[Image] HM Treasury 1 9 November 1999 NEW AMBITIONS FOR STABILITY AND STEADY GROWTH Chancellor Gordon Brown today set out the Government's strategy for enterprise and fairness where everyone can share in the benefits of economic success. Publishing the Pre-Budget Report today, the Chancellor set out four new economic ambitions for the next decade, based on a platform of stability: * Britain will raise its productivity faster than its competitors, as we close the productivity gap; * A higher percentage of people in employment than ever before; * A majority of Britain's school and college leavers to go on to higher education for the first time; and * Child poverty to be reduced by half, on the way to the Government's 20 year target to end child poverty. The Pre-Budget Report updates forecasts on the economy and the public finances, and sets out the direction of economic policy and further measures that are under consideration in the run up to the 2000 Budget. Stability and steady growth Since the Government took office, the new monetary and fiscal frameworks have been delivering low inflation and sound public finances. The Government is determined to avoid the mistakes of the past and not return to boom and bust. The Government's latest economic forecast, published today, shows: * for this year, inflation remaining close to target; stronger GDP growth than expected in March at 1¾ per cent; and a current budget surplus of around 1 per cent of GDP; * in future years, the economy growing at close to trend rates with inflation at target, reinforcing the platform of stability necessary for lasting increases in output and employment. Meeting the productivity challenge Britain's productivity levels lag behind those of other major economies. Raising productivity performance is vital to meeting the Government's objective of delivering high and stable levels of growth and employment. Taking forward the Government's ambition to raise its productivity faster than its competitors within the next decade, and building on Budget 99 measures, the Chancellor announced: * a consultation on a new package of Capital Gains Tax reform; * a £10 million package to boost enterprise skills in schools; * a £25 million package of measures to promote enterprise among disadvantaged groups; * further details of the new Enterprise Management Incentive and the All Employee Share Ownership Scheme. The PBR also outlines a package of measures focussing on improving and extending IT skills, including a network of 1000 computer learning centres and 80 per cent discounts on computer literacy courses for holders of Individual Learning Accounts, and provision for 50,000 more people to study for basic qualifications in information technology. Increasing employment opportunity for all The Government's strategy is to move people from welfare to work, make work pay and ease the often difficult transition into work. The provision of employment and opportunity for all goes hand in hand with responsibilities and, alongside new measures to increase New Deal support for those aged 25 and over, new technologies will provide a more intensive and proactive job brokering service. Building on the New Deal programme, the Government today announced: * that it intends to intensify and extend the New Deal 25+ on a national basis from April 2001, building on the principles of the New Deal for the under 25s, and bringing the rights and responsibilities closer into line with those for young people. In preparation, from April 2000, the support available for those out of work for two years or more will be intensified; * setting up a national network of job-broking call centres to help employers fill the one million vacancies in the economy and help the unemployed move from welfare to work; * a national rollout of the Intensive Gateway Trailblazers within the New Deal for 18-24 year olds; * enhancements to the New Deal for Lone Parents, including inviting those on income support with children from the age of three to participate; * establishing a New Deal Intermediaries Fund to develop new and innovative ways to help the most disadvantaged back into work; and * funds for child care in further education, to look after 10,000 children, and thus help their parents study and improve their employability. The hidden economy is a significant problem. A review tackling this, to be carried out by Lord Grabiner QC, was announced today. The review will report by the time of the Budget. Fairness for families and communities The Government is committed to building a fairer and more inclusive society. The Pre-Budget Report today sets out further measures to support families and communities and deliver strong public services: * a new Children's Fund to support voluntary and community organisations in their work with children in poverty; * a further £150 million of spending on schools through the Private Finance Initiative and the New Deal for Schools; * free TV licences for people over 75 from Autumn 2000; * the extension of the 10p tax rate to savings; and * a new tax package to encourage individuals and businesses to give more to charity. The Chancellor today announced a tough range of measures designed to crack down on tobacco fraudsters, including the compulsory marking of cigarette and tobacco packs to show that UK duty has been paid, a national network of container x-ray scanners to help detect shipments of smuggled tobacco hidden in commercial freight, and new offences and tougher penalties for those caught with smuggled tobacco. There is a strong ongoing health case for year-on-year real terms increases in the price of cigarettes and tobacco. The Chancellor will in future form his Budget judgements on the appropriate level and timing of any increases taking into account a wide range of factors, including the Government's health objectives. Any additional revenue raised from real increases in tobacco duties in future would be spent on improved health care. For example, the extra revenue from a 5 per cent real terms rise in tobacco duty next spring would raise £300 million that would go to a further additional investment in the National Health Service from next April. Protecting the environment Today, the Chancellor announced further progress in meeting the Government's environmental objectives. * refinements to the climate change levy package will increase the environmental effectiveness of the levy, and deliver bigger carbon savings than the illustrative package outlined in Budget 99, whilst protecting business competitiveness. * increases in fuel duties since 1996 are estimated to produce carbon savings of between 1 and 2.5 million tonnes of carbon by 2010. The Government is committed to meeting its environmental targets. The time has now come to review the way that any increases in the fuel duty are determined. The Chancellor has, therefore, decided that the appropriate level of fuel duties will be set on a Budget by Budget basis, taking account of the Government's economic and social objectives as well as the UK's environmental commitments; * the Chancellor has decided that revenues from any real terms increases in fuel duties will, in future, go straight in to a ring-fenced fund for improving public transport and modernising the road network; and * the Government welcomes the enhanced package of voluntary measures from the Quarry Products Association but is concerned that it does not go far enough to address the environmental impacts of quarrying. The Government is minded to introduce an aggregates tax unless further negotiation with the quarrying industry can deliver an improved package of voluntary measures. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release at http://www.hm-treasury.gov.uk. Other Treasury material can also be found at this address. © Crown Copyright | home [Image] HM Treasury 2 9 November 1999 MAKING BRITAIN A MORE ENTREPRENEURIAL SOCIETY Further steps aimed at raising Britain's productivity faster than our competitors by making Britain more entrepreneurial and opening enterprise to all were set out today by the Chancellor in his Pre-Budget Report. The measures aim to: create the right environment and incentives for entrepreneurs; ensure that young people learn the skills to take advantage of a more entrepreneurial Britain; promote business and growth in deprived areas; ensure Britain is the best place to trade electronically by 2002; ensure UK research helps produce wealth-creating enterprises; and improve competition in the UK economy. The Chancellor said: "Raising productivity is one of the key conditions for meeting the Government's objective of high and stable levels of growth and employment and delivering sustained increases in living standards." Further detailed announcements will be made tomorrow by the Secretary of State for Trade and Industry. The measures include: Enterprise Management Incentives The Chancellor has confirmed that a new Enterprise Management Incentives (EMI) scheme will be included in the Finance Bill 2000. EMIs will encourage high quality managers to join small higher-risk companies, by offering access to tax-advantaged share options. Under this scheme, such companies will be able to offer up to 10 key employees options over shares worth up to £100,000 (at time of option grant), which will be taxed under a favourable capital gains tax regime on sale of the shares, rather than taxed as income at exercise of the options. Employee Share Ownership Scheme The Government is introducing the most tax-advantaged all-employee share scheme ever seen in the UK. It is a comprehensive scheme to support firms' own efforts to foster a more enterprising productive relationship with their employees. Corporate Venturing Tax Incentive The Chancellor will be introducing a tax incentive in next year's Finance Bill to encourage UK companies to undertake corporate venturing. Companies that make corporate venturing investments in small higher risk trading companies will receive an up-front corporation tax relief at 20 per cent. Corporate venturers who reinvest gains in new ventures will be able to defer payment of tax on these gains. Making Enterprise open to all The Chancellor announced a £30 million programme to promote better access to business support amongst disadvantaged groups and in deprived areas. The package will help ensure that the opportunities from a more entrepreneurial Britain are open to all, and includes: * A new enterprise development fund to promote innovative enterprise support for business growth and creation, such as incubator units; * New funding for Community Finance Initiatives (CFIs), which help to get finance and training to entrepreneurs in deprived groups, running a challenge fund to help resource CFIs, and provide loan guarantees to help co-finance commercial lending to CFIs; and Improving enterprise in schools To ensure that young people acquire both the skills and the attitudes necessary to have successful careers in a more enterprising economy, the Chancellor announced: * a £10 million package in 2000-01 to boost enterprise skills in primary and secondary schools; and * that he is supporting next year's National Campaign for Enterprise including the publication of an "Enterprise for All" book. MIT and Cambridge University partnership The Chancellor announced yesterday that MIT has agreed to locate its European partnership in the UK. Jointly with Cambridge University, it will set up an Institute in the UK that will bring a new dimension to education and research. The Institute will build on the 8 centres of enterprise that will be created in the UK universities that won the Government's Science Enterprise Challenge. The Institute will also: * undertake education and research designed to improve the UK's entrepreneurship and competitiveness; * develop a research programme in fields likely to have a substantial impact on the future evolution of technology; and * stimulate the development of technology based business out of the academic base. E-commerce The Chancellor announced measures to help the Government meet its aim to make Britain the best place to trade electronically by 2002: using £230 million from the Invest to Save Budget to fund new innovative ways of delivering government services - many exploiting the potential of the Internet; and * providing £1.1 million from the Capital Modernisation Fund to develop electronic procurement systems across government, which could save over £10 million a year. Clusters The Government wants to encourage the growth of clusters of innovative firms. The Deputy Prime Minister will today be announcing changes to the planning system that will ensure for the first time that the growth and development of clusters is recognised and supported. R&D tax credit The Government will introduce an R&D tax credit, targeted on small and medium-sized businesses, from April 2000. The tax credit will increase the 100 per cent relief for R&D to 150 per cent. When added to the existing relief, the cost of R&D to a company benefiting from the small companies rate will be reduced by 30 per cent. For companies not yet in taxable profit, the proposed credit will reduce the immediate cash cost of R&D by up to 24 per cent. By making the new tax credit payable to companies not yet in taxable profit, the new tax relief recognises the greater cash constraints that innovative, early-stage companies face and the extra assistance that they need. Baker Report - commercialisation of Government science The Government today welcomed the recent Baker report into the commercialisation of science conducted in Government laboratories (PSREs) and accepted the thrust of its recommendations. The Government will announce more details in the new year. But today the Chancellor announced that: there will be a much stronger drive to exploit PSRE research - with more freedoms for PSREs; government scientists will be allowed new incentives and rewards, subject to safeguards, for participating in exploitation - with changes to be made to civil service conduct rules; the risk-avoidance culture in the PSREs will be tackled. The Government welcomes the statement issued today affirming that the National Audit Office will adopt an open-minded and supportive approach to commercialisation by PSREs; address the need of PSREs for advice to help them commercialise their discoveries and inventions; the Government will consult on options, including a role for Partnerships UK - the new public private partnership which the Government is creating to replace the Treasury Taskforce. Improving Competition The new Competition Act comes into force in March 2000 and will revolutionise the enforcement of competition policy by enhancing the powers of the Office of Fair Trading to tackle anti-competitive practices. NOTES TO EDITORS 1. Further details on the Government's plans to open enterprise to all see HM Treasury news release 5. 2. Further details on: Enterprise Management Incentive scheme; Employee Share Ownership Scheme; Corporate Venturing; and R & D tax credits will be announced by the Secretary of State for Trade and Industry tomorrow. 3. Details on the MIT-Cambridge University partnership were announced by the Chancellor on Monday 8 November. Please refer to Treasury news release 186/99. 4. Further details on the Government's strategy on clusters will be announced by Lord Sainsbury, Minister for Science and Innovation at the DTI on 18 November. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release and other Treasury information at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 3 9 November 1999 CHANCELLOR ANNOUNCES FURTHER MEASURES TO INCREASE EMPLOYMENT OPPORTUNITIES AND SUPPORT FAMILIES Delivering employment opportunity for all, ending child poverty and ensuring fairness for families and communities was at the heart of the Pre-Budget Report published today by the Chancellor Gordon Brown. The Chancellor said: "This Government's central aim is employment opportunity for all, the modern definition of full employment. Our long term economic ambition over the next decade, for employment, is to achieve a higher percentage of people in work than ever before. " Building on the New Deal measures already implemented, the Chancellor set out further measures designed to increase employment opportunities. These are: The Government intends to intensify and extend New Deal 25+ on a national basis from April 2001, building on the principles of the New Deal for the under 25s, bringing rights and responsibilities for the 25+ into line with those for young people. This will include the offer of a job with a private sector employer; or self employment; work-based training or work preparation programmes; In preparation, the New Deal for over 25s will be strengthened from April 2000. It will provide more support for job search and to enhance links with employers. Extra support will be available to those who do not manage to find a job to address their basic skills needs, including 'soft' skills with access to careers guidance and mentors, and specialist support for those with deep-rooted problems such as alcohol or drug dependency; There will be tougher implementation of responsibilities for the long term unemployed. New Deal Personal Advisers will identify a number of suitable vacancies and jobseekers will be expected to apply for them. If candidates are unsuccessful advisers will try to establish why and use this feedback to help candidates enhance their employability; building on the internet jobs bank, using new technologies to deliver an improved service: expanding the nationwide network of touch-screen Job Points and developing links with the BBC and other potential partners to harness the potential of interactive digital television; For the New Deal for Young People a nationwide expansion of the intensive gateway approach currently being piloted, from Spring 2000, taking into account the lessons learnt from the evaluation of these pilots. In, addition, an extension of the New Deal Innovation Fund, to develop new approaches to help people into jobs; enhancement to the New Deal for Lone Parents: including inviting lone parents on Income Support with children between the age of three and five to participate; outreach to lone parents with children aged 14 and 15; and the long term aim of extending the principle of the Working Families Tax Credit (WFTC) to working households without children through an Employment Tax Credit. The Chancellor announced the Government's aim to reduce child poverty by half within a decade as the Government moves forward with its commitment to end all child poverty in Britain within the next twenty years. Building on the measures announced in Budget 98 and 99 (increases in Child Benefit, introduction of WFTC, new Children's Tax Credit from April 2001, and increases in Income Support), which will together lift 1.25 million people out of poverty (including 800,000 children), the Chancellor announced: * consultation on a new Children's Fund. Recognising that the best solutions can come bottom up from community organisations working in partnership with government. The Fund will support pioneering work by voluntary and community organisations with children in poverty. Work on the Fund will be taken forward over the coming months as part of the 2000 Spending Review in consultation with the voluntary sector; and * the longer-term aim of integrating the Children's Tax Credit, and child elements of WFTC and Income Support into a single child credit paid direct to the main carer, building on the foundation of universal Child Benefit. Alongside the Pre Budget Report the Treasury has today published a new paper - "Supporting Children Through the Tax and Benefits System". The paper describes the increasing prevalence of low incomes amongst families with children, details the latest research on child poverty and explains how the evidence has informed the Government's policy approach. NOTES TO EDITORS 1. For further information on the more intensive New Deal for long term unemployed over 25 and the enhanced package for jobseekers see HM Treasury news release 6. 2. Since May 1997, youth and long-term unemployment have been halved. The claimant count measure of unemployment, at 1.2 million, is the lowest for nearly 20 years and there are nearly one million unfilled vacancies in the economy. 3. The New Deal for people aged 18-24 aims to help young people who have been unemployed and claiming Job Seekers Allowance (JSA) for six months or more to find work. It includes: gateway provisions, help with job search, careers advice and guidance; for those who do not find unsubsidised employment, mandatory activity after four months, to help improve their employment prospects; and follow-through to ensure clients are helped to build on their experience and move into employment. More intensive gateway provision is currently being trailblazed in 12 areas, and will be rolled out from April 2000. So far,, nearly 350,000 young people have joined the New Deal and 145,000 have found jobs. 4. The New Deal for Lone Parents is a voluntary programme providing a personalised service combining job search help, advice and training to all lone parents on income Support. As part of a package of enhancement, invitations to participate will be extended to lone parents with children under 5. 5. The 10p rate of income tax was introduced in April 1999. From 2000-01, the basic rate of income tax will be cut to 22p. The point at which employees start to pay national Insurance contributions will be increased by 25% over the next two years so that it will be aligned with income tax personal allowance in April 2001. The National Minimum Wage was introduced in April 1999. 6. Working Families Tax Credit (WFTC) was launched in October 1999. It replaces Family Credit with a more generous tax credit, which will generally be payable to employees through the pay packet from April 2000. By 2001, about 1.4 million working families will be receiving WFTC, around 500,000 more than would receive Family Credit. 7. The Children's Fund will be worked up to the same timetable as the forthcoming spending review and the size of the Fund will be decided as part of this, with a view to it being up and running in April 2001. The Fund will complement how the Government already works with and supports the children's voluntary sector. The review process will be cross-departmental and decisions on how the Fund will be organised within Government is still to be decided. Throughout the process, the Government will engage in active consultation with voluntary and community organisations, particularly on how the voluntary sector can deliver the Government strategic objectives on child poverty, and also on the best way to support the sector without adding unnecessary red tape. 8. The children's paper published today includes: a survey of the latest research in particular showing the growth in child poverty in the UK and that work is the best route out of poverty; and an explanation of how measures already announced in Budgets 98 and 99 will provide an extra £6 billion a year for children by the end of this Parliament, lifting 800,000 out of poverty. These include the largest increases in Child Benefit, the introduction of the Working Families Tax Credit, the new Children's tax Credit, and increases in Income Support. 9. "Supporting Children Through the Tax and Benefits System" is the fifth paper in the Treasury's "Modernisation of Britain's Tax and Benefit System" series. Media copies are available from the Treasury Press Office on 0171 270 5238. Non media copies are available from the Treasury Public Enquiry Unit on 0171 270 4558. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release, children's paper and other Treasury information on http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 4 9 November 1999 CHANCELLOR ANNOUNCES FURTHER PROGRESS ON MEETING THE UK'S ENVIRONMENTAL COMMITMENTS Further measures towards integrating the effective protection of the environment and the prudent use of natural resources into the heart of economic decision making in Government were announced today by the Chancellor Gordon Brown. The Chancellor said: "The Government wants to ensure that economic growth takes place in a way which ensures the effective protection of the environment and the prudent use of natural resources. Our strategy is to ensure that the environment is protected for current and future generations. Climate change levy The Chancellor announced further details on the design of the climate change levy today, following an extensive consultation exercise. The environmental effectiveness of the levy will be increased by: an exemption from the levy for electricity generated from 'new' renewable sources of energy and 'good quality' combined heat and power plants; and a trebling of support for energy efficiency measures under the levy package to around £150m in 2001-02, to allow for the introduction of a system of enhanced capital allowances for energy saving investments. To help protect competitiveness, the overall size of the levy will be reduced from £1.75bn to £1bn and there will be an 80 per cent discount for energy intensive sectors that sign energy efficiency agreements. The levy will be revenue neutral for the private sector since all the revenues raised will be recycled to business via a 0.3 percentage point cut in employers' National Insurance Contributions and the additional support for energy efficiency schemes. Overall, the levy package is expected to deliver bigger carbon savings than those envisaged at Budget time. Fuel duties The Chancellor said today that the fuel duty escalator has played an important role. Increases in fuel duties since 1996 are estimated to produce carbon savings of between 1 and 2.5 million tonnes of carbon by 2010. The Government is committed to meeting its environmental targets. The time has now come to review the way that any increases in the fuel duty are determined. The Chancellor has, therefore, decided that the appropriate level of fuel duties will be set on a Budget by Budget basis, taking account of the Government's economic and social objectives as well as the UK's environmental commitments. The Chancellor has decided that revenues from any real terms increases in fuel duties will, in future, go straight in to a ring-fenced fund for improving public transport and modernising the road network. Land use and pesticides Further progress was announced by the Chancellor: The Government welcomes the enhanced package of voluntary measures from the Quarry Products Association, but is concerned that it does not go far enough to address the environmental impacts of quarrying. The Government is minded to introduce an aggregates tax unless further negotiation with the quarrying industry can deliver an improved package of voluntary measures; Further discussions will be held with the agrochemical industry prior to the next Budget, on ways to meet the Governments's objectives to minimise the environmental impacts of pesticide use; and The forthcoming Urban White Paper will consider the 105 recommendations in the Lord Rogers' Urban Task Force report, aimed at reversing the legacy of neglect and decline that has scarred our towns and cities. NOTES TO EDITORS 1. Budget 99 contained the biggest ever package of tax reforms to help protect the environment. This built on the principles set out in the Statement of Intent on environmental taxation in July 1997, where it was stated that the Government would explore the scope for using the tax system to deliver environmental objectives, and that over time the Government would aim to shift the burden of taxation from 'goods' such as work, saving and investments to 'bads' such as pollution. 2. For further details on the climate change levy see HM Treasury news release 7. 3. Since 1997, the Government has maintained and increased the fuel duty escalator introduced by the previous Government in 1993. This has given a clear signal to motorists and manufacturers to design more fuel efficient vehicles, avoid unnecessary journeys and consider alternatives to the car. 4. In August 1998, DETR commissioned London Economics to carry out research to value the external environmental costs and benefits associated with the supply of aggregates for the UK construction industry using Contingent Valuation surveys and building on the first phase of this project, which was published in April 1998. The second phase report was published in July 1999. 5. It was announced in Budget 99 that the Government accepted that there was a case in principle for a tax on the extraction of aggregates, but that before coming to a final decision, the Government would first pursue the possibility of an enhanced package of voluntary measures with the quarrying industry. The Quarry Products Association submitted a revised package on 21 July 1999. 6. DETR commissioned ECOTEC to conduct a research project to design a possible tax on pesticides, and investigate its potential impact on manufacturers, farmers and the environment. This research was published on 24 March, and was followed by a three month consultation. A summary of the consultation responses has been published today on the Treasury website. Hard copies are available from HM Treasury Public Enquiries Unit on 0171 270 4558. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release and other Treasury material on http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 5 9 November 1999 CHANCELLOR OPENS ENTERPRISE TO ALL Strengthening the UK's enterprise culture and ensuring enterprise was open to all were central themes of the Pre-Budget Report published today by the Chancellor Gordon Brown. The Chancellor announced a package of measures to provide enterprise opportunities in deprived areas and boost enterprise skills in schools. He said: "This Government wants to open up enterprise to all. We need more new and successful businesses in our least well-off communities. And we need to involve as many schools and businesses in developing a new spirit of enterprise among young people. "Strengthening the UK's enterprise culture is a long term challenge, requiring partnership between Government, business and educators. That is why we are currently working with the British Chambers of Commerce on developing the forthcoming National Campaign for Enterprise." The Chancellor announced a £30 million programme to promote better access to business support and finance in deprived areas. This includes: a development fund to promote innovative enterprise support in deprived areas, such as incubator units; funding for Community Finance Initiatives (CFIs) - local intermediaries serving locally based SMEs - by running a challenge fund to help resource CFIs, and provide loan guarantees to help co-finance commercial lending to CFIs; and a national network of mentors to business start-ups through a new Business Volunteer Mentoring Association. These measures address many of the issues raised in the report of the Treasury led Policy Action Team 3 on enterprise and social exclusion, published on 2 November. The Government is also considering the case for a start-up grant to act as an income bridge between benefits and business, as recommended by PAT 3. The Government will also consider creating scholarships specifically targeted at entrepreneurs from deprived areas, which would provide these individuals with the skills they need to turn their ideas into thriving businesses. The Chancellor also announced a £10 million package of measures to boost enterprise skills in schools. This includes: £5 million to improve the quality of the existing national network of bodies that bring together schools and businesses; £3 million to enhance teachers' professional development and improve the quality of work experience for students; and £2 million to help double the scale of enterprise programmes with a proven track record of success, such as those provided by Understanding Industry and Young Enterprise (including Junior Achievement in primary schools). The Government will also be supporting the National Campaign for Enterprise, due to be launched in spring 2000. The Campaign will help to create a more entrepreneurial culture in the UK by transforming attitudes, developing skills and encouraging the formation of new and successful companies. The Campaign will be spearheaded by a network of entrepreneurial Ambassadors, who will promote and encourage enterprise throughout the UK. Alan Sugar, who for the last two years has toured schools and universities speaking about the importance of enterprise to young people, will add his weight to the Campaign. As will Richard Branson, who is to launch the new Virgin Business Schools in the new year. Other Ambassadors will include Reuben Singh, Simon Woodruffe, Prue Leith and Dr Chris Evans. The Campaign will help to develop the enterprise skills of young people in the UK, promoting the existing range of enterprise programmes such as Young Enterprise and Understanding Industry. And the Campaign will launch an 'Enterprise for All' book in the new year, with a foreword by the Chancellor - it will showcase successful entrepreneurs and aim to inspire young people to go into business. NOTES TO EDITORS 1. The two packages of measures will be implemented in 2000-01. 2. The £30 million programme of measures to promote enterprise amongst disadvantaged groups and in deprived areas, includes £20 million of additional money from the Windfall Tax. 3. The enterprise support development fund will promote innovative ways of supporting enterprise in deprived areas, such as business incubator units. Business incubators typically consist of managed workspace combined with business support services, such as training, advice and help with finance. 4. Community Finance Initiatives are local finance intermediaries that act as lenders of last resort - providing finance for businesses that cannot gain access to mainstream finance. 5. Patricia Hewitt, Minister for Small Firms, DTI, announced on 20 September the setting up of the Business Volunteer Mentoring Association, a mentoring scheme for people looking to start up their own business. 6. The report of Policy Action Team 3, "Enterprise and Social Exclusion", was published on 2 November. The report is available on the HM Treasury website - http://www.hm-treasury.gov.uk. For a hard copy of the report please contact HM Treasury Public Enquiry Unit (tel: 0171 270 4558). 7. Young Enterprise and Understanding Industry are the two leading providers of enterprise education in the UK. Together, they provide enterprise skills training to 90,000 young people. From April 2000, this package will help increase that number to 200,000. 8. In July, Peter Davies (Managing Director of Business in the Community) completed a report on school-enterprise activities. His recommendations were to: set up an improved infrastructure linked to the Learning and Skills Council; rejuvenate the teacher placement scheme and review the provisions of work experience; integrate enterprise education in the National Curriculum and link it to teacher development; and raise awareness through the National Campaign for Enterprise. 9. This package builds on the revised National Curriculum, announced by David Blunkett in September, which will include enterprise skills, financial literacy, consumer education and key skills. The new Curriculum will be introduced in September 2000. 10. This package implements the rest of the Davies recommendations. It will help ensure that: more young people - particularly the disadvantaged - are better prepared for the changing world of work; more teachers have better quality professional development; more schools - particularly those in Education Action Zones and those already covered by the "Excellence in Cities" initiative - have an effective partnership with business; and more businesses are aware of the benefits of investing in their local schools and communities. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet, you can find this news release and other Treasury information at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 6 9 November 1999 NEW MEASURES TO HELP UNEMPLOYED ADULTS INTO WORK New measures to increase the support available to unemployed people aged 25 and over to move into work were announced today by the Chancellor Gordon Brown. The Government intends to intensify and extend New Deal 25+ on a national basis from April 2001, building on the principles of the New Deal for under 25s, bringing rights and responsibilities for the 25+ into line with those for young people. The package, outlined in the Pre-Budget Report, will be backed by extra steps to advertise the support and advice available for job seekers aged 25 and over. The Chancellor said: "There are almost one million vacancies in economy at the moment, spread over the country. We want better matching of the unemployed to these jobs. And we want people to take up the opportunities available. Rights and responsibilities go hand in hand. "As a first step we will increase the amount of information available to job-seekers on local vacancies and strengthen the New Deal 25+ to give those who need it extra help to move into work. "We will expect job-seekers to take up this extra support to move into employment or to enhance their employability. It will not be an option for long-term unemployed people to do nothing." The measures, for those unemployed for 6 months or more, include: more intensive and pro-active job broking, including the creation of a jobs and learning bank, which will put jobs, jobseekers' CVs and information about careers and learning opportunities on the Internet; a national network of job-broking call centres; expansion of a nationwide network of touch-screen job points in job centres and developing links with the BBC and other possible partners to harness the potential of interactive TV; access to basic skills help, and more use of worktrials, to give unemployed people the chance to try out jobs and prove their suitability to employers; and using this structured approach to reinforce the JSA regime - including the requirements to widen jobsearch both occupationally and geographically - with tougher implementation of sanctions. JSA claims will be disallowed if jobseekers do not take up the available opportunities without good reason. In preparation for the nationwide intensification of the New Deal 25+, from April 2000 the support available for those unemployed for 2 years or more from New Deal 25+ into line with those for young people by: a more intensive gateway advisory process, with participants actively submitted for interview for appropriate jobs, together will follow-up for unsuccessful candidates; more structured support to develop an Action Plan, including access to careers advice and mentoring support as well as support for job search techniques and help with basic skills and soft skills development (eg communications skills) and access to specialist support for the hard to help, including homeless people or those with drug or alcohol problems; and backed up with tougher implementation of sanctions - JSA claims will be disallowed if jobseekers do not meet their obligations or take up the support on offer. NOTES TO EDITORS 1. These measures will be available for all those who have been claiming Job Seekers' Allowance (JSA) for either 6 or 24 months. People claiming JSA are required to be available for and actively seeking work. 2. The New Deal 25+ was launched nationally in June 1998. Those aged 25 and over and unemployed for 2 years or more have had access to a Personal Adviser and, alongside a range of options for the long-term unemployed, a £75 a week wage subsidy and opportunities to undertake full-time education. 3. New Deal 25+ pilots were launched in November 1998 to test a range of innovative approaches to helping people unemployed for 18, or in some cases, 12 months or more. There are 28 pilots in Great Britain; and the whole of Northern Ireland is covered by a pilot. 4. Unemployed people aged 50 or more who have been claiming JSA for at least 6 months will be eligible for Personal Adviser support and an employment credit under the New Deal 50+ announced in Budget 99, currently available in 12 pathfinder areas and available nationally from Spring 2000. The New Deal 50+ was launched by the Chancellor and David Blunkett, Secretary for State for Education and Employment on 4 November 1999. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet, you can find this news release and other Treasury information at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 7 9 November 1999 FURTHER DETAILS ANNOUNCED ON THE CLIMATE CHANGE LEVY Further details on the design of the climate change levy (CCL) were announced today by the Chancellor Gordon Brown, following an extensive consultation exercise with business and other interested parties. The levy is to be introduced on the business use of energy from April 2001. Its aim is to encourage energy efficiency, and help meet the UK's legally-binding target for reducing greenhouse gas emissions set under the Kyoto Protocol. The Chancellor said: "We have consulted widely on the design of the levy and listened closely to the views of industry, environmental groups and other interested parties. The changes to the design of the levy that we have announced reflect the representations we have received. They will increase the environmental effectiveness of the levy." The further details on the design of the levy announced today will: Increase its environmental effectiveness, by: * Exempting from the levy electricity generated from 'new' forms of renewable energy, like solar and wind power, and in 'good quality' combined heat and power plants; * Trebling the support for energy efficiency measures arising from the levy package, from £50 million to £150 million in 2001-02, to allow for the introduction of a system of 100 per cent first year capital allowances for energy saving instruments; and * As a result of these refinements, the levy package is expected to save at least 2 million tonnes of carbon - a greater saving than associated with the proposal announced at Budget time. The negotiated agreements with energy intensive sectors could save as much again. Safeguard competitiveness, by: * Lowering the overall size of the levy from £1.75 billion to £1 billion in 2001-02, with a commensurate reduction in the levy rates; * Offering an 80 per cent discount to energy intensive sectors that agree targets that meet the Government's criteria; * Recycling all the revenues raised to business through a 0.3 percentage point reduction in employers' NICs; ensuring * The levy will therefore be revenue neutral for the private sector. Its introduction will entail no net financial gain for the public finances. The Government will also be: * Exempting from the levy those energy products which serve a dual purpose as a fuel and as a feedstock within the same process, as well as the electricity used in electrolytic processes similar to chlor-alkali production and primary aluminium smelting; Exempting from the levy traction electricity used by railfreight locomotives; and Publishing later this month draft legislative clauses for consultation. NOTES TO EDITORS 1. The climate change levy was first announced in the March 1999 Budget. The design of the climate change levy reflects closely the recommendations made by Lord Marshall in his report, Economic instruments and the business use of energy, in November 1998. 2. Following the Budget announcement, HM Customs and Excise carried out an extensive consultation exercise with business and other interested parties, on the detailed design and administrative issues relating to the levy. 3. Negotiations are underway with the main energy intensive sectors, to agree targets for improving energy efficiency. The deadline for target offers to be made and Heads of Agreement to be signed has been extended to 20 December 1999. Smaller trade associations will be expected to sign up to target offers and Heads of Agreement in early 2000. 4. The rates of the levy are expected to be 0.15 p/kWh for gas and coal, and 0.43 p/kWh for electricity. These compare to the illustrative rates given in the March Budget of 0.21 p/kWh for gas and coal, and 0.60 p/kWh for electricity. 5. The Government will be consulting business on exactly which energy efficient products and technologies might qualify for the enhanced capital allowances scheme. 6. HM Customs and Excise will be making available an analysis of the responses to the consultation document and a number of technical briefs giving more detail on the exemptions. Later this month, Customs and Excise will also be publishing draft legislation for consultation. These will be placed on the internet at http://www.hmce.gov.uk, or can be obtained by e-mail from helpdesk.ccl@hmce.gov.uk, and by post by faxing 0161 827 0356. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release and other Treasury material at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 8 9 November 1999 GETTING BRITAIN GIVING IN THE 21ST CENTURY Modernising and simplifying the tax system to boost charity giving in Britain are at the heart of a major new package of tax incentives announced today by the Chancellor, Gordon Brown. Announcing the package of measures entitled Getting Britain Giving in the 21st Century, the Economic Secretary, Melanie Johnson said: "The package of measures announced by the Chancellor today is the result of the Government's extensive consultation on its review of charity taxation. "We have listened to what charities and others have told us, and the measures we are introducing go well beyond the proposals set out in the consultation document. "Getting Britain Giving delivers a modernised charity tax system that will make tax breaks more extensive, easier to understand and therefore more attractive to more people. "We are helping charities to help themselves. The extension of the Gift Aid scheme is a major incentive to help boost giving in Britain. It will help charities to make much more out of their donations." The abolition of the £250 minimum limit for donations in the new Gift Aid scheme means that, in future, tax relief will apply to any donation whether large or small, regular or one-off. Donors will also be able to join the scheme by phone or Internet, removing the need for them to sign a form. Other new measures to help boost individual and business giving include: * abolishing the £1200 maximum limit for Payroll Giving. In future employees will be able to give as much as they like through their pay packet; * boosting the take-up of Payroll Giving with a promotional campaign. The campaign, to be launched next year, will be backed by a 10 per cent supplement on donations paid to charities for three years. Both the campaign and the time-limited supplement will be funded by the Government; * encouraging gifts of quoted shares and securities to charity by introducing a new income tax relief. The tax relief will be given for the full market value of the gift, in addition to any existing capital gains tax relief; and * removing existing barriers facing those who wish to settle assets to charities through trusts. More measures to simplify and modernise the tax system for charities include: * removing the need for small charities to go to the expense and trouble of setting up a subsidiary company to run their fund-raising trades by introducing a new exemption from tax for the profits of small fund-raising trades run by charities; * extending and aligning the income tax and VAT exemptions for charity fund-raising events. In future these exemptions will apply to a wider range of events. Also charities will no longer have to operate two sets of rules and deal with two Government Departments; * a significant extension to the VAT zero rating of advertisements bought by charities; * raising from £250 to £1,000 the de minimis limit below which charities and other businesses do not have to account for VAT when they de-register; and * other VAT changes which will make life easier for charities, such as VAT relief for bathrooms in day centres, and relief for donated goods sold to disabled people and those on low incomes. Work continues on improving the service provided by Inland Revenue and HM Customs & Excise to charities. For example, developing a new telephone help-line, a directory for charities, new tax guidance and better use of the Internet. All of the changes in Getting Britain Giving are due to start from April 2000. NOTES TO EDITORS 1. The review of charity taxation was launched in July 1997. During the first phase of the open consultation, over 3,000 charities and other interested parties sent in their views on a wide range of subjects. A consultation document was published on Budget Day this year containing the Government's options for further consultation. Some 500 responses were received before the consultation closed on 31 August. A summary of the consultation responses was published on 28 October (see Press Notice 174/99). 2. Information sheets containing details of all the measures announced today are being sent to those organisations that responded to the consultation document. Copies of * the information sheets; * summaries of the responses to the consultation document; * the findings of research carried out by Inland Revenue as part of the review; and * the amended Draft Regulatory Impact Assessment are available on the HM Treasury, Inland Revenue and Customs & Excise websites: http://www.hm-treasury.gov.uk http://www.inlandrevenue.gov.uk http://open.gov.uk/customs/c&ehome.htm or from: Clare Reilly, Room 120 New Wing, Inland Revenue, Somerset House, Strand, London WC2R 1LB. Tel: 0207 438 6742, Fax: 0207 438 7134; E-mail: clare.reilly@ir.gsi.gov.uk/ HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet, you can find this news release and other Treasury information at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 9 9 November 1999 FREE TV LICENCES FOR OLDER PENSIONERS Free TV licences will be available to pensioners aged 75 and over from Autumn 2000, the Chancellor Gordon Brown announced today. The measure will benefit over 3 million households. Almost 50% of such households, set to benefit, are the poorest in the country. The Chancellor said: "From autumn, at a cost of £300 million, every year, every pensioner who is over 75 will receive their TV licence absolutely free of charge. For three million households with pensioners over 75 - a £101 saving a year." Other measures which have been announced to help pensioners include: the £100 Winter Allowance - due to be paid for the first time from this month; and the Minimum Income Guarantee for poorer pensioners. NOTES TO EDITORS 1. This measure will cost the Government around £300 million in a full year. 2. A colour TV licence costs £101 and a black and white licence £33.50 a year. 3. The BBC's funding will not be affected by this measure. Central Government funding will make up the difference so there will be no increase in the licence fee for others. 4. Existing concessionary schemes - such as the reduction in the licence fee for blind people and for people in residential and sheltered accommodation - will remain in force for people not affected by the new change. Anyone currently qualifying for these concessions who also meets the age criterion will now qualify for the free TV licence. 5. The Government will also consider its response to the Review of the Future Funding of the BBC in due course, and in the light of responses to consultation. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet, you can find this news release and other Treasury information at http://www.hm-treasury.gov.uk © Crown Copyright | home [Image] HM Treasury 10 9 November 1999 IMPROVEMENTS TO THE COMPETITION REGIME IN THE FINANCIAL SERVICES AND MARKETS BILL The Government today announced that it would make important improvements to the competition regime in the Financial Services and Markets Bill to take account of recommendations made in Don Cruickshank's interim report. Amendments will be brought forward to the Bill in due course aimed at: - ensuring the Financial Services Authority (FSA) gives full weight to competition concerns and takes account of the effect of its rules on competition in the light of market developments; and - strengthening the existing arrangements for competition scrutiny by giving the Competition Commission a central role in deciding whether anti-competitive rules are justified in order to protect consumers and the markets. Economic Secretary, Melanie Johnson, commented: "I am very grateful to Don Cruickshank and his team for their interim report. "While the Bill already requires the FSA to take account of competition in the way it regulates and provides for external scrutiny in this area, this report has helped us to identify some significant improvements which can be made to the current proposals. These will help ensure that competition concerns are given their full weight by the FSA. "It is vital that in fulfilling its statutory objectives the FSA continues to regulate in a way which does not unnecessarily distort competition. A healthy and competitive market is in the interests of consumers and practitioners, providing greater choice, innovation and opportunities for growth." The changes will: * ensure that the FSA keeps to a minimum any distortionary effects of its regulation on competition; require the FSA to consult on the economic costs of its rules. The FSA will also be expected to report annually on the effects of regulation on competition in the financial services market in the light of market developments; provide that the Competition Commission, rather than Ministers, will take the final decision on whether a rule or practice is anti-competitive, and reach a view on whether the rules or practices are nevertheless justified; narrow the exclusion from general competition law so that the conduct of financial services businesses is only excluded if it is required, urged or legitimised by FSA rules or practices; and allow the Office of Fair Trading and the Competition Commission, when investigating complex monopolies, to consider and comment on any part played by FSA rules. Miss Johnson added : "This is an important package of changes, in particular we place great importance on the new role for the Competition Commission alongside the Office of Fair Trading. The Competition Commission, as well as taking the final decision on whether a rule or practice is anti-competitive, will also come to a view on whether an anti-competitive rule or practice is justified on regulatory grounds, with a Ministerial override which would only be used in exceptional circumstances." NOTES TO EDITORS 1. Chancellor of the Exchequer, Gordon Brown, announced the setting up of the banking review in his Pre-Budget report on 3 November 1998. Its terms of reference are to: o examine the banking sector in the UK, excluding investment banking; o examine the levels of innovation, competition and efficiency in various sub-markets, including SMEs; o look at how these levels compare with international standards; and o consider whether there are options for change which the industry or Government should consider. The review is being undertaken by a team of Treasury officials under Mr Cruickshank's direction, and calls on the advice of outside experts. 2. On 13 April 1999 Mr Cruickshank announced that electronic commerce and money transmission issues would be added to the scope of the review, in response to consultation (HMT press release 62/99). 3. The Banking Review Team's interim report, 'Competition and Regulation in Financial Services: Striking the Right Balance', was published on 22 July 1999. The interim report, the initial consultation document, responses to it, and banking review press releases are available on the Bank Review website at www.bankreview.org.uk. 4. Mr Cruickshank was Managing Director of the Virgin Group Plc (1984-89); Chief Executive of the NHS in Scotland (1989-93); and Director-General of OFTEL (1993-98). He is Chairman of the Government's Action 2000 Millennium Bug campaign and Chairman of Scottish Media Group plc. 5. The Financial Services and Markets Bill (FSMB), was introduced to Parliament on 17 June 1999 (HMT news releases 98/99 and 99/99). It establishes a single regulatory system in place of the existing separate arrangements for different sectors. 6. Media enquiries should be addressed to Charles Keseru or Deborah Done in the Treasury Press office on 0171 270 5188 and 0171 270 5222. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet, you can find this news release and other Treasury information at www.hm-treasury.gov.uk © Crown Copyright | home [Image] Inland Revenue 1 9 November 1999 CAPITAL GAINS TAX: INCENTIVES FOR ENTREPRENEURIAL INVESTMENT The Chancellor today announced plans to make capital gains tax (CGT) taper relief for business assets more generous. This relief creates incentives for investment in assets which generate sustained growth, with particular support for entrepreneurial investment. In particular, the Government will: * Shorten the business asset taper from 10 years to 5 years, subject to detailed consultation; and * Assess the case for widening the scope of CGT incentives towards entrepreneurial investment by reducing substantially the percentage thresholds for qualifying business asset shareholdings. DETAILS Subject to detailed consultation, the Government intends to introduce a 5 year taper for business assets which reduces the equivalent CGT rate for a higher rate taxpayer from 40 per cent for assets held for less than 1 year, reducing in 6 per cent steps to 10 per cent for assets held for more than 5 years. A business asset includes substantial shareholdings in a trading company. The Government will assess the case for substantial reductions in the thresholds of 5 per cent and 25 per cent at which these shareholdings qualify. NOTES FOR EDITORS 1. CGT taper relief was introduced in Finance Act 1998. The relief reduces the amount of a capital gain which is charged to tax on the disposal of an asset; the reduction increases the longer that asset is held after 5 April 1998. Taper relief applies to the capital gains of individuals, trusts and the personal representatives of deceased persons, but not to the capital gains of companies. 2. Different tapers apply to business assets and non-business assets. A business asset is an asset used for the purposes of a trade and a shareholding in a trading company (or the holding company of a trading group) in which the shareholder can exercise voting rights of at least 5 per cent (if the shareholder works full-time in the company's business) or 25 per cent (otherwise). 1. The present CGT taper relief reduces the taxable gain on a business asset from 100 per cent if the asset has been held for less than one year after 5 April 1998 to 25 per cent if held for more than 10 years - effectively the rate of tax for a higher rate taxpayer is reduced from 40 per cent to 10 per cent. 2. For a non-business asset, CGT taper relief reduces the taxable gain from 100 per cent if the asset has been held for less than 3 years after 5 April 1998 to 60 per cent if held for more than 10 years - effectively a reduction in the CGT rate for a higher rate taxpayer from 40 per cent to 24 per cent. 3. Comments on the proposed changes are welcome and should be sent to: Richard J. Thomas Capital and Savings Division New Wing Somerset House Strand London WC2R 1LB. Media enquiries to: Jane Ashton Clare Merrills on 0171 438 6692/6706/7327 (Out of hours: 0860 359544) Non-media enquiries to: 0171 438 4260/6425 (Office hours only) Inland Revenue press releases are on the Internet: www.inlandrevenue.gov.uk © Crown Copyright | home [Image] Inland Revenue 2 9 November 1999 CAPITAL GAINS TAX - COUNTERING AVOIDANCE As part of the Government's drive to counter tax avoidance, the Chancellor has today announced a change to capital gains tax gifts relief. Legislation will be introduced in next year's Finance Bill to end business assets gifts relief on the transfer of shares or securities to companies. Any such transfers made on or after today will no longer qualify for relief. DETAILS 1. Where gifts relief is allowed : * the donor is not charged any tax on the gain; * the recipient is treated for capital gains tax purposes as acquiring the asset for the current market value less the amount of the chargeable gain on the gift; and * as a consequence the gain is effectively brought back into charge when the recipient disposes of the asset. 3. The main purpose of the relief is to prevent erosion of business capital when a business is handed down within the family and to prevent the break-up of small businesses. However, the relief is also available where assets used in an unincorporated trade are transferred to a company. 4. There is considerable evidence that this relief is being widely abused where shares or securities, rather than assets used in a trade, are involved. The relief is being exploited in schemes where the primary purpose is to avoid a CGT liability on an anticipated sale, rather than simply defer the liability on a bona fide gift. Some of the schemes involve the direct transfer of shares or securities to companies so that a tax exemption or other tax shelter can be taken advantage of. Others employ the relief as part of a complex series of transactions where the sole purpose is to shift gains outside United Kingdom tax jurisdiction. 5. The tax being lost through these arrangements is currently estimated as in excess of £50 million per annum. 6. Legislation to be introduced in next year's Finance Bill will end the relief for transfers of shares or securities to a company made on or after today. Media enquiries to: Janis Eate 0171 438 6692/6706/7327 (Our of hours: 0860 359544) Non-media enquiries to: 0171 438 6420/6425 (office hours only) Inland Revenue press releases are on the Internet: www.inlandrevenue.gov.uk © Crown Copyright | home [Image] Inland Revenue 3 9 November 1999 ENCOURAGING SAVINGS TO BENEFIT MILLIONS Over 2.5 million individuals will pay up to £150 less tax as the Chancellor announced today that the 10p starting rate of income tax will be extended to savings income from April 1999. The change will particularly benefit pensioners where up to 1.5 million will gain an average of £65. The new rate will also apply for capital gains tax from April 2000. DETAILS The 10p rate of income tax was announced by the Chancellor in his last Budget. It came into effect from 6 April 1999. It applies to the first £1,500 of an individual's non-savings income, and has improved work incentives by allowing individuals to keep more of what they earn. To give further help and encouragement to savers, the 10p rate will be extended to savings income such as bank and building society interest, with effect from 6 April 1999. As a result, whether an individual has income from earnings, a pension or savings they will enjoy the benefit of the 10p rate on the first £1,500 of their income. Savings income above the limit for the starting rate but within the basic rate band will continue to be taxed at 20 per cent. Corresponding changes will be made to the capital gains tax from April 2000. (The existing structure for taxing dividends at 10 per cent and 32.5 per cent will remain unchanged.) NOTES FOR EDITORS 1. The 10p rate of income tax was announced by the Chancellor in his last Budget. The relevant legislation is in sections 22 and 23 of Finance Act 1999. Finance Bill 2000 will include provisions which apply the 10p rate to individuals' savings income from April 1999 and to capital gains from April 2000. The rate at which tax is deducted from bank and building society interest will remain at 20 per cent. 2. For individuals within Self Assessment, or those who make annual claims to the Inland Revenue for a repayment of tax, their savings income will be taxed at the 10p rate if appropriate when calculating their next tax bill or a final repayment. Some individuals who have had untaxed interest taken into account in their PAYE code may need their code adjusted. 3. Taxpayers who think they may benefit from the 10p rate on their savings income, but are not within Self Assessment or already making annual claims, may now be able to make an annual claim for repayment of tax. An Inland Revenue helpline is available to advise individuals about what they need to do. The helpline number is 0845 307 5555. (Calls are charged at local rates.) 4. Individuals who have already received a final repayment of tax for the current tax year (starting 6 April 1999) who think they may benefit from the 10p rate on their savings income should also ring the same Helpline number. 5. For individuals, capital gains tax is calculated by treating the gains, in excess of the annual exempt amount, as though they were the top slice of income and taxing them at the appropriate marginal rate, which will include the 10p rate from April 2000. Media enquiries to: Paul Franklin 0171 438 6692/6706/7327 (Out of hours: 0860 359 544) Non-media enquiries to: 0171 438 6420/6425 (Office hours only) Inland Revenue information is on the Internet: www.inlandrevenue.gov.uk © Crown Copyright | home [Image] Inland Revenue 4 9 November 1999 RISE IN INCOME TAX PERSONAL ALLOWANCE, WORKING FAMILIES' TAX CREDIT AND DISABLED PERSON'S TAX CREDIT The Chancellor today announced that the income tax personal allowance would be increased in line with indexation to £4,385 from April 2000. This means that all taxpayers will be able to have income of at least £84 a week in the tax year 2000-01 before they have to pay any income tax. Other changes to income tax rates and allowances will be announced in the Budget in the usual way. The Government has already announced a cut in the basic rate of tax by a penny, to 22p, from next April, to be legislated for in the 2000 Finance Bill. As part of a package of National Insurance reform designed to improve work incentives for employees and reduce burdens on employers, the starting point for employers' National Insurance contributions (NICs) has been aligned with the income tax personal allowance since April this year. This means that the starting point for employers' NICs in 2000-01 will also be £84 a week. A statement covering NICs changes will be made by the Paymaster General shortly. The Chancellor also announced that Working Families' Tax Credit (WFTC) and Disabled Person's Tax Credit (DPTC) rates and thresholds would be increased by 1.6 per cent from April 2000. And, in line with a commitment made in his last Budget, the child credit for under-11s will be increased by an extra £1.10 from the same date. These increases will boost the incomes of 1.4 million low-income working families and disabled people. DETAILS The income tax personal allowance will rise by £50 in 2000-01, in line with the increase in the Retail Prices Index for the year ending in September. Changes to income tax rates and allowances are normally announced in the Budget each year. However, the alignment of the income tax personal allowance and the starting point for employers' NICs means that, in practice, the level of both now needs to be announced in the Autumn, to give employers time to implement the threshold. WFTC and DPTC rates and thresholds will rise from April 2000 in line with the increase in the Rossi index in the year to September. (The Rossi index is broadly the Retail Prices Index, less certain housing costs.) In addition, from April 2000, the under-11 child credit will rise by £1.10 over and above indexation, to align it with the 11 - 16 child credit. This will provide yet further help to families with young children. From April 2000 the WFTC and DPTC rates will be as attached. These rates will provide a minimum income guarantee of £202 a week for a family with one child in receipt of WFTC, £157 for a single person on DPTC and £234 for a family with one child on DPTC. (These figures are based on one earner in full-time work, receiving the national minimum wage of £3.60 an hour, and include the effects of indexing the personal allowance). NOTES FOR EDITORS 1. The announcement today confirms that the basic personal allowance will be increased next year in line with statutory indexation. Income tax allowances are uprated each year in line with statutory indexation unless legislation is passed to override its effects. Statutory indexation is based on changes to the Retail Prices Index in the year to September, so this early announcement does not affect the amount of the increase. A statutory instrument has been made today in the usual way, confirming that the effect of indexation on the basic personal allowance is to increase it to £4,385 for 2000-01. 2. WFTC and DPTC were introduced on 5 October 1999 and are administered by the Inland Revenue. Ministers decide whether to change the rates and thresholds each year. From April 2000, they will be increased in line with the Rossi index. Media enquiries to: Paul Franklin 0171 438 6692/6706/7327 (Out of hours: 0860 359 544) Non-media enquiries to: 0171 438 6420/6425 (Office hours only) Inland Revenue press releases can be found on the Internet: www.inlandrevenue.gov.uk Working Families' Tax Credit £ 1999-00 2000-01 Basic credit 52.30 53.15 30 hours credit 11.05 11.25 Child credits Under 11 19.85 21.25 11 ­ 16 20.90 21.25 16 ­ 18 25.95 26.35 Income threshold 90.00 91.45 Disabled Person's Tax Credit £ 1999-00 2000-01 Basic credit ­ single 54.30 55.15 ­ lone parent/couples 83.55 84.90 30 hours credit 11.05 11.25 Child credits Under 11 19.85 21.25 11 ­ 16 20.90 21.25 16 ­ 18 25.95 26.35 Disabled child 21.90 22.25 Income threshold ­ single 70.00 71.10 ­ lone parent/couple 90.00 91.45 Note: The 11-16 and 16-18 child credits are paid from the September following the 11th birthday and 16th birthday respectively. © Crown Copyright | home [Image] HM Customs and Excise 1 9 November 1999 CRACKDOWN ON TOBACCO FRAUDSTERS The compulsory marking of cigarette and tobacco packs to show that UK duty has been paid is one in a number of hard-hitting measures to crack down on the criminal practices of smuggling and pushing untaxed tobacco unveiled today by Chancellor Gordon Brown. The package of measures, which follow Martin Taylor's independent advice on enforcement strategy, will strengthen Customs' ability to tackle tobacco smuggling and includes: * a national network of container x-ray scanners to help detect shipments of smuggled tobacco hidden in commercial freight; * compulsory marking of UK duty-paid cigarettes and tobacco to make identification of smuggled tobacco easier; * new offences and penalties for those smuggling, handling or selling untaxed tobacco; better public information to tell travellers that, except where such goods are purely for personal consumption, their importation without paying UK duty is illegal; toughening the penalty regime for those smuggling tobacco or involved in its subsequent sale or possession: - confiscation powers against criminals' assets, including smugglers, will be enhanced; - proposals for a new licencing framework, to be published next year, will provide for a more graduated range of penalties such as the temporary closures of pubs and other licenced premises. There is a strong ongoing health case for year-on-year real terms increases in the price of cigarettes and tobacco. The Chancellor will in future form his budget judgements on the appropriate level and timing of increases taking into account a wide range of factors, including the Government's health objectives. Any additional revenue raised from real increases in tobacco duties in future would be spent on improved health care. For example, the extra revenues from a 5 per cent real terms rise in tobacco duty would raise £300m that would go to a further additional investment in the national health service from next April. NOTES FOR EDITORS 1. In the 1999 Budget the Chancellor emphasised that fraud and smuggling presented a serious threat to the Government's health and revenue objectives. An independent evaluation of the anti-smuggling strategy was announced and Martin Taylor, now chairman of WH Smith, appointed in August 1999. The Chancellor has now received advice from Martin Taylor and will be considering that in detail. 2. Customs' latest estimates for revenue lost (excise duty and VAT) through cross-Channel smuggling in 1999 and cross-border shopping in 1998 are set out in the table below: Revenue lost through cross-Channel smuggling and legitimate cross-border shopping (£million) cross-border cross-Channel smuggling in shopping in 1998 1999 Tobacco 85 1,055 Alcohol 290 215 Total 375 1,270 Figures have been independently rounded to £5 million. Components may not therefore sum to the totals shown. Figures do not include any amounts for smuggling by air passengers, or revenue evaded through commercial fraud or in very large freight consignments The figures shown use Customs' assumption that between 70 per cent and 80 per cent of all alcohol purchased abroad substitutes for similar purchases in the UK. This year, almost £1½b of revenue is expected to be lost through illegally-imported tobacco hidden in freight containers. Customs' latest assessment of overall revenue losses associated with all forms of tobacco smuggling in 1999 is of the order of £2½ billion. The Government, having taken advice from Martin Taylor, will introduce a range of measures designed to tackle the evasion of tax on tobacco. These will include:- The increased use of new technology, including x-ray scanners The Government will invest in a national network of x-ray scanning equipment. A start will be made immediately. There is a range of technology being developed: Mobile scanners - are ideal for scanning small vehicles and small containers. Their mobility makes them suitable for rapid re-deployment as smuggling patterns change and they will be a valuable deterrent to smugglers shifting traffic in order to try and avoid detection. A number of these will be deployed; Relocatable scanners - capable of providing a good quality image are suitable for larger containers and can be dismantled, transported and re-installed in a matter of days. They will enable Customs to respond quickly to changing smuggling patterns; Finally, fixed scanners are capable of providing high powered images of the contents of large containers. The use of pack marks to counter tax evasion and forestalling From early in 2001 cigarette packs and hand rolling tobacco pouches sold in the UK will be required to carry a mark to show that UK duty has been paid on them: [Image] The complete pack mark will fill the centre of the top third of the front face of the pack. So anyone buying or selling tobacco will know immediately whether they are dealing with legitimate goods and it will make it easier for the police and trading standards officers to help C&E in their enforcement role. Mock-ups of marked packets are available from Customs & Excise press office. Following the introduction of pack marks, new offences will be brought in to ensure that those who deal in smuggled goods can be prosecuted more quickly and effectively. Tobacco manufacturers and importers avoid duty increases by building up large stocks of cigarettes in the months leading up to a Budget change. Such forestalling costs the Exchequer around £300 million a year. The new mark will help to reduce stockpiling by at all points in the supply chain by making it an offence to sell tobacco products after the date show on the mark. C&E will publish a technical note and a draft regulatory Impact Assessment relating to the introduction of pack marking. It can be obtained from Chris Mountford on 0161 827 0354 or found at Customs' website at http://www.hmce.gov.uk./bus/excise/fisctob.htm. Media enquiries only to: HM Customs and Excise, Public Relations Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ. Telephone: 0171 865 5471/5472. Other individuals or companies should contact their local VAT Business Advice Centre, listed under Customs and Excise in the telephone book. Customs and Excise Internet address: http://www.hmce.gov.uk This news release can also be found at: http://www.hm-treasury.gov.uk Other Treasury material can also be found at this address. © Crown Copyright | home [Image] HM Customs and Excise 2 9 November 1999 GOVERNMENT TO TAKE ACTION ON OFFSHORE BOOKIES The Government is to take action against the threat to the UK betting and racing industries from offshore bookmakers, the Chancellor announced today. Steps to protect these important UK industries will start with a strengthening of the ban on advertising by offshore bookmakers on teletext services and other media in the UK. The Government has ruled out no options in its effort to discourage offshore betting and protect the revenue, and may bring forward further measures in the Budget. NOTES FOR EDITORS 1. General Betting Duty receipts are up by 3.5 per cent in 1999 compared to 1998, but the government is concerned this trend will be reversed if the big bookmakers carry out their threat to take their telephone credit business offshore. 2. Duty rates at 6.75 per cent are about the average by international standards. 1.25 per cent goes to the horseracing levy, and raises some £52 million per year for the UK horseracing industry. The UK racing industry employs 50,000 people and the UK betting industry employs another 35,000. 3. UK bookmakers have been operating offshore betting centres for several years. Until recently their impact upon the UK betting market was constrained by a voluntary code between them that they would not accept bets from the UK. The code was breached by Gibraltar-based Victor Chandler International in May 1999, which actively sought to attract UK customers. Chandler charges a 3 per cent levy on these UK bets. 4. This competition has caused the big UK bookmakers to consider expanding or setting up their own offshore centres to take UK bets. 5. This has forced the government to intervene in order to ensure that UK bookmakers can operate in a fair competitive environment, pay their fair share of taxes, and provide the financial support to the racing industry upon which the betting industry depends. 6. Currently, offshore bookmakers are able to exploit a loophole in the ban on advertising in the UK by promoting 'tax-free' offshore betting on teletext services and other electronic media. The Government will be strengthening this ban, and making it more flexible so that any further avoidance schemes can be quickly tackled. Media enquiries only to: HM Customs and Excise, Public Relations Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ. Telephone: 0171 865 5471/5472. Other individuals or companies should contact their local VAT Business Advice Centre, listed under Customs and Excise in the telephone book. Customs and Excise Internet address: http://www.hmce.gov.uk This news release can also be found at: http://www.hm-treasury.gov.uk Other Treasury material can also be found at this address. © Crown Copyright | home [Image] HM Customs and Excise 3 9 November 1999 CHANGES TO AIR PASSENGER DUTY The Government today announced changes to Air Passenger Duty (APD) to be introduced in the next Budget: The current exemption for the return leg of a journey within the UK will be replaced by a new reduced rate structure for lower cost flights. In the pre-Budget period Customs and Excise will consult on details; There will also be consultation on an exemption for flights from airports in the Scottish Highlands and Islands from APD - in recognition of the reliance on air transport in this remote region. These changes will be made on a revenue-neutral basis. NOTES FOR EDITORS 1. Air Passenger Duty (APD) was introduced in November 1994. It is payable by airlines on each passenger they carry from a UK airport. There are currently two rates of duty: - £10 per passenger on flights from within the UK to European Economic Area (EEA) destinations. Return legs of round-trip flights within the UK are exempt; and - £20 per passenger for departures to all other destinations. 2. This duty structure is legally defective because it does not provide the same effective tax treatment for all return journeys within the European Economic Area. The Government will in the next Budget replace the return leg exemption with a reduced rate structure. 3. The Government also recognizes the importance of air transport to the most remote areas of the UK. Customs and Excise will, therefore, also consult on introducing an exemption from air passenger duty for flights from airports in the Scottish Highlands and Islands as part of the restructuring of the air passenger duty. 4. This package of reforms will be introduced on a revenue-neutral basis. Media enquiries only to: HM Customs and Excise, Public Relations Office, New King's Beam House, 22 Upper Ground, London, SE1 9PJ. Telephone: 0171 865 5471/5472. Other individuals or companies should contact their local VAT Business Advice Centre, listed under Customs and Excise in the telephone book. Customs and Excise Internet address: http://www.hmce.gov.uk This news release can also be found at: http://www.hm-treasury.gov.uk Other Treasury material can also be found at this address. © Crown Copyright | home [Image] HM Treasury/Department of Health 9 November 1999 ADDITIONAL MONEY FROM TOBACCO DUTY INCREASES TO GO TO HEALTH SPENDING Chancellor Gordon Brown and Health Secretary Alan Milburn today announced that additional revenue raised from any real increases in tobacco duties in future would be spent on improved health care. The Chancellor will in future form his Budget judgements on the appropriate level and timing of increases, taking into account into account a wide range of factors, including the Government's health objectives. The Chancellor said: "This Government is serious about tackling the deaths, disease and health inequalities caused by tobacco. Any new money will help to deliver a modern NHS which is fast and fair for patients." Any additional revenue raised from real increases in tobacco duties in future would be spent on improved health care. For example, the extra revenue from a 5 per cent real terms rise in tobacco duty next spring would raise £300 million that would go to a further additional investment in the NHS from next April. Alan Milburn said: "Today's announcement demonstrates the commitment of the whole Government to tackling smoking and the ill-health it causes. It will give the NHS the means to modernise services and to help deal with some of the health damage caused by tobacco." Price is only one means of reducing smoking and harm caused by smoking. The Government's "Smoking Kills" and "Saving Lives" White papers set out an integrated policy approach to counter reduce smoking and tackle smoking-related diseases. This includes a three year public education campaign, a ban on tobacco advertising, better help for people who want to quit smoking, together with ambitious targets to reduce the death rates from the two main tobacco-related killers: cancer and heart disease. These measures will complement any real terms increases in the price of tobacco and help reduce the 120,000 deaths from smoking in the UK each year. NOTES TO EDITORS 1. "Smoking Kills - A White Paper on Tobacco" was published on 10 December 1998. This is the most comprehensive plan to tackle smoking ever undertaken by a European Government to help prevent children start smoking and help the two out of three adults smokers who say they want to quit. This broad, integrated programme of action aims to cut the number of people smoking in Britain by 1.5 million by 2010. It includes the first ever national NHS smoking cessation programme, a public information campaign and a ban on tobacco advertising. 2. The White Paper "Saving Lives: Our Healthier Nation" was published on 6 July 1999. It proposes new targets to cut preventable deaths - targets which were significantly tougher than those previously suggested in the public health Green Paper, Our Healthier Nation, published in February 1998. Two of the four targets focus on the main smoking related killers. The targets, to be achieved by 2010, are: - Cancer: to reduce the annual death rate in people under 75 by at least a fifth, saving 100,000 lives; - Coronary heart disease and stroke: to reduce the annual death rate in people under 75 by at least two fifths, saving 200,000 lives. 3. Under "Saving Lives", the NHS is being reorientated to ensure that for the first time ever, health improvement will be integrated into the local delivery of health care. Health authorities have a new role in improving the health of local people and primary care groups and primary care trusts will, once established, have new responsibilities for public health. HM TREASURY PRESS OFFICE Press enquiries to: 0171 270 5238 Non-media enquiries to: 0171 270 4558 If you have access to the Internet you can find this news release athttp://www.hm-treasury.gov.uk. Other Treasury material can also be found at this address. © Crown Copyright | home