| ECONOMIC
FORECASTS
Growth
Estimates for economic growth for both this year and next year
are unchanged at 3-3.5 per cent. The new forecast for 2006 is
2.5-3 per cent. Fixed investment is expected to grow by at least
5 per cent this year and at least 6 per cent next year. Manufacturing
output is forecast to grow by just under 2 per cent this year
and 2 per cent next year. Domestic demand this year is expected
to grow by 3.5 per cent and 3.25 per cent in 2005.
Public borrowing
Public sector net borrowing for 2003/04 is forecast at £37.5bn
and for subsequent years is expected to be £33bn, £31bn,
£27bn, £27bn and £23bn.
Public debt
Public sector net debt is estimated at 33 per cent of national
income this year, rising to 36 per cent by 2008.
Budget deficit
Deficit forecast at £21.3bn this year, then £11bn
and £5bn respectively for subsequent years, breaking even
in 2006/07, with a surplus of £4bn in 2007/08 and £9bn
the following year.
Inflation
Inflation rate forecast at 1.75 per cent this year, rising to
2 per cent next year and beyond.
CIVIL SERVICE REFORMS
Overview
Wide-ranging job losses across the Civil Service, with 40,500
staff to go in the departments for Work and Pensions, Education,
and Inland Revenue and Customs & Excise by 2008. All government
departments to cut administration budgets by at least 5 per cent
by 2008, following review by Sir Peter Gershon.
Inland Revenue merger
Inland Revenue and Customs & Excise to merge, with 10,500
jobs to be cut by 2008.
Department for Work and Pensions
Department for Work and Pensions' back-office functions to be
streamlined, leading to a staff reduction of more than 5 per cent,
with numbers falling by 30,000 by 2008.
Education Department
Administrative jobs to be cut across the Education Department,
with 31 per cent of posts at department headquarters to go in
favour of more teachers.
Regions
20,000 Civil Service jobs to be moved out of London and the south-east
to the regions, saving £2.3bn, in line with the recommendations
of review by Sir Michael Lyons.
EDUCATION
Spending and investment
Spending on UK education to rise by £8.5bn to £77bn
in 2008. Capital investment in English schools to be £6bn
next year, rising to £8.1bn in 2008.
Specialist schools
Up to 1,000 more comprehensives to receive cash to enhance them
to specialist school status.
Direct payments
Payments for investment will be made directly to head teachers,
averaging £55,000 for each primary school, £180,000
for each secondary school.
HOMES
Housing supply
Deputy Prime Minister to consult on how to increase the supply
and affordability of housing. The Government will release public
sector land and extend the contaminated land tax credit to create
more affordable housing.
Real estate investment
Property Investment Trusts given the go-ahead.
Planning
A single body for housing and planning to be set up.
OTHER TAXES
Freeze on rates of stamp duty, insurance premium tax, air passenger
duty.
SPENDING REVIEW
Public spending to rise from £459bn this year to £579bn
by 2008. The annual spending review later this year will include
increases in the budgets for Defence, Transport and the Home Office.
COUNCILS
Local councils to receive £1bn extra over the next 3 years
to improve services.
HEALTHCARE
NHS to receive investment increases of 7.2 per cent in real terms
each year until 2008. NHS spending on research and development
would increase by £100m over the next four years, taking
spending to almost £1.2bn a year from 2008. Creation of
a National Clinical Research Network to co-ordinate the activities
of private companies, public sector organisations and medical
charities.
TERRORISM
£1bn set aside this year for anti-terrorism measures, in
addition to £6bn ongoing commitment, rising to £2bn
in future years.
MOTORISTS
Fuel and excise duty
Petrol to rise by 1.9p per litre, sulphur-free petrol by 1.4p
per litre. Rises deferred for six months. Vehicle excise tax frozen.
ALCOHOL AND CIGARETTES
Price of a pint of beer to rise by 1p. Duty on a bottle of wine
to rise by 4p. No increase in cider, sparkling wine and spirits.
Cigarettes up by 8p a packet.
PENSIONS
The cap on earnings, applied in calculating maximum contributions
allowed for personal and certain occupational pension schemes,
has been increased for 2004/05 from £99,000 to £102,000.
New simplified tax scheme
Single scheme for all approved pension arrangements to be introduced,
with £1.5m lifetime cap on capital value of pension benefits
in the first year (2006/07), rising to £1.8m in 2010 and
reviewable quinquennially thereafter.
PENSIONERS
Winter payments
Pensioners over 70 to receive £300, including additional
£100 to offset council tax rises. Over 80s will get £400
in total.
EURO
Entry assessment
No euro assessment. Will be reviewed in next year's Budget.
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