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Darling promises greater access to government contracts

Chancellor of the Exchequer Alistair Darling promised firms greater access to government contracts in his debut budget, earlier today.

Darling said, "So we will take immediate steps to give firms better access to Government contracts, and to help them with their cashflow.

"And I am asking Anne Glover, Chief Executive of Amadeus Capital Partners, to look into what other barriers we can remove and the practicality of setting a goal for Small and Medium Enterprises to win 30 per cent of all public sector business in the next five years.

"I believe that this could help promote enterprise in one of our most innovative and dynamic areas of the economy.

"I believe we can help support them grow their businesses, creating new jobs and opportunities," he said.

Growth forecasts were downgraded to 2.25-2.75%, from 3% in the pre-budget report. The inflation forecast remains at 2%. While fuel duty will increase by 0.5% in 2010, but the planned 2p rise on fuel has been postponed until October.

Darling said the state of the world economy is in a poor state, but Britain was well equipped to weather the storm. "Mr Deputy Speaker, in every country in 2008, every government has one aim - to maintain stability through the world economic slowdown. Britain with its central role in the world’s financial system is no exception.

"With low inflation. Record levels of employment. And unemployment at its lowest level for a generation. And with the action taken last year to curb inflation, Britain is better placed than other economies to withstand the slowdown in the global economy."

He revealed a package of measures to help small and medium sized firms. "13 million people work in Small and Medium Enterprises. And there are over 750,000 more firms than in 1997.

"The new Capital Gains Tax rate will come in next month including the entrepreneurs' relief I announced in January. And that will benefit over 80,000 businesses and investors in the next year alone – 90 per cent will continue to pay Capital Gains Tax at 10 per cent – one of the lowest rates in the world."

The chancellor also pledged to "do more to help Small and Medium Enterprises get access to the finance they need. To help them in current conditions, I can therefore announce that funds available through the Small Firms Loan Guarantee scheme will be increased by £60M for the coming year.

"And I am from next month extending the scheme to small and medium firms. I am also increasing the amount of investment on which tax relief is available under the Enterprise Investment Scheme from £400,000 to £500,000, and the employee share limit for tax relief under the Enterprise Management Incentive Scheme will increase from £100,000 to £120,000.

"The Secretary of State for Business and Enterprise will consult on radical new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall departments.

There is more I can do to ensure that small and medium firms win more business from the public sector.

Darling also said corporation tax would be reduced. "our goal is, and will continue to be, to maintain the most competitive corporation tax rate of any major economy. We have the lowest corporation tax rate in the G7.

"A competitive and simplified tax regime is essential. That is why we cut the main rate of corporation tax in 1997 and again in 1999. And from next month the main corporation tax rate falls again from 30 per cent to 28 per cent."

'Green' taxes on cars and taxes on alcohol will raise money for the exchequer, to be fed into removing child poverty and helping the those affected by fuel poverty.

"From April 2009, I am proposing a major reform to Vehicle Excise Duty to encourage manufacturers to produce cleaner cars and by introducing new bands, there will be an incentive to encourage drivers to choose the least polluting car.

"And as a second stage for new cars, from April 2010 there will be a new first-year rate based on carbon dioxide emissions of the car. Cars that emit less than the proposed 130 grams per kilometre European standard of carbon dioxide emissions will pay no car tax at all in the first year.

"But a higher first year rate will be introduced on the most polluting cars. Cutting taxes for those who cut carbon emissions. But it is right that if people choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost."

Darling said there would be incentives for biofuels, "biofuel duty differential will be replaced by the Renewable Transport Fuel Obligation," but alcohol duty will increase.

"In 1997, the average bottle of wine bought in a supermarket was £4.45 in today's prices. If you go into a supermarket today, the average bottle of wine will cost about £4. From midnight on Sunday, alcohol duty rates will increase by 6 per cent above the rate of inflation. Beer will rise by 4p a pint, cider by 3p a litre, wine by 14p a bottle and spirits by 55p a bottle.

"Alcohol duties will increase by 2% above the rate of inflation in each of the next four years."

According to the budget text, the government will publicise science and engineering. "DIUS and the Department for Children, Schools and Families (DCSF) are delivering a new campaign on Science, Technology, Engineering and Mathematics (STEM) skills, including a new £6 million communications campaign, working towards better careers guidance for pupils, and planning for a National Science Competition from 2008-09."

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