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Yesterday in response to the Cruickshank Report, my Rt Hon Friend the Secretary for Trade and I referred small business banking to the Competition Commission.
Mr Cruickshank estimates that competition can reduce banking costs and charges by up to 10 per cent or 3 - 5 billion pounds a year.
The money transmission system affects every cheque, every credit card and every debit transaction and reaches from every local cash dispenser to every corporate inter-bank transfer. Today I am announcing that we will legislate to ensure the UK payments system is open to new competition.
The international competitiveness of the bond market in the City of London depends upon a level playing field. That is why today I am announcing the abolition from April 2001 of the withholding tax on the interest paid on international bonds. We will legislate so we can proceed on the basis of exchange of information nationally and internationally. This change should be widely welcomed in all parts of the house. There is no clearer indication of our determination to stand up for what is right for Britain.
Since 1997 the number of small businesses in Britain has risen from 1.2 million to 1.3 million - a 100,000 increase.
Today I continue to remove the old barriers to small business growth.
Having already cut small business corporation tax from 23 per cent to 20 per cent and, for the first 10,000 pounds of their profits, to just 10 per cent, I am today making a further tax reduction. For all small and medium sized businesses the 40 per cent capital allowances - which I introduced in my 1997 Budget - will be made permanent.
This will be of special help to manufacturing companies. Half manufacturing employment is in small and medium sized firms. So manufacturing will derive further benefit from the 150 million pounds I am allocating to our new research and development tax credit, introduced on 6th April, to finance 30 per cent of their R and D costs.
I want to make Britain the best environment for e-commerce and catch up with America as swiftly as possible. To encourage one million small companies to go on line, I will introduce a special tax reduction. For the next three years any small business buying computers, or investing in e commerce and new information technology, will be able to immediately write off against tax the full 100 per cent of the cost in the year of purchase.
Side by side with this incentive, the small business service will offer consultancy, advice and planning to help small businesses get on line and become e-companies, and with the additional resources the Secretary for Employment is providing the University for Industry, which starts this Autumn, will offer small business employees training on the Internet
We are determined to lead in e-commerce and the Internet. Today we are introducing new rules for work permits in areas of highly skilled information technology where there is a global shortage.
And to promote the use of the Internet we will legislate for other tax cuts - a 100 pounds tax cut for electronic filing of tax and VAT returns, and a further 50 pounds tax cut for electronic filing for those paying the working families tax credit.
Tax cuts since 1997 are worth one billion pounds a year for small businesses alone.
After today's measures, Britain now has the lowest small business corporation taxes we have ever had, the lowest in the industrialised world: since 1997, for small companies an average tax cut of almost 25 per cent.
And to encourage the next generation of entrepreneurs, we are forming a partnership with the CBI, the Institute of Directors and the Chambers of Commerce to encourage enterprise in all communities. Two new enterprise funds will target business loans and management scholarships to high unemployment areas.
Stage by stage we are moving from the Britain where enterprise was a closed circle for the few, to a Britain where enterprise will be open to all.
We must also remove the old barriers of under-investment and neglect that for too long have held our regions back. Working with the new Regional Development Agencies and the Small Business Service, our aim is balanced economic development across all the regions and nations of the United Kingdom - a modern regional policy supporting local innovation, more investment and improved infrastructure.
To finance a network of regional venture capital investment funds, we are today announcing a partnership with the European Investment Bank and the private sector - with a target of one billion pounds for new economic development for our regions and nations.
The regional targets will be 85 million for the South West, 120 million for the North West, 130 million for the North East and Yorkshire, 250 million for the Midlands and East, 250 million for London and the South East. Scotland, Wales and Northern Ireland will have their own funds.
To further promote a modern regional policy, the Secretary for Industry will be announcing a regional innovation fund to facilitate the formation of local clusters in hi tech industries.
For years Britain, as a whole, has lagged behind America in business access to venture capital investment. Here only half as much is invested per head.
I am grateful to Mr Paul Myners, who has agreed to head a review of institutional investment, to report to me in time for the next Budget.
Our goal for the whole of the United Kingdom is to remove the old barriers to full employment. We know that greater opportunity for all means greater prosperity for all. Since 1997 the number of unemployed on benefits has fallen by 30 per cent.
Youth unemployment is down 70 per cent and nearly 200,000 more young people have now found jobs. Long term youth unemployment, which in the mid-eighties was at 500,000 and even in 1997 was as high as 200,000, is already down to 50,000.
The New Deal demonstrates how false was the old choice between enterprise and fairness, between efficiency and equality. By delivering employment opportunity for all, we are making Britain both more enterprising and more fair, to the benefit not just of the high unemployment areas but the whole country.
And because we have succeeded in this Parliament in removing the old barriers to employing the young, I can announce that starting from April next year we will extend the opportunities and the obligations of the New Deal to the long term adult unemployed - with four options of: work, work-based training, work experience including in the voluntary sector, self-employment. But no fifth option, no staying at home on benefit doing nothing.
The relationship we are forging between rights and responsibilities is firmly rooted in both economic opportunity and individual responsibility.
Instead of being left to draw benefit at a social security office, the unemployed who are able to work will sign up to seek work, with the long term unemployed offered the help of a personal employment adviser.
To ease the transition back to work, the Government will introduce a new job grant for long term unemployed starting at 100 pounds and help with rent or mortgage.
Instead of benefits paying more than work, work will now pay. And I can announce that we will extend the principle of the working families tax credit.
As a first stage, from 1st April, all long term unemployed over 50 who want to return to work will be guaranteed a minimum income for their first year back - for wages up to 15,000 pounds a year, an extra payment of 60 pounds a week.
And building on the forthcoming rise in the national minimum wage, I am today increasing the working families tax credit. It is already being paid to one million families in our country. And with today's family tax cut, the minimum family income will rise next April - from 200 pounds a week by 7 per cent to 214 pounds a week.
Full employment is not just about the right to work, but, where there are jobs, the responsibility and the requirement to work.
We will implement the Report of Lord Grabiner QC.
Starting in May, a confidential phone line will advise claimants on how to move from the hidden economy and end fraudulent benefit or tax claims; how to get work, register as a business, or become self employed. After six months, from 1 January, for those who fail to respond, tougher rules and penalties will be imposed.
From October, in the 20 highest unemployment areas of Britain covering 127,000 unemployed, local special action teams will be set up to help local unemployed people into nearby vacancies.
The number of lone parents on income support has fallen by almost 100,000 since 1997. But the employment rate among lone parents in Britain is still only 45 per cent, far below the 70-80 per cent rates of America, France and Scandinavia.
In this Budget we remove old barriers to work and I can today announce an extension of the New Deal in a new way to half a million lone parents.
Piloted from this Autumn, and starting nationally from next April, lone parents with children over five will be invited to work-focussed interviews - and encouraged to take up new choices:
- the choice to train for work with a new cash payment of 15 pounds a week on top of benefits;
- the choice of a few hours work a week, with the first 20 pounds of earnings allowed with no reduction in benefit;
- the choice of part time work with a guaranteed 155 pounds for 16 hours or the choice of full time work on a guaranteed 214 pounds a week;
- and on every rung of this ladder of opportunity, help with back-to-work costs and with child care.
Just as we remove old barriers to lone parents working when their children go to school, so too we will help mothers who want to be at home in the first months of their child's life.
Today, too many children are born into poverty because the family income drops when the mother stops work. Yet this is the time when many mothers feel they need to be at home with their young child.
The Secretary for Trade is announcing that he will review what improvements can be made in maternity pay and parental leave to improve family friendly employment.
But today I can announce immediate decisions which recognise the extra costs families face when a child is born.
For all low income mothers who meet the basic requirement of health check ups for their young child, we will increase the Sure-Start maternity grant from 200 to 300 pounds. Helping over 200,000 low income mothers. Mothers on paid maternity leave who would otherwise fall into income support will now stay on working families tax credit.
Families receiving the credit where the mother wants to stay at home will no longer have to wait as long as six months for additional support after a child is born - this will be worth up to 30 pounds a week.
I have examined the alternative put to me of a transferrable tax allowance for husbands and wives when mothers stay at home.
Under this system, a family with two children on 15,000 pounds a year would receive 965 pounds a year. The working families tax credit is far better. With the improvements in it announced today the same couple will receive not 965 pounds a year but 2,200 pounds a year.
The Prime Minister has set a national goal for our country - to abolish child poverty in 20 years, and to halve it by 2010.
A Sure Start for all Britain's children is not only right but the best anti-crime, the best anti-drugs, the best anti-unemployment and the best anti-dependency policy for this country's future.
And our strategy starts from the foundation of universal child benefit for all seven million families with children.
When we came to office, child benefit was just 11 pounds five pence for the first child. Child benefit will be 15 pounds fifty pence from April 2001, 40 per cent more than in 1997.
For young children in the poorest families, weekly support in 1997 was just 28 pounds. We have raised it in every Budget and today the Secretary for Social Security is announcing a further increase for the poorest children of four pounds 35 pence a week.
So maximum support is up from the 28 pounds of 1997 to up to 50 pounds a week next year.
As a result of all our measures, the poorest two child family on income support will now be 1,500 pounds a year better off than in 1997.
And the low paid family with two children on a wage of 10,000 pounds a year will now be 2,700 pounds a year better off.
This is what we mean by tackling child poverty while making work pay.
I can now report that the numbers of children lifted out of poverty will this year rise beyond one million, and next year reach 1.2 million children - the greatest reduction in child poverty in 50 years, our country now at last fulfilling this generation's obligations to the next.
And as we move forward to take the second million children out of poverty, I can confirm today that the Secretary for Social Security and I have agreed on the next major reform.
Over the next three years, building on the foundation of universal child benefit, we will create an integrated and seamless system of support for children paid to the mother.
The war against child poverty needs more than finance and more than the efforts of government acting alone. The war against child poverty can only be won by the combined efforts of private, voluntary, charitable and public sectors working together.
I can confirm that after consultation with charities and voluntary organisations we will proceed to set up, in every region of our country, and with new cash allocated in our spending review, not just one children's fund but a network of local and regional children's funds to support work by the voluntary sector in meeting the needs of children.
Budget speech - part three
Budget speech - part one
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