EC Harris commentary on 2006 pre-Budget Report

160,000 families to be helped onto the housing ladder through shared equity schemes and further 300,000 households will be offered free insulation and free central heating.

EC Harris commentary on the 2006 pre-Budget Report.

As expected Chancellor Gordon Brown's 10th pre-Budget Report saw the announcement of billions of pounds of investment in schools.

The 15-year programme will see England's 21,000 primary and secondary schools given funding to expand and refurbish.

In his speech the chancellor, the favourite to become the next PM, said that economic growth for 2006 is to exceed targets at 2.75%, with growth for 2007 expected to be 2.75% to 3.25%.

Mr Brown predicted that inflation would hit the 2% target by mid-2007 and remain on target during 2008.

Mr Brown told MPs the UK was performing better than its major competitors, apart from the US, and the country was enjoying the "longest period of sustained growth in our history".

But he also stressed the importance of investment in education and training if Britain is to compete with countries such as China and India.

In line with this Mr Brown announced that universities will receive GBP60m a year for applied research with commercial potential to help British science to transform knowledge into new jobs.

As expected former director general of the CBI, Sir Digby Jones, has been made the government's skills envoy.

The chancellor also announced that there would be new cash for children who had fallen behind at schools and more basic skills training for adults.

Public Finances.

The chancellor forecast that the overall surplus for this economic cycle is GBP8bn, meeting his own "golden rule", while borrowing will fall from 2.3% of national income to 1.3% by 2011.

Education.

The chancellor confirmed to the House of Commons that capital investment in education for next year would be GBP8.3bn.

Direct payments to schools will go up in April from GBP39,000 to GBP50,000 for primary schools, and GBP150,000 to GBP200,000 for secondaries.

Mr Brown said his goal was 12,000 new or completely refurbished schools - half of all primaries and 90% of secondaries - and 100 rebuilt colleges and 3,500 new children's centres.

In addition, new "summer universities", along with work experience and coaching, would be established to encourage people to stay on in education after 16.

In his 38-minute speech Mr Brown outlined his plans that by 2020, 90% of adults should achieve five GCSEs or equivalent.

He also added that the government will consult on GBP2,000 bursaries to encourage young people from poorer backgrounds to go to university.

The focus on skills and training was welcomed by Graham Kean, Head of Public Sector for EC Harris, "If the government is serious about creating sustainable communities then it has to look at the whole issue of training and employment at the grass roots level.

"The construction sector is already active in this area through the CITB and other organisations.

There are examples of best practice in this area, such as Fusion21, which combine three of the government's touchstones of regeneration, skills training and employment, and offer a pathway for regenerating our communities and ensuring the UK economy has the skills to grow".

Further measures within the education sector announced by the chancellor today were news of 3 million free books to help childhood literacy and GBP200 extra per pupil in direct payments to schools.

Environment and fuel duty.

As anticipated by political watchers the chancellor took the opportunity to reaffirm his green credentials.

Amongst the measures he announced were:.

- An ambition for all new homes to be zero carbon by 2016, with a stamp duty exemption incentive to be introduced.

- From February, air passenger duty will rise from GBP5 to GBP10 for longer flights.

- There will be an inflation rise in fuel duty from midnight.

The fuel duty escalator will not be restored.

The rise will come to 1.25 pence.

- Tax discounts for bio fuels will be extended.

- A further 300,000 households to be offered free insulation and free central heating.

The tax measures were welcomed by Martin Silvester, Head of Tax for EC Harris, who said: "The chancellor's measures on encouraging the use of bio fuels through tax incentives is a positive move.

The continued increase on polluting fuels was inevitable, but fair." Housing and planning.

Mr Brown confirmed that the budget 2007 would contain details of a stamp duty exemption for most new carbon-zero homes.

"It is worth considering that more than half of the UK's total CO2 emissions are derived from buildings.

The stamp duty exemption measures are a start, but in many ways this is a missed opportunity for the government to set the lead in the development of best practice through tax incentives in this particular area", added Silvester.

The chancellor also revealed that all planning decisions on major infrastructure projects are to be made by an independent planning body.

"We are already seeing developers moving in this direction and are excited at this decision which creates a positive driver for the industry", added Graham Kean.

In addition, another 160,000 families are to be helped onto the housing ladder through shared equity schemes.

A further 300,000 households will be offered free insulation and free central heating.

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