Eltham Labour Party

 

Clive's Pre Budget Brief

A Briefing by Clive Efford MP

The government has invested £20 billion into the economy to assist people through this economic downturn.

Why has it done this?

It is vital that we maintain as much economic activity through this period as possible to keep businesses working and to save people’s jobs. To turn away from people now would lead to even higher unemployment and leave businesses in worse state and making it difficult for them to take advantage of the upturn when it occurs. High unemployment would also result in a loss of skills in the workforce and would make it difficult for the UK to take advantage when the upturn comes.

This is a world-wide economic downturn and the UK government is leading the debate about how the international community should respond.

I have listed below an outline of the measures that we are taking here in the UK as part of this world wide strategy.

£12.5 billion VAT reduction

• VAT will be cut from 1 December from 17.5 percent to 15 percent this year until the end of next year. This will keep an extra £12.5 billion circulating in the economy.

Help for 22 million people earning less than £40,000 per year

• Every basic rate tax payer will receive an extra £145 next year through changes to personal allowances (maintaining the £600 increase and adds a further £130) in 2009-10 and 2010-11.

• All basic rate tax payers earning less than £40,000 will continue to benefit from a small reduction in taxes

• For the longer term (in 2011-12) aligning National Insurance Contributions primary threshold with the personal allowance. This means every basic rate payer earning less than £40,000 will be better off, compared to now, even after the NIC changes have taken effect.

• In the next two years, higher rate taxpayers earning less than £100,000 will pay NO more. In fact they will benefit from a small reduction in their taxes.

Help for Families

• Increase Child Benefit to £20 from January for the first child brought forward from April.

• Increase the child element of Child Tax Credit by £75 above indexation to £2,235 (brings forward the April 2010 indexation to April 2009) This targets support to families on low incomes.

12.5 million Pensioners get extra £60 in January

• Pensioners and 2.5 million disabled people will get £60 (£120 for a couple)

• State Pension to rise by £4.55 from £90.70 to £95.25 from April 09

• Pension Credit to rise from £124.05 to £130 per week from April 09 (for single pensioners)

• The government had already announced a £250 Winter Fuel Payment for every household with someone over 60 years and £400 for households with someone over 80 years.

Bringing forward £3 billion of public investment

• £700 million for extra motorway capacity and to provide 200 new rail carriages

• £775 million for housing including £50m brought forward and an extra £100 m through the Warm Front programme benefiting 60,000 homes from energy efficiency measures being introduced more speedily. Energy efficiency for 24,000 council homes. Delivering 2,000 more social rented homes and major repairs to council homes.

• £800 million brought forward for schools, including money for primary schools, adaptations to 2,000 secondary classrooms, energy efficiency in 140 secondary schools, building 30 kitchens in primary schools, creating 800 mother and toddler rooms in primary schools.

• £442 million brought forward for Higher and Further Education

• £100 million brought forward to upgrade 600 GP surgeries

• £20 million for flood defences

• £20 million for the technology for the fight against organised crime

Vehicle Excise Duty

The government is committed to protecting the environment. To reflect this we are moving towards a VED that reflects CO2 emissions. However, to reduce the pressures on motorists at this time the government is making the following pledges:

• In 2009 no car will pay more than £5 extra per year

• In 2010 no will pay more than £30 extra; many will see a £30 cut

• In 2010 differential First Year Rates of VED will be introduced as planned

£7 billion of help for British Businesses

• £1 billion of tax cuts

• £2 billion in loan guarantees

• £4 billion from the European Union

Green Money

• Supporting low-carbon growth and jobs by accelerating £535 million of capital spending on energy efficiency, rail transport and adaptation measures.

£1.5 billion package for home owners and housing

• An additional £775 million on top of the £400 million already announced for new social rented homes and shared equity schemes

• Increased the upper limit of the Mortgage Interest rate relief scheme from £100,000 to £200,000

• Extend the Mortgage Rescue Scheme to help protect vulnerable home owners

• £15 million funding for debt advice

• Setting up the Lending Panel – a new body to monitor lending bringing together lenders, trade bodies, consumer groups, government, regulators and Bank of England to monitor lending levels and practices of banks.

• All mortgage lenders that join the Lending Panel guarantee that people facing difficulties will get a three month moratorium

For more information on the Pre Budget Report. click here.