Brown's three-point pre-Budget plan

Rises for pensioners and cash for schools, but no major fuel tax cuts

Chancellor Gordon Brown today offered Britain a three-point plan to build on the country's 'prosperity' under Labour in his pre-Budget statement.

Chancellor Gordon Brown today offered Britain a three-point plan to build on the country's 'prosperity' under Labour in his pre-Budget statement.

He said the Government would encourage entrepreneurs, as well as acting to stop under investment and bring in tax cuts as soon as it was affordable.

Mr Brown also put forward new measures aimed at heading off further confrontation on the dual contentious issues of fuel tax and pensions.

On fuel, there was no 26p a litre cut as demanded by hauliers. Instead, he pledged to freeze fuel tax for two years and cut tax only on ultra-high sulfer. Non-UK hauliers will also have to pay a new roads tax.

But pensioners did see an expected increase, with single pensions rising to £100 and £154 for a couple from 2003. That is an increase of £5 and £8 a week respectively

The following year pensions would again rise faster then earnings by £3 for a single pensioner and £4.80 for married couples. And the poorest pensioners will get an extra £14 a week from next year.Pensioners

Mr Brown said he would push ahead with three-year spending plans with a doubling of public investment in a range of areas, cutting unemployment and doing more for pensioners.

He said: "We want to all citizens sharing in rising prosperity."

The Government would "do nothing to put at risk the economic stability that has given this country the lowest unemployment for 20 years and lowest inflation for 30 years".

Pointing to investment in hospitals, schools and public services, he said: "This hard won and newly won stability, now gives Britain an opportunity we can either seize or squander".

It was an opportunity to achieve high levels of productivity growth, ensuring prosperity for all.

"The risk for Britain is to repeat the 80s mistakes of taking economic strength for granted.

"The choice of this pre-Budget report is that we build economic strength by investing, and through tax incentives encourage a new generation of entrepreneurs."

He also said he would give families the lowest direct tax burden in 30 years.

Mr Brown claimed the economy had given the country an opportunity which it could either "seize or squander".

A new road tax will be brought in for non-UK hauliers operating on Britain's roads. He also offered £100m to help firms scrap old lorries. Excise Duty on lorries will also be cut by as much as £2,000. The average cut is expected to be £700.

There will also be lower car tax on vehicles 1500cc on less.

Mr Brown said he hoped ultra-low sulphur fuel would account for 100 percent of petrol and diesel sales next year, adding that it required no adaptation of car or lorry engines.

Mr Brown also pledged to continue the fight against unemployment, which stands at its lowest level since 1979, with long-term unemployment at its lowest level since 1978.

He said the Government was close to achieving its target of moving 250,000 young people from welfare into work.

He said New Deal had cut youth employment by 14 percent.

New Deal will be extended for single parents next year, trying to get an extra 150,000 on to the scheme.

Unemployment, Mr Brown added, was now costing the country £5bn less than in 1997.

Falling unemployment had brought savings of £1.5bn in the social security budget this year and would bring savings of £2bn next year and £2.5bn the year after that.

The Chancellor also promised huge investment in schools, which would get an extra £200 million from the windfall levy. New money for every school in the country, which could be as much as £30,000 for large secondary schools.

Mr Brown told MPs the extra cash was available because the Government had not spent all the money it raised from the windfall tax.

"This lower unemployment means we can allocate new money to every school of every constituency in the country," he declared.

Other key features included the cutting of Stamp Duty in poor areas and the abolition of Withholding Tax. But he said there would be no windfall tax on North Sea oil profits.

There will also be tax relief to bring empty flats above shops back in to use and VAT cuts to reduce the costs of residential property conversions.

Mr Brown forecast that next year manufacturing would grow by between two percent and 2.25 percent, with exports growing by 7 percent to 7.5 percent.

Since 1997 debt had fallen from 44 percent of national income to 36.8 percent by April this year. The net cash debt repayment this year would be £28bn.

VAT will also be simplified for small firms, and ISAs limited to £7,000 for next five years.

Mr Brown predicted the Budget surplus will be 16.6 percent.

Debt will be held below 40 per cent of national income.

He said he would cut VAT on property conversions to encourage regeneration and VAT on church repairs would fall from 17.5 percent to five percent, if the EU agrees.

Mr Brown told MPs that since 1997 inflation had averaged 2.4 percent, interest rates six percent, mortgages seven percent and growth 2.7 percent, saying: "We have steered a course of stability but we are not satisfied - long term prosperity for all is our objective."

He said the Government would investigate a new tax incentive to develop anti-TB, malaria and Aids drugs in a bid to cut infant mortality in the developing world.