3G phones fund the UK's future
Well, at least something good has come of them
Budget special Well, Gordon Brown has played it fairly careful. However, he did have two main thrusts in the Budget today. One, people with young kids to have it easier. And two - which is of greater interest to The Reg in a professional capacity - encouraging small businesses and in particular the "new economy".
But before we get there, the biggest moment of exultation came when Gordon announced the amount of national debt we would pay back this year. "Last year we paid back nine billion pounds and this year we plan to pay back thirty-four billion pounds - which is more than all the debt paid by British governments of the last 50 years."
MPs couldn't get their heads round it. Gordon continued: "Due to this payment, debt interest payments will be £3.5 billion lower this year." And then he went on to explain that this recovered money would form the fund from which a lot of the subsequent tax breaks and increased spending would be funded.
People could hardly believe it, and even the commentators on the TV at the moment are still trying to work where this huge figure came from. Well, we can tell them. From the ludicrous figures paid by mobile companies for the 3G licences. The £22.5 billion coughed up by telecoms companies may have brought them into dire trouble - caused debt to rocket, share prices to fall and credit ratings to be cut - but for Gordon is was Christmas come early.
And so, folks, thanks to 3G phones, we should have more funding in schools and hospitals, tax incentives for innovation and cheaper booze, all before the blasted things actually arrive on the market. Marvellous.
Right, back to Internet companies. There will be new tax relief on intellectual property and goodwill and withholding tax on interest payments and royalties for UK businesses will be abolished. This is good news for Net firms. Tax relief on share options is to be increased to £3 million, and employees will also pay a lower capital gains tax of 10p (from 14p).
New tax credits will be put in place to encourage innovation and small businesses, Mr Brown said. The VAT threshold has been increased to £54,000 (so if you earn below that, you are VAT-exempt). The VAT system will also be simplified to a flat rate - this will be life easier for small businesses to get to grips with accounts. Red tape will also be cut on company accounts - saving time and money, the Chancellor said. Start-ups will be given £2,000 free advice.
A £1 billion regeneration programme was also announced, with Gordon Brown stressing that while some saw steel, iron-industry based parts of the company as no-go areas, he saw them as a wealth of potential. This is an important aspect to the UK's Net industry as a survey by the CBI last week showed that the north of England and manufacturing industries were leading the way when it came to Internet revolution.
He also announced a large plan (which will be expanded on by Stephen Byers possibly later this week) to retrain employees to "the skills needed in the new economy". An example of this also came last week when a steel company joined up with a union and the DTi to announce retraining of its people to become telecoms engineers.
That's about it really. Nothing was mentioned about IR35, ISPs and all that. But that doesn't mean it isn't there - a huge chunk of proposals are only covered in the hefty budget booklet dished out as soon as the Chancellor sits down. Things may crop up in the next day or two as people sift through it. ®
Summary of the whole thing
Well, Gordon Brown could hardly go wrong. The world economy is incredibly strong at the moment and the UK is doing especially well. The lowest inflation for 30 years, the lowest interest rates for 35 years and the lowest unemployment since 1975.
The speech was shorter than usual - 52 minutes - but it was full of good news. The Opposition were eerily quiet. As we write this, William Hague is grasping at straws and relying on gags to get him through (so far, it's all about stealth taxes).
- Booze prices stay the same. That means whisky, all spirits, all beer, all wine. We can't remember the last time this happened.
- Fags to go up by 6p a pack. This is an inflation figure, and there's no above-and-beyond tax
- 10p rate of income tax increased to first £1,880 (from £1,550)
- VAT laws to be changed to accommodate museums, so they will remain free
- Betting duty abolished
- Loads of increased measures for parents - tax credits, relief etc.
- Maternity leave up from 18 to 26 weeks
- Paternity leave enshrined in law - 2 weeks' worth
- More money to pensioners
- Extra £1 billion to schools this year
- Extra £1 billion to NHS this year
- Inflation set at two-and-a-half per cent
- Consumer demand estimated at three-and-a-quarter to three-and-a-half per cent
Basically, Gordon Brown has not brought in any huge tax cuts, despite the fact that he's got something like £23 billion in the bank. Why? "Stability is the foundation of this Budget, with tax cuts that we can afford. We will not return to the economy of boom and bust."
Sponsored: RAID: End of an era?