HMT1
9 March 1999
Budget 99: A better deal for the people of Britain
A Budget which offers a better deal for the people of Britain was
delivered by Chancellor Gordon Brown today. Securing a stronger
economic future for the country, the Budget makes targeted tax cuts
to put work, enterprise and families first, and provides extra
resources for schools and hospitals.
The Budget continues to lock in the economic stability secured by the
Government, meeting its promise to make work pay through a new 10p
rate of tax and continued reform of the NICs system. A package of
measures will help widen opportunity and fairness for all and will
take 700,000 children out of poverty. Further action is being taken
to create the right conditions to boost productivity and allow
business to thrive and grow, and the biggest environmental package so
far will safeguard the quality of life for future generations.
The Chancellor said:
"This Budget offers a better deal for Britain. It continues to
lock in sound public finances, and promotes enterprise, giving
business the opportunities to compete and invest for the future.
It fulfils our promises to the British people to make work pay,
to cut taxes for working families, to support children, to
provide extra money for key public services, and to protect the
environment."
Locking in stability
Budget 99 continues to lock in the economic stability created by the
Government's tough decisions and robust new macroeconomic framework:
- the Government's two strict fiscal rules will be met comfortably;
- the Budget measures are able to provide an extra £6 billion
support for the economy over the next three years, as a result of
the strengthening underlying fiscal position;
- delivering the £40 billion extra for health and education,
allocated in the CSR.
Boosting productivity
Budget 99 delivers a better deal for business and enterprise, by
increasing investment, promoting innovation, strengthening
competition and improving skills:
- for small businesses, a new 10p corporation tax rate and 40 per
cent capital allowances to encourage investment and growth;
- a new R&D tax credit to encourage small business investment in
R&D;
- a new Employee Share Ownership scheme to encourage employees to
take a stake in the success of their companies;
- a new Small Business Service to support growing small firms;
- big discounts from 2000 on training costs through Individual
Learning Accounts.
Increasing opportunity for all
Budget 99 will make people better off, support families and reward
work with:
- a new 10p rate of income tax on the first £1500 in April 1999,
halving the tax bill for 1.8 million people;
- a major reform of national insurance - removing 900,000 low-paid
people from the system;
- cutting the basic rate of income tax to 22p from April 2000, the
lowest basic rate of tax for 70 years - to reward work and ensure
working families are better off;
- guaranteeing a minimum income of £200 per week for working
families with a full time earner;
- a New Deal for the Over 50's, with a £60 a week in-work payment
to people over 50 moving back to work.
Building a fairer society
Modernising taxes to direct help to people who need it most -
especially families and children - removing 700,000 children from
poverty:
- a new Children's Tax Credit for families with children in April
2001, worth up to £416 a year;
- a £1 billion package for pensioners, increasing the winter
allowance to £100 and giving a minimum guarantee on tax;
- a 3 per cent real increase in child benefit to at least £15 and
£10 a week from April 2000;
- cracking down further on tax avoidance and evasion - so everyone
pays a fair share;
- extra £1.1 billion for schools, hospitals and safer communities
through the Capital Modernisation Fund.
Protecting the environment
Budget 99 includes the biggest ever package of tax reforms to protect
the environment, including:
- a new climate change levy in April 2001 to encourage energy
efficiency in business, brought in on a revenue-neutral basis,
with no overall increase in the taxation burden on business;
- a long-term, revenue-neutral reform of company car taxation to
remove the incentive to drive additional business miles, and
encourage the take-up of more fuel efficient vehicles;
- a reduction in Vehicle Excise Duty to £100 for cars with the
smallest engine sizes;
- increases in landfill tax to promote sustainable waste
management.
HOW THE BUDGET AFFECTS UK HOUSEHOLDS
Together with the measures announced in the last Budget, Budget 1999
delivers gains to over 20 million UK households, including 7 million
families with children and 7 million pensioner households.
Over three years, UK households will see their incomes rise by an
average £380 a year.
The Budget particularly directs resources at children. On average
families will be £740 a year better off.
The Budget rewards work. The average gain to working households is
£450 a year.
Children and working families gain the most
Some typical households are affected as follows:
- A single-earner married couple on average earnings of £20,000 a
year with children will gain £460 a year, even allowing for the
abolition of MIRAS.
- The same couple on earnings of £30,000 a year will gain £275.
- A single person working full-time on the national minimum wage
will gain £300 a year.
Notes for editors
1. All figures for gains given relative to indexation, and all in
1999 equivalent prices. Measures included are those announced in the
1999 and 1998 Budgets and taking effect over the three years from
1999-00, plus the impact of the national minimum wage.
2. The data underlying the chart is contained in the table below. It
is based on Family Expenditure Survey data uprated to 1999-2000
levels of earnings and expenditure.
All households Working Households Households
with children
Average (£pa) [380] [450] [740]
3. The table shows the change in annual net household income from the
major direct tax, National Insurance, and benefit measures announced
in the Budget which take effect in 1999-2000, 2000-01 and 2001-02.
Also included are the effects of those measures which were announced
in the March 1998 Budget and have not yet taken effect.
4. Households are divided into income quintiles after ranking them
according to equivalised disposable income. Equivalisation
standardises on spending power, by taking into account the size and
composition of households in order to recognise differing demands on
resources. The effect of all measures is given as in a full year.
5. Households have been classified in the following way:
- Households with children are households where there is at least
one child.
- Working households are households where at least one adult is
working full- time, part-time or is self-employed.
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£ = pounds sterling