Highlights from the pre-Budget report


Chancellor Alistair Darling has delivered his pre-Budget report, the last before 2010’s general election.

He says it comes at a "critical time for the economy and country" and represents the choice between "going for growth or putting recovery at risk".

Hightlights include:

* An increase in national insurance contributions
* A new boiler-scrappage scheme to help 125,000 homes replace old boilers
* A new 50p monthly levy on landlines to help fund faster broadband
* Bankers' bonuses above £25,000 to be hit with 50% tax  
* A cap on public sector pensions
* Measures to help older and younger unemployed people back into work
* Crackdown on tax avoidance and offshore accounts

measures and forecasts unveiled:

* Darling says he is confident the UK economy will start growing by turn of the year, despite an expected 4.75% contraction this year. He forecast growth of 1% to 1.5% next year, and 3.5% in 2011/12. 

* New legislation will be introduced to ensure public sector borrowing falls every year and is more than halved by 2013/14 to meet the deficit forecast plan. This is a "sensible" timetable, says Darling.

* Darling admitted public borrowing in 2009 would exceed its forecast of £175 billion - at £178 billion.

* As a share of gross domestic product (the official measure of economic health), public borrowing will be 12.6% this year. Darling also forecast that net debt will reach 56% of gross domestic product this year.

* He said the government would reduce its deficit by "encouraging growth, fairer taxes and tighter public spending".


* Introduction of a 50p per month duty on landlines to help fund faster broadband to 90% of homes by 2017.

* There will be no changes to income tax next year, but the starting point for national insurance contributions will be raised, and the rate will increase by 0.5%. People earning under £20,000 will not be affected.

* Bankers' bonuses over £25,000 will be taxed 50% to "claw money back for taxpayers". Banks, not the employee, will pay. This will force banks to reduce bonuses and also help to pay for young and older unemployed to get back into work.

* The rate of VAT will return to 17.5% on 1 January as planned, with no other changes in the pipeline. The inheritance tax threshold will not be raised as previously planned from £325,000 to £350,000, nor will the stamp duty holiday be extended.

Other changes:

* Boiler scrappage scheme to help 125,000 homes replace old boilers. Plus, £200 millon funding to help homes be more energy efficient. Tax breaks for people with own wind turbines.

* Public sector pensions will be capped, saving £1 billion.

* Extend free school meals to half a million children.

* With unemployment set to continue to rise, the support for mortgage interest scheme, which helps struggling homeowners, will be extended for a further six months. 

* From January, no one under the age of 24 will be unemployed for more than six months without being offered work or training. The over 50s will also be offered specialist support to give them the skills and confidence they need to enter employment.

* To make it easier for people aged over 65 to receive working tax credit, the government will reduce the number of hours they need to work to be eligible.

* Roll-out a nationwide guarantee so that anyone in work will always be better off than they would be on benefits.

* Bingo duty will be cut from 22% to 20%.

* Child benefit and some disability benefits will increase by 1.5% in April.

* The Time to Pay scheme, which helps businesses pay their tax, has been extended for "as long as needed". The 1p increase in corporation tax for small businesses has been deferred.

* Empty commerical properties with a value below £18,000 will be exempt from business rates.