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The Chancellor’s Budget 2009 On Wednesday 22 April 2009, the Chancellor of the Exchequer, Alistair Darling, issued the 2009 Budget, entitled Building Britain’s Future. This paper provides a range of information, on the Chancellor’s 2009 Budget, including an overview of its impact on Wales, a summary of the main policy decisions contained within the budget, how much such decisions will cost/benefit HM Treasury and a range of stakeholders’ views and press coverage. MAprilonth 2009 Members’ Research Service / Gwasanaeth Ymchwil yr Aelodau Members’ Research Service: Research Paper Gwasanaeth Ymchwil yr Aelodau: Papur Ymchwil The Chancellor’s Budget 2009 Eleanor Roy April 2009 Paper number: 09/014/ER © National Assembly for Wales Commission 2009 © Comisiwn Cynulliad Cenedlaethol Cymru 2009 Enquiry no: 09/1503/Eleanor Roy 26 April 2009 Members’ Research Service briefings are compiled for the benefit of Assembly Members and their support staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public. We welcome comments on our briefings; these should be sent to the Members’ Research Service, National Assembly for Wales, Cardiff CF99 1NA or e-mailed to [email protected]. Members’ Research Service: Research Paper Gwasanaeth Ymchwil yr Aelodau: Papur Ymchwil Executive Summary On Wednesday 22 April 2009, the Chancellor of the Exchequer, Alistair Darling, issued the 2009 Budget, entitled Building Britain’s Future.1 This paper provides a range of information, analysis and commentary on the Chancellor’s 2009 Budget, including an overview of its impact on Wales, a summary of the main policy decisions contained within the budget, how much such decisions will cost/benefit HM Treasury and a range of stakeholders’ views and press coverage. It should be noted that this paper is not intended to provide an exhaustive list of all the relevant policy decisions announced in Budget 2009, but provides a summary of the main headlines in particular areas. Section 1 provides information on the Chancellors’ Budget, what it contains and how it fits into the annual budget cycle at Westminster. Section 2 provides an overview of Government spending and receipts for 2009-10, as well as a summary expenditure on services per capita across the UK. Section 3 summarises the UK economic forecasts including information on gross domestic product (GDP), inflation, fiscal projections and fiscal balances. Section 4 examines the potential impact of decisions announced in Budget 2009 on the Welsh block funding for 2010-11 and beyond, including the impact of efficiency savings. Whilst there is a lack of clarity around the precise financial impact of the Budget, compared to the departmental expenditure limit (DEL) received in the Welsh block for 2009-10 (£15.3bn), the 2010-11 allocation stated in the Budget 2009 represents a £0.4bn (or 2.6 per cent) increase, rather than the £0.7bn (4.5 per cent) increase forecast in Budget 2008. Sections 5 to 10 summarise the main policy decisions announced in Budget 2009, and looks at how much these policies will cost or benefit HM Treasury. Section 5 looks at decisions which will impact upon individuals and households. Section 6 considers decisions which will impact upon business. Section 7 considers decisions which will impact upon the environment and transport. Section 8 examines the efficiency savings announced in Budget 2009. Section 9 considers other policy decisions announced in Budget 2009. Section 10 looks at the overall cost or benefit to HM Treasury of the policy decisions contained within Budget 2009. Section 11 provides links to relevant documents, responses and media coverage of Budget 2009. 1 HM Treasury. Budget 2009: Building Britain's future. (22 April 2009) [26 April 2009] Members’ Research Service: Research Paper Gwasanaeth Ymchwil yr Aelodau: Papur Ymchwil Contents 1. About the Chancellor’s Budget ...........................................................................................1 2. Overview of Government Spending....................................................................................2 3. UK Economic Forecast.........................................................................................................5 3.1 UK Gross Domestic Product (GDP)........................................................................................5 3.2 Inflation Forecasts...................................................................................................................6 3.3 Fiscal Projections & Balances ................................................................................................7 4. Impact of Budget 2009 on Welsh Block Funding ............................................................10 5. Impact of Budget 2009 on Individuals and Households .................................................12 5.1 Personal Tax.........................................................................................................................12 5.2 Pension Tax Relief................................................................................................................13 5.3 Pensioner Savers..................................................................................................................13 5.4 Support for Savers ................................................................................................................13 5.5 Support for Pensioners .........................................................................................................13 5.6 Child Trust Fund ...................................................................................................................13 5.7 Child Tax Credit ....................................................................................................................13 5.8 Job Centre Plus Funding ......................................................................................................14 5.9 Youth Employment................................................................................................................14 5.10 Social Fund...........................................................................................................................14 5.11 Statutory Redundancy Pay ...................................................................................................14 5.12 Housing Supply.....................................................................................................................14 5.13 Stamp Duty Holiday ..............................................................................................................14 5.14 Alcohol and Tobacco Duty....................................................................................................14 5.15 National Insurance Credits for Families................................................................................15 5.16 Support for Mortgage Interest (SMI).....................................................................................15 6. Impact of Budget 2009 on Business .................................................................................16 6.1 First Year Capital Allowance.................................................................................................16 6.2 Support for Loss-making Businesses ...................................................................................16 6.3 Business Rates .....................................................................................................................17 6.4 Strategic Investment Fund....................................................................................................17 6.5 Vehicle Scrappage Scheme .................................................................................................17 6.6 Trade Credit Insurance .........................................................................................................17 6.7 North Sea Fiscal Regime......................................................................................................17 6.8 Digital Britain.........................................................................................................................18 6.9 Further Education Capital Funding .......................................................................................18 7. Impact of Budget 2009 on Environment and Transport..................................................19 7.1 UK Carbon Budgets ..............................................................................................................19 7.2 Energy and Resource Efficiency...........................................................................................19 7.3 Renewable Energy Projects .................................................................................................20 7.4 Low Carbon Energy Infrastructure........................................................................................20 7.5 Carbon Capture and Storage................................................................................................20 7.6 Combined Heat and Power...................................................................................................20 7.7 Fuel Duty..............................................................................................................................20 7.8 Company Car Tax.................................................................................................................21 7.9 Landfill Tax............................................................................................................................21