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Budget Resolutions and Economic Situation

I do not want to repeat myself, but I will explain that, although the trend rate of growth is 2.75 per cent., we take a cautious base-line view of public finances, using 2.5 per cent., and that is what we base all our public spending decisions on. I want to turn to the personal taxation changes. The purposes of the package of reforms are varied. They include: a desire to cut the basic rate of income tax by 2 per cent. for all; taking 600,000 pensioners out of taxation altogether by increasing the age-related allowances; providing direct support for families with children, taking another 200,000 children out of poverty; improving the incentives to work by raising the value of the working tax credit; and simplifying the personal tax system so that we have two rates and two thresholds, by aligning the national insurance contributions upper earnings limit with the higher rate threshold.