Economics

Inflation The Chancellor said he is writing to the Governor of the Bank of England to keep the inflation target at 2 per cent.

Growth The growth forecast for 2008 was reduced to 1.75 per cent to 2.25 per cent, compared with previous forecasts of between 2 per cent and 2.5 per cent. Growth forecasts for 2009 were 2 per cent to 2.5 per cent, a reduction on 2.5 per cent to 3 per cent expectations.

GDP Gross domestic product was forecast to rise to between 2.25 per cent and 2.75 per cent in 2008 and to between 2.25 per cent and 2.75 per cent in 2009.

Public spending In the coming three years public spending will grow by 2.2 per cent a year.

Borrowing next year will rise from £36 billion to £43 billion, about 2.9 per cent of national income. This will decline to £23 billion, or 1.3 per cent, by 2012-13. Borrowing will total £140 billion over the next four years.

Debt UK debt fell to 36.6 per cent of GDP. Debt was forecast to reach 38.5 per cent in 2008. The Government will be £10 billion in deficit in 2008-09. The deficit was forecast to decline to £4 billion in the following year and was expected to return to a surplus in 2010-11.

Family & investment

Child benefit From April 2009 child benefit will rise to £20 for the first child — a year earlier than planned. An extra £125 million over three years was pledged to combat child poverty.

Individual savings accounts The tax-exempt limit on Isas was raised to £7,200 a year for standard accounts and to £3,600 a year for cash accounts. A “savings gateway” — a cash-saving scheme for those on lower incomes — was launched.

Excise duty

Alcohol From midnight on Sunday, the duty on a bottle of spirit will increase by 55p — the first increase in spirit duty in more than ten years. The price of a bottle of wine will rise by 14p and a pint of beer will increase by 4p. Cider is up 3p a litre. By introducing an escalator for alcohol duty similar to the one that used to apply to road fuel, the Chancellor planned to bring in £1.5 billion over the next three years in extra tax on beer, wine and spirits.

Tobacco From midnight, a packet of 20 cigarettes will be 11p more expensive. The price of a packet of five cigars will rise by 4p.

Transport

Fuel duty A 2p increase in fuel duty was deferred until October this year. Fuel duty will rise by 0.5p per litre in 2010.

Road tax Reform to road tax was planned for 2009. Low-polluting cars will pay no tax for the first year from 2010.

Crossrail Funding for the Crossrail project in London was secured.

Airport congestion Measures were introduced at Heathrow and other airports, using biometric technology, to speed up the time it takes to get through security.

Aviation duty Revenue from aviation duty will increase by 10 per cent.

Business

Corporation tax There was no further cut to corporation tax above the 2 per cent reduction, to 28 per cent, that was announced last year.

Small business The corporation tax rate will increase to 21 per cent in 2008-09 and 22 per cent in the following year. The small firms’ loan guarantee scheme was increased by £60 million this year.

Entrepreneurs The Government will introduce a capital fund of £12.5 million to encourage more women entrepreneurs.

VAT The threshold for businesses to account for VAT on a cash basis will increase from £660,000 to £1.35 million in April.

Capital gains tax A flat rate of 18 per cent was confirmed.

Personal taxes

Non-domiciled residents The Government will press ahead with plans for a £30,000 levy on non-domiciles from April. The levy will remain in place for this parliament and the next.

Income tax and national insurance The Government confirmed that the 10 per cent rate on the first £2,230 of earnings will be abolished from April. The basic tax rate will be applied to earnings between £2,231 to £34,600, with the rate falling from 22 per cent to 20 per cent. The upper earnings limit on national insurance contributions will be increased from £670 per week to £770 per week.

Inheritance tax The threshold for inheritance tax of 40 per cent will rise from estates valued at £300,000 to £312,000, with plans to increase the level to £350,000 by 2010-2011.

Charitable donations Charities were given a three-year reprieve allowing them to claim 22 per cent tax relief on donations despite a cut in the basic rate of income tax to 20 per cent next month.

Environment

Plastic bags Charges on plastic bags may be introduced next year if shops fail to reduce their use voluntarily.

Carbon emissions The Government will take advice on whether the carbon emissions reduction target can be raised to 80 per cent by 2050. The first “carbon budget” will be announced next year.

Climate change levy will rise in line with inflation from April.

Green Home Service The Government committed £26 million to the Green Home Service to help families to cut fuel bills.

Defence

Armed Forces An extra £2 billion will be spent on troops on the front line, including £900 million on military equipment.

Education

Schools Underperforming schools will receive an extra £200 million to raise GCSE results. A £30 million fund will be introduced to improve science studies.

Adult training An extra £60 million was committed to filling the UK “skills gap”.

Property

Affordable housing Some £8 billion was committed to new, affordable and social housing. The Government has found sites for 70,000 new homes this year

Stamp duty on shared ownership homes will not be required until the occupant owns 80 per cent of the equity.

Shared-equity schemes Teachers, nurses and first-time buyers will be able to borrow money for shared equity schemes. The minimum stake has been reduced from 75 per cent to 50 per cent.

Fixed mortgages Labour is seeking views on how long-term fixed mortgages can help first-time buyers to get on to the housing ladder.

Council tax bills will rise by an average 3.9 per cent from April.

Benefits

Incapacity benefits By April 2010, all long-term recipients will face work assessments.

Fuel benefits will rise from £200 to £250 for those aged 60 and over and from £300 to £400 for those aged 80 and over.

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