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Budget2000 Tuesday, 21 March, 2000, 18:35 GMT
The chancellor's speech: part two
Part two of Chancellor Gordon Brown's Budget speech

We must also remove the old barriers of under-investment and neglect that for too long have held our regions back.

Working with the new Regional Development Agencies and the Small Business Service, our aim is balanced economic development across all the regions and nations of the United Kingdom - a modern regional policy supporting local innovation, more investment and improved infrastructure.

To finance a network of regional venture capital investment funds, we are today announcing a partnership with the European Investment Bank and the private sector - with a target of 1bn for new economic development for our regions and nations.

The regional targets will be 85m for the South West, 120m for the North West, 130m for the North East and Yorkshire, 250m for the Midlands and East, 250m for London and the South East. Scotland, Wales and Northern Ireland will have their own funds.

To further promote a modern regional policy, the Secretary for Industry will be announcing a regional innovation fund to facilitate the formation of local clusters in hi tech industries.

Full employment

For years Britain, as a whole, has lagged behind America in business access to venture capital investment. Here only half as much is invested per head.

I am grateful to Mr Paul Myners, who has agreed to head a review of institutional investment, to report to me in time for the next Budget.

Our goal for the whole of the United Kingdom is to remove the old barriers to full employment.

We know that greater opportunity for all means greater prosperity for all.

Since 1997 the number of unemployed on benefits has fallen by 30%.

Youth unemployment is down 70% and nearly 200,000 more young people have now found jobs.

'More enterprising, more fair'

Long term youth unemployment, which in the mid-eighties was at 500,000 and even in 1997 was as high as 200,000, is already down to 50,000.

The New Deal demonstrates how false was the old choice between enterprise and fairness, between efficiency and equality.

By delivering employment opportunity for all, we are making Britain both more enterprising and more fair, to the benefit not just of the high unemployment areas but the whole country.

And because we have succeeded in this Parliament in removing the old barriers to employing the young, I can announce that starting from April next year we will extend the opportunities and the obligations of the New Deal to the long term adult unemployed - with four options of: work, work-based training, work experience including in the voluntary sector, self-employment.

But no fifth option, no staying at home on benefit doing nothing.

The relationship we are forging between rights and responsibilities is firmly rooted in both economic opportunity and individual responsibility.

Instead of being left to draw benefit at a social security office, the unemployed who are able to work will sign up to seek work, with the long term unemployed offered the help of a personal employment adviser.

'Work will now pay'

To ease the transition back to work, the government will introduce a new job grant for long term unemployed starting at 100 and help with rent or mortgage.

Instead of benefits paying more than work, work will now pay. And I can announce that we will extend the principle of the working families tax credit.

As a first stage, from 1st April, all long term unemployed over 50 who want to return to work will be guaranteed a minimum income for their first year back - for wages up to 15,000 a year, an extra payment of 60 a week.

And building on the forthcoming rise in the national minimum wage, I am today increasing the working families tax credit. It is already being paid to one million families in our country. And with today's family tax cut, the minimum family income will rise next April - from 200 a week by 7% to 214 a week.

Full employment is not just about the right to work, but, where there are jobs, the responsibility and the requirement to work.

We will implement the Report of Lord Grabiner QC.

Starting in May, a confidential phone line will advise claimants on how to move from the hidden economy and end fraudulent benefit or tax claims; how to get work, register as a business, or become self employed.

After six months, from 1 January, for those who fail to respond, tougher rules and penalties will be imposed.

Lone parents

From October, in the 20 highest unemployment areas of Britain covering 127,000 unemployed, local special action teams will be set up to help local unemployed people into nearby vacancies.

The number of lone parents on income support has fallen by almost 100,000 since 1997.

But the employment rate among lone parents in Britain is still only 45%, far below the 70-80% rates of America, France and Scandinavia.

In this Budget we remove old barriers to work and I can today announce an extension of the New Deal in a new way to half a million lone parents.

Piloted from this Autumn, and starting nationally from next April, lone parents with children over five will be invited to work-focussed interviews - and encouraged to take up new choices:

  • - the choice to train for work with a new cash payment of 15 a week on top of benefits;
  • - the choice of a few hours work a week, with the first 20 of earnings allowed with no reduction in benefit;
  • - the choice of part time work with a guaranteed 155 for 16 hours or the choice of full time work on a guaranteed 214 a week;
  • - and on every rung of this ladder of opportunity, help with back-to-work costs and with child care.

    Just as we remove old barriers to lone parents working when their children go to school, so too we will help mothers who want to be at home in the first months of their child's life.

    Today, too many children are born into poverty because the family income drops when the mother stops work. Yet this is the time when many mothers feel they need to be at home with their young child.

    'Immediate decisions'

    The Secretary for Trade is announcing that he will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.

    But today I can announce immediate decisions which recognise the extra costs families face when a child is born.

    For all low income mothers who meet the basic requirement of health check ups for their young child, we will increase the Sure-Start maternity grant from 200 to 300 pounds. Helping over 200,000 low income mothers.

    Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.

    Families receiving the credit where the mother wants to stay at home will no longer have to wait as long as six months for additional support after a child is born - this will be worth up to 30 a week.

    I have examined the alternative put to me of a transferrable tax allowance for husbands and wives when mothers stay at home.

    Under this system, a family with two children on 15,000 a year would receive 965 a year.

    The working families tax credit is far better. With the improvements in it announced today the same couple will receive not 965 a year but 2,200 a year.

    Child benefit

    The prime minister has set a national goal for our country - to abolish child poverty in 20 years, and to halve it by 2010.

    A Sure Start for all Britain's children is not only right but the best anti-crime, the best anti-drugs, the best anti-unemployment and the best anti-dependency policy for this country's future.

    And our strategy starts from the foundation of universal child benefit for all seven million families with children.

    When we came to office, child benefit was just 11.05 for the first child.

    Child benefit will be 15.50 from April 2001, 40% more than in 1997.

    For young children in the poorest families, weekly support in 1997 was just 28.

    We have raised it in every Budget and today the Secretary for Social Security is announcing a further increase for the poorest children of 4.35 a week.

    So maximum support is up from the 28 of 1997 to up to 50 a week next year.

    As a result of all our measures, the poorest two child family on income support will now be 1,500 a year better off than in 1997.

    'Fulfilling obligations'

    And the low paid family with two children on a wage of 10,000 a year will now be 2,700 a year better off.

    This is what we mean by tackling child poverty while making work pay.

    I can now report that the numbers of children lifted out of poverty will this year rise beyond one million, and next year reach 1.2 million children - the greatest reduction in child poverty in 50 years, our country now at last fulfilling this generation's obligations to the next.

    And as we move forward to take the second million children out of poverty, I can confirm today that the Secretary for Social Security and I have agreed on the next major reform.

    Over the next three years, building on the foundation of universal child benefit, we will create an integrated and seamless system of support for children paid to the mother.

    The war against child poverty needs more than finance and more than the efforts of government acting alone.

    The war against child poverty can only be won by the combined efforts of private, voluntary, charitable and public sectors working together.

    I can confirm that after consultation with charities and voluntary organisations we will proceed to set up, in every region of our country, and with new cash allocated in our spending review, not just one children's fund but a network of local and regional children's funds to support work by the voluntary sector in meeting the needs of children.

    'Civic patriotism'

    A strong civic society is built not by rights alone but by rights and responsibilities and by the shared pursuit of the common good - which every year enlists the energies and realises the idealism of more than 22 million British citizens.

    It is time for government to do more to encourage and extend this civic patriotism.

    All voluntary organisations and charities will benefit from the tax reforms I am announcing to make it easier to give money and time.

    From 6 April this year for every pound any taxpayer gives to charity, the government will add an extra 28 pence.

    And to encourage payroll giving, for every pound contributed through the pay packet, the government will add up to 50 pence worth of tax relief.

    Tax relief will be available not just for cash donations, but for gifts of shares.

    To encourage corporate giving, any company can, from 1 April, receive tax relief on the full amount of any donation.

    Within prescribed limits, I will go further in exempting ticket sales for charitable fund raising events from VAT, so that the contributions people make will go straight to the charities they support.

    Each of these measures will also help those charities and non-governmental organisations who, with the churches, have, for decades, led the crusade to combat Third World poverty and secure debt relief.

    With these reforms, this government matches their commitment because it shares their cause - a virtuous circle of debt reduction, poverty relief and economic development for the poorest countries.

  • See also:

    21 Mar 00 | Budget2000
    21 Mar 00 | Budget2000
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