Mr Deputy Speaker, the core purpose this Budget is stability - now in the future. And its core are fairness and opportunity, founded on and strength. Mr Deputy Speaker, in country in 2008, every government has aim - to maintain stability through world economic slowdown. And Britain with central role in the world’s financial is no exception. But with low . record levels of employment, and unemployment its lowest level for a generation, with the action taken last year curb inflation, Britain is better placed other economies to withstand the slowdown the global economy.
Mr Deputy Speaker, year’s Budget is a responsible Budget will secure stability in these times global economic uncertainty. And we will everything in our power to maintain - keeping inflation and interest rates and maintaining our record of growth. whilst other countries have suffered recessions, British economy has now been growing for over a decade - the period of sustained growth in our . And because of the changes that made to entrench stability and to the flexibility and resilience of our , I am able to report that British economy will continue to grow this year and beyond. And even today’s difficult and uncertain times, we determined that we will not be from our long-term aim - to our country for the challenges of future, to confront climate change and end child poverty in a generation.
Deputy Speaker, this Budget is about Britain for the times ahead. Making that everyone - no matter what circumstances - can exploit their potential. ’s about building a fairer society, offering opportunity, a fair Britain in which can succeed. Mr Deputy Speaker, throughout world economies have benefited from the of trade and investment, which has strong world growth. Here in Britain, openness, our global reach, our history scientific invention and creative success, make uniquely placed to succeed in the economy. But with the benefits of we see too how problems in part of the world can quickly to another. Turbulence in global financial - which started in the American market - have affected all economies the United States to Asia, as as Europe. We have seen significant across many credit markets: with a of them barely functioning at all. since the turn of the year, stock markets have also been affected. , Mr Deputy Speaker, this poses a risk to the world economy.
And we welcome yesterday’s commitment by the is central banks including, the Bank England to address these concerns. Here, action we took last autumn to Northern Rock and protect depositors and mean that - despite seeing the period of financial disruption for a - we have maintained confidence and in the banking system.
Mr Deputy , between the early 1970s and the 1990s the UK was one of least stable economies in the G7. Deputy Speaker, today we are the stable, In the past our economy from high unemployment and high inflation today unemployment is lower than in , France and Italy. Mr Deputy Speaker, reform makes work pay and encourages off benefits. Our strengthened competition regime increased the flexibility of product and markets, backed by fair employment laws. , the reforms we have made since - independence for the Bank of and tough fiscal rules - mean Britain is now more resilient and prepared to deal with future shocks. , Mr Deputy Speaker, it is better to meet the challenges of rapid change. We are developing new strengths the industries of the future - industries account for 7 per cent our economy; pharmaceuticals account for a of the UK's research and development. is the only major industrial economy see an increasing share of trade global services - from 7 per a decade ago to 8¼ cent today. In the knowledge-intensive services, UK is second only to the States. Its high-tech manufacturing has grown 30 per cent in the last years. And driven by improved productivity, UK’s GDP per head - the income for every man, woman and - has gone from the lowest the group of seven leading industrial in the early 1990s to being only to the United States last .
Mr Deputy Speaker, right across the , countries have lowered their forecasts for in the coming year. In Japan, is forecast to be 1.4 per , in the Euro area and the States 1.6 per cent, and in , 1.8 per cent. And even in fastest growing markets: China, India and , which have enjoyed record growth in years, it is expected to slow. despite the slowdown in the world , in 2007 the British economy grew 3 per cent - the fastest of any major economy. So Mr Speaker, this year my forecast is - as growth in the world slows further - growth in the British economy be between 1¾ and 2¼ per cent in 2008 - but than Japan, the US and the area. I expect growth to shift companies and exports with growth rising 2¼ to 2¾ in 2009 and 2½ to 3 per by 2010.
Mr Deputy Speaker, my forecast shows the UK economy will continue to throughout this period of global uncertainty - view supported by the Bank England, the International Monetary Fund and Organisation for Economic Co-operation and Development.
Deputy Speaker, in the past, inflation overshadowed many Budgets. From the 1970s the early 1990s, the British economy through the failure of successive governments deliver economic stability. Mr Deputy Speaker, have seen recent increases in world , fuel and energy prices. And the we have made since 1997 mean can be confident about the inflation . Mr Deputy Speaker, there will be return to the inflation rates of early 1990s.
As is happening in countries because of commodity prices, inflation will rise in the short term higher oil and food prices feed into domestic inflation. But inflation is to return to target in 2009 remain on target thereafter.
The success the Monetary Policy Committee and the of the UK economy is clear. prices have tripled since 2002, but this period inflation has averaged just per cent and growth has 2¾ percent. So to provide certainty, and build on this foundation of stability, am today writing to the Governor the Bank of England to re-affirm the inflation target for the Monetary Committee remains 2 per cent on CPI basis, which will entrench our to low inflation.
And the discipline have shown on pay in the sector will support the Bank of in maintaining low and stable inflation. the reforms we made, this hard-won , means that - whereas in previous the UK economy suffered more than economy in the face of global downturns - we enter this period uncertainty, better placed than any other economy. And for that reason, Mr Speaker, I will continue to reject for a 10 billion programme of tax and spending commitments, which will that stability at risk.
Mr Deputy , our fiscal policy, like our monetary is designed to support stability. It founded on tough fiscal rules, underpinned the Code for Fiscal Stability and on the basis of cautious assumptions are audited by the independent National Office. Our fiscal rules - to debt low and stable and to only for investment over the economic - deliver sound public finances in medium term. They protect public investment, allow fiscal policy to support monetary at the right time to support stability and growth.
Over the past years at all times we have the action necessary to meet our rules. And the disciplines we have mean that borrowing is much lower it was before 1997 - and too is debt. Between 1979 and borrowing was 3.4 per cent of income. Since 1997 it has averaged 1.2 per cent. And, Mr Deputy , debt which - at the start the economic cycle in 1997 - 43.3 per cent has now fallen 36.6 per cent of GDP. And is precisely our commitment to this and stability that gives us the now to respond to the global challenges we face today.
Mr Deputy , Given the fundamental strength of our finances, it is right to allow policy to support monetary policy over period ahead, helping to maintain stability the face of the global downturn.
Deputy Speaker, for environmental reasons we increase fuel duty by ½ pence litre in real terms from 2010. fuel duty is due to rise in April but because I want support the economy now and help and families I will postpone that until October.
Mr Deputy Speaker, I tell the House with our Budget for the current budget balance in /08 will come in at £8 billion forecast. And our projection for net at £36 billion is £1.4 billion than forecast at the time of Pre-Budget Report. Debt this year is to be lower than the Pre-Budget at 37.1 per cent. As a of decisions in this and recent that come into effect this year - a reduction in the main of income tax from 22 to pence - fiscal policy is able support real support to the economy year. This is a responsible approach - the disciplines of our fiscal - that will help entrench the of the UK economy.
So, Mr Speaker, borrowing next year, which peaked 7.8 per cent of national income 1993, that’s equivalent to £110 billion , next year will rise to £43 , some 2.9 per cent of national , less than at its peak and than the average level of borrowing 1979 and 1997.
And Mr Deputy , because of the decisions taken in Budget it will fall to 2.5 cent, then 2 per cent, then .6 per cent and then 1.3 per by 2012/13, supporting stability and resilience the economy. That is £38 billion then £32 billion, £27 billion and billion by 2012/13. And Mr Deputy , even taking into account the turbulence financial markets and the support we providing to the economy now, the balance this year is in line my forecast at Pre-Budget Report at £8 billion. Next year it will minus 10, then minus 4, before to a surplus in 2010 of billion, then £11 billion and then billion by 2012, forecast to meet Golden Rule over the economic cycle.
so Mr Deputy Speaker, the Budget that we are meeting our first rule - the Golden Rule - the current budget in surplus over economic cycle. Mr Deputy Speaker, in previous 2 cycles the then Governments to meet the Golden Rule; in cycle which in 1986 to 1997 failed by a margin of £240 and in the cycle from 1977 1986 by £140 billion.
Mr Deputy , in the past, the then Government to fund the immediate pressures of day with no long-term return to taxpayer. It’s vital that today our discipline means that over the cycle will borrow only to invest. Vital - in transport, schools and hospitals - been protected and it’s been . So whereas in 1996-7 public sector investment was £5.4 billion, over the period it is set to rise from £33bn next year to £37bn 2010 - the highest in three .
Mr Deputy Speaker, borrowing for investment the fiscal rules, means that we meet our second fiscal rule - Sustainable Investment Rule. In each year over the cycle. This year debt be lower than the United States, that the Euro area and lower Japan. Debt levels are forecast to 38.5, 39.4, 39.8, 39.7 and then .3 per cent of GDP by 2012/13. year lower than in 1997.
Mr Speaker, in the 18 years between and 1997 investment increased by only per cent in cash terms and a low of 0.3 per cent a share of national income. But, can tell the House, by 2011, will have increased by 500 per since 1997 and will have trebled a share of national income.
Mr Speaker, by 2011 we will have the longest sustained expansion of investment public services since 1945. It is achievement that we can be rightly of. And we remain committed to investment in these public services. And on the platform of stability provided the new fiscal rules, successive Spending have delivered sustained increases in spending the backlog of underinvestment in public .
Mr Deputy Speaker, public spending grew 3.6 per cent a year in terms between 1997 and 2007. And the Comprehensive Spending Review last October, spending in the coming three years grow by 2.2 per cent, building past increases and underpinned by stretching for money reforms. In 10 years, on health has almost doubled; spending education is up by 58 per . And as a result waiting lists down; school standards are up. Transport is now 90 per cent higher. people are using public transport than before.
Mr Deputy Speaker, aid for world’s poorest countries has doubled in terms. The Defence Budget has seen longest period of increased spending in generation. And this year we again to spend over £2 billion more our troops on the front line. around £900 million on military equipment. Deputy Speaker, I want to take opportunity to pay tribute to our men and women and their families Iraq and Afghanistan. We are deeply of the bravery, professionalism, and the they display in serving our country.
Deputy Speaker, this has been an commitment to improving public services. By -11 we will have seen the longest expansion of investment in public services recent history. In 1997 the annual of servicing our national debt was per cent of public spending. But it is 5 per cent , up an extra £23 billion each to invest in public services - half the entire budget for schools. the early 1990s, Mr Deputy Speaker, much as three quarters of all public spending went on debt and security costs. The figure today is a third of that - allowing to target spending where it is . We have turned welfare into work borrowing into wealth creation. And it essential that we continue to help who can work to do so.
Mr Deputy Speaker, we will bring further proposals to reform housing benefit ensure that work pays. From April all long-term recipients of incapacity benefit attend work capability assessments, helping them work. And these reforms will continue free up resources for investment. And is right that like any other , the public sector is as efficient possible and that it delivers value money. Over the last year public employment has fallen. At the same , private sector employment has grown strongly to record levels of employment, which again the resilience of the British .
Mr Deputy Speaker, all departments have published plans which will deliver another billion in savings each year from . All of these savings will be in services. And we will examine major spending areas to identify where reform could be made to deliver value for money and maintain the of public services.
Mr Deputy Speaker Prime Minister has made clear, spending be matched by reform. Reform remains . It’s not optional - it’s essential. ’s common sense. And since 1997 we responded to peoples’ expectations for better services after decades of underinvestment and . We have driven up standards, we developed a greater diversity of providers, have tackled failing services, and ensuring maximum benefit was gained from investment we put in.
10 years ago were 600 schools in which less a quarter of pupils gained at five good GCSEs. Today there are than 50. And compared to 1997, are 10 percent fewer people dying cancer each year, thanks to faster better treatment and more specialist doctors.
the test for public services in future is not whether they are than before or simply good enough. is whether they are as good they can be. So, if the of the past decade was on the old; the focus of the must be on developing genuinely world-class . And after a decade of hugely investment, we will continue our spending a sustainable rate alongside our wider for the economy and public services.
this Budget therefore confirms the spending set out in last year’s spending , and makes an assumption for continuing growth in public spending after 2011 a rate of 1.9 per cent year, which will allow departmental resources continue to grow at broadly the rate as in the next three .
Now, Mr Deputy Speaker, I want turn to the steps that we to equip Britain for the future. there is no greater moral imperative to make sure that every child the highest aspiration and ambition. And best possible opportunity to go as as they can the talent to . Not some children, but every child this country. If we are to a fairer future for our children we must eradicate child poverty in . Between 1979 and 1997 the number children living in poverty doubled. Since Mr Deputy Speaker, I can report 600,000 fewer children live in relative , and we have halved the number children living in absolute poverty.
We set ourselves an ambitious target to child poverty by 2020 and to it by 2010. And today I to do more to deliver that . So, I will help families escape this cycle of deprivation that blights many lives. Central to this is more parents into work. So we to demonstrate our commitment to supporting , through a contract in which Government to provide the support that families to move into work and the side of this contract we look families to make a commitment to their situations wherever they can.
From 2009, we will change the rules Housing and Council tax benefit so parents are better off in work on benefits. And as a result, working family with one child on lowest income will gain up to a week. And, Mr Deputy Speaker measure alone will lift 150,000 more out of poverty.
And I can more to help all children and working families. In 1997 Child Benefit the first child was just £11 week. I can tell the House from April 2009, I will increase Benefit for the first child to a week - a year earlier planned. And I will increase by a year above inflation the child of the Child Tax Credit for on low and middle income from next year. And that means that family with two children, earning up £28,000 a year, will be over a year better off.
And Mr , to make further progress we will a further £125m over the next years targeting help to those that it most and where the challenges the hardest, developing new approaches that families for the long-term. Taken together measures mean that, even at a when we need to take difficult , are investing a further £765 million year and then a further £950 the following year to take 250,000 children out of poverty.
Mr Deputy , today I am publishing analysis on further steps we intend to take eradicate child poverty. And I believe action is now needed to help groups deal with rising energy prices. want to see the 5 million on prepayment meters given a fairer and energy companies increase their support vulnerable customers. We will work with companies to take forward further action a voluntary and statutory basis - underpin this as necessary we will when it is necessary to do . Energy companies currently spend around £50 a year on social tariffs. I to see this rising to at £150 million a year in the ahead.
So, Mr Deputy Speaker, the is committed to helping people who the help most. We are also to encouraging more people to save. are now over 17 million people individual savings accounts and, from this , we are increasing the annual Individual Accounts investment limit to £7,200 while amount that can be held in rising to £3,600. And parents have opened over 2.4 million Child Trust accounts saving more for their children’s .
But we can go further. So can also announce that the Government launch the Saving Gateway nationally with first accounts available from 2010. By to these accounts we will offer to save to up to 8 more people on lower incomes.
Mr Speaker, ending child poverty, encouraging saving, ambition and providing greater opportunity. That the objective of this budget.
Mr Speaker, for business, my Budget provides stability and certainty and introduces new for entrepreneurs, and also maintains the critical factors contributing to the strength the UK’s business environment. Ensuring that remain one of the best places the world to do business, we continue to promote open and competitive - including by removing barriers to across the world through bilateral and trade negotiations including the conclusion of Doha development agenda.
Mr Deputy Speaker, goal is, and will continue to , to maintain the most competitive corporation rate of any major economy. We have the lowest corporation tax rate the G7. And a competitive and tax regime is essential, which is we cut the main rate of tax in 1997 and again in . And from next month the main tax rate falls again from 30 cent to 28 per cent.
Mr Speaker, the UK is one of best places in the world to business. We can remain committed to with business to maintain a stable tax system that remains responsive to ’ needs and is internationally competitive. And our commitment to maximising the economic of the UK's oil and gas , I can also confirm reforms to North Sea fiscal regime to help investment and support production.
But today, Deputy Speaker, I want to do to support Small and Medium Enterprises and in the longer term. 13 people work in these enterprises. And are over 750,000 more small and firms than there were in 1997.
new Capital Gains Tax regime will in next month including the entrepreneurs’ that I announced in January. And will benefit over 80,000 businesses and in the next year alone - per cent of them will continue pay Capital Gains Tax at 10 cent - one of the lowest in the world. This Budget also a programme of tax simplification. I today announcing further steps to help companies simplify their tax calculations.
Mr Speaker, especially at this time we to do more to help Small Medium Enterprises get access to the they need. And to help them current conditions, I can therefore announce funds available through the Small Firms Guarantee scheme will be increased by million for the coming year. And am from next month extending the to small and medium firms.
I also increasing the amount of investment which tax relief is available under Enterprise Investment Scheme from £400,000 to ,000, and the employee share limit for relief under the Enterprise Management Incentive will increase from £100,000 to £120,000.
Deputy Speaker, the Secretary of State Business and Enterprise will consult on new proposals to impose a limit the amount of regulation that can imposed by Whitehall departments. I will provide, Mr Deputy Speaker, a capital of initially £12.5 million specifically to more women entrepreneurs.
There is more can do to ensure that small medium firms win more business from public sector. So we will take steps to give firms better access Government contracts, and to help them their cashflow. And I am asking Glover, Chief Executive of Amadeus Capital , to look into what other barriers can remove and the practicality of a goal for Small and Medium to win 30 per cent of public sector business in the next years. I believe that this could promote enterprise in one of our innovative and dynamic areas of the . I also believe we can help them grow their businesses, creating new and opportunities.
Mr Deputy Speaker, we the contribution made by people born the UK who choose to come work here. They are an important central contributor to our economy’s growth prosperity. They pay taxes on their here and also pay tax on they bring into the country from . But for those non-domiciled individuals or who have chosen to make Britain home, I believe that it is and fair that they should, after years, pay a reasonable charge to the right to be taxed differently other UK residents. Beyond that, as have said before, we will not to charge UK tax on offshore or capital gains that is not into the UK. This new charge be implemented from April. There will no further changes to this regime the rest of this Parliament or next.
Mr Deputy Speaker, last October said that I would also consider scheme which claimed to raise an £2.8 billion from people who are -domiciled. On closer examination it was clear the sums that did not add . And not for the first time the source of where that representation . And I rejected it.
We will though to be vigilant against tax and we are publishing today further to ensure fairness for all taxpayers. Deputy Speaker, if we are to in the future it is essential do even more to drive up in education and to improve skills. increased spending on education has benefited across the UK. We have cut number of underperforming schools dramatically in last decade. And building on last 's Spending Review, we will raise standards further. To create greater opportunity for children. And so the Secretary of for Children, Schools and Families will investing £200m to bring forward by year to 2011 the Government's aim no schools to have fewer than per cent of its pupils achieving A*-C GCSEs, including English and Maths.
will also extend the successful London model, enable the best head teachers turn round low performing schools, to new trusts and federations around successful , and in areas of greatest need well as driving forward a faster of our Academies programme. And as result, by 2011, we will ensure every school is an improving school the standards that we have set.
I can announce today that we commit £10 million over the next years - which alongside contributions from Wellcome Trust and the private sector create a £30 million Enthuse Science , which will give every science teacher secondary and further education access to quality professional development helping improve the offer to today’s children.
And, Mr Speaker, to improve skills, the Comprehensive Review increased resources for adult training. funding will enable nearly 3 million to gain new, higher-level skills by . And today I can announce an £60 million over the next three to provide new opportunities for people gain the skills they need to the labour market, to remain in progress through work. And that includes apprenticeships with leading employers to help skill gaps and shortages.
Mr Deputy , by 2010 we will be spending £6 billion a year supporting British and innovation. And tomorrow the Secretary State for Innovation, Universities and Skills publish the Science and Innovation White , which will include proposals for a Education Innovation Fund to help it businesses to develop their innovative potential.
Deputy Speaker, if we are to in the future, not only do need to have the best business and higher skills levels, we also good transport links to make up decades of underinvestment. In the last years we have doubled the amount spend: £7 billion on transport, £7 on the West Coast Mainline to journey times. And public transport usage at a 25 year high.
Mr Speaker, last November, following the Government’s of £6 billion, we saw the of the Channel Tunnel rail link, the opening of the St Pancras station. And this week Terminal 5 at Heathrow. Today I can announce measures at Heathrow and other airports ensure that a greater use of technology to speed up the time takes passengers to get through immigration .
The Government is also funding for is now secure; and this will economic growth not just in London in the whole of the United by adding an estimated £20 billion national income. And that will help retain its position as the world’s -eminent international financial centre.
£7 billion, we spending more on public transport. And also need to reduce congestion and transport links. If we are to competitive over the next 20 to years, we have to take more steps to reduce congestion on our . We do need more capacity on roads but we cannot build our out of all the problems we . Last week the Secretary of State Transport announced further measures to ease . In addition she has made available to develop local schemes to tackle in the short-term. In the longer-term, , road pricing could reduce congestion as as helping our wider environmental obligations. I am setting aside new funding develop the national road pricing, inviting to test road pricing technology with results expected next year.
Mr Deputy , just as we need good transport , we also need to make sure we need more housing to meet rising demand for homes as well to support our growing economy. Since , as a result of historically low rates we have seen one and half million more home owners. And we have helped 95,000 families into homes through shared ownership and shared schemes. And we will now spend billion on new, affordable and social over the next three years.
This enable the Housing Corporation to deliver ,000 new affordable homes each year in years time. But I want to further. From this April, key workers - as teachers and nurses - first time buyers will be able borrow money from new-shared equity schemes. now these were only available to who could afford three quarters of price of their new home. I now extending the scheme to help able to afford half of the of their new home. I can announce that from today, stamp duty shared ownership homes will not be until buyers own 80 per cent the equity in their home.
Mr Speaker, it is precisely at this we need to do more to longer-term stability for home owners and holders. Already the reforms we have have created much greater stability with low mortgage rates for home owners. , the uncertainty in the financial markets having an impact on mortgage lenders in the UK. So I want take measures that will keep mortgage low and stable. In 2006, 30 cent of mortgages agreed in the - that’s a £100 billion of - were funded through secondary funding . Current conditions in these mortgage funding are extremely difficult because of financial in global markets. In some countries markets are closed. It is, however, that lenders have access to stable low cost funding so that mortgage can come down as soon as . So we want to bring together, and lenders with the Treasury, the and the Financial Services Authority to market-led solutions to strengthen these funding further.
Mr Deputy Speaker, I also more people to have the choice long term fixed mortgages. These protect from risks and still allow them to move, or get a new if rates go down. Today, however, people in the UK have short-term rate mortgages for two or three , leaving them exposed to interest rate when their mortgage deal ends. It not the case in other countries, as Denmark where the majority of take out long-term fixed rate mortgages. want to see more flexible and long-term fixed rate mortgages for 10, or even 25 years. And I today publishing the findings of the of housing finance in the UK. conclusions show that long term fixed mortgages can reduce some of the of taking out a mortgage, especially first time buyers and lower income . And it will help more people on - and stay on - housing ladder. So, I want to views on how we can deliver - on international experience - the framework for the UK to achieve term fixed rate mortgages. I will back at the Pre-Budget Report.
Mr Speaker, the best way to improve term affordability and stability is to more houses, which is why we committed to building more homes by . So I can announce that in to the 40,000 already under construction, have through the review of public land identified sites for 70,000 more .
Mr Deputy Speaker, we are determined take decisions now for the long-term of our country. Helping to improve , supporting long-term stability for homeowners, and the needs of future generations. And greatest obligation to future must be tackle climate change. Britain has been the forefront of international action. We one of the few countries meeting Kyoto target. We are working with countries following agreement in Bali last to agree tougher global goals after . And the UK will use our million environment fund to work with United States, Japan and other countries well as the World Bank to clean technologies in developing countries, with for climate change. We are already leading financial centre for carbon markets we are also working with California other American states to build these and strengthen partnerships.
We need to more and we need to do now, though. Few doubt the science. need to take action is urgent. effects if we do not will catastrophic. Recognising this threat, we are first Government anywhere in the world introduce legal targets compelling us to action to cut carbon emissions. We an established target to reduce emissions at least 60 per cent by . But I believe that we should further. That is why we have the Climate Change Committee to advise - whether as part of an commitment - we should raise our , not to 60%, but o 80 cent.
And if we are serious, Deputy Speaker, about reaching demanding targets every government, every department in Government, single public sector body, every business, one of us needs to play part. And to ensure carbon reduction a central part of our economic , I can tell the House that first carbon budgets to 2022 will announced alongside the Budget next year.
-term growth must be sustainable. There are opportunities here too for business, and could be over a million jobs our environmental industries within the next decades. Meeting these long term challenges require us to make substantial reductions emissions across the economy - in supply, and transport, and in our and in our homes. But I that there are three key steps can take now. Firstly, working in we have helped build the Emissions Scheme to curb the amount of produced by generators and large industrial . The scheme imposes a cap on amount of carbon companies can generate. get allocations for credits to help adapt. But if we want to investment in low carbon technology in renewables and nuclear, for example, and make industry more carbon efficient we to go further. So in the phase, instead of auctioning 7 per , I want to see auctioning of per cent of these allowances for generators. Last year’s Energy White paper us to increasing the supply of energy and the Energy Bill, now through Parliament will allow the tripling renewable electricity by 2015. And we consult on how to meet our of the European Union target in summer.
Secondly, we need to do to reduce the amount of carbon at home and at work. Given damage that single-use carrier bags inflict the environment, we want to take now. So we will introduce legislation impose a charge on them if have not seen sufficient progress on voluntary basis. Legislation will come into in 2009 and based on other ' experience, it could lead to a percent reduction, with around 12 billion plastic bags in circulation. And the raised, Mr Deputy Speaker, should go environmental charities.
And next month we launch the most ambitious household emissions programme. Energy companies are obliged through Carbon Emissions Reduction Target to give customers better deals for energy efficiency therefore cut bills. Cavity wall insulation nearly three million homes. Loft insulation, energy efficiency appliances and light bulbs. can announce £26 million funding next for a Green Homes Service to people cut their carbon emissions and fuel bills. And we will also the use of smart meters to and large companies over the next years, to provide them with greater to reduce the amount of energy consume.
Mr Deputy Speaker, we already a target to make new homes carbon from 2016. I believe that need to go further. And I announce today that new non-domestic buildings become zero-carbon from 2019. We will on achieving that target with the to achieve 75 million tonnes of dioxide over the next thirty years. Climate Change levy, and which is main reason why we have met Kyoto targets and which is still by some, will increase in line inflation from April.
I believe the key area in which we need take action now is in relation transport. It accounts for nearly a of our carbon emissions. We recognise contribution of aviation to the UK , which is why we support the at Stansted and Heathrow. But I always been clear that aviation must its environmental costs, and that is we want aviation in the European Emissions Trading Scheme. But because emissions aircraft are forecast to continue to , I am also announcing that revenue plane duty will be increased by per cent in the second year operation.
But Britain’s 30 million cars, and lorries together account for 22 cent of total carbon emissions. Over last 20 years new cars have 50 per cent more efficient. And technology will bring further improvement. Today, am publishing Professor Julia King’s review low carbon cars in which she new technologies which could help cut emission. Professor King found that by switching to the cleanest cars on , motorists could save 25 per cent their fuel costs. She also found manufacturers needed to be encouraged to new technology to the market. I asking the European Commission today to a tighter target which reduces the on emissions from cars from 130 per kilometre to 100 grams per by 2020.
But I believe, Mr Speaker, that the road tax system do more to support the use more carbon-efficient, and there less costly . It will continue to reduce the carbon dioxide levels in new cars.
firstly, from April 2009, I am a major reform to Vehicle Excise to encourage manufacturers to produce cleaner by introducing new bands, there will an incentive to encourage drivers to the least polluting car. And as second stage for new cars, from 2010 there will be a new -year rate based on carbon dioxide emissions the car. Cars that emit less the proposed 130 grams European standard carbon dioxide emissions will pay no tax at all in the first . But a higher first year rate be introduced on the most polluting . Cutting taxes for those who cut emissions. But it is right that people choose to buy a more car that they should pay more the first year to reflect the cost.
Mr Deputy Speaker, these changes provide a real incentive both to and motorists. We will encourage sustainable . Therefore the biofuel duty differential will replaced by the Renewable Transport Fuel . I am also reforming capital allowances business cars to increase the incentive move to more lower emitting cars.
Deputy Speaker, today is no smoking . From 6pm today the duty on will rise, adding 11 pence to price of a packet of 20 and 4 pence to the price five cigars. To help people to smoking, we are continuing the 5 cent reduced rate of Value Added on smoking cessation products beyond 30 this year. Mr Deputy Speaker, as have risen, alcohol has become more . In 1997, the average bottle of bought in a supermarket was £4.45 today's prices. If you go into supermarket today, the average bottle of will cost about £4. So from on Sunday, alcohol duty rates will by 6 per cent above the of inflation. Beer will rise by a pint, cider by 3p a , wine by 14p a bottle and by 55p a bottle. And those will increase by 2 per cent the rate of inflation in each the next four years.
Mr Deputy , it is only because I have these decisions on alcohol and on tax loopholes that I am able provide additional support for families and more children out of poverty. And also why I am now able make two further announcements whilst still our fiscal rules. As the House know, the basic rate of income will fall by 2 pence in . And because charities have a vital to play, we will therefore implement transitional rate of 22 per cent, allow them to continue to claim aid at the current rate, delivering million worth of relief and will provide charities with the certainty they for the next three years.
Mr Speaker, I also said that one the key features of this Budget fairness. And I want to do to help older people especially this . Mr Deputy Speaker, we are spending billion more in real terms per on pensions with over half this money going to pensioners on the incomes. From April, as a result changes made last year, a further ,000 pensioners will be taken out of income tax. The pension Credit now a minimum income of £124 per from April.
Mr Deputy Speaker, before there was no Winter Fuel Allowance. this year I have decided to pensioners who are facing pressures such higher energy bills. So I intend raise the winter fuel payment for 60s from £200 to £250 and the over 80s from £300 to . 9 million pensioner households will be off.
Mr Deputy Speaker, this is responsible Budget to secure Britain’s stability the face of global uncertainty. I made my choice. Responsible decisions not , unfunded promises. Fairness and opportunity for in Britain. To secure a strong, future. And I commend it this to the House.