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Darling to outline spending plans Heirs, bosses await tax verdict
(about 3 hours later)
The government's spending plans are set to be outlined as it strives to regain the political initiative. The government is expected to signal inheritance tax changes and target tax loopholes for private equity bosses as it strives to regain political ground.
Chancellor Alistair Darling will set out thinking on the state of the economy and future tax changes in his pre-Budget report.Chancellor Alistair Darling will set out thinking on the state of the economy and future tax changes in his pre-Budget report.
In an unusual move, he will also unveil long-term spending plans in the Comprehensive Spending Review. He will also unveil long-term plans in the Comprehensive Spending Review.
It comes after the prime minister was criticised for allowing speculation on a snap election, then ruling it out. It follows criticism of the prime minister for allowing speculation on a snap election, then ruling it out.
He said he wanted more time to set out his vision after having to face a series of crises - such as flooding, terrorism, foot-and-mouth disease and problems at Northern Rock - since becoming prime minister.
Credit crunch
Mr Darling's two statements will include an assessment of the state of the economy and taxation, and outline the government's spending priorities until 2011.
In an interview with the Financial Times last week, he said there would undoubtedly be an effect on Britain from the "credit crunch" experienced in the US.
It is thought Mr Darling may downgrade the forecast for UK economic growth.
2008 GROWTH PREDICTIONS Government forecast 2.5-3.0%Lehman Brothers 1.7% (2.3%)HSBC 1.8% ( 2.1%)Barclays 2.5% ( 2.7%)NIESR 2.2% (2.6%)Lombard Street 1.5% (1.5%)Previous forecast in brackets Analysis: Tough times ahead2008 GROWTH PREDICTIONS Government forecast 2.5-3.0%Lehman Brothers 1.7% (2.3%)HSBC 1.8% ( 2.1%)Barclays 2.5% ( 2.7%)NIESR 2.2% (2.6%)Lombard Street 1.5% (1.5%)Previous forecast in brackets Analysis: Tough times ahead
Mr Brown said he wanted more time to set out his vision after having to face a series of crises - such as flooding, terrorism, foot-and-mouth disease and problems at Northern Rock - since becoming prime minister.
The prime minister told his parliamentary party on Monday night that Tuesday's statements would be an opportunity for Labour to set out its vision and respond to some of the Conservative proposals outlined at last week's Tory conference.
It was the Tory plan to cut inheritance tax with a levy on business executives registered abroad for tax purposes that helped the Conservative revival.
There is now speculation that the chancellor may signal the government has its own ideas for reforming inheritance tax.
Moves to close the tax loopholes enjoyed by private equity bosses are also expected.
Lower forecasts
In an interview with the Financial Times last week, Mr Darling said there would undoubtedly be an effect on Britain from the "credit crunch" experienced in the US.
It is thought Mr Darling may downgrade the forecast for UK economic growth.
Spending reviews detail how much money the government will put into schools, hospitals and other public services.Spending reviews detail how much money the government will put into schools, hospitals and other public services.
But as it is the first Comprehensive Spending Review (CSR) since 1998 - it could set strategy for the next decade.But as it is the first Comprehensive Spending Review (CSR) since 1998 - it could set strategy for the next decade.
The Treasury has already said it will consider the impact of such long-term issues as population and technological change, terrorism and pressure on natural resources.The Treasury has already said it will consider the impact of such long-term issues as population and technological change, terrorism and pressure on natural resources.
In the last CSR, in 1998, health and education were earmarked as priorities and have received more money ever since.In the last CSR, in 1998, health and education were earmarked as priorities and have received more money ever since.
NHS spendingNHS spending
When he succeeded Tony Blair as prime minister in June, Mr Brown said education was his "passion" but the NHS was his "priority".When he succeeded Tony Blair as prime minister in June, Mr Brown said education was his "passion" but the NHS was his "priority".
But both can expect smaller spending increases than previous years.But both can expect smaller spending increases than previous years.
He has already said that education spending in the UK will rise from £77.4bn in 2007/08 to £90bn by 2010/11.He has already said that education spending in the UK will rise from £77.4bn in 2007/08 to £90bn by 2010/11.
Since 2002 the NHS has been given record annual funding increases of about 7%. There is speculation this will slow to between 3% and 3.5% by 2011/12.Since 2002 the NHS has been given record annual funding increases of about 7%. There is speculation this will slow to between 3% and 3.5% by 2011/12.
With the credit crunch biting in the city, it feels as though the boom is coming to an end and normality is about to return Evan DavisBBC economics editor Analysis: Budget challengeWith the credit crunch biting in the city, it feels as though the boom is coming to an end and normality is about to return Evan DavisBBC economics editor Analysis: Budget challenge
The prime minister has already announced an extra £7.7bn for defence and some departments have agreed to a 5%-a-year real-terms cut over the CSR period - including HM Revenue and Customs and the Department for Work and Pensions.The prime minister has already announced an extra £7.7bn for defence and some departments have agreed to a 5%-a-year real-terms cut over the CSR period - including HM Revenue and Customs and the Department for Work and Pensions.
There has been speculation that Mr Darling may look to introduce higher charges on "gas guzzlers", through road tax or a one-off charge.There has been speculation that Mr Darling may look to introduce higher charges on "gas guzzlers", through road tax or a one-off charge.
Mr Brown has also suggested there will be a clampdown on tax breaks enjoyed by private equity executives and extra money to reduce child poverty. Mr Brown has also suggested there could be extra money to reduce child poverty.