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As Britain works to lead in the new economy, we must resolve to lead also in respecting the environment.

Our Government's target is to reduce greenhouse emissions by 12½ per cent. by 2010. So today, I am announcing a programme of measures that will cut carbon pollution by 3 million tonnes.

My first proposal alone will reduce carbon pollution by 1.5 million tonnes. The Government have received Lord Marshall's report, for which I thank him, on the role of economic instruments and the business use of energy.

We will now implement Lord Marshall's recommendations and we will introduce a levy on business use of energy from April 2001. And it will be brought in, after further consultation with the industry, on a revenue-neutral basis, with no overall increase in the burden of taxation on business. Because we intend at the same time to cut the main rate of employers' national insurance contributions from 12.2 per cent. to 11.7 per cent.

We also intend to set significantly lower rates of tax for energy-intensive sectors that improve their energy efficiency. Today, we are inviting these companies to submit their proposals. In pursuit of our policies for sustainable development, we will allocate an extra £50 million to encourage business to invest in the new environmental technologies and in renewable fuels.

In line with the fuel escalator first introduced by the previous Government at 5 per cent. above inflation and now 6, petrol duty will rise from 6 pm today.

Vehicle excise duty for smaller cars will, from 1 June this year, be cut by £55--the first cut in the licence fee in 50 years. Other cars' rates are only increased in line with inflation.

I will freeze vehicle excise duty for 98 per cent. of all lorries, and for lorries and buses with clean engines I am cutting the licence fee by up to £1,000.

To encourage a switch to cleaner fuels, last year I promised to give an additional tax advantage to ultra-low sulphur diesel. By the end of the year, almost all producers will have switched to this cleaner fuel. This alone will cut their emissions by 20 per cent. and at a revenue cost of over £400 million, I will maintain this favourable tax treatment for cleaner diesel.

I also propose a reform to reward the use of fuel-efficient company cars and to remove today's counter-productive incentive to drive more miles in order to get bigger discounts. So I start in this Budget with a measure that will cost the company car user with a typical car around £1 a week. This reform--to link tax to emissions--will be implemented finally in 2002 on a revenue-neutral basis.

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To reduce pollution, employees from this year will be able for the first time to secure tax-free from their employer the benefit from employer-run or employer- subsidised buses, car-sharing schemes and other environmentally friendly means of transport to work.

Last year, we set up the new rural transport fund. To build on its success in extending the range of public transport services in rural communities, we will increase its funding--and, therefore, its accessibility for rural services--for the next two years by 20 per cent. to£120 million.

To reduce the amount of waste going to landfill, the landfill tax, £10 per tonne in 1999, will in future rise by £1 per tonne per year.

Taking into account all these tax changes and all the changes that I have yet to announce, there will be a net tax cut of £4 billion in this Budget.


I turn now to policy for families. Children are 20 per cent. of the British people, but they are 100 per cent. of Britain's future. To build that future, this Budget provides a better deal for families and children.

Family life is the foundation of society, and our first principle in society's support for the family is that the interests of children must be paramount.

For the last third of this century, families with children have been losers in the tax system. Their tax burdenhas risen by nearly 20 per cent. under successive Governments--even though the time when children are growing up is the time when families need tax help most.

So it is time to reform the tax and benefit system to strengthen the family by putting children first.

What is today called the married couple's allowance is in fact neither restricted to marriage, nor restricted to couples; nor is it strictly an allowance. It is in fact a tax credit paid at the same flat rate to married couples, single parents and unmarried parents living together.

Far from recognising marriage, it is now so confused that it can even be paid at twice the rate in the year of separation or divorce. A married couple's allowance that can pay more for separation or divorce cannot be said to uphold the institution of marriage.

The last Government called the married couple's allowance an anomaly and reduced it from 40 per cent. to 15 per cent., cutting its value in half.

If we were now to restrict the married couple's allowance to married couples only, as some propose, we would unfairly exclude, for example, widows with children, and wives who have been deserted and left to bring up their children alone.

So I have responded to many representations and views, including one that said that

the words of the Leader of the Opposition.

So we will replace the married couple's allowance with a new family tax cut that will increase the amount that goes to help families with children. This children's tax credit will give more--not less--help to families at the time when they need it most, when they have their children and when their children are growing up.

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Today's pensioner couples will retain the married couple's allowance. Couples without children, or whose children have grown up, will benefit from other changes I will shortly announce.

The married couple's allowance is today worth £190 to married couples. The children's tax credit, the tax cut for families to be introduced from April 2001, will be worth £416, and, as a result, the typical family with children will be over £200 a year better off.

This tax cut for families represents the first recognition in the tax system for over 20 years of the extra costs of bringing up children. Under my proposals, the tax burden on the typical family will fall to its lowest level for25 years. I will introduce similar improvements in the working families tax credit and income support for children.

In the Budget last year, I set down the two principles that govern my approach: we must substantially increase support for families with children and we must do so in the fairest way. It is in fulfilment of those two principles that the children's tax credit will be tapered away for the higher-earning family where there is a top-rate taxpayer.

In the light of this reform, my Budget decision is that child benefit will not be taxed for taxpayers on the basic rate, or on the higher rate. As our manifesto promised, child benefit itself will remain as it is, paid to all mothers, rising annually with inflation.

When we came to power, child benefit for the first child was £11.45 a week. Next month, it will rise to £14.40.

It has risen by 25 per cent. since we came to Government--an increase of £150 a year.

I now propose a further increase in child benefit, well above the rate of inflation. It will rise next April to £15 a week for the first child, £780 year. I will also raise the rate for the second and further children beyond inflation to £10 a week.

Support for children as a result of all the measures that I am announcing will be twice as high at the end of this Parliament as it was at the beginning.

With the children's tax credit added to child benefit, families who were receiving £11 a week in 1997 for their first child will be receiving £23 a week, £1,200 a year.

And, taking all our reforms together, the maximum support for the first child will be £40 a week for families when they need it most.

Every child in the country in every family will get more, not less, support under this system--support ranging from £780 a year to £2,000 a year, and every child will receive more year on year.

When we came into power, we found a chaotic, even counter-productive system of child support. It gave far too little help to mothers. It did not provide enough to those who needed it most.

Child benefit had not been increased every year in line with inflation. The married couple's allowance could not fulfil its intended purpose. Income support for children was based on family status, not on family need. Family credit failed to guarantee a living wage for working families. What the benefits system gave with one hand, the tax system was taking with the other.

Our long-term goal is to bring together the different strands of our support for children in the working families tax credit, in income support, in our children's tax credit

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and so create an integrated and seamless system of child financial support paid to the mother, building on the foundation of universal child benefit.

Already, with the changes that we are making today, we are creating the best system of family support in the history of this country.

I also had to consider the alternative case that has been advocated for a transferable tax allowance for mothers who stay at home. The better deal for mothers who stay at home is what we are doing from October this year--the working families tax credit. A family with two children on £15,000 a year where the mother stays at home would have received nothing under the old system of family credit. Transferable tax allowances, as some propose, would give them £997. Under the working families tax credit, they will receive £1,460.

Where both parents need to work, we will do more to help them to balance the demands of making a living and having children.

With 1 million new child care places now being created and, from October, our new child care tax credit set at a maximum of £70 for one child and £105 for two children, Britain has a national child care strategy for the first time in our history.

From December 1999, all parents will be entitled to three months' unpaid leave for each child.

But currently up to 15 per cent. of working mothers-to-be are not entitled to any maternity pay. That is wrong. Today's Budget will ensure that all mothers in work earning £30 a week or more--90 per cent. of all women in work--are entitled to maternity pay and to 18 weeks of maternity pay. That is family-friendly employment in action.

Every year, a quarter of a million children--even at the minute they are born--are born into poverty. This, too, is wrong.

Our sure start programme for the under-threes, beginning next month, will ensure that the full resources of health visitors, primary care and schools are there to give every young child a better chance.

Today, we are announcing a new sure start maternity grant: Government offering more help to parents, but in return for parents meeting their responsibilities. Help amounting to £200 will be conditional, linked to keeping appointments for child health advice and child health check-ups.

When we came into power, one child in every three in our country was in poverty. With our measures today, 700,000 children are being lifted out of poverty. Families with children are better off. Instead of a past that developed only some of the potential of some our children, the future depends on developing all of the potential of all of our children.

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