Mobile auction billions to pay off national debt

Chancellor Gordon Brown today announced plans to slash Britain's mounting national debt in the Budget, promising to pay off £34bn this year.

The Chancellor received rousing support from the Labour benches as he told MPs that the amount represents more debt repayment than the last 50 years of governments have managed between them.

Brown will be hoping to please the high-tech industry with plans for tax relief on intellectual property and goodwill. The Chancellor also announced a consultation on tax credit for research and development in large firms.

"Stability is the foundation [of this Budget]," said Brown, "and these are tax cuts we can afford."

The Budget increased the amount of employees able to benefit from tax relief on share schemes, enlarging the band to include all staff - as long as the options conform with the government's Enterprise Management Incentive Scheme. Capital gains rate for employees in all types of companies was cut to 10p from 40p.

In a speech which focussed heavily on families and pensioners and contained surprisingly little for the IT industry, Brown also unveiled plans to simplify VAT (value added tax) for small companies, acknowledging the heavy criticism the government has received for over-burdening companies with red tape.

Firms with a turnover less than £54,000 will see VAT scrapped altogether. Those with a turnover up to £100,000 will have VAT set at a lower flat rate, while companies drawing in revenues up to £600,00 will be consulted on a simplified scheme.

For start-up companies and entrepreneurs, the DTI's Small Businesses Service will provide up to £2,000 of advice and help for anyone with a business plan. Brown also referred to plans to launch schemes designed to fill vacancies in the IT industry - but did not flesh out what shape those schemes will take.

The British Chambers of Commerce welcomed what it called a "responsible" speech, singling out the simplifications to the VAT system and tax breaks for small companies.

But Peter Bishop, acting CEO of the London Chamber of Commerce, said the Chancellor could have done more to help business. "As ever, the devil is in the detail with Budgets, but early indications suggest that the Chancellor was more interested in delivering a second term for Labour, rather than a Budget for business," he said.

The Chancellor also referred to the world economic slowdown, admitting that important trading partners such as the US would be heavily effected over the next year but claiming the Labour government has prepared UK industry to deal with the disruption.