PBR (2): Chancellor's speech (part two)
The Chancellor's Pre Budget Report continued (my 'bold' on small business issues and other matter of interest to business).
The Chancellor said:
The Deputy Prime Minister is today responding to the joint representations from the CBI, the Town and Country Planning
Association and Shelter, and publishing new planning guidelines that seek to bridge the gap between the 150,000 new houses we build each year and the 190,000 new households, and in particular to build houses that young couples can afford.
To provide land for new homes, while protecting and improving the environment, he is asking local authorities to bring forward more brownfield areas for development.
Where proposed new housing is of high quality meeting the design code, local authorities will be obliged to accelerate planning consent.
The construction industry must also rise to the challenge of building more homes and investing in skills.
To widen the number of investors in the residential and commercial property markets, we will this month publish legislation to set up in
Britain Real Estate Investment Trusts that will increase the funding of new property developments.
And because our aim is to build not just homes but communities: to fund the new roads, schools, hospitals and infrastructure that convert estates into genuine communities, building on the recommendation of Kate Barker, we are today publishing for consultation proposals for a local planning gain supplement to give local authorities a fair share of planning gains to invest locally.
Investment in social housing has almost doubled since 1997 but will have to rise further. And we are announcing pilot projects today to encourage local authorities to bring derelict sites back into use and build more new housing for rent.
We know that shared equity has an increasing role to play in helping young couples in all our constituencies get on to the first rung of the housing ladder, and I can tell the House how we plan to extend shared equity schemes.
I can announce that three of the biggest building societies and banks have joined the Government as partners in shared equity; that building companies, including four of the biggest builders, are also now able to offer shared equity purchases; that we are now in discussions with investment companies on their possible involvement;
and that we see a future role for housing associations in extending shared equity.
Our aim: a new consensus across our country on the extension of homeownership and affordable housing - public and private sectors working and investing together to strengthen our economy, protect the environment and meet the housing needs not just of some but of all.
Mr Speaker
As part of the figures I am publishing today let me confirm that already this year the first £4.7 billion of savings identified by the
Gershon Review have been achieved. With the Government's target of £3 billion procurement savings exceeded by £1 billion, a year early.
On target, we have also seen the reduction of a further 18,500 civil service posts, including over 10,000 from the Department for Work and
Pensions and 3,500 from Revenue and Customs.
And I can also confirm that we are on target with the relocation of a further 2,000 civil service posts out of London including to
Bridgend, Cardiff, Derby, Leeds, Edinburgh, Liverpool, Manchester,
Newport and Taunton.
And ahead of schedule, £5.7 billion of assets have been sold - on target to meet our objective of £30 billion by 2010. And in the coming year we will conduct a zero based asset review.
In addition to the new measures we have announced to implement our risk based approach to regulation in Britain tomorrow, I am proposing to apply the EU competitiveness tests for new and existing regulations.
I am closing a relief under which, for tax reasons only, people are being persuaded without changing what they do to set up a company, replacing the £10,000 starting allowance with a rise in the investment allowances for smaller businesses to 50 per cent.
I have today written to the European Commission asking for a derogation so that over 1 million businesses with turnovers, not at the current £660,000, but at £1.35 million or less will be able to take advantage of more flexible VAT payment options to suit their business needs.
After consultation with British film makers, I can announce a new film tax credit to support British films, increasing support directly for producers, so we can guarantee credit worth 16 per cent for large budget films and at least 20 per cent for small budget films.
Anti-avoidance and fraud measures published today, including new requirements for disclosure, will address artificial tax arrangements involving capital gains and losses, trusts and offshore companies, rebated oils, and the misuse of SIPPS schemes to purchase second homes.
From reallocations to local councils from departments, £305 million in 2006 and £508 million in 2007 will be made available to reduce pressures on the council tax. Later this afternoon the Minister for
Local Government will give full details.
I can tell the House that the current budget deficit which reached a peak of £55 billion at today's prices in 1993 will fall from £19.9 billion last year, to 10.6 billion this year and then to 4, then 0, and then a surplus of 7 and then 11 and then £13 billion in future years -- meeting the fiscal rule in this cycle by more than £16 billion - in contrast to the deficit over the last cycle, 1986-1997, of one hundred and fifty seven billion pounds.
And it is on the basis of this fiscal rule and our second rule, the sustainable investment rule, that the Government will plan its 2007 spending review, including our response to the long term reviews on transport, pensions, energy and skills.
Our second rule allows us to borrow for essential public investment, as long as there is a sustainable level of debt.
In 1997 the nation's capital investment in schools and colleges was just half a billion a year. Today we are investing seven billions a year, on track to renovate 12,000 more primary and secondary schools.
In 1997 Britain invested just over £1 billion a year in building and renovating hospitals, today the figure is £5 billion a year rising to
£8 billion a year in 2008.
And investment in transport is doubling.
In total, net public investment which was just £5 billion a year in
1997 will this year be five times as high - £26 billion and next year
£29 billion.
Even with this record investment, we meet our second rule, that ensures borrowing for investment within sustainable levels of debt.
Net debt levels will be 36.5 this year and in future years 37.4,
37.9, then 38.2, 38.2, 38.2, at every point lower than today's 44 in
France, 47 per cent in the USA, 61 per cent in Germany, 81 in Japan.
So Mr Speaker, our debt levels are lower than our major competitors.
And even as we borrow not for short term consumption, but for long term investment, our borrowing levels are also lower than major competitors.
Total net borrowing, which reached £51 billion in 1993, will fall from 37 this year to 34, 31, and then 26, 23 and 22.
Cyclically adjusted, our net borrowing is this year just 2.2 per cent of GDP, falling to 1.6, 1.6, 1.6 and then falling to 1.5 and 1.4.
Within these figures public investment which was just £5 billion in
1997 will continue to rise to £31 billion in 2007 then 32, 34 and 35 in 2010.
On average £40 million a year today per Parliamentary constituency rising to £55 million a year by 2010. Contrasted to just £10 million a year per constituency in the period 1979 to 1997.
In just five years, from now to 2010, Britain will see more investment than in the entire eighteen years from 1979 to 1997.
Our two fiscal rules enabling us to meet the country's priority to invest more not just in schools and hospitals but in transport, housing and, of course, sport and the Olympics.
I have, however, received representations that a third fiscal rule should be adopted: each and every year, irrespective of the needs of the economy and the case for investing in public services, restricting public spending growth to a lower rate than the growth of the economy in order to cut taxes.
On closer examination, what has been called sharing the proceeds of growth, would this year mean spending at least 12 billion lower by next year, at least 17 billion lower than plans. And I have concluded that this rule, however rebranded, is simply a new gloss on an old proposal advanced before previous budgets which would undermine our public services our infrastructure and our economy.
It is our commitment to investment for the long term that allows us not only to address global economic challenges but to combine prosperity with fairness to all - and within the fiscal figures we can do more to help families, the elderly and young people and to meet our obligations on security and defence.
Defending our country is the first duty of government.
And in response to the bombings in London in July and the terrorist threat, it is right to do all we can to support our police, armed forces and security and emergency services whose bravery we commend and upon whom we depend each and every day for our safety.
Since September 11th we have doubled the budget for national security.
Today we are making available an additional £135 million for security and counter-terrorism.
And for the armed forces for Iraq, Afghanistan and other international obligations an additional £580 million.
At the end of a year when we have won the doubling of aid to Africa and debt relief, just the start of what we must do in future years, the International Development Secretary, to expedite the critical negotiations on trade, is offering to treble Britain's aid for trade to £100 million. And it is unacceptable that the world is insufficiently prepared for natural disasters, so Britain will contribute £40 million to an expanded UN emergency fund and £50 million to a new IMF shocks facility.
Mr Speaker, the child tax credit is benefiting six million families with one and a half million poor children already lifted out of poverty.
But the mobility of our economy is now such that each year 200,000 men and women who move into new or better jobs see their family income rise by more than 10,000 pounds.