BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Thursday, 1 March, 2001, 17:21 GMT
What we know already

Budget purdah has gone out of fashion
By BBC economics reporter Jenny Scott

In earlier years the Budget was the centrepiece of the government's economic strategy - and its contents were a closely guarded secret until the actual event.

One Labour chancellor, Hugh Dalton, was even forced to resign when he inadvertently alerted a journalist to some of the budget measures a few minutes before he stood up to speak.

But under current Chancellor Gordon Brown there has been an increasing tendency for the government to pre-announce its budget plans, sometimes for consultation.

Under the new strategy, many measures are now foreshadowed in the pre-Budget report published in November.

Freeze fuel duties
Cut vehicle excise duty for small cars
Cut duty on low sulphur fuel and LRP
Cut vehicle excise duty on lorries
Introduce Brit disc for foreign lorries
Last November's pre-Budget report was less of a warm-up to the main event and more a star attraction in itself.

Numerous measures were put in place which, together with initiatives set out in last year's budget, mean we can expected a raft of tax and spending changes in the next few months, regardless of any new measures announced on 7 March.

In particular, the chancellor has already outlined most of his strategy to target extra help to families with children and the elderly.

And he has already made most of the concessions to the fuel protestors in the autumn.

But it is certain that these measures will reappear in the Budget statement, with Gordon Brown hoping for fresh headlines.

The substantial cost of these measures means that despite the government's huge surplus, there is only a limited scope for more tax cuts or spending increases.

Fuel and Transport

The chancellor has already said that all fuel duties will be frozen in cash terms in this year's Budget. That lowers petrol and diesel duties by around 1-1/2 pence a litre in real terms.

From March 2001, vehicle excise duty (VED) for all new cars will be split into four bands, linked to carbon emission levels and the type of fuel used.

The government also said in its pre-budget report that it would consult on the following measures.

These are pretty much considered a "done deal", and will cost around 1.75 billion a year to implement.

Duty on ultra low sulphur petrol will be cut by 2p a litre. Ultra low sulphur diesel duty will also be cut, by 3p a litre. Both measures are pencilled in for April.

The government has said it will remove the 2p a litre duty premium on lead-replacement petrol, subject to a full assessment of the environmental implications

Lorry VED is to be cut by more than 50% on average in the 2001 Budget, plus lower rates will be charged for cleaner lorries.

The chancellor proposed the introduction of a vignette system, a British disc to ensure non-British lorries pay for using British roads.

The reduced rate of VED will be extended to existing cars with engines up to 1,500cc, meaning an extra 5 million car owners will pay the lower rate.


Following criticism of the 75p-a-week rise in the state pension last April, at the Labour Party conference the chancellor announced big increases this year in payments to pensioners.

Winter fuel allowance of 200
Basic state pension up 5 a week
Minimum income guarantee to rise to 100
Possible boost to age-related allowances
The winter fuel payment was increased to 200 from 150 in the pre-Budget report, for this winter only.

The basic state pension will rise by 5 a week for single pensioners from April this year, and a further 3 a week in April 2002. For couples, there will be increases of 8 and 4.80 a week.

The minimum income guarantee - which gives pensioners with no other resources extra means-tested benefits - will rise to 92.15 a week for a single pensioner and 140.55 a week for couples in April this year. That increases to at least 100 for a single pensioner and 154 for a couple by 2003.

The chancellor has also said he's consulting on raising the age-related personal tax allowances for pensioners in 2003-4 by 240 over and above indexation (on current forecasts, that would raise the allowance by 570 to 6,560 in 2003/04 for people aged 65-74 and by 590 to 6,850 for those over 75).

The Tories have announced they'll increase the age-related personal tax allowances for pensioners by 2000 from 2003/04.

Support for families and children

Gordon Brown has already announced the introduction of the children's tax credit, to replace the married couple's allowance, to be introduced this April.

Child tax credit of 8.50 a week
Possible increases in child allowances
Uprating of child benefit
Possible extra family leave
Most families entitled to receive it will get at least 8.50 a week. He's also already said he hopes to increase this to 10 in the March 7th budget.

And there is speculation that he might also increase the child allowances in the working families tax credit and income support to give more help to poor families.

And other changes to make work more "family-friendly" are also in the pipeline after a consultation document published by the Department of Trade and Industry.


The government has several plans to encourage people to save more for retirement.

Stakeholder pensions, private, low-cost pensions that must be provided by companies who do not offer occupational pensions, come into effect on 1 April and become compulsory for those companies on 1 October.

From April 2001, pensioners can have 6,000 of savings without any reduction in benefit under the minimum income guarantee (it was 3,000). The upper limit at which entitlement is removed altogether is to be increased to 12,000 from 8,000.

The Individual Savings Account (ISA) annual contribution limit of 7,000 has been extended to April 2006. Cash ISAs will be made available to 16 and 17-year olds from April 2001.

Employment opportunities

From April 2001, the threshold above which employees pay national insurance contributions (NICs) will be increased to align it with the income tax personal allowance.

There will be a reduction in employer NICs of 0.3% from April 2001, and a further fall of 0.1% from April 2002.

That is to compensate companies for the cost of the climate change levy, which comes in on 1 April, and charges industries which are heavy users of carbon fuels.

The New Deal - which helps the long-term unemployed find work and training - will be extended for lone parents from autumn 2001, and will be intensified for the over-25 year olds from April 2001.

The government has announced the introduction of a new job transition service where large-scale redundancies occur.

A job grant of 100 will be available for people who move from welfare into work from spring 2001.

There are also tax breaks for property development in inner-city areas designated for regeneration.

Search BBC News Online

Advanced search options
Launch console
See also:

09 Nov 00 | Business
Does the pre-Budget report add up?
08 Nov 00 | UK Politics
Brown acts on fuel and pensions
08 Nov 00 | Business
Boost for pensioners
21 Mar 00 | Budget2000
Crusade to end child poverty
10 Mar 00 | Budget2000
Tackling tax inequalities
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories