Show Hide image 24 November 2008 Pre-Budget report The key points from this year's crucial pre-Budget report delivered to MPs in the House of Commons. By Ben Davies 1530 GMT Alistair Darling is invited by the Speaker to deliver his pre-Budget report. Darling said he wanted to take fair and responsible steps to support people and businesses and put Britain in position to take of advantage of the recovery. He wanted to ensure sound public finances in the medium term to ensure Britain lives within its means The chancellor gave an assessment of the state of the global economy "This is an unprecedented global crisis," he told MPs. The root of the problem was a failure in the global financial system. Restoring financial stability was crucial - and that had to be done internationally Internationally and domestically regulation had to be improved In Britain unemployment was still 2m below the levels of the 1990s when the Tories were in power "We did fix the many roofs that needed fixing - the roofs of hospitals and schools throughout the United Kingdom," Darling said The chancellor said inflation was expected to continue to fall allowing the Bank of England to cut interest rates to a 50 year low Darling then turned to the economic forecasts UK GDP contracted by half a percent in the three months to September. It will contract further next year and output would continue to fall for the first two quarters of 2009 before beginning to recover Britain would have between one and half and two percent growth in 2010, the chancellor predicted The government believed there was a choice - the sink or swim approach [of the Tories] or Labour's way which was to table a package of measures to support people through these difficult times. The pre-Budget report represented a substantial fiscal loosening, Darling said Britain was experiencing significantly lower tax revenues because of the downturn - as was happening in the rest of the world. Tax take on stamp duty alone was down 40 per cent Borrowing would rise to 8 per cent of GDP before falling back down again. By 2016 Britain would be again only borrowing to invest Britain's debt would still be lower than other countries, the chancellor insisted Allowing borrowing to rise was right for Britain Darling said investment in public services would continue £3bn of capital spending for 2010/11 would be brought forward to this year to renovate infrastructure, improve schools and put people people to work The temporary £120 allowance for people who lost out as a result of ending the 10 per cent income tax rate would be made permanent Darling said he would cut VAT from 17.5 per cent to 15 per cent from December 1, 2008 until the beginning of 2010. Equivalent to a 12.5 per cent boost shot in the arm of the economy The chancellor said from there would be an increase in half of a per cent on National Insurance - but the threshold would be raised. No-one earning under £20,000 would pay any more There would be a new higher rate of tax - 45 per cent on those earning more than £150,000 Those earning between £100,000 and 140,000 would have their personal allowance reduced, and it would be abolished for those earning more than £140,000 There were a number of measures that were targeted at small and medium-sized firms Darling said he was monitoring commitments by banks to ensure they treated businesses fairly The government was offering credit through a small business finance scheme to help with short term cash flow problems Companies would be allowed to offset current losses of up to £50,000 against taxes paid in the past three years - tax would be repaid Air passenger duty would be reformed into a new four band system whereby those travelling further would pay more The chancellor said the most pressing problem for many families was in meeting their energy bills. Unjustified discrepancies in different billing methods would be tackled, said the chancellor The government was going to keep the pressure on energy companies to produce a proportion of their power from renewable sources Steps were being looked at to help ensure the availability of more mortgage products Repossession should be a last resort, families worried about finances should be able to get free debt advice and the chancellor announced a number of measures including new mortgage support for people in work The chancellor also announced new cash to build social housing The chancellor said he would phase in new duty rates for cars In a bid to encourage saving a savings gateway would be set up where the government would add 50p to every £1 saved by low wage earners Pensioners on modest incomes - pension credit would go up from £124 to £130 a week Every pensioner would get a payment of £60 on top of the annual £10 pounds bonus - £70 that would also go to disabled children. Mr Darling finished his statement at 1620 Responding Shadow Chancellor George Osborne said Mr Darling was going to double the national debt to £1 trillion an "unexploded tax bombshell". The lie that boom and bust had ended had been comprehensively nailed the Tory politician argued. "In the end all Labour chancellors run out of money. All Labour governments bring the country to the verge of bankruptcy," he said Fiscal stimulus only worked when there were strong public finances The pre-Budget report was the greatest failure of public policy in a generation, Osborne said. For the Lib Dems, Vince Cable welcomed some of the chancellor's measures. A serious tax cut concentrated on the low paid was needed. Rather than cutting VAT there should be a cut on income tax for the least well off He added the government was big on rhetoric but not on action Ben Davies trained as a journalist after taking most of the 1990s off. Prior to joining the New Statesman he spent five years working as a politics reporter for the BBC News website. He lives in North London.