Gordon Brown sat down at 1.20 pm, after delivering his eleventh, and what many expect to be his final, Budget.

His focus was on the economy, productivity and employment, where he reported that there has been growth of 220,000 in employment. He reported that he expected growth for the current year of 2.5% and similar growth of 2.5-3% in the coming year.

His big announcement is the reduction in the UK Corporation tax rate from 30% to 28% from April 2008. At the same time, the small companies tax rate will rise in stages from 20% to 22%. Capital allowances will be reformed from 2008, with a new 20% rate (down from 25%) and a new 10% rate for long life assets (up from 6%). Industrial Buildings allowances , hotel allowances and agricultural buildings allowances are to be phased out. The capital allowance changes will finance the reduction in the main rate. The changes to capital allowances and tax rates do not apply to North Sea oil and gas companies. There is to be new environmental tax credit and the rate of R&D tax credits for small companies goes up to 175% (from 150%). There will also be an annual 100% investment allowance of £50,000.

Public companies will benefit from the rate reduction in their financial accounts, even though for many companies their cash tax payments will be broadly similar. Small companies investing in growing their businesses will also benefit from the new investment allowance, but those distributing their profits will face a higher tax charge.

Landfill tax will rise by £8 per tonne from 2008-2011; aggregates tax will rise from £1.60 to £1.95. At the same time, VAT will be reduced to 5% on home energy saving products.

Income tax and national insurance thresholds are set to be aligned from 2008-09, with a threshold for the 40% rate of around £43,000. The existing 10% rate will be abolished and the basic rate of tax will be reduced to 20%. This will actually raise tax for those earning less than about £18,500, so it is to be hoped that tax credits will make up the gap.