The government details its plans for tax and business
13th May 2010
The Conservative-Liberal Democrat coalition government has spelled out its policies in a number of areas.
Several of those concern the economy, business, tax, pensions, employment and the environment.
There will be an accelerated reduction in the budget deficit, with £6 billion coming this year (although the commitment contains a proviso that the level of the cuts will be subject to advice from the Treasury and the Bank of England). The main burden of the cuts will be felt in reduced government spending rather than tax increases.
An emergency Budget, to be delivered within 50 days, will set out the detail of the planned cuts. An independent Office for Budgetary Responsibility will be established to produce new growth and borrowing forecasts.
A full spending review is to be held in the autumn, following a consultative process involving all tiers of government and the private sector.
The coalition has ruled out joining the euro for the duration of the next Parliament.
The personal allowance for income tax is to be increased, the first stage of which is to take effect from April 2011. The funds required for such an increase will come from the dropping of Conservative proposals to raise employees' national insurance contribution thresholds. The increase in employers' national contribution thresholds, however, will go ahead.
There is to be a long-term policy of raising the income tax threshold to £10,000, graduated across a number of years. This will take precedence over Conservative plans to raise the inheritance tax threshold to £1 million.
Another Conservative manifesto commitment to introduce transferable tax allowances for married couples stays in place, although Liberal Democrat MPs will be allowed to abstain in the Commons vote on the measure.
Capital gains tax on non-business assets will, at some point, rise to a rate similar to that of income tax; exemptions will be made for entrepreneurial business activities.
A switch to per-plane rather than per-passenger duty will be implemented.
The two parties have agreed to reduce the child trust fund and tax credits for higher earners.
A banking levy is also to be introduced.
The government is to focus on improving the flow of credit to smaller firms. This will include the possibility of establishing a loan guarantee scheme to replace the Enterprise Finance Guarantee programme and the use of net lending targets for nationalised banks.
Some backdated demands for business rates will be cancelled.
The default retirement age is to be phased out, and a review will be held to establish the dates at which the state pension retirement age begins to rise to 66. There is a commitment that, in the case of men, this will not be before 2016 and, in the case of women, not before 2020.
Rules requiring mandatory annuitisation at 75 are to be dropped.
The link between the basic state pension and earnings will be restored from April 2011 with a guarantee that pensions are raised by the higher of earnings, prices or 2.5 per cent, as proposed by the Liberal Democrats.
All existing welfare-to-work programmes are to end and are to be replaced by a single welfare-to-work programme.
There will be no further transfer of sovereignty or powers to the EU over the course of the next Parliament.
The government will work to make sure that the application of the Working Time Directive in the UK is limited.
Any future European treaty that involves the transfer of power will be subject to a referendum.
A green investment bank will be set up.
The government is to press ahead with a high-speed rail network but will reject plans for additional runways at Gatwick and Stansted.
A national planning statement will be drawn up to allow a process for replacing existing nuclear power stations with new ones, although Liberal Democrat MPs will be allowed to abstain on any vote on the plans.