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Wednesday, November 26, 1997 Published at 00:13 GMT

UK: Politics

Brown helps pensioners with fuel bills
image: [ Brown's announcement to cut corporation tax will please the business sector ]
Brown's announcement to cut corporation tax will please the business sector

In his pre-Budget statement ahead of next spring's full package, the Chancellor, Gordon Brown, said his aims would be increased productivity, employment opportunity for all and long-term strength through stability.

One of the most popular announcements with MPs was Mr Brown's extra money for every pensioner household to help tackle fuel bills.

He also announced a far reaching childcare plan which will establish a nationwide network of 30,000 childcare clubs, benefits for businesses with a cut in the rate of corporation tax and environmental proposals to cut VAT on insulating materials reducing consumption of fossil fuels.

At the heart of the pre-Budget report was "openness" and a "shared sense of national purpose," he said.

Pensioners' windfall

The Chancellor announced: "For this winter and next, every pensioner household will get 20 extra to help with fuel bills and every pensioner household on income support will get 50 extra."

"I am simply not prepared to allow another winter to go by when pensioners are fearful of turning up their heating even in the coldest winter days because they do not know whether they will have the help they need for their fuel bills," the Chancellor said.

Childcare proposals

Mr Brown proposed the biggest ever investment in childcare, committing 300m over the next five years to 30,000 new out-of-school clubs for a million children.

He said: " Under our plan, every lone parent who needs it will be able to find an out-of-school club in their community ... A national childcare strategy is no longer the ambition of workless parents - it is now the policy of this country's Government."

Corporation tax

He announced that in the next Budget, the main rate of corporation tax would be cut again by 1% to 30%, from April 1999. This is the lowest rate of any major industrialised country. On the same date, advance corporation tax will be abolished.

"Advance Corporation Tax, it has become abundantly clear, is now a hindrance to sensible business planning and investment decisions. Britain needs a reformed system that matches the needs of modern companies and favours the long term.

"So to allow companies to plan ahead I can confirm today that in April 1999 Advance Corporation Tax will be abolished ... At that point we will begin the move to paying Corporation Tax by quarterly instalments. Small companies will be exempt from this change and special arrangements will be made for medium sized companies," he said.

The unemployed, benefits and tax

[ image: Benefit system to be overhauled]
Benefit system to be overhauled
Mr Brown said that instead of simply compensating people for unemployment , the priority of the Government was to tackle its root causes and provide opportunities.

He said to help people get into work there would be a comprehensive overhaul of the benefits system.

"A comprehensive tax and benefits reform and modernisation of the welfare state is now required," he said.

To do this, he said, involved "three basic elements": providing skills for work, making work pay and creating new job opportunities. The Government also plans an integrated tax and benefit plan so people are better off at work.

He said that the Government still backed a 10p in the pound starting rate of income tax for low earners, but would only introduce it when "it is prudent to do so". He also said the Government would consider the future structure of national insurance for the low paid.

Also under consideration are proposals for greater help under the tax care system with child care costs.

Mr Brown that the "new deal" for the young unemployed originally announced in the July Budget would start in pilot form in January. The "new deal" encompasses a 4bn scheme.

He also announced a special travel deal for the young: "some of Britain's leading bus and rail companies have agreed to play their part by introducing a new travel pass for young people on our new deal, cutting by at least 50% their travel fares," he said.

New measures to help innovative businesses

Mr Brown said that after the success of his initiative to encourage the British film industry he had now decided to do more to encourage other areas of British talent.

[ image:
"No return to the instability of the 1980s"
"It is time to do more to encourage other creative industries where from science, computer software and communications to design, fashion and music, our British genius for creativity has made Britain a world leader.

"This year, entrepreneurs in small and medium sized companies can draw on our 200m doubling of capital allowances to invest in new technology."

From next year the new National Endowment for Science, Technology and the Arts is to make grants to encourage creative talents.

He said he wanted to encourage Britain to have a "more entrepreneurial culture" and was looking at ways to develop new technologies and improve investment in research and development.

Fiscal responsibility

The Chancellor said the Government would also publish proposals for a code of fiscal stability.

"We will legislate so there is a duty on Government to report to Parliament on how it is meeting its fiscal rules."

Mr Brown stressed it was was imperative that there should be a long term and stable framework with no return to the instability of the 1980s.

"We will be both cautious and prudent. We will not make the mistakes of 1988 when it was wrongly assumed the structural deficit had disappeared and the penalty was a return to boom and bust."

He said that paying interest on the Government's debt was costing 25bn, and pledged to reduce this figure.

By reallocating resources he promised to fulfill the "people's priorities" by finding 2.3bn for education, 300m for the NHS this year and 1.2bn for patient care next year. He said there would be "year on year increases" in spending on frontline patient care in the NHS.

Mr Brown said he planned to keep a tight reign on public spending. Overall he said his reforms would take time: "But it is in no one's interests if today's pay rise threatens to become tomorrow's mortgage rise."

To encourage more people to save on an individual level, the Government also plans to introduce from April 1999 new savings accounts. The details of these are to be put out to consultation next Tuesday.


Mr Brown also announced plans to cut VAT on insulating materials from 17.5% to 5%. It is intended to help reduce the use of coal, gas and oil and with them the amount of carbon dioxide being pumped into the atmosphere, and will enable 40,000 more homes to be insulated per year.

Mr Brown told MPs nothing was more important than the Government's approach to the environment.

"We are also looking at how the tax system can reflect our environmental objectives and we will do so in the light of decisions at Kyoto ... The Government will explore with our European partners the possibility of a reduced rate of VAT for a wider range of energy saving materials."

The Chancellor closed his first pre-Budget speech by saying, "We are already steering a new course for Britain and building a new country."

Brown: cannot stand by while pensioners suffer another cold winter (Dur:1'12")
Brown: stresses there must be wage restraint (Dur:17")
Brown: announces new after school clubs (Dur: 11")

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