Budget June 2010: Key points

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The following are key points from chancellor George Osborne's budget statement to Parliament.

Business and the economy

• The government aims for the structural current deficit to be in balance by 2015 and debt to be falling as a percentage share of GDP
• Spending cuts will account for 77 per cent of deficit reductions, while 23 per cent from tax rises From 4 January 2011 VAT will be raised to 20 per cent
• The corporation tax rate will be cut by one per cent per year for four years, from 28 to 24 per cent and the small firms’ rate will be cut to 20 per cent. Capital and investment allowances will be reduced, but this will be delayed until 2012
• Capital gains tax to be raised to 28 per cent for higher rate tax payers
• A bank balance sheet levy will be introduced from January 2011 to eventually generate over £2bn annually
• From April 2011 the employer national insurance contributions threshold will rise by £21 a week above inflationary rises
• The income tax personal allowance will be increased by £1,000 to £7,475
• For the next three years the first £5,000 of national insurance contributions will be waived for the first ten employees of new businesses outside London, the South East and the East of England
• No rises in alcohol, tobacco or fuel duty – alcohol and fuel duties, including air passenger duty, to be considered in the autumn
• Part of Royal Mail to be sold off to raise investment capital
• The government will implement the recommendations of the Dyson review into R&D tax credits and expand the enterprise finance guarantee scheme
• The government will publish a white paper on tackling regional economic differences in Britain later in the summer, followed by a paper on rebalancing the economy of Northern Ireland
• The government will create a Regional Growth Fund to provide finance for regional capital projects over the next two years

Health

• Cuts to other government departments will exclude the NHS
• The health in pregnancy grant to be abolished from April 2011 and the Sure Start maternity grant will be restricted to the first child
• Child benefit to be frozen for next three years
• Disability living allowance will not be reduced, but a medical assessment will be applied to new and existing claimants from 2013

Education and skills

• The government will look at how to dispose of its shareholding in the student loan book
• The chancellor said he recognised "particular pressures on our education system and on defence", and final departmental settlements will be set in the spending review

Culture, media and sport

• The broadband levy will be abolished and replaced in part with spending from the digital switchover portion of the television licence fee
• The government will examine how Tote betting can be sold off
• Tax relief for the video games industry will be scrapped
• The furnished holiday lettings rules will be maintained

Transport

• The government will look at how to dispose of its shareholding in air traffic body NATS
• The chancellor announced that some backdated business rate bills will be cancelled including that of port businesses
• A number of regional transport schemes will go ahead, including upgrading the Tyne and Wear Metro, extending the Manchester Metrolink, redevelopment of Birmingham New Street Station and improvements to the rail lines to Sheffield and between Liverpool and Leeds
• The government will report back in the autumn on its proposal to impose a per plane tax as opposed to a per passenger tax to contribute towards a reduction in carbon emissions

Welfare and benefits

• Earnings will be re-linked with basic state pensions from April 2011
• There will be a two-year pay freeze for civil servants earning more than £21,000. Those earning less than this will receive a flat rate pay rise of £250 in both these years
• The government will increase the retirement age to 66 and consult on whether to phase it out altogether
• The uprating of benefits will be aligned to the consumer price index rather than the retail price index
• Tax credits will be reduced for families earning over £40,000 and the taper rate increased
• Child benefit will be frozen for the next three years
• Local housing allowances and mortgage interest support will be restricted and maximum limits set on housing benefit payments

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