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Chancellor to signal tax changes Darling lowers UK growth forecast
(about 7 hours later)
Chancellor Alistair Darling is expected to signal inheritance tax changes and plans to target private equity bosses' tax loopholes in his pre-Budget report. The UK's economy will grow at a slower rate than previously forecast in 2008, Chancellor Alistair Darling has said as he delivers the pre-Budget report.
Mr Darling is also likely to downgrade expectations for growth as he outlines his latest thinking on the UK economy. Mr Darling, who will also outline his spending plans, said growth would be 2%-2.5%, down 0.5% on predictions.
Hospitals and schools may also get more than expected when he sets out to MPs the government's longer term plans in the Comprehensive Spending Review. But he said the UK economy was strong enough to withstand turmoil in global markets and would bounce back in 2009.
The statements come as ministers seek to regain the political initiative. He pledged to close tax loopholes for private equity bosses and "non-doms" so they paid their "fare share".
It follows criticism of the prime minister for allowing speculation about a snap election to build, then ruling it out. EXPECTED MEASURES Economy: Growth forecasts to be revised downTax: Inheritance tax thresholds may be increased. Private equity loopholes could be closedHealth: Spending growth to slow but more cash for family doctor services and hospital cleaningEducation: Rate of growth to slow to 2.5% annuallySecurity: Cash for extra Special Branch officersTransport: Details of £5bn Crossrail pledge unveiled last week class="" href="/1/hi/business/7026599.stm">Analysis: Tough times ahead
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 class="" href="/1/hi/business/7026599.stm">Analysis: Tough times ahead class="" href="/1/hi/business/7027606.stm">What we know is in it He said Tory plans to charge a flat rate of £25,000 on non-doms - people who register abroad for tax purposes - did not add up.
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. He said would consult on early legislation on non-domiciled taxpayers, as a first step introducing a charge after seven years, then a higher rate after 10.
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. He also said he would prevent people claiming they are out of the country when they are actually here and from disguising income as capital. These measures will raise an average of £650m, he said.
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. Mr Darling is also setting out the government's Comprehensive Spending Review, which he said "will be tighter for many departments".
There is now speculation that the chancellor may signal the government has its own ideas for reforming inheritance tax. He said there would be an extra £400m for the armed forces, including cash for improved accommodation.
Moves to close the tax loopholes enjoyed by private equity bosses are also expected. On Tuesday morning Alistair Darling told the Cabinet that the economy remained strong and well positioned to deal with increased global economic uncertainty.
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.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. Lower forecasts
Spending reviews detail how much money the government will put into schools, hospitals and other public services. HAVE YOUR SAY In a time of increasing global instability, defence spending needs to be a priority Bryan McC, UK class="" href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=3652&edition=1">Send us your comments They normally outline plans for the following three years, but there is speculation that this year's could be more like 1998's, which set strategy for the following decade. Spending reviews detail how much money the government will put into schools, hospitals and other public services.
They normally outline plans for the following three years, but there is speculation that this year's could be more like 1998's, which set strategy for the following decade.
As chancellor, total obscurity is not an option for Alistair Darling BBC political editor Nick Robinson Read Nick's thoughts in full
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 spending When he succeeded Tony Blair as prime minister in June, Mr Brown said education was his "passion" and 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. 'Gas guzzlers'
Mr Brown 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 href="/1/hi/business/7030830.stm">Analysis: Budget challenge HAVE YOUR SAY In a time of increasing global instability, defence spending needs to be a priority Bryan McC, UK href="http://newsforums.bbc.co.uk/nol/thread.jspa?forumID=3652&edition=1">Send us your comments
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 could be extra money to reduce child poverty.Mr Brown has also suggested there could be extra money to reduce child poverty.