The Government’s Pre-Budget Report is now available on the Treasury website.

From the Overview:

The Government’s objective is to build a strong economy and a fair society, where there is opportunity and security for all. The 2008 Pre-Budget Report, Facing global challenges: supporting people through difficult times, presents updated assessments and forecasts of the economy and public finances, and reports on how in the face of major global economic shocks the Government intends to support the economy, businesses and households through these uncertain times while delivering its long-term goals. The Pre-Budget Report:

Announces discretionary fiscal policy to support the economy through these difficult times followed

by a sustained fiscal consolidation from 2010-11 when the economy is expected to be recovering and able to support a reduction in borrowing:

• temporarily reducing the Value Added Tax (VAT) rate to 15 per cent with effect from

1 December 2008 to 31 December 2009;

• bringing forward £3 billion of capital spending from 2010-11 including introducing a

green stimulus supporting low carbon growth and jobs;

• restricting the income tax personal allowance for those with incomes over £100,000

from April 2010, and introducing a new additional higher rate of income tax of 45

per cent for those with incomes above £150,000 from April 2011;

• increasing the employee, employer and self-employed rates of national insurance

contributions by 0.5 per cent from April 2011;

• to offset the effects of the temporary reduction in VAT, increasing alcohol and

tobacco duties, maintaining these increases after December 2009 to support fiscal

consolidation; and following a fall in pump prices of over 20 pence per litre from

their summer peaks, a two pence per litre increase in fuel duty from 1 December

2008; and

• an additional £5 billion value for money target for 2010-11 and setting assumptions

for spending growth from 2011-12 onwards.

Announces immediate action to help those individuals and businesses most affected by the economic downturn:

• making permanent the £600 increase in the income tax personal allowance

announced in May 2008 with a further increase of £130;

• bringing forward April’s increase in Child Benefit to January, increases of the Child

Tax Credit and a payment of £60 to all pensioners equivalent to bringing forward

the April increase in the basic state pension;

• help through mortgage rescue and Support for Mortgage Interest schemes for

eligible homeowners in difficulty and a commitment from major mortgage lenders

not to initiate repossession action within at least three months of an owner-occupier

going into arrears;

• an additional £1.3 billion to continue delivering effective support for the unemployed

to find a new job;

• measures to help small and medium-sized enterprises facing credit constraints,

including a new Small Business Finance Scheme and a £1 billion guarantee facility

to support bank lending to small exporters;

• a new HMRC Business Payment Support Service to allow businesses in temporary

financial difficulty to pay their HMRC tax bills on a timetable they can afford; and

• more generous tax relief for businesses now making losses and the modification of

a number of planned tax reforms, including vehicle excise duty, air passenger duty,

and the deferral of the increase in the small companies’ rate of corporation tax.

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