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Brown cuts basic tax rate by 2p Brown cuts basic tax rate by 2p
(20 minutes later)
Gordon Brown announced a 2p cut in the basic income tax rate from April 2008 in a surprise move at the end of what is likely to be his last Budget.Gordon Brown announced a 2p cut in the basic income tax rate from April 2008 in a surprise move at the end of what is likely to be his last Budget.
But the chancellor also scrapped the 10p lower rate, which critics say means most people will not be better off.But the chancellor also scrapped the 10p lower rate, which critics say means most people will not be better off.
He also cut corporation tax from 30p to 28p, while this year's 2p fuel duty rise will be delayed for six months.He also cut corporation tax from 30p to 28p, while this year's 2p fuel duty rise will be delayed for six months.
Duty on beer and cider rises 1p a pint, wine 5p and cigarettes 11p. Road tax on "gas guzzlers" rises to £300 this year.Duty on beer and cider rises 1p a pint, wine 5p and cigarettes 11p. Road tax on "gas guzzlers" rises to £300 this year.
From 2008 that figure will rise to £400. The least polluting cars will have their road tax cut to £35.
Mr Brown also cut VAT from 17.5% to 5% on nicotine patches and similar products and said duty on spirits was being frozen.Mr Brown also cut VAT from 17.5% to 5% on nicotine patches and similar products and said duty on spirits was being frozen.
Mr Brown announced more money for education in England, which he said would narrow the gap in funding between pupils in state and private schools.Mr Brown announced more money for education in England, which he said would narrow the gap in funding between pupils in state and private schools.
BUDGET HIGHLIGHTS 2p off basic rate of income tax10p starter rate abolished 2p cut in corporation taxGas guzzling car duty up to £300 this year and £400 next Beer and cider up 1p, wine 5p, spirits duty frozen11p on cigarettes2p petrol increase frozen for six monthsMore cash for schools and hospitals Budget at-a-glance BBC experts' blogBUDGET HIGHLIGHTS 2p off basic rate of income tax10p starter rate abolished 2p cut in corporation taxGas guzzling car duty up to £300 this year and £400 next Beer and cider up 1p, wine 5p, spirits duty frozen11p on cigarettes2p petrol increase frozen for six monthsMore cash for schools and hospitals Budget at-a-glance BBC experts' blog
There will also be an increase from £2bn to £8bn in help for people who lost their pensions when their employers went bust before 2005.
The NHS in England will get an extra £8bn over the coming year, with extra health spending for the whole of the UK to rise by £10bn.The NHS in England will get an extra £8bn over the coming year, with extra health spending for the whole of the UK to rise by £10bn.
BBC Political Editor Nick Robinson said Mr Brown's surprise announcement of a tax cut "produced huge roars on the Labour benches and awkward gasps on the Tory benches".BBC Political Editor Nick Robinson said Mr Brown's surprise announcement of a tax cut "produced huge roars on the Labour benches and awkward gasps on the Tory benches".
But, he added, once all the changes in the Budget had been taken into account, "there's no net tax cut - it's neutral".But, he added, once all the changes in the Budget had been taken into account, "there's no net tax cut - it's neutral".
In his Budget response, Conservative leader David Cameron said Mr Brown was "the chancellor who has taken one tax down but put 99 up".In his Budget response, Conservative leader David Cameron said Mr Brown was "the chancellor who has taken one tax down but put 99 up".
Mr Cameron told Mr Brown that average families were paying £1,300 more "because of your Budget decisions".Mr Cameron told Mr Brown that average families were paying £1,300 more "because of your Budget decisions".
He said the Labour Party were "just realising their next leader has the tendencies of Stalin and the poll ratings of Michael Foot".He said the Labour Party were "just realising their next leader has the tendencies of Stalin and the poll ratings of Michael Foot".
'Subsidise rich''Subsidise rich'
Liberal Democrat leader Sir Menzies Campbell said it was "a Budget of missed opportunities" and abolishing the 10p starting tax rate meant income tax would be increased for many people.Liberal Democrat leader Sir Menzies Campbell said it was "a Budget of missed opportunities" and abolishing the 10p starting tax rate meant income tax would be increased for many people.
"We are asking the poor to subsidise the rich," Sir Menzies told MPs."We are asking the poor to subsidise the rich," Sir Menzies told MPs.
Mr Brown began his speech by telling MPs the British economy was growing, alongside the US, faster than all the other G7 economies - between 2.5% to 3% for 2008 and 2009.Mr Brown began his speech by telling MPs the British economy was growing, alongside the US, faster than all the other G7 economies - between 2.5% to 3% for 2008 and 2009.
READ THE REPORT The Budget 2007 [1.76MB] Most computers will open this document automatically, but you may need Adobe Reader All Budget documentsREAD THE REPORT The Budget 2007 [1.76MB] Most computers will open this document automatically, but you may need Adobe Reader All Budget documents
He said inflation - which has increased this week to 2.8% raising the prospect of an increase in interest rates - would fall to 2% next year and carry on falling.He said inflation - which has increased this week to 2.8% raising the prospect of an increase in interest rates - would fall to 2% next year and carry on falling.
"This is a Budget to expand prosperity and fairness for Britain's families - and it is built on the foundation of the longest period of economic stability and sustained growth in our country's history," he told MPs."This is a Budget to expand prosperity and fairness for Britain's families - and it is built on the foundation of the longest period of economic stability and sustained growth in our country's history," he told MPs.
He also focused on the environment, with a cut in road tax for the least polluting cars from £50 to £35 and a rise in tax on "gas guzzling" vehicles.He also focused on the environment, with a cut in road tax for the least polluting cars from £50 to £35 and a rise in tax on "gas guzzling" vehicles.
But he rejected Tory calls for VAT to be added to airline tickets, saying the proposals had not been "thought through".But he rejected Tory calls for VAT to be added to airline tickets, saying the proposals had not been "thought through".
Golden ruleGolden rule
He said more cash would be made available for public services from efficiency savings and the £36bn sale of government assets, ahead of the publication of the Comprehensive Spending Review, which will take place in the autumn rather than July as previously expected.He said more cash would be made available for public services from efficiency savings and the £36bn sale of government assets, ahead of the publication of the Comprehensive Spending Review, which will take place in the autumn rather than July as previously expected.
HAVE YOUR SAY A pretty good budget all round...I can't help thinking that a snap autumn election might be on the cards Edward, London Send us your comments Cameron: Brown 'in deep hole'HAVE YOUR SAY A pretty good budget all round...I can't help thinking that a snap autumn election might be on the cards Edward, London Send us your comments Cameron: Brown 'in deep hole'
Intelligence and counter-terrorism will receive an additional £86m for the coming year.Intelligence and counter-terrorism will receive an additional £86m for the coming year.
But there will be real-terms cuts totalling £2bn in the budgets of several departments, including work and pensions, HM Revenue and Customs, the Cabinet Office, the Treasury along with the Department of Constitutional Affairs and the Attorney General's departments.But there will be real-terms cuts totalling £2bn in the budgets of several departments, including work and pensions, HM Revenue and Customs, the Cabinet Office, the Treasury along with the Department of Constitutional Affairs and the Attorney General's departments.
In a Budget which looked back over his near-10 years as chancellor, Mr Brown said that over the economic cycle, current spending and revenues show a surplus of £11bn, which he said met his Golden Rule.In a Budget which looked back over his near-10 years as chancellor, Mr Brown said that over the economic cycle, current spending and revenues show a surplus of £11bn, which he said met his Golden Rule.
Mr Brown's Budget came the day after the former head of the civil service accused him of "Stalinist ruthlessness".Mr Brown's Budget came the day after the former head of the civil service accused him of "Stalinist ruthlessness".
BUDGET CALCULATOR Work out how the 2007 budget will affect youBUDGET CALCULATOR Work out how the 2007 budget will affect you
Mr Brown tried to laugh off the comments at the start of his speech, but he was reported to be "incandescent" on Tuesday, when former head of the civil service, Lord Turnbull, made them in a newspaper interview.Mr Brown tried to laugh off the comments at the start of his speech, but he was reported to be "incandescent" on Tuesday, when former head of the civil service, Lord Turnbull, made them in a newspaper interview.
It is expected to be the chancellor's final budget - if he takes over from Tony Blair, as expected, within the next few months.It is expected to be the chancellor's final budget - if he takes over from Tony Blair, as expected, within the next few months.
Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May.Mr Blair has said he will step down by September, and is expected to announce his resignation shortly after the Scottish and Welsh elections on 3 May.