Mini-Budget

£1bn extra revenue needs to be found each year, the Chancellor said.

The measures to replace the VAT on fuel are:

Small change in pensions rate. The package which would have gone to pensioners to compensate for VAT would be scrapped, saving £200m. Pensioner couples will get £1.05 a week to compensate for the 8% VAT on fuel remaining..

Main objective is to rein in public spending – but cannot do any further than original budget.

Direct taxation – no change.

Business taxes – no change.

INDIRECT TAXATION

Hole will be filled with increases in indirect taxation. Increases will take effect from 31 December 1994.

Duty on tobacco will increase by 4%, equivalent to 6p per packet of cigarettes, with the exception of hand rolling tobacco.

Increase on road fuels will be 1p per litre.

Alcohol will rise by 4% = 1p per pint, 5p per bottle of wine, 26p on whisky.

PSB will be same next year as predicted in original budget. 1996/7 will leave a gap of £300m, a reduction in PSB will finance this.