Keeping you up to date with the latest news around the world

Chancellor to signal tax changes

Chancellor Alistair Darling is expected to signal inheritance tax changes and plans to target private equity bosses' tax loopholes in his pre-Budget report.
Mr Darling is also likely to downgrade expectations for growth as he outlines his latest thinking on the UK economy.

Hospitals and schools may also get more than expected when he sets out to MPs the government's longer term plans in the Comprehensive Spending Review.

The statements come as ministers seek to regain the political initiative.

It follows criticism of the prime minister for allowing speculation about a snap election to build, and then rule it out.

Global uncertainty

Mr Brown said he wanted more time to set out his vision after having to face a series of crises - such as flooding, terrorism, foot-and-mouth disease and problems at Northern Rock - since becoming prime minister.

On Tuesday morning the chancellor told the Cabinet that the economy remained strong and well positioned to deal with increased global economic uncertainty.

He said "tough" economic decisions taken by the government meant it was in a good position to invest in the key priorities of health, education, security and transport.

Economic stability was the first priority and there would be no unfunded tax cuts, he said.

The prime minister told his parliamentary party on Monday night that Tuesday's statements would be an opportunity for Labour to set out its vision and respond to some of the Conservative proposals outlined at last week's Tory conference.

It was the Tory plan to cut inheritance tax with a levy on business executives registered abroad for tax purposes that helped the Conservative revival.

There is now speculation that the chancellor may signal the government has its own ideas for reforming inheritance tax.

Moves to close the tax loopholes enjoyed by private equity bosses are also expected.

Lower forecasts

In an interview with the Financial Times last week, Mr Darling said there would undoubtedly be an effect on Britain from the "credit crunch" experienced in the US.

It is thought Mr Darling may downgrade the forecast for UK economic growth.

The Treasury has already said it will consider the impact of such long-term issues as population and technological change, terrorism and pressure on natural resources.

In the last CSR, in 1998, health and education were earmarked as priorities and have received more money ever since.

NHS spending

When he succeeded Tony Blair as prime minister in June, Mr Brown said education was his "passion" and the NHS was his "priority".

But both can expect smaller spending increases than previous years.

Mr Brown has already said that education spending in the UK will rise from £77.4bn in 2007/08 to £90bn by 2010/11.

Since 2002 the NHS has been given record annual funding increases of about 7%. There is speculation this will slow to between 3% and 3.5% by 2011/12.

The prime minister has already announced an extra £7.7bn for defence and some departments have agreed to a 5%-a-year real-terms cut over the CSR period - including HM Revenue and Customs and the Department for Work and Pensions.

There has been speculation that Mr Darling may look to introduce higher charges on "gas guzzlers", through road tax or a one-off charge.

Mr Brown has also suggested there could be extra money to reduce child poverty.