Budget 2007: Prosperity and fairness for families. By Lucie Bensonby
The chancellor's eleventh budget speech was posited as a "budget to expand prosperity and fairness for Britain's families"
But his speech was given a roasting by Opposition leader David Cameron who branded tax changes a "con trick" and reiterated claims that Britain was the worst place in the developing world to bring up a child. Conservatives claim that 3.5 million families will be worse off after the budget.
Brown pledged to invest in the UK's future, including a major package of reforms to the corporate tax system to enhance international competitiveness, encourage investment and promote innovation.
The budget details a reduction in the main rate of corporation tax to 28p by April 2008. "Because our goal is and will continue to be the most competitive business tax rate of the major economies, I have decided to cut mainstream corporation tax from April 2008 from 30p down to 28p - at 28p a rate lower than America, Germany, France, Japan, and all of our other major competitors - Britain's corporate tax rate, the lowest of all the major economies," he said.
The government has made a commitment to simplify the tax system, to provide help for pensioners, support families and make work pay, including removing the 10 pence starting rate of tax and cutting the basic rate of income tax from 22 pence to 20 pence in April 2008. This comes alongside increases of £150 per year to the Child Tax Credit and a raise in the threshold by £1,200 for Working Tax Credits.
Other announcements included an investment in education and skills in the UK to rise to £90 billion by 2010-11, the restriction of tax relief available on empty commercial properties, and an increase in the tax rate for small companies to tackle individuals artificially incorporating to minimise tax.
High on the agenda was measures to tackle climate change, including an increase in fuel duty rates from 1 October 2007, an increase in vehicle excise duty and measures to improve the energy efficiency of homes.
"For the coming year I will set fuel duty rises at 2p a litre, for 2008 at 2p, and for 2009 1.8p. But I will defer this year's annual fuel duty increase by six months to October," announced Brown.
He added: "Business accounts for 40% of emissions: our objective for Britain is that we have not only the most economically competitive but environmentally sustainable companies. And to complement our new environmental tax credit worth £40 million a year to business, the advice support and incentives available from Business Links and the Regional Development Agencies to small businesses for environmental improvement, innovation and energy audits will rise from this year's £140 million to, in the coming year, £240 million."
But Conservative leader David Cameron criticised Brown on his pledges to combat climate change, saying he had not only borrowed, but wasted millions: "The chancellor has failed public services by posing as a friend to the environment," he said.