth. It has been more about that than a row about you can't do

this and you mustn't do that. We will join Stephanie soon to talk

about growth. When he steps out and knows that he

is going to have to sell this to lots of people who will be

sceptical about the content and the political motivation behind it,

what is the narrative going to be for the Chancellor? Reform. What he

wants to do is do what negligentle Lawson did when he was Margaret

Thatcher's chancellor. He wants to say in that red box outside is the

Budget is the secret to making the tax system, simpler and fairer.

The Chancellor proudly brandishing the red box. Danny Alexander

someone of the so-called quad of ministers who has been in charge of

directing the negotiations a very, very important task they have had.

As everyone agrees, even owe pone poneants this -- opponents this

Budget will have a big impact on the health of the British economy

going forward next year. When you look at the growth figures which

have been feeble for lots of the quarters involved, it is really a

big question about whether this package of measures, not just the

taxing, but what he is doing on spending and the levels of

borrowing, whether that package will lead to healthier growth and

more jobs for people. As the Chancellor makes his way to

the House of Commons, I will bring Stephanie Flanders in. Whatever

individual measures the Chancellor announces in the the Budget,

everything being driven by the need to reduce Government borrowing

because that's been such a huge concern. Stephanie, tell us where

we stand on that? What does that look like? We are not far along in

filling that big hole in the public finances as the the Chancellor

hoped he would be when he had his first Budget in June 2010. We are

not as far along as many would think, at least when it comes to

spending cuts. If you look at the first two years of George Osborne's

If you go to the full seven years of austerity that we are looking at

and remember it was five years, it was at the Pre-Budget Report in

November that we ended up with an extra couple of years, all the

spending cuts still to come. Overall, we are looking at 80% of

the austerity if you like is coming from spending cuts. Only 20% from

tax rises most of which we have had. We have only had 12% of the

spending cuts we're going to have. We have had the reversal of the

stimulus spending, but in terms of long-term spending cuts, only 12%.

A lot more to go. This is the toughest period for public spending

since the war. We We should remember the Gordon Brown era after

2004 was the period of fastest growth since the war.

Back back to June 2010, duren George Osborne thought he would

have rapid reduction in Government borrowing and he could count on the

private sector, on the rest of the world to fill the gap. Go back to

ancient history, it feels like a boom now, 2007, growth was looking

strong. It was the strongest in four years, but then we had the

banking crisis. We had the deepest recession in 2008 that we have had

since the 1920s and right into 2009, we were only starting to recover in

2009, 2010 when George Osborne came in, we were looking at what we

thought was a mediocre recovery until that last quarter of 2010

when we had the fall in national output which turned out out to be

not necessarily a blip. 2011, a feeble year. Disappointing compared

to what we were expecting. We knew it wasn't going to be a normal

The gap at the end there. 2012 - what was that look like? It may go

up a little bit. 0.7% is what they said in November. We may see it go

up to 0.8%. A year ago, they were expecting 2.5%. This is a much

weaker picture and that limits George Osborne's room for manoeuvre.

With all of that in mind, Robert, how do you see it? What do you

expect today which will change this picture, if anything? Plainly I

will look at how this affects the confidence of businesses. They will

be very interested on what happens on corporation tax. We have seen

some plans from the Chancellor for some pretty sustained cuts in the

rates of corporation tax. There has been speculation he might do more.

That will be interesting to see if he does do more on that.

Many of those who run companies will be cheered by this cut in the

top rate of income tax. It will not go down well with everybody. For me

personally, I am fascinated to see what the Office for Budget

Responsibility says that will cost. Obviously, at a time when resources

are very scarce, if it turns out to be a lot of money, that will

massively fuel the political battle. If it turns out to be a tiny amount

of money, in their view, it will be interesting to see how Labour

responds. So, a huge amount, really, to get one's teeth into. The other

side of it, which I know only affects a few thousand people,

particularly in London and the southeast, but these are famous

footballing superstars, hedge fund managers and the rest - I am

fascinated to see, not so much the rise in stamp duty. We know from

the leaks that it is going up to 7% on houses worth more than two

Thank you. Throughout the programme we will be

getting reaction, of course, from people Robert is talking about,

business people and others and today we are in Stratford-Upon-Avon

to talk to people there about their hopes and then their response and

my colleague, Jo Coburn is there for us.

Thank you very much, Huw. I am here on the factory floor. Everybody

working around me. This company is based in Stratford-Upon-Avon in the

heart of the Midlands. They have been making bikes since 1926. The

company prides itself on assembling bikes from start to finish,

sourcing most of the components locally. This saddle came from

Birmingham and the wheel manufactured in West Bromwich. To

talk about that is the managing director, Adrian Williams and with

him is Annabel Mc Mahon. Welcome. We have talked before and

you have said that manufacturing is doing all right, but there is a

problem with confidence in the And that's stopping people spending

a fair bit of money on a bike? There has been too much negativity

and we need to go back to positivity and they will start

buying bikes again. Now one of your concerns Annabel,

you employ two people, both of of whom were on benefits and you said

the process was a nightmare, why? It just seemed to me that the

process is working against them rather than for them. They They to

ring up and go through hoops and both said it would be easier to

stay at home and carry on taking the benefits, but they are good

employees and they wanted to get into the workplace. We are a

growing business and we needed them and we have worked it out, but I

was horrified at how difficult it was.

Is work paying for them or are they not earning anymore than they were

on benefits? They are earning about the same. It is not incentivising

them to get into the workplace and we really need them. It is so wrong

that the system is geared up towards everybody staying at home

when people want to get back into the workplace.

Is that one of the reasons that actually growth is very difficult,

taking on new staff, Steve? It is. In my case, it is probably

the technical skills that aren't available. The skills are something

that's been an issue for sometime now. We need apprentices, we have

got them, but it is complex and I find if you look at a company's

size, be it a PLC or a microbusiness, the situation is

very different with each company. The help they need. The finance

they need. Cutting through the regulation necessary to get the

apprentices, those are the issues we have.

What What about on the financial side? Are you getting credit? Are

banks lending to you? The access to finance is a difficult thing. They

say they are, there are new initiatives, but the complexity of

them and whether they are targeted to the home market, I can get some

help now on my overseas export, on the export market. There are some

credit guarantee schemes that would help you get the finance, but

access to finance for your working capital has stopped us growing and

The previous experience we had was when they brought the last scheme

in, we went to our bank and said "What about the Government-

supported scheme?" they said, "We don't do that." Thank you. Let's

speak to our expert. Thank you for coming to the programme. You are

the presenter of Money Box on Radio 4. We heard there particular

difficulties of getting access to finance. What are the options?

think he'll do something. He wants an enterprise Budget. None of the

briefs have been about that. I think he'll surprise us. One option

would be if wealth I -- welty people wanted to help, they could

get interest on that loan. That would be different from the scheme

we have at the moment. That interface, that was being spoken

about between work and jobs, it's so important to get that right, so

people on benefits who want to go into work, they can make that

transition easily, from an employer's and employee point of

view. The expectation is of those people providing that growth and

taking those people on. Yes. Small businesses are one of the biggest

recruiters of people. They want people to go into work and get off

benefits, or off some benefits. People are desperate for work.

us before we go how people can get in touch with the programme? They

can go to the BBC News website and click on "Budget Live." They can

Texas or Tweet us. Yes, get on Tweeting and texting. Now back to

you. Thank you. Plenty more business to come to Jo

and her colleagues. You can follow the coverage not just on the TV,

You can send comments via the BBC website. You can take part in the

conversation on Twitter. You can spot the comments there, add your

own comments too. You are very welcome to do that. In the mean

time, we are keeping tabs on what they are saying in the financial

quarter of London. Hello. I am at Rabobank. Remember

at the time of the Autumn Statement, the Euro-debt crisis was raging.

There's been a lull in the storm, but the UK economy is struggling,

with very sluggish growth and high unemployment. What is the City

expecting from this Budget? Let's speak to Jane, a senior strategist

here. The City does not like surprises, does it? It does not.

are looking for measures to support growth? The whole of Europe has

been a key theme for this year. Parts of Europe will suffer a deep

recession. It seems the UK is likely to avoid a double dip

recession. Things are stabilising this year. With respect to this

Budget, the Chancellor's hands are tied. Our debt situation, deficit

situation is likely to keep him on a course of austerity. We still

have monetary policy. There have been expectations that the Bank of

England could do more. This morning, we saw sterling go up. This is

going up against the our euro. The minutes suggested there could be

more on the cards. One of the ways to promote growth, it is thought,

is possibly tax cuts. Let's speak to a City analyst. Do you think the

tax cuts proposed, trailed are going to help promote growth?

think they might, but slowly. If we look for rapid changes, not likely.

If we have a one or two year change, then it might help in getting the

economy moving. That means getting younger people into employment?

have an unbelievable young people who don't have jobs. I have not

heard anything as to how we will get them into jobs. The only way we

will be able to do that is to get people to spend more money, to buy

new cookers, buy new cars. The economy is not at a state where we

can do that. Thank you. I know you will watch closely the Chancellor's

speech. We are expecting those tax cuts and on the other, those

sticking the austerity plan. A lot of people here will watch closely

to see how those numbers add up. Back to you.

Thank you. We will be back with you in a short while. Susannah Streeter

there. If you have just joined us here on BBC Two and the BBC News

channel, welcome, you are watching our special coverage of Budget Day

at Westminster. More guests outside Parliament, this time with Jon

Sopel. We know a lot about what is in

today's Budget, thanks to plenty of advanced leaks, or is it a briefing,

we should call it, from the Government? I will discuss some of

the expected measures in a moment with MPs from the three major

parties we asked the director of the institute for fiscal studys to

set out the options available to Chancellor Osborne to get the

There's only one direction that any Chancellor wants the economy

travelling in - the route to growth. There are plenty of levers he can

put. There is tax, spending or legislation. Get the combination

right and we could be on the fast- track to growth.

Changing tax rates is a way the Chancellor can control the economy.

For individuals, cutting the amount of money collected through income

tax, national insurance and VAT can encourage us to spend more, pumping

more cash back into the economy. For businesses, reducing the amount

of corporate and business taxes and free up more money to higher staff,

helping more people back into work. The Chancellor needs to make sure

to keep enough money coming in, to keep services we rely on to keep

running and reduce our deficit. The sweeping cuts mean big costly

spending plans are unlikely to appear in this Budget.

Spending money on big building projects can put money into

construction jobs and in the long- term it can help the way we do

business in the UK. He needs to be careful though, because any

loosening of the purse stranges could make it more costly for the

Government to finance its borrowing. Changing the rules we have to

follow on jobs and welfare can influence the route we take.

Reducing employment regulations can have an impact in the medium-term,

encouraging businesses to employ more people, which makes taking on

staff less of a liability. Businesses get rid of workers when

the going gets tough. It is a brave Chancellor who is willing to

takeaway employment rights. Rules on welfare and benefits can make a

difference to the bill the country pays for, things like child benefit.

Keeping the economy on the right track is a complex game. Economies

travelling alongside us threatening to derail us all together. What

levers will the Chancellor pull? Every rail met for there, exploited

to the full. In one respect this is a perfectly normal Budget Day,

because a group of protestors have arrived, which you can hear in the

background, shouting "Tax the banks, not the poor."

I am now joined by three guests. Welcome to you all. While we have

this noise in the background, you are comfortable are you to be

cutting the top rate of tax? I am comfortable they will charge the

rich more than we are doing. My aim this day, let's see what the

Chancellor comes up with, is that those 1% of people who currently

pay the 50p rate they should pay more after today's Budget. Why cut

the tax rate? I don't know why the Tories want to do that. It is

something they want to do. My concern is for the 23 million

people, the bottom end they should get a cut. You are in coalition

with them. It is a compromise Budget. The end result will be the

rich will pay more in tax after today than they do now. And the

poor will be paying less than they do now. That's because the Liberal

Democrats have been trying to achieve. The Tories want to posture

towards that 1% of the richest people. We want to help the 23

million least well paid. If that is the critique you are getting from

coalition partners, you will have a hell of a job. I am getting it from

Tim. What the Budget is about is what this group of supporters are

calling for. We are taxing the banks at the highest level. We will

have the biggest tax give away for the middle and lower earning people.

On 50p it was a temporary tax. It is a bad tax. I hope we will get

data which shows it was a political gesture which sends out a terrible

signal. This Budget must show that Britain is open for business.

Without growth we don't dig our way out of the borrowing disaster.

are shaking your head in horror. High? Because Clare said we are in

it all together. It is not just a question of being out of touch, it

is about treating people as if they are fools. People are angry for

very good reasons. They have to pay enormous amounts for petrol. They

have to pay higher VAT. Their food bills are going up. Their real

wages are falling. At a time like this it is appalling to be cutting

that 50p rate. Hang on, I will ask you this. Will you commit yourself

to overturning it? If we were having the Budget today we would

not be cutting the 50p rate. We have three years before we get

to the next election. It is impossible.... Labour won't

reinstate the tax. OK. Ling -- I tell you what, we will leave it

here. Thank you very much indeed. Back to you in the studio.

Full marks for trying. Full marks to your guests as well for trying.

There you go - that is a very vivid illustration of the fact this

Budget is provoking intense debate because there are some very

important, central decisions to be made. If you have just joined us,

it is coming up to midday here on BBC Two and the BBC News channel.

In a moment, we will cross live to the House of Commons, because it is

Prime Minister's Questions. It will follow the session of questions

going on now. Perhaps it is a good idea to remind ourselves of some of

the things we have been led to expect in the Chancellor's Budget,

which starts in half an hour. A lot of trails, a lot of leaks in the

media. We have noted that. We have a good idea about at least some of

what is planned. We think Mr Osborne is set to raise the point

at which people start to pay income tax. The coalition's aim is clear,

it wants to get it up to �10,000 eventually. We will see the

progress. We need to know how the Chancellor will pay for any change.

These are expensive. There is an expectation he'll scrap the 50p tax

rate on earnings above �150,000. Suggestions it could be cut to 45p.

We will see what is said. A hard one to sell, of course, because

he'll need to show that the Budget is taking money from the well off

in other ways, we could see something like Nick Clegg's tycoon

tax. That is looking less likely now. That is to say a minimum rate

for the wealthiest. There could be a new 7% stamp duty rate on

properties costing more than �2 million.

As well as new curbs on tax avoidance. We will look for any

tweaks to take child benefit away from high earners from next January.

An adjustment expected there. Nick is with me. Robert and Stephanie

too. We will have time to set the scene before Prime Minister's

Questions. Traditionally they will not touch on the substance of any

Budget matters. A thought about this tax rate. I suspect it will be

one of the biggest headlines - clearly. The Labour predicament is

interesting. What are they likely to do in response? In advance they

have kept saying it is the wrong priority to give money back to the

richest and not those who need it. Why is George Osborne doing it when

he has a sound bite from his own leader from Prime Minister that we

are "all in it together." He will send a signal to people to set up

businesses in this country. When Alistair Darling announced the 50p

tax rate, he said it was a bad thing to do long term. George

Osborne will say, what will you do? Will you reverse this? Are you in

stpaivour of what you are saying? - - favour of what you are saying?

If it's not costing him a lot to do, is this ideological, you are now

against rich people. So there is a lot of politics today. The economic

numbers don't change that much. A lot of politics. It is like Budgets

I'm just wondering if the Speaker will take another question. He is

taking another question. So, let's just get a thought from you, Robert

Peston. Well, there are a couple of interesting things to say. One is,

now that we have got this battleground over the top rate of

tax, it will be interesting to see whether one of the laws of politics

over the past 30 years has changed. The presumption was always that you

could not win an election saying that you were going to put up

income tax. So what will be fascinating. We will have to stop

you there, I'm afraid. This morning, I had ministerial -- meetings with

ministerial colleagues and others. I shall have further such meetings

later today. Small Business is concerned about the culture in this

country. Does the Prime Minister agree with me that the example

should be set from the top, and that those who have a sick day and

then go to a football match in a Rolls Royce are setting a very bad

example indeed? My Right Honourable Friend makes an important point. We

do have a problem of a sick note culture. I have to report, Mr

Speaker, the problem can sometimes go to the very top. The Leader of

the Opposition was meant to be addressing a health rally, called

in sick, and three hours later was that a Hull football match. I think

the question is, as well as knowing the miracle cure, the question

would be, what was it that first attracted him to the multi-

millionaire owner of the football club in Hull? Mr Speaker, following

the Prime Minister's recent trip to Washington, we now know that the

timetable for the withdrawal of British forces in Afghanistan will

be reviewed at the NATO summit in Chicago in May. The Prime Minister

has previously set out a timetable that would see combat operations

for British troops seizing by the end of 2014. Given the recent

statement by the US Secretary of State for Defence and the French

President about an accelerated timetable for their troops, can the

Prime Minister confirm the British Government's position? Let me take

this opportunity, on behalf of the House, to once again pay tribute to

the magnificent work done by our Armed Forces in Afghanistan. We had

another reminder yesterday of the very high price that we pay. In

terms of the programme for withdrawal, what I have said is

that we will not be in a combat role in Afghanistan after 2014, nor

will we have anything like the number of troops that we have now.

We will be performing a training task, particularly helping with the

training academy. It is important that we have a sensible profile for

the reduction in troop numbers, which should be largely based on

the conditions in the three parts of Helmand province which we are

still responsible for. What I discussed with President Obama was

making sure that in 2013, if there are opportunities to change the

nature of the mission, and be more in support rather than in a direct

combat role, then I think that is something everyone will want to see.

We can make further progress on that issue in Chicago. I thank the

Prime Minister for that answer, and I know he will keep the House

informed of any change in the British position. I'm sure he will

also agree that in the wake of the tragic killing of Afghan civilians

last week, it is something we all abhor, but we must carry on with

our mission. President Karzai has said that international troops

should be confined to their bases, but does the Prime Minister agree

with me that while the troops are there, they must be able to perform

that role of protecting the Afghan population. Can he tell us what

discussions he has had with President Karzai about the impact

of any possible change in our role in that country? Our teams are in

permanent contact, and I speak to President Karzai regularly. What

happened in Afghanistan, with the dreadful shootings which were

carried out by the American soldier, is a dreadful event, it was a mass

murder, and it must be dealt with as such. I know that President

Obama takes that view as well. In terms of making sure that we work

with the Afghans, the key is to make sure that we transition into

three parts of Helmand for which we are responsible, and that we hand

over to Afghan troops, and that they are in the lead as soon as

they are capable. I do not have any concerns at the moment about the

role of British troops, they're able to carry out the tasks which

they have been allotted. We are making good progress in the three

parts of Helmand. But transition is a process, and we should be trying

to make the most of the transition. I know he agrees with me that

dialogue with President Karzai and his representatives is very

important on this issue. A few days ago, the Taliban took the decision

to suspend talks with the United States. In the light of this, can

the Prime Minister tell the House what his assessment of the

significance of this is, and does he agree with me that we await to

our troops in Afghanistan to be much more urgently focused on the

task of securing a lasting political settlement? Can he tell

us how the British Government plans to play its role in getting the

political process re-started. thank him for that question, it is

vitally important that we get this right. The last government took the

same view, that the British position has always been that we

need to have a political settlement, in order to make sure we get the

best possible outcome for the people of Afghanistan. Britain has

been pushing for political reconciliation and reintegration,

and I have had very productive talks with President Obama on this,

because the American view is the same, they want to support the

political process. But of course, the Taliban have said what they

said last week, and I would make his point - we're committed to

handing over to the Afghan Government, the Afghan military,

the Afghan police, and the numbers of Afghan military and police are

on track - we committed to doing that at the end of 2014. We believe

that can happen, even without a political settlement, with a

satisfactory outcome for the United Kingdom. But clearly it would be

better for everyone if it was accompanied by a political

settlement. The work for that, including setting up a Taliban

political office, is progressing well. I believe it is in everyone's

interest that we keep pushing the agenda, but the Taliban should be

in no doubt, there are opportunities for a political

settlement if they give up violence, renounce Al-Qaeda and want to play

a part in the future of politics in Afghanistan. If they do not take

those steps, we will continue to defeat them on the battlefield

every time they raise their head. know that the Prime Minister will

agree that the air ambulance is a fantastic charity, which enjoys

support across the whole House. A typical branch needs to raise

around �5 million a year, and yet can only claim gift Aid on about 5%

of that - will he help make it easier for charities to get the

gift aid which they are due? Let me join him in paying tribute to the

air ambulance, they do an amazing job. We're providing �3 billion a

year in tax reliefs for charities, of which gift Aid makes up around

�1 billion. We are increasing the amount that charities are allowed

to claim on without the need for a declaration, taking it up to �5,000.

When the Disability Minister came to Wales last week, she said it was

for others to consider whether budgets should be devolved to Wales.

I think when she said others, she meant you, Prime Minister. The

Welsh Government has already said it is committed to supporting the

Remploy budget in Wales. We knew there for devolve that budget in

order to make sure that those factories can have a future? I will

look carefully at the proposal. It has been put forward in a

constructive spirit. But whether this decision is reserved or

devolved, it does not actually mean you do not have to take difficult

decisions. The fact is, we did ask the chief executive of Disability

Rights UK to look at this issue, and the outcome which she came up

with has been supported by many organisations, and the point is

that government funding allows for half a billion pounds over five

years for Remploy, but even that is not enough to keep those factories

open. The reason for that is, while Access to Work awards are around

�2,900 per disabled person, the cost of each job in Remploy is

around �25,000 per person. So, if the aim of policy is to use the

money that we have to support getting disabled people into work,

you can understand why the review came to the decision it did.

last few weeks have seen the start of the �350 million construction of

Jaguar Land Rover's new engine plant in my constituency. Does my

Right Honourable Friend agree that this is a sign of growing

confidence and belief in British manufacturing, which is in stark

contrast to the destruction wrought on it by the last Labour

government? My Right Honourable Friend makes an important point,

the Jaguar Land Rover news is excellent news for the West

Midlands, excellent news for British manufacturing and car-

making. What is happening in the car industry is not confined to

Jaguar Land Rover. If you look at Honda, Nissan, Toyota, they are all

expanding across our country, which is great news for British

manufacturing. On the bus to the Commons today, I foolishly revealed

to a fellow passenger that it was a member of parliament. After some

light hearted and customary abuse, our conversation turned to life,

the universe and commuting. So, can the Prime Minister tell me, and the

man on the Peckham on the bus, if that journey cost me 90p under Ken

Livingstone, how much did that same journey cost me today, under Boris?

The point I would make is that Ken Livingstone twice promised to

freeze fares, and twice did not deliver. But the difference between

the two is that Boris pays his On that very subject, I look

forward in the Budget later to measures on tax avoidance. Would

the Prime Minister agree with me that people seeking high office in

public life should set a better example? The Right Honourable Lady

makes an important point. I have to note, Ken Livingstone has said that

if he is elected Mayor of London, he will then fully pay his taxes.

It is not for me to hand out political advice, but my advice

would be to pay them before the campaign gets going. Does the Prime

Minister recognise that the introduction of regional pay would

set hospital against hospital and school against school, and yet it

would almost certainly push up the overall cost of public sector pay?

Unless he can give us a guarantee here today, a promised that if he

introduces regional pay, it will bring down the overall bill...

I would say is, the last government introduced local pay into the

Courts Service, so the idea of looking at local pay for some

public services is not some alien concept, it is a perfectly sensible

thing to look at. I also have to say, his front bench suggested that

we look at a local level of benefits in the debate about

benefits. So surely he should be in I'm sure the Prime Minister shares

with me admiration for the work of the rescue helicopter service

around our country. Does he share my concern that the loss of the

Portland search-and-rescue helicopter in 2017 will threaten

the lives of my constituents and damage the integrity of the search-

and-rescue service on the south coast? I totally agree with the

Honourable Gentleman that a reliable search-and-rescue service

is absolutely vital. We have looked at keeping west King helicopters,

which is one of the things he has suggested, but they would not be

able to provide such a good service as a modern fleet of helicopters.

We believe our changes should provide faster flying times and a

more reliable service. Mr Speaker, following the riots last year, the

Prime Minister came to the House and said, we will help you repair

the damage, get your business is back up and running and support

your communities. Last week the Metropolitan Police revealed that

of those uninsured people who make claims under the act of Parliament,

only about half of those have been settled - does the Prime Minister

agree this is not good enough? agree, there have been problems

under the act. This is why we have introduced a number of extra funds,

run by the Department for community and local government, and those

funds have paid out faster. The act of Parliament is a good piece of

legislation, although it is quite out of date, but it does take time

to make those payments, and I'd I say to the Prime Minister to that

we are eight months on from the riots. The Deputy Prime Minister

hosted a reception - I think that the honourable gentleman opposite

should listen to this very important issue about the riots -

at a reception last week organised by the Deputy Prime Minister, he

and I met an owner of a supermarket that was raised to the ground

during the eye vence on 8 and the - - -- violence on 8th August. She is

still waiting for compensation. That is not right. It is the

Government's responsibility to make sure she gets the compensation she

deserves? I agree. I will look into that specific case. As I said, one

of the reasons why I introduced funds along alongside the Riot

Damages Act was to get that money out of local authorities faster. If

he likes, I will put in the library of the House of Commons a set of

information about what those funds did, where we have got to with the

Riot Damages Act and also I will look into the individual case that

he mentions. Talking about people who haven't

been helped by that money that was provided to local authorities and

can't get help. Now Mr Speaker, three things need to happen to make

good on this. First of all, there needs to be proper information on

the payments made under the Riot Damages Act as a matter of urgency

because there is - no, there is one report, they say there is

information, there is information from the Metropolitan Police, but

the reality is that the information available is very patchy about what

is happening around the country. So firstly, we need proper information.

Secondly, I asked him him to nominate a minister in the in the

Home Office whose job it is to make sure the claims are paid and

thirdly, can he promise to back to the House with a clear indication

when 100% of legitimate claims will be properly settled? I am happy to

come back to the House. As I said, putting answer into the House of

Commons library about this information. On the case he

mentions, it was a multiple claim, but I accept eight months is too

long. The honourable member in the Home Office who is the policing

minister is take ago lead on this, but I have held follow-up meetings

myself with DCLG and the Home Office to make sure the money is

paid out. Thank you, Mr Speak he were. The

Prime Minister maybe aware that the charity which provides support for

servicemen has has changed its name. In order to raise awareness of this

name change l the Prime Minister join with me in visiting their new

residential centre in order to see at first handted wonderful -- hand

the wonderful work they do in supporting our veterans? Perhaps I

will be able to schedule a visit before long. I would like to put on

record my thanks for the way they help former service personnel who

have tragically lost their sight. He pays them a compliment and

explains the change in their name. As a country and as a Government we

have a debt to pay to former service personnel. They do, they

have done extraordinary on behalf of their country and we need to

look after them through their life and the Chancellor will be making

announcements about that in his Budget. The Prime Minister said

last year unhis Government unemployment would fall year-on-

year and here we are on at this moment with a 17 year high record

in unemployment. In my constituency, there is a 5.4 people chasing every

job vacancy. The regional jobs fund has only supported four businesses.

Why should the workers and many others set to lose their job

believe a single word the Prime Minister...

THE SPEAKER: The Prime Minister. First of all, on the specific case

of the Rio Tinto plant, I know how important that is we are working

with the council and with the company to do what we can to help

get those people work. I understand Rio Tinto areinitions with a

potential purchaser of that plant. What I say to him about employment

and unemployment is clearly we need more jobs in our economy, but since

the election we have had over 600,000 new jobs in the private

sector. The level of employment in the country is up by around 250,000

and there are fewer people on out of work benefits benefits now than

there were at the time of the election. And in terms of what is

happening in the north-east, we should celebrate the good news, the

fact that Nissan is creating 2,000 jobs. The fact that high high tachy

is -- high tachy is building a new plant. The fact that Greggs are

putting more money into the north- east. We should be talking up the

north-east instead of talking it down.

Thank you, Mr Speaker. The running aground of a cargo vessel on a

small island showed the need for the emergency coastguard tug that

was withdrawn from service. Will the Prime Minister please look into

this as a matter of urgency in view to get ago replacement tug in place

before a worse indent happens? know this issue is being looked

into at the moment so I'm happy to write to the honourable gentleman

and give him the details. I know he represents island communities that

can be cut off particularly during the winter months and he needs to

know that those services are there and I will write to him about that.

THE SPEAKER: Question seven, a closed question. Graham Alan.

Question number seven, Mr Speaker. Will let me pay work to the work

the honourable gentleman does this this area. Early intervention is

central to what this Government is looking to achieve. That is how

we're going to improve the life chances of the least well off in

our country and lift young people out of poverty. We will base

funding decisions on what comes out of the first two, the early

intervention grant is going to rise next year.

May I thank the the Prime Minister and the leaders of all parties in

the chamber, there speaker for their continue for early

intervention. Early intervention not only helps babies and children

and young people develop the social and emotional capability to make

the best of themselves, but it saves the country billions of

pounds in the Long Run. Would he and indeed, the Chancellor take

this as the first representation, not for today's Budget, but for

next year's Budget? Would he consider theming next year's Budget

around early intervention, bringing forward proposals for tax changes

to stimulate the social finance market that we heard about in

earlier questions and move 1% only of departmental dughts departments

from late intervention to early intervention.

That was an example of early intervention and I praise him for

the work that he has done. As he knows, we are going to be setting

up the early intervention foundation that will be funded in

order to make the arguments that he has put whichever side of the House

he has been sitting on for many years. I will discuss this with the

Chancellor, what we are trying to do is look at all the mechanisms we

have whether it is backing nursery education, introducing a pupil

premium, making sure that the early intervention grant is going up, of

putting the money in early to try and change people's life chances

before it is too late. Thank you, Mr Speaker. Is the Prime

Minister aware that Harlow has the highest business growth in the

whole of the United Kingdom? Thanks to a Conservative council

that is open for business a a Conservative-led Government that

invested in an enterprise zone and increased apprentices and cut tax.

Will the Prime Minister come to Harlow so we can show Britain how

to lead the economic recovery? danger of being accused of watching

too much television, you can summarise this question as saying

The Only Way is Essex! What I would say is congratulate Harlow on the

fantastic achievement they have. The Government wants to play itself,

not least by the enterprise zone and we hope will create 5,000 new

jobs. In North Tyneside, over 7,000 hard-

working families depend on working tax credits to make ends meet. Yet

less than 200 people have to pay top rate tax. Which of these groups

does the Prime Minister think needs the most support in the

Chancellor's Budget? What I can tell the honourable lady,

we have we have increased the Child Tax Credit by �255 last year which

was the biggest increase in its history and it will go up by

another �135 this year and in terms of the very richest in our country,

let me reassure her, after this Budget, they will be paying more in

tax. As well as the Liberal Democrat

priority to lift the tax threshold to �10,000, account Prime Minister

agree that on the best ways of helping...

THE SPEAKER: Order. Mr Hughes must be heard. Simon Hughes.

Does the the Prime Minister agree that one of the best ways of

helping families on low and medium incomes is to build more affordable

housing throughout the country? And given Labour's legacy in London was

350,000 families on the waiting list, can he assure us that there

will be more affordable housing both in London and across the

country? Well, we do want to get our housing market started again

including affordable housing and that's why the higher right to buy,

that is going to go into building affordable homes. We are doing more

to kick start those places that have planning permission, but can't

get underway because of problems with bank and other finance and

that's why we are putting extra money into those schemes to make

sure that building takes place this year or next year.

Some of the information used by the consulting association could have

only come from the police or the Security Services. When 3,000

mostly celebrities had their telephones Hacked, the Government

set up a public inquiry under Leveson. The Over 3,000 trade

unionists have been back listed. Why is there one route for justice

for celebrities and another for working people? There is one law

that has to cover everybody in this land. If there is any accusations

of wrongdoing, that is something that the police, who are completely

independent of Government, can investigate. And that is what

should happen. Let me say to the honourable gentleman, I say that on

his behalf, but he could do do something on everyone's behalf. He

runs the Right To Work campaign that stops young people getting

workplaces. If he cares about young people, he will give up that left-

wing position. My county has below average

household income, but funding for schools and healthcare has for a

long time been some of the lowest in the country. Does my right

honourable friend share my view this is unfair and will he support

measures to change the funding formulas it and to get a fair deal

for my my county and for other similarly affected rural areas?

are looking at the funding formula for schools and we want to make it

simple so we can people can see what criteria are and why their

area receives the money that it does, but at the same time as that

are, we are introducing the pupil premium which will mean that parts

of the country like his, where there are quite high levels of

deprivation in parts, will get specific funding for those children

who are on free school meals and that should help the funding of the

schools that need the money the most.

Will the Prime Minister publish - including the action that is needed

to mitigate the risks this that Health Bill poses to patients?

I would say is that as far as I can see we have voted in this House of

Commons twice on the same issue and on both occasions, thank you Mr

Speaker, there was a sigma jort in -- significant majority in favour

of the Government's position and I would also add that the last

Government had many, many opportunities to publish risk

registers and they didn't do it. THE SPEAKER: I always appreciate

the Prime Minister's gratitude, I am sure.

For ten years or more, leading Conservatives like the noble Lord

Saatchi and Tebbit have argued for people on low incomes to be taken

out of income tax altogether. Does my right honourable friend

agree that this is a thoroughly Conservative idea whose time has

well and truly arrived? What I would say to my honourable

friend is almost uniquely, I am not going to prejudge what is in the

Chancellor's Budget, but I think we can say in reference to what he

says there, is if you like, Mr Speaker, a kaleidoscope Budget!

THE SPEAKER: I am so encouraged that the Prime Minister is using my

language! Good on him!

Thank you, Mr Speaker. The Prime Minister may recall that at the

time of the Strategic Defence and Security Review he described it as

a mistake and an error to use the short take of the Joint Strike

Fighter. As the Ministry of Defence is about to perform a U-turn on

that decision, doesn't he now accept and understand that the real

mistake and error has been in a Defence Review that's been

inadequate and is fast unravelling. The mistake and error was in

inheriting a �38 billion black hole in the defence budget. What he

wants as Defence Secretary is to be the first Defence Secretary in a

generation frankly to announce a balanced and funded budget for

defence for this year and for many years to come. That is what we are

discussing. We will look at all of the evidence, all of the costings

and costings as he will know change in defence, but I do make this

pledge - unlike previous governments, if costs change and if

facts change we won't just plough on regardless and make wrong

THE SPEAKER: We come now to the The Speaker is vacating the chair

because it is not the job of the Speaker to preside over the Budget

statement itself. It is the job of the senior deputy, who will now go

through a few of the formal motions which will prepare the way for the

Budget statement itself. This is all part of the parliamentary

Mr Deputy Speaker, this Budget rewards work. Britain is going to

earn its way in the world. There is no other road to recovery. This

Budget supports working families and helps those looking for work.

It unashamedly backs business, and it is on the side of aspiration,

those who want to do better for themselves and for their families.

This Budget reaffirms our unwavering commitment to deal with

Britain's record debts. But because we have already taken difficult

decisions, this can also be a reforming budget. A model which saw

manufacturing almost half while the national debt doubled. Mr the

biggie Speaker, this is how Britain will earn its way in the world,

with far-reaching tax reform. The tax system will be more competitive

for business than any other economy in the world, a system where

millions on the lowest pay are Reforming tax is only part of the

story. We will earn our way in the world

by saying to all business, large and small, we will provide you with

the modern infrastructure. New growth-friendly planning rules and

employment rules. The kind of schools and universities our future

workforce needs. In return, new British business have the

confidence to invest, innovate and be the best. We earn our way in the

world F we stop being afraid to identify Britain's strengths and

re-enforce them instead, backing industrieser row space,

pharmaceuticals, creative media and science. A deliberate strath gi to

create a more balanced -- strathgi to create a more balanced economy.

Mr Deputy Speaker, stability comes first.

The report from the Office for Budget Responsibility reminds us

today of the risks to stability. Despite the welcome action by the

European Central Bank, the impact of the sovereign debt crisis on the

European economy has been significant. Italy, the Netherlands,

Belgium and others are now in recession. Germany's economy shrank

in the last quarter. In today's report the OBR are sharply revising

down their forecast for Euro-area growth from 0.8% to minus.3%. Their

forecast is revised down by 0.2% and by 0.3%. Of course, Britain is

not immune from these developments in our largest export markets. And

the OBR say today that the situation in the Euro-area remains

a major risk to our forecast. Another risk they identify is a

further spike in oil prices. There is no doubt that the high oil price,

driven by real demand and the Iranian situation is of great

concern across the world. It means that the OBR's overall

assessment of the outlook and risks to the British economy is broadly

unchanged since last November's report. Despite these headwinds,

there are more positive signs. The OBR expect the British economy to

avoid a technical recession, with positive growth in the first

quarter of this year. They say that the British economy has, in their

words "Carried more momentum into the New Year than previously

anticipated." Indeed, the Office for Budget Responsibility is

slightly revising up their growth forecast for the UK this year.

That is 0.8%. Then they forecast 2% next year, 2.7% in.... THE SPEAKER:

Order! In fairness, we want to hear from the Chancellor of the

Exchequer. We cannot do that with too much noise on either side.

Chancellor of the Exchequer. They then forecast 2% next year.

2.7% in 2014 and 3% in both 2015 and 2016.

The OBR's forecast unemployment rate is the same as last autumn.

They expect it to peek at this year at 8.7%, before falling each year

to 6.3% by the end of the forecast period. But they have revised down

their estimate of the claimant count, which they now expect to be

100,000 lower in each of the next four years than previously forecast.

Peeking this year rather than at the 1.8 million they forecast in

November. They forecast one million more jobs in the economy over five

years. Inflation is expected to fall

throughout the period. From 2 por i.8% this year. To 2 -- 2.8% this

year. I am today writing to the Governor

of the Bank of England to reaffirm the CPI inflation target of 2%. The

Government's credible and responsible fiscal policy allows

the independent central bank to pursue an activist monetary policy,

consistent with targeting low inflation. I confirm that the asset

purchase facility will remain in place for the coming year. So

unemployment is growing. Inflation is coming down. So too is the

deficit. When this Government came to office,

the Budget deficit stood at 11%. The state was borrowing one in four

of every single pound that it spent. Today, I can report that the

deficit is falling and is forecast to reach 7.6% next year. The share

of national income taken by the state will have fallen from 48%

when we took office to 43% next year.

We must stick to the course, so that there will be no deficit-

funded give aways today. Because we have taken difficult decisions, nor

do we need to tighten further. Over the five year period this is a

fiscally neutral budget. So, Mr Deputy Speaker, let me turn to

fiscal forecasts. The whole House will be pleased to know that these

have improved from the forecasts I presented in November. Borrowing

this year is to come in at �126 billion. �1 billion lower than I

forecast in the autumn. Over �30 billion a year lower than its peek

the year before we came to office - - peak the year before we came to

office. Borrowing will fall to �120 billion next year f you exclude the

pension assets. �75 billion, then �52 billion, reaching �21 billion

by 2016-2017. Borrowing is �11 billion less than I last forecast

in the autumn. This will be used to pay down debt.

In my first Budget, I set the Government the fiscal mandate of

achieving a current balance by the end of the five-year horizon. The

OBR confirmed today that we are on course to achieve that mandate and

have eliminated the current deficit by 2016-2017. They also confirm

that we are on course to reach our target for debt to be falling as a

percentage of national income by the end of the Parliament in 2015-

2016. Public sector net debt is set to

peek at �76.3%. -- 76.3%. Lower than forecast, before falling the

previous year. A balanced structural budge and falling debt,

our deficit reduction plan is on course. We will not waiver from it.

To do so would risk a sudden loss of confidence and a sharp rise in

interest rates and we will not risk that.

Instead, we reinforce today our commitment to fiscal responsibility,

not just this year, but in the years ahead.

The transfer of the �28 billion of assets from the Royal Mail pension

fund to the ex-checker will free it from its -- exchequer will free it

from its debt, ensure that staff are paid and help bring in new

investment. Some would have been tempted to spend the win fall. I do

not propose to spend it. I have used it to pay off debt.

We will also maintain our control on welfare spending. The pasting of

the welfare reform act was an historic moment. I pay tribute to

the Work and Pensions Secretary. And to all my coalition colleagues

for supporting him against determined opposition, from those

who defend unlimited welfare. Even with the act, the welfare budget is

set to rise to consume one-third of all public spending. If nothing is

done to curb welfare bills, then the full weight of the spending

restraint will fall on departmental budgets. The next Spending Review

will have to confront this. I am, today, publishing analysis, which

shows if in the next Spending Review we have the same reductions

in departmental spending as we have in this review, we would need to

make saving of �10 billion by 2016. We will address the rising costs of

an ageing population and the burden this places on future generations.

We will publish a White Paper on social care.

I have also said that we would consider proposals to manage future

increases in the state pension age beyond the increases already

announced. I can confirm today that there will be an automatic review

of the state pension age to ensure it keeps pace with increases in

long life. Details of how this will operate will be published alongside

the OBR's report this summer. One area, Mr Deputy Speaker, where

Government spending is expected to be lower than planned is, as the

Prime Minister just indicated, Afghanistan.

We were reminded again yesterday of the sacrifice so many of our

servicemen and women have made. As the Prime Minister made clear with

the US President last week, UK forces will stop combat operation

by the end of 2014. As a consequence, I can tell the House

that the cost of operations, which are funded by the Government's

special reserve, an and entirely separate from the defence budget,

are expected to �2.4 billion lower than planned over the remainder of

the Parliament. Let me be clear today, the full cost of operations

will continue to be met from the reserve. Our brave Armed Forces

will get the equipment they need to complete the job.

I can ensure that some of the benefit of the lower cost is felt

by those who fight so hard and give so much for our nation's security.

We will fund an extra �100 million of improvements in the

accommodation of our Armed Forces and families.

I will also double the family's welfare grant, which is used to

provide additional support to families behind when people deploy.

We have doubled the operational allowance. Today, I am doubling the

rate of council tax relief for thousands serving our country in

operations over seas, will receive 100% relief on an average council

tax bill. Mr Deputy Speaker, our commitment

to reduce the deficit is keeping interest rates low.

In this Budget, we take measures to ensure the benefits of those low

interest rates are felt across the economy. They are benefiting the

taxpayer. Thanks to the reduction in the deficit and our low interest

rates, this Government is saving a total of �36 billion in debt

This year is the 400th anniversary of the foundation of the modern

Treasury. There have been times recently when the Treasury has been

borrowing more than at any other time in that long history. This

reflects the confidence that reflects the confidence that

investors have in Britain's ability to pay its way. I now want to test

whether we can extend these benefits further into the future

and diversify our portfolio. At present, the longest guilt we

currently offered to the market is 50 years. The Debt Management

Office will consult on the case for issuing gilts with maturities of

longer than 50 years, and the case for a perpetual one, something

Britain was last able to do six decades ago. We are also taking the

opportunity to rebuild Britain's reserves, which had fallen to

historically low levels. I can historically low levels. I can

historically low levels. I can confirm, Mr Deputy Speaker, has an

gold holdings have risen in value to �11 billion. Sadly, this does

not include the 400 or so tons of gold sold a decade ago for �2

billion, which would now be worth six times that, at over 30 in

billion pounds. -- over �13 billion. Mr Speaker, working families are

already being helped by historic low mortgage rates. The new buy

scheme which we introduced last week uses the Government's balance

sheet to help those who cannot afford the larger deposits which

some mortgage companies are now demanding. It comes alongside a new,

reinvigorated right to buy. To make sure that there are new homes to

buy, we are today expanding the building fund which provides

upfront finance to construction firms. We are passing on low

interest rates to small businesses through the National Loan Guarantee

Scheme, which started operation yesterday. Barclays, Lloyds, the

RBS, Santander and the new business bank are all involved. �20 billion

a guarantees in total will be available. In the Autumn Statement

I also allocated �1 billion to invest in funds which lend directly

to the businesses which are the backbone of our economy. This is an

alternative source of finance to the banks. The response has

exceeded our expectations, 24 funds have submitted proposals. I am

today short listing seven of them. Such has been the quality of the

bids, I have decided to increase the size of the finance partnership

to 20%, and I am also today expanding the Enterprise Finance

guarantee. Stability, credibility, the low interest rates they bring,

and passing those low rates on to families and businesses, these are

necessary for growth, but alone they are not efficient. As a nation,

we have to make a choice - his country became seduced by large

deficits and the illusion of cheap finance. Do we watch as the Brazils

and the Chinas and the Indias of this world power ahead of us in the

global economy, or do we have the national resolve to say, no, we

will not be left behind, we want to be out in front? That is this

government's resolve. Under this government, Britain has moved into

the top 10 of the most competitive places in the world to do business.

But we have to do more. Here's how. First, exports - over the last

decade, our share of world exports shrank as Germany's grew. We sold

more to Ireland than to Brazil, Russia, India and China put

together. That was the road to Britain's economic irrelevance, and

we want to double our nation's exports to one trillion pounds this

decade. So, we are expanding UK export finance and we are setting

up new plans to help firms in new markets. Experts abroad must be

accompanied by investment at home. Britain has a reputation as a

remarkably open and welcoming place for investment. We must never allow

protectionist rhetoric to creep into our political system. Instead,

we are actively seeking investment from overseas pension and sovereign

wealth funds, and working to develop London as a new offshore

market for the Chinese currency. We also want investment from British

pension funds and British infrastructure, and we are now

working with a dozen of the large pension schemes specifically on

that, and we are the first British Government to set out in a national

plan the projects we are going to prioritise in the coming decade,

the roads, railways, clean energy and water and broadband networks we

all need. I also believe this country must confront the lack of

airport capacity in the south-east of England, we cannot cut ourselves

off from the fastest growing cities in the world, and the Transport

Secretary will set out government thinking later this summer. We want

to look at the opportunities for increasing the role of private

investment in the road network, learning lessons from the water

industry. I confirm today that Network Rail will extend the

northern hub, adding to the electrification of the TransPennine

rail route by upgrading the line between Manchester and Sheffield

and improving the Manchester to Preston and Blackpool lines. For

years, transport investment in the north of England was neglected -

not under this government. We are working with our great cities to

devolve decision-making powers, and we are striking a ground-breaking

deal this week with Manchester, to support �1.2 billion in growth-

enhancing infrastructure in that city. We will support �150 million

of tax increment financing to help local authorities promote

development, and we will provide an extra �270 million to the Catt in

Places Fund. In all of this we are working with local areas to support

their good ideas for growing the private sector in parts of the

country where the state has taken a larger and larger share of the

economy. Mr Deputy Speaker, the Mayor of London is also a very

effective champion for the city he effective champion for the city he

runs so well. We will work with him on plans this summer to go on

investing in London Transport, lengthening commuter trains,

extending the Underground and exploring new river crossings in

east London. So, from the allegation made to the Mayor

through the Growing Places Fund, he will be creating a new, �70 million

development fund to attract new business and jobs. And the Mayor

has persuaded me of the has persuaded me of the

has persuaded me of the opportunities the new Royal Docks

Enterprise Zone offers a largest city, if we offer enhanced capital

allowances there, and so we will. Mr Deputy Speaker, 24 enterprise

zones are now going ahead across England. Chinese investment is

pouring into the zone in Liverpool, the zone in the West Midlands is

already expanding, I want other parts of the United Kingdom to

benefit from these policies. The Chief Secretary can confirm today

that we will offer enhanced capital allowances for businesses starting

up in the new Scottish Enterprise areas in Dundee and other areas,

and there will be a new Welsh enterprise zone in Deeside, while

we look forward to the first enterprise zone in Northern Ireland.

I also want to see investment in our world leading energy sector,

including renewables. We have launched the green investment bank,

open for business next month, we have introduced the carbon pricing

forum to our tax system, and we set the rate today. Combined heat and

power plants will not be liable to come and price support rates,

renewable energy will play a crucial part in Britain's energy

mix, but I will always be alert to the costs we're asking families and

businesses to bear. Environmentally sustainable has to be fiscally

sustainable as well. The carbon reduction commitment was

established by the previous government. It is cumbersome,

bureaucratic and imposes unnecessary costs on business, so

we will seek major savings in the administrative cost of this

commitment to business, and if those cannot be found, I will bring

forward proposals this autumn to replace the revenues with an

alternative environmental tax. Gas is cheaper and has much less carbon

than coal, and will be the largest single source of electricity in the

coming years. My Right Honourable Friend the Energy Secretary will

set out our new cash generation strategy in the autumn. I also want

to make sure we extract the greatest possible amount of oil and

gas from our reserves in the North Sea. We are today introducing a

major package of tax changes to achieve this. We will end the

uncertainty over decommissioning tax relief, which has hung over the

industry for years, by entering into a contractual approach, and we

are also introducing new allowances, including a �3 billion new field

allowance for large and deep fields to open up west of Shetland, the

last area of the basin which is left to be developed, which will be

a huge boost for investment in the Now, Mr Deputy Speaker, we should

not be shy about identifying our successful industries and

reinforcing them. Around one fifth of the world's top 100 medicines

originate from UK research, so we are backing our Life Sciences

sector through creating the Institute in St Pancras and cutting

taxes to make is one of the most attractive places in the world to

invent new medicines. We have protected the science budget, and

now, we are committing �100 million worth of support alongside the

private sector for investment in major new university research

facilities. We are the world's second largest aerospace industry,

and we are establishing a centre for aerodynamics to open next year,

which will encourage innovation in aircraft design and the

commercialisation of new ideas. We are determined to turn Britain into

Europe's technology sector. We will start with digital content. The

film tax credit helps generate more than �1 billion of film production

investment in the UK per year. Today I am announcing our intention

to introduce similar schemes for the video games, animation and high

end TV production industries. Not only will this help stop premium

British TV programmes being made abroad, it will also attract top

international investors like Disney to make more of their premium shows

in the UK. It will support our brilliant video-games and animation

industry's, too. Mr Deputy Speaker, it is the determined policy of this

government that we keep Wallace & Order! I would have thought that

the government side would want to hear more from the Chancellor.

Mr Dabic is bigger, to be Europe's Technology Centre, we also need to

have the best technology infrastructure. Two years ago,

Britain had some of the slowest broadband speeds in Europe. Today,

our plans will deliver some of the fastest, with 90% of the population

having access to super-fast broadband. But we should not be

complacent by saying it is enough to be the best in Europe, when

countries like Singapore do even better. Today we're funding ultra-

fast broadband and wi-fi in 10 of the UK's largest cities. My

Honourable Friend for Brighton asked me to help small cities, too,

no doubt with his own city in mind, and we are doing that as well. With

the most connected countryside in Europe, the most digital content,

that is what a modern industrial policy looks like. The business

secretary and I have asked Michael Heseltine to review by the autumn

how government spending departments and other public bodies can work

better with the private sector on economic development. From

Liverpool to Canary Wharf, Michael knows how it is done. And of course,

these projects succeeded because they were not killed off by the

planning system. You cannot earn your future if you cannot get

planning permission. Global businesses have diverted specific

investments which would have created hundreds of jobs in some of

the most deprived communities in Britain to countries like Germany

and the Netherlands because they cannot get planning permission here.

That is unacceptable. Next week, my Right Honourable Friends the

Communities Secretary and the planning minister will publish the

results of our overhaul of planning regulation. We are replacing 1,000

pages of guidance with just 50 pages, introducing a presumption in

favour of sustainable development, while protecting our most precious

environment,. The new policy comes into effect when the national

policy framework is published next Tuesday. This is the biggest

reduction in business red tape ever undertaken. As a country, we also

want to make the most of the Olympic and Paralympic Games. Some

of the biggest events will be on a Sunday. And when millions of

visitors come to Britain to see them, we do not want to hang up a

closed for business sign, so we will be introducing limited

legislation to relax the Sunday Earning our way in the world means

giving young people the skills to compete and in time, my honourable

friend the school reforms will do more to improve the long-term

economic performance of our country than any Budget measure ever will.

But we've got to help the young adults who have already been let

down by the school system. We are offering a record number of

apprenticeships and our Youth Contract comes into force next

month. I can tell the House, we are also exploring the idea of

enterprise loans, young people get a loan to go to university or

college, now we want to help them get a loan to start their own

business. We're also looking to see whether

we can make public sector pay more responsive to local pay rates. It

is something as we have just heard, the last Government introduced into

the court service, London Weighting exists aloss the public sector. The

Opposition have opposed the idea of regional benefit rates, so we shall

what we can do to make our public services more responsive and help

our private sector to grow and create jobs in all parts of the

country. We have asked the independent pay review bodies to

look at this issue. Today we are publishing the evidence of the

treasury that are submitting to them and some departments will have

the option to moving to more local pay. Mr Deputy Speaker, new

infrastructure and investment ambitious reforms on planning,

education and welfare to help businesses to create jobs. These

will all help Britain earn its way in the Worle, but we need a tax

system that supports work. 200 years ago, Adam Smith set out the

four principles of good taxation and they remain good principles

today. Taxes should be simple, predictable, support work, and they

should be fair. The rich should pay pay the most and the poor the least.

The tax system this Government inherited from its predecessor has

drifted far from these principles. We've already addressed some of the

problems. We have established an office of tax simp simplification,

companies are moving to Britain, not away. We have stopped the jobs

tax. We have taken one million low paid people out of tax altogether.

Now we need further reform. Reneed to give Britain a modern tax system

fit for the modern world. The first goal is a far simpler tax system

which businesses can easily navigate and where ordinary

taxpayers understand what they are being asked to pay. So we will

radicalically change the administration of tax for our

smallest firms. Last year I asked the Office of Tax Simplification

for recommendations. They have propose that had we tax small firms

on the basis of the cash that passes through their businesses

rather than asking them to spend a huge amount of time doing

calculations designed for big businesses. I agree. So we will

consult on this new cash basis for calculating tax for firms with a

turnover of up to �77,000, double what actually the office proposed.

This will make filling in tax returns simpler for up to three

million firms. Remember also pressing forward with our ambition

to integrate the operation of income tax and national insurance I

announced at last year's Budget so we don't ask businesses to run two

different payroll tax administrations, a consultation on

how we do this is being published next month. We will address the

loopholes and anomalies in our VAT system, for example, at present

soft drinks and sports drinks are charged VAT. Sports nutrition

drinks are not. Hot take ski away food has been charged VAT, but some

new hot products in supermarkets are not.

We are publishing our plans today to remove loopholes and anomalies,

but we keep the exceptions on children's clothes, printed books

and newspapers. We should simplify the age related allowances which

the office of tax tax simplification highlighted as a fe

fewer of the tax system. Many Pensioners don't understand them.

These allowances require 150,000 pensioners to fill in self

assessment forms. As we have real increases in the personal allowance,

their value is beinger being eroded away. We will do away with the age

related allowance. I will freeze the cash value of the allowance for

existing pensioners. This will protect the existing level of

allowance pensioners have while introducing a new single personal

allowance for all. It is a major major simplification, it saves

money and no pensioner will lose in cash terms. Under this Government,

pensioners next month will receive the largest ever cash increase in

the basic State pension of �5.30 a week. Now we want to simplify the

basic State pension and its interaction with the second State

pension. I pay tribute to the work my honourable friend the Pensions

Minister has done on this. Such is the complexity of this means-tested

system, only someone like our Pensions Minister can work out what

someone is entitled to and what they need to save. So I can confirm

that we will introduce a new single tier pension for future pensioners

set above the means-test. This is currently estimated at �140, it

will be based on contributions and it will cost no more than the

current system in any year. We will bring forward further details later

this spring. A single generous basic State pension for those who

have worked hard and saved hard all their lives and a further major

simplification of our tax and benefit system. Mr Deputy Speaker

in the information age, people should know what taxes they are

paying and what their money is being spent on. Now my honourable

friend, the member for Ipswich, recently proposed to this House

that we sent to taxpayers an annual statement showing them just that. I

think this is an excellent idea and I intend to put it into practise.

HMRC contacts roughly half of taxpayers each year from 2014,

these 20 million taxpayers will at the same time receive a new

personal tax statement. This will tell people how much income tax and

national insurance they have paid. Their average tax rates. How this

contributes to public spending. In other words, how much

proportionally of their tax bill goes to fund the healthcare,

education, or welfare bills and how much is spend on servicing interest

payments on the national debt. People will know what they are

paying and what they are paying it for. A tax system that is simple

and transparent. Now, Mr Deputy Speaker, that is our tirst goal --

first goal. Our second goal is a tax system that is more competitive

for business than any other major economy in the world. Our

predecessors wanted to increase taxes on small businesses. Instead,

we've cut the tax rate on small companies to 20%. Our predecessors

wanted to increase national insurance on jobs and we've cut it.

Our new control foreign company rules will be legislated for in the

coming Finance Bill and will stop global firms leaving Britain and

encourage them to start coming here. This Government also supports

research and development here in Britain instead of abroad. We have

increased the generosity of the tax credit for smaller firms. I confirm

from next year, we will introduce an above the line R & D tax credit

that business organisations have campaigned hard for. And we will

help new start-up businesses recruit and retain talent by more

than doubling the enterprise management incentive grant limit to

�250,000 and easing the rules so that academics in our universities

can turn great ideas into great companies. The Treasury will review

for this autumn what more we can do to encourage employee ownership.

All of these tax reductions will help win business for Britain. But

the headline rate of corporation tax remains the most visible sign

of how competitive our country is. We've already cut the rate from 28%

to 26%. This April, it is due to fall again to 25%. I can tell the

House today, that we will have a further cut of 1% to be implemented

right away. From next month, Britain Britain will have a

corporation tax rate of just 24%. And we will continue with the two

further cuts planned next year and the year after so that by 2014

Britain will have a 22% rate of corporation tax. This is the

biggest sustained reduction in business tax rates for a generation.

A headline rate that is not just lower than our tors, but --

competitors, but 18% lower than the US, 16% lower than Japan, 12% be

below France and 8% be employee Germany, an advertisement for jobs

and investment in Britain. And it is a rate that puts our

country within sight of a 20% rate of business tax that would align

basic rate income tax to, the small companies rate and the corporation

tax rate. I'm also increasing the rate the bank levy to 0.105% from

next January so that the additional corporation tax cuts do not benefit

the banks. And so our levy will in addition

raise the �2.5 billion a year that we said that it would. That brings

me to the main duties. Let me start with alcohol duty duty. The

Government will be publishing its alcohol strategy to address the

growing problem of alcohol abuse and the many billions of pounds it

costs our NHS and the Criminal Justice System, but today I have no

further changes to make to the duty rates set out by my predecessor.

Turning to tobacco duty. Smoking remains the biggest cause of

preventable illness and premature death in the UK. There is clear

evidence that increasing the cost of tobacco encourages smokers to

quit and discourages young people from taking it up. So duty on all

tobacco products will rise by 5% above inflation, that's 37 pence on

a packet of cigarettes and and this will take effect at 6pm tonight.

One area where I am today making substantial changes is gambling

duties. The VAT treatment of gaming machines is being challenged by

operators in the courts. So I will introduce a new machine games duty

with a standard rate of 20% and a lower rate for low stakes and prize

machines of 5% of net takings. The current duty regime for remote

gambling introduced by the last Government was levied on a place of

supply basis. This allowed overseas operators to avoid it and much of

the industry has as a result moved off shore. 90% of online gambling

consumed by our citizens is supplied from outside the UK and

the remaining UK operations are under pressure to leave. This is

clearly not fair and not a sensible way to support jobs in Britain. So

we intend to introduce a tax regime based on the placed of consumption

and from this April, we will introduce double taxation relief

for remote gambling. These changes will create a more level playing

field and protect jobs here. I turn now to fuel and vehicle excise

duties. High oil prices have put real pressure on household

household bugs and on businesses, that is -- budgets and on

businesses, that is why we took action to cut fuel duty so it is

sixpence lower than our predecessors planned. We have also

scrapped the last Government's fuel duty escalator of annual above

inflation rises regardless of the oil price and I am confirming the

fair fuel stabiliser, above inflation rises will only return if

the oil price returns to below �45. This Government has eased the

burden on motorists by �4.5 billion at a time when money is very short.

I do not propose to make any further further changes to the fuel

duty plans already set out. I am increasing vex highly excise duty

by inflation only to encourage fuel fuel efficiency, we will extend the

low emission allowance for cars. I can also announce that I am again

freezing Vehicle Excise Duty for road hauliers. I now turn to

personal and property taxation. My goal is a tax system where the

lowest paid are lifted out of tax altogether while the tax revenues

we get from the richest increase. Now, most wealthy people pay their

taxes and without without them we could not begin to afford the

public services upon which this country depends. But under the last

Government, it was the boast of some high earners with the help of

accountants, they were paying less in tax than their cleaners. I

regard tax evasion and aggressive tax avoidance as morally repugnant.

We have increased both the resources and the number of staff

working on evasion and avoidance at HMRC. Taken together, the anti-