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EDITIONS
Thursday, 19 March, 1998, 10:53 GMT
Families at centre of Budget 'revolution'
Brown
Gordon Brown making his speech in the House of Commons
Full Budget news index

The Chancellor of the Exchequer, Gordon Brown, has promised to "revolutionise" Britain's tax and benefits system and unveiled a number of measures to help families and encourage people to work.

Mr Brown put up child benefit for the first child by 2.50 a week above the rate of of inflation. The increase will be implemented from April 1999.

In his speech, which lasted 62 minutes, Mr Brown said there was a case for higher-income families paying tax on child benefit if it went up in future.

The child benefit increase is being paid for by reducing married couples' allowance from 15% to 10% from April 1999.

Working families tax credit introduced

Mr Brown also said a childcare tax credit, part of a new Working Families Tax Credit, would meet up to 70% of childcare costs up to 100 a week for a first child and 150 for two or more children.

"The rules we draw up, which will be reviewed after two years of experience, will be designed to ensure that parents have access to high quality childcare: childminders, day nurseries and out-of-school clubs."

Mr Brown also announced a Working Families Tax Credit from October 1999, which he said would help the lowest paid people in Britain.

Mr Brown said he would raise revenue to fund these measures partly by closing tax loopholes, including offshore trusts, worth 1.5bn.

Hague calls Budget a 'betrayal'

The Conservative leader, William Hague, branded the Budget a "betrayal of families who work hard and save hard".

Hague
William Hague: humiliating U-turn on savings limit
He seized on changes allowing people to transfer all their existing tax-free savings into new Individual Savings Accounts.

"I am glad we have forced you into a humiliating U-turn over your plans," he said. "We may have lost the vote but we clearly won the debate."

The leader of the Liberal Democrats, Paddy Ashdown, welcomed many Budget measures but said the government was relying too heavily on interest rates to control the economy.

Inflation to hit 2.5% in 1999

Inflation, Mr Brown said, would peak at 3% this year and reach his stated target of 2.5% by 1999.

Growth this year could slow to 2% and increase to between 2.25% to 2.75% in 2000.

He said vigilance was required not to succumb to short-term pressures and concentrate on long-term goals.

Borrowing is predicted to be 5bn and next year is expected to be 4bn.

By the year 2000, he said, the Budget is expected to balance.

 WATCH/LISTEN
 ON THIS STORY

Gordon Brown: "No young person in Britain will be without opportunity" (1'04")

Watch the BBC's Chief Political Correspondent John Sergeant's report

Gordon Brown: "Childcare from now on will be available for the many and not just the few" (1'18")

William Hague: "Betrayal of people who work and save hard" (1'06")
See also:

18 Mar 98 | BUDGET NEWS
18 Mar 98 | BUDGET NEWS
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