Family finances
There are 125,000 people who, when their employer became insolvent, lost their work pension. The Secretary for Work and Pensions will extend the financial assistance scheme from its present budget of £2bn to a total of £8bn so that every one of those affected will receive help.

The annual tax exemption for capital gains will rise from £8,800 to £9,200, and will be £18,400 for married couples.

The inheritance tax allowance, £285,000, and will rise each year, will in 2010 be increased to £350,000, ensuring that 94% of estates will not pay inheritance tax.

For a specified list of alterations to housing, to support the needs of older people, I will reduce the rate of VAT from 17.5% to 5%.

I will extend for the 1m men and women with ISAs the amount of cash that can be saved tax free from £3,000, raising it by 20% in April 2008, to £3,600.

Child benefit is £17.45. We will raise it annually for the first child in three stages to 2010, raising child benefit by a total of 15% to £20.

Help for the poorest child, which is today £61, I will raise in three successive stages by more than 25% to £75 a week With children's credits offsetting income tax liabilities, the effective point at which a family with two children starts paying income tax which is £22,500 now, will be £24,250 in April 2009, effectively wiping out income tax liability until earnings of £450 a week.

I have set aside today funds for expanding Childline, Parentline Plus and the services parents and children use and rely upon.

Early learning
We now know the importance of early years learning. So the Education Secretary and I have today made available the funds for each of the years to 2010 to honour our promise that there will be six children's centres in the typical constituency, 3,500 in total.

We have also set aside funds for the years to 2010 so that we can expand the numbers of hours of free nursery education, meeting our promise to raise nursery hours for every three and four year old from 12.5 hours a week to fifteen.

Pensioners' incomes
I am also able to take several hundred thousand pensioners out of income tax. For those under 75, the tax free allowance will rise from £7,280 now to £8,990 in 2008, to £9,500 in 2010 and £9,770 in 2011. For those over 75, the allowance will rise annually from £7,420 to, by 2011, £10,000. Couples under 75 will have a tax free married allowance up to £19,540; for a couple over 75, up to £20,000. We will lift out of income tax a total of 600,000 pensioners.

For elderly people with either no works pension or small works pensions, we will raise the pension credit guarantee from £114 a week this year, to £119, then £124, increasing to £130 a week in 2009-10 - £6,750 a year.

Income tax
I can now return income tax to just two rates by removing the 10p band on non-savings income. The point at which people start paying top rate income tax will, from April 2009, not be annual income of £38,000 but £43,000; and I will align the income tax with the national insurance system with its ceiling set at the same threshold - £43,000s.

As a result of all the measures taken today, 58% of pensioners over 65 will not pay income tax; 6m out of 7m families with children are better off; and the incentive to work is increased by up to £350 a year.

Education
Education spending in England, £60bn this year, will be £64bn next year, £67bn the year after, then £70bn, rising in 2010 to £74bn for education.

Separate announcements will be made later for Scotland, Wales and Northern Ireland.

I have one further announcement.

To reward work, to ensure working families are better off, and to make the tax system fairer, I will from next April cut the basic rate of income tax from 22p to 20p - the lowest basic rate for 75 years. And I commend this Budget to the House.