The main measures to help make work financially worthwhile were a new 10p starting rate of income tax and the basic rate cut to 22p in the pound. Meanwhile jobs growth is expected to flow from a raft of measures for small businesses which include a starting rate of corporation tax set at 10%.

Over 50s The Government has effectively recognised that the election-pledge New deal for the under 25s has had an unintended side effect. It has symbolically ignored the older unemployed - particularly the over 50s - many of whom have become disengaged from the labour market. The proportion of men aged 50-64 who are economically active has fallen from 87.5% in 1979 to 72.5% now. Over-50s face a particular problem when going back into employment. On average they start a new job on earnings that are less than they were paid in their previous job - a more significant cut than for younger workers. So, the Budget announced a new voluntary programme to help over 50 year olds who have been out of work for six months or more and are looking for work: a personalised advice service to help with job search including access to ES programmes; eligibility for a £60 per week Employment Credit (£40 per week for part-time work); a £750 in-work training grant which should lead to accredited training; help with self-employment (making use of the in-work payment and in-work training grant). The Employment Credit will be paid for up to a year and has a maximum value of £3,120. Combined with higher NI contribution thresholds and the statutory minimum net income guarantee of £170 a week for the first year back in full-time work. It will be available to those on JSA (and we assume this includes those who are receiving credits of NI contributions only), those on Income Support or disability benefits and to the partners of benefit claimants in non-working households. The credit will be launched in pathfinder areas from October 1999 followed by a national roll-out in 2000.

Families Lower and middle income families will get more help when they are bringing up their children with a new Children's Tax credit worth £416 a year for lower and middle income families with children and an increase in Child Benefit to £15 for the eldest child and £10 for subsequent children. From October 1999 the Working Families Tax Credit (WFTC) will be increased - the adult credit by £2.50 a week and the credit for children aged under 11 by £4.70 a week. This will provide a minimum income guarantee for families with a full time earner of £200 per week. No family with children will pay income tax until their earnings exceed £235 a week or more than £12,000 a year. On average, WFTC will give families an extra £24 a week compared with Family Credit. The Income Support under-11 premium will be increased by an extra £4.70 with a further £1.05 from April 2000. To help lower and middle income families there will be a new 10p rate of income tax on the first £1,500 of taxable income to be introduced this April. Its effect will be to halve the tax bill for 1.8 million low-paid people and mean a gain of up to £150 a year for those on low incomes. The basic rate of income tax will be cut to 22p from April next year.

Lone Parents Income Support payments will be extended to bridge the period between leaving benefit and starting a new job. To help ease the transition, from October 1999, IS will continue to be paid for a 2 week period (for claimants who have received IS for at least 26 weeks previously). The Government says that it will 'consider whether there is a case' for extending this run-on to other groups of claimants on the basis of the evidence from lone parents.

Housing In his speech, the Chancellor indicated that further reforms to housing benefits are to be considered. at present, only rent payers receive in-work assistance with housing costs - making the transition to work very risky for those with mortgages. The Budget announced that over he longer term, the 'better deal for work' should include help with housing costs including help for home owners going back to work. According to the Chancellor, 'taking a job should not put them in danger of losing their homes'.

National Insurance National Insurance changes should reduce the burden on the low paid by increasing the starting point for paying NI contributions from £64 per week now to £76 per week in April 2000, and then to £87 per week in April 2001. As a result 900,000 low-paid people will no longer have to pay NI Contributions. This 25% increase over two years will align the starting point for NICs with income tax personal allowances. At the other end of the earnings scale, the upper limit will be increased to £575 from April 2001 thus maintaining the differential between lower and upper earnings limits. However, entitlement to contributory benefits will be protected for those very low paid part-time workers earning between the lower earnings limit and the new starting point of NICs by a new zero rate between these two points. The 1998 Budget abolished the NICs entry fee which cuts tax for all employees by £65 a year and this will take effect in April 1999.

Small Business Service A new Small Business Service was also announced. This will have a strong remit to deliver the advice and support that firms need to grow and bring together different parts of the DTI, Better Regulation Unit and the DfEE from April 2001. Modelled partly on the Small Business Administration in the USA, the new service will provide small business with: options to cut compliance burden; automated payroll service for small employers; expansion of quarterly employers PAYE scheme from a limit of £600 a month to £1,000 a month; new Inland Revenue business support teams to discuss problems with any business within 48 hours; new business advice service from Customs and Excise for exporters and importers; new Enterprise Support Initiative, including a dedicated helpline for new employers; discounts for internet-filed electronic tax returns. There will also be measures to encourage investment. The Government will extend 40% first year capital allowances for another year; together with proposals for R&D tax credits for small and medium-sized companies.