Mr Deputy Speaker, the core purpose of this Budget is stability - now and in the future. And its core values are fairness and opportunity, founded on stability and strength.

Mr Deputy Speaker, in every country in 2008, every government has one aim - to maintain stability through the world economic slowdown.

Britain with its central role in the world's financial system is no exception. . .

Here, the action we took last autumn to support Northern Rock and protect depositors and savers mean that - despite seeing the worst period of financial disruption for a generation - we have maintained confidence and stability in the banking system.

Economic growth
Mr Deputy Speaker, right across the world, countries have lowered their forecasts for growth in the coming year.

In Japan, growth is forecast to be 1.4%, in the Euro area and the United States 1.6% and, in Canada, 1.8%.

And even the fastest growing markets: China, India and Brazil, which have enjoyed record growth in recent years, are expected to slow.

Despite the slowdown in the world economy, in 2007 the British economy grew by 3% - the fastest growth of any major economy.

This year my forecast is that - as growth in the world economy slows further - growth in the British economy will be between 1-3/4% and 2-1/4% in 2008 - but faster than Japan, the US and the Euro area.

I expect growth to shift towards companies and exports with growth rising to 2-1/4% to 2- 3/4% in 2009 and 2-1/2% to 3% by 2010.

So Mr Deputy Speaker, my forecast shows the UK economy will continue to grow throughout this period of global uncertainty - a view supported by the Bank of England, the International Monetary Fund and the Organisation for Economic Co-operation and Development. . . Given the fundamental strength of our public finances, it is right to allow fiscal policy to support monetary policy over the period ahead in helping to maintain stability in the face of the global downturn.

Fuel duty
For environmental reasons we will increase fuel duty by 1/2 pence per litre in real terms from 2010.

Fuel duty is due to rise again in April but because I want to support the economy now and help business and families I will postpone that increase until October.

Borrowing
Mr Deputy Speaker, I can tell the House with our Budget projection for the current budget balance in 2007/08 will come in at £8bn as forecast. . .

So borrowing next year, which peaked at 7.8% of national income by 1993, equivalent to £110bn today, next year will rise to £43bn, some 2.9% of national income, less at its peak than the average level of borrowing between 1979 and 1997.

Because of the decisions taken in this Budget it will fall to 2.5%, then 2%, then 1.6% and then 1.3% by 2012/13, supporting stability and resilience in the economy. That is £38bn and then £32bn, £27bn and £23bn by 2012/13.

Even taking into account the turbulence in financial markets and the support we are providing to the economy now, the current balance this year is in line with my forecast at Pre-Budget Report minus £8bn.

Next year it will be minus £10bn, then minus £4bn, returning to a surplus in 2010 of £4bn, then £11bn and then £18bn by 2012/3, forecast to meet the Golden Rule over the economic cycle.

Social welfare We have turned welfare into work and borrowing into wealth creation. And it is essential that we continue to help everyone who can work to do so.

So, Mr Deputy Speaker, we will bring forward further proposals to reform housing benefit to ensure that work pays.

From April 2010 all long-term recipients of incapacity benefit will attend work capability assessments.

These reforms will continue to free up resources for investment. . .

Now, Mr Deputy Speaker, I want to turn to the steps that we need to equip Britain for the future.

There is no greater moral imperative than to make sure that every child has the highest aspiration and ambition. . .

If we are to build a fairer future for our children then we must eradicate child poverty in Britain. . .

Central to this is helping more parents into work. . .

From October 2009, we will change the rules for housing and council tax benefit so that parents are better off in work than on benefits. As a result, a working family with one child on the lowest income will gain up to £17 a week. Mr Deputy Speaker, this measure will lift 150,000 more children out of poverty.

And I can do more to help all children and hard working families.

In 1997 Child Benefit for the first child was £11 a week. I can tell the House that from April 2009, I will increase Child benefit for the first child to £20 a week - a year earlier than planned.

I will increase by £50 a year above inflation the child element of the Child Tax Credit for families on low and middle income from April next year.

This means that a family with two children, earning up to £28,000 a year, will be over £130 a year better off.

To make further progress we will spend a further £125m over the next three years targeting help to those who need it most. . . Taken together these measures mean that, even at a time when we need to take difficult decisions, are investing a further £765m next year and then a further £950m the following year to take 250,000 more children out of poverty...

And I believe further action is now needed to help vulnerable groups deal with rising energy prices.

We want to see the five million customers on prepayment meters given a fairer deal and energy companies to increase their support to vulnerable customers. Energy companies currently spend around £50m a year on social tariffs. I want to see this rising to at least £150m a year over the period ahead.

Savings
Mr Deputy Speaker, the government is committed to encouraging more people to save.

There are now over 17 million people with Individual Savings Accounts and, from this April, we are increasing the annual Individual Savings Accounts investment limit to £7200 with the amount that can be held in cash rising to £3600.

And parents have now opened over 2.4 million Child Trust Fund accounts saving more for their children's future.

We must go further. So I can also announce that the government will launch the Saving Gateway nationally with the first accounts available to savers from 2010. By contributing to these accounts we will offer incentives to save to up to eight million people on lower incomes. . .

Business
Mr Deputy Speaker, our goal is, and will continue to be, to maintain the most competitive corporation tax rate of any major economy. We have the lowest corporation tax rate in the G7. . . And from next month the main corporation tax rate falls again from 30% to 28%. . .

This Budget continues a programme of tax simplification. I am today announcing further steps to help small companies simplify their tax calculations.

Mr Deputy Speaker, especially at this time we need to do more to help Small and Medium Enterprises get access to the finance they need. . . I can therefore announce that funds available through the Small Firms Loan Guarantee scheme will be increased by £60m for the coming year. And I am from next month extending the scheme to small and medium firms.

I am also increasing the amount of investment on which tax relief is available under the Enterprise Investment Scheme from £400,000 to £500,000, and the employee share limit for tax relief under the Enterprise Management Incentive Scheme will increase from £100,000 to £120,000.

The Secretary of State for Business and Enterprise will consult on radical new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall departments.

I will also provide a capital fund of initially £12.5m to specifically encourage more women entrepreneurs.

There is more I can do to ensure that small and medium firms win more business from the public sector. So we will take immediate steps to give firms better access to government contracts, and to help them with their cashflow. . .

Non-doms
Mr Deputy Speaker, we welcome the contribution made by people born outside the UK who choose to come and work here. They are an important and central contributor to our economy's growth and prosperity.

They pay taxes on their earnings here and also pay tax on money they bring into the country from abroad.

But for those non-domiciled individuals or families who have chosen to make Britain their home, I believe that it is right and fair that they should, after seven years, pay a reasonable charge to maintain the right to be taxed differently from other UK residents.

Beyond that, as I have said before, we will not seek to charge UK tax on offshore income or capital gains that is not brought into the UK.

This new charge will be implemented from April. There will be no further changes to this regime for the rest of this Parliament or the next. . .

Mortgages
From this April, key workers - such as teachers and nurses - and first time buyers will be able to borrow money from new-shared equity schemes.

Until now these were only available to those who could afford three quarters of the price of their new home. I am now extending the scheme to help those able to afford half of the price of their new home.

And I can also announce that from today, stamp duty on shared ownership homes will not be required until buyers own 80% of the equity in their home.

I also want more people to have the choice of long term fixed rate mortgages. . . So, I will seek views on how we can deliver ... the right framework for the UK to achieve affordable, long term fixed rate mortgages. I will report back at the Pre-Budget Report.

Climate change
Our greatest obligation to future generations must be to tackle climate change.

Britain has been at the forefront of international action. We are one of the few countries meeting our Kyoto target.

We are working with other countries following agreement in Bali last year to agree tougher global goals after 2012. . .

We have an established target to reduce carbon emissions by at least 60% by 2050.

I believe that we should go further. That is why we have asked the Climate Change Committee to advise us - whether as part of an international agreement - we should raise our target to 80%. . .

And to ensure carbon reduction is a central part of our economic objectives, I can tell the House that the first carbon budgets to 2022 will be announced alongside the Budget next year. . .

I believe that there are three key steps we can take now.

Firstly, working in Europe we have helped build the Emissions Trading Scheme to curb the amount of carbon produced by generators and large industrial users.

The scheme imposes a cap on the amount of carbon companies can generate. Companies get allocations for credits to help them adapt. . . So in the next phase, instead of auctioning 7%, I want to see auctioning of 100% of these allowances for energy generators.

Secondly, we need to do more to reduce the amount of carbon generated at home and at work.

Given the damage that single-use carrier bags inflict on the environment, we want to be able to take action. We will introduce legislation to impose a charge on them if we have not seen sufficient progress on a voluntary basis.

Legislation would come into force in 2009 and based on other countries' experience, it could lead to a 90% reduction, with around 12 billion fewer plastic bags in circulation.

The money raised should go to environmental charities.

And next month we will launch the most ambitious household emissions reduction programme.

Energy companies are obliged through the Carbon Emissions Reduction Target to give their customers better deals for energy efficiency and therefore cut bills.

Cavity wall insulation for nearly three million homes. Loft insulation, more energy efficient appliances and light bulbs. I can announce £26m funding next year for a Green Homes Service to help people cut their carbon emissions and their fuel bills.

We will roll out smart meters to medium and large companies over the next five years, providing greater incentives to reduce the amount of energy they consume.

We already have a target to make new homes zero carbon from 2016. I believe that we can go further.

And I can announce today that new non-domestic buildings will become zero-carbon from 2019.

We will consult on achieving that targets with the potential to save 75 million tonnes of carbon dioxide over the next 30 years.

The Climate Change levy, which is the main reason why we have met our Kyoto targets and which is still opposed by some, will increase in line with inflation from April.

The third key area we need to take action now is in relation to transport.

It accounts for nearly a third of our carbon emissions.

We recognise the contribution of aviation to the UK economy. That is why we support the expansion of Stansted and Heathrow. . .

Because emissions from aircraft are forecast to continue to grow, I am also announcing that revenue from plane duty will be increased by 10% in the second year of operation.

But Britain's 30 million cars, vans and lorries together account for 22% of total carbon emissions. . .

I am asking the European Commission today to set a tighter target which reduces the cap on emissions from cars from 130 grams per kilometre of carbon dioxide to 100 grams per kilometre of carbon dioxide by 2020.

The road tax system should do more to support the use of more carbon-efficient, and therefore less costly cars.

This will help reduce average carbon dioxide levels in new cars.

Firstly, from April 2009, I am proposing a major reform to Vehicle Excise Duty to encourage manufacturers to produce cleaner cars and by introducing new bands, there will be an incentive to encourage drivers to choose the least polluting car.

And as a second stage for new cars, from April 2010 there will be a new first-year rate based on carbon dioxide emissions of the car.

Cars that emit less than the proposed 130 grams per kilometre European standard of carbon dioxide emissions will pay no car tax at all in the first year.

But a higher first year rate will be introduced on the most polluting cars. . .

We must encourage sustainable biofuels. Therefore the biofuel duty differential will be replaced by the Renewable Transport Fuel Obligation.

I am also reforming capital allowances for business cars to increase the incentive to move to lower emitting cars.

Tobacco
Mr Deputy Speaker, today is no smoking day. From 6pm today the duty on tobacco will rise, adding 11 pence to the price of a packet of 20 cigarettes and 4 pence to the price of five cigars.

And to help people to stop smoking, we are continuing the 5 per cent reduced rate of Value Added Tax on smoking cessation products beyond 30 June this year.

Alcohol
Mr Deputy Speaker, as incomes have risen, alcohol has become more affordable.

In 1997, the average bottle of wine bought in a supermarket was £4.45 in today's prices. If you go into a supermarket today, the average bottle of wine will cost about £4.

From midnight on Sunday, alcohol duty rates will increase by 6 per cent above the rate of inflation. Beer will rise by 4p a pint, cider by 3p a litre, wine by 14p a bottle and spirits by 55p a bottle.

Alcohol duties will increase by 2 per cent above the rate of inflation in each of the next four years.

Mr Deputy Speaker, it is only because I have taken these decisions on alcohol and on closing tax loopholes that I am able to provide additional support for families and lift more children out of poverty.

Charities
And it also why I am now able to make two further announcements whilst still meeting our fiscal rules.

As the House will know, the basic rate of income tax will fall by 2 pence in April.

Charities play a vital role. We will therefore implement a transitional rate of 22%, to allow them to continue to claim gift aid at the current rate, delivering £300m worth of relief and will give charities the certainty they need for the next years.

pensions
I said that one of the key features of this Budget is fairness. I also want to do more to help older people especially this year.

Mr Deputy Speaker, we are spending £11bn more in real terms per year on pensions with over half this extra money going to pensioners on the lowest incomes. From this April, as a result of changes made last year, a further 600,000 pensioners will be taken out of paying income tax.

The pension Credit now guarantees a minimum income of £124 per week from April. Before 1997 there was no Winter Fuel Allowance.

For this year I have decided to help pensioners who are facing pressures such as higher energy bills. I will raise the winter fuel payment for over 60s from £200 to £250 and for the over 80s from £300 to £400. 9 million pensioner households will be better off.

Mr Deputy Speaker, this is a reponsible Budget to secure Britian's stability in the face of global uncertainty . . . and I commend it to the House.