Jonathan Oliver in Washington and David Smith
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Gordon Brown is planning to give away billions of pounds to low-paid families in the run-up to Christmas in an attempt to lift Britain’s recession-hit economy.
Speaking at a G20 financial summit in Washington, which endorsed action to ease the economic pain caused by the credit crunch, the prime minister said the case for tax cuts was now “unanswerable” and they would “show results as quickly as possible”.
He also made it clear that the less well-off would be the main beneficiaries of any fiscal stimulus announced in next Monday’s prebudget report, implying that those on higher incomes will receive little extra cash. The extra money, which will be delivered mainly through tax credits, would “entrench the fairness agenda”, he said.
It comes as an opinion poll for The Sunday Times, carried out by YouGov, shows that the Conservative lead over Labour has slumped to just five points, its lowest in a comparable poll this year, mainly as a result of Brown’s handling of the financial crisis. The Conservatives are down two on 41%, while Labour is up three on 36%. The Conservative lead has halved from 10 points in the space of a month. In September, when the financial panic erupted, the Tories were 19 points ahead.
Brown’s personal rating has soared, climbing by 41 points in the space of two months. He will be hoping to build on that when Alistair Darling, the chancellor, presents the pre-budget report.
Aides at No 10 said the tax credit system would be the main mechanism by which the extra money would be distributed. Tax credits primarily benefit low-income families, with 6m households receiving them in all.
With the pre-budget report scheduled to take place only four weeks before Christmas, it will be a challenge for the Treasury to put extra money into taxpayers’ bank accounts in time for the holiday period.
However, Brown, who has had talks with Kevin Rudd, the Australian prime minister, is understood to have been impressed by a recent £4.5 billion Australian fiscal package targeting poorer families and pensioners, which had been dubbed the “Christmas giveaway”. Downing Street aides were confident that some of the extra cash planned by Brown could reach people by the year’s end.
The maximum income that a family can earn and still remain entitled to receive credits is £66,350 for households with a child under one and £58,175 for those with other children. Officials say 90% of families with children under 16 are eligible for credits.
Neither the Treasury nor Downing Street would be drawn on the size of the planned giveaway, which is intended to be temporary. However, officials have privately signalled that the figure could be about £15 billion, equivalent to 1% of gross domestic product.
If devoted entirely to cutting tax bills, this would amount to several hundred pounds for every eligible family. However, Darling is also expected to announce extra cash for transport infrastructure projects and new “green” tax breaks.
Business will welcome action to boost the economy but favours direct tax reductions. The Institute of Directors will tomorrow call for a £20 billion temporary boost for the economy, including a 3p cut in the basic rate of income tax and 4p off corporation tax.
In their final communiqué at the end of the Washington summit the 20 leaders endorsed Brown’s plan for co-ordinated worldwide tax cuts. They agreed to “use fiscal measures to stimulate domestic demand while maintaining a policy framework conducive to fiscal sustainability”.
Brown described the agreement as a “route map to reform”. “I believe we will see many countries following this lead in the next few weeks,” he said. “Today’s G20 meeting is historic. We have reached important conclusions about trade, about financial stability and about the expansion of our economies.”
The summit also pledged to reopen world trade talks but it put off detailed decisions about the regulation of the global financial system and the international banks.

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A tax cut is not the same as a tax credit. 60% of the population will not see the benefit.
steve tea, manchester, cheshire
What can single people and childless couples expect? As usual nothing.
Kate, NEwcastle, England
Do we really need a poll every week?
There won't be an election for another 18 months yet and the fact that the pollsters claim that our terrible PM has got a great chance of winning an election, despite his part in causing the chaos in this country,shows just how inaccurate these polls are .
Fergus Sira-Lexon, England,
I am 59, divorced, and work full time on a low income. I am not entitled to tax credits as I do not have children. The Government seem to forget about people like us who are struggling to keep up with the increases in fuel costs, council tax and food.
Ann, Swansea, UK
So come on with the green energy! In he Great Depression of the thirties Roosevelt built the Tennesse Dam thus employing thousands and boosting a deflated economy. So come on with the Severn Barrage. Unlike the wind, the tide is free and predictable and will supply one fifth of our energy
jeannie johnson, Chepstow,
People only take Brown seriously because he's got a Scottish accent.
William Mortimer Moore, Cheltenham, UK
Interesting. Self employed claim tax credit on net income, PAYE employed gross. Self employed adjust income and expenses, PAYE employed cant. Tax credit great for self employed. Friends on same income as self employed get next to nothing under PAYE, yet self employed plenty. Singles no kids get nowt
Richard , Canillas de Aceituno, Spain
I smell a General Election, the Labour rating is rising, why because wee Gordon is giving away money for nothing to all who will join his Tax Credits. If you have managed to provide a modest income in retirement, you dont get anything. Always my free TV licence when 75 !!!
Bee, york,
I am one of the million people who are to face a tax increase in April. Yet again on just £10,000 a year I will be asked to subsidise people with children. Increasing the taxes of people on as low an income as mine to pay for this is criminal.
judy, liverpool, england
"Congratulations to Gordon Brown and Alistair Darling ,who have both statesmanship and political courage", Glen - London
Thanks Glen! Thats the best laugh I've had today! Brown is not a statesman, he rode the wave of cheap money knowing this crunch may come. You have been conned like many others.
Paul, Grantham, UK
Thanks again to labour it will be those of us on middle incomes who pay more than anyone else who end up funding this bribe and us who will end up losing out again.
Why, when it is the middle earners in society who pay more yet lose most do we always get forgotten?
I can't wait for an election!
Terry, Oxford, UK
The "less well off". To whom is he referring? Pensioners juggling the "heating or eating" problem, or those young girls who believe that having numerous children by muliple partners is a career move and are provided with every comfort, free of charge, by the state? No prizes for correct answers.
Letitia Mainwaring, UK,
Boost everyone, make a difference. Increase personal allowances. Cut fuel duty/VAT. Double pensioners winter fuel payments. Suspend all stamp duty. But most of all immediately increase public works that are investments in the future but will increase jobs. Everything else is just a sideshow.
Melanie King, Birmingham, UK
Just so long as the money isn't spent on beer, cigarettes and lottery tickets
Richard, Bexhill, UK
How many more years will it take for people to realise that Brown is just all talk?
Robert, Wigan, GB
It is right, why should families earning such a high band of Income, receive Tax Credits? and those who earn half of that, without children, are not eligible for Tax Credits. We all know, that the government only do this, to recieve Votes to Labour, and that is the only reason.
Wendy, Dorset,
How nice of Mr Brown to save us after getting us into this mess, hiding behind global causes. Our children will have to pay later for his UK extravagence - re-election bribes, public sector pensions, bank bail outs and PFI waste will make sure the dwindling working age population will be taxed
Andrew, Warrington, Cheshire
The tax credit system is a poor way of giving a fiscal stimulus. Brown found when he removed the 10p band and claimed no one was a loser due to tax credits how wrong he was. This main is a fool who never learns.
Eddie Reader, birmingham, england
Surely Brown is showing himself as a complete hypocrit? In the same week that he rubbishes Tory tax plans as being unfunded details of a much bigger unfunded tax giveaway are released. The sooner an election comes the better so we can get rid of Brown and his irresponsible spending.
matthew, Workington,
From my point of view reduce VAT from 17.5% to around 8% ,reduction in energy prices , reduction in NI contribution and transport would be the direct benefit to everyone. The idea of giving away money in form of Tax credit is just another method of cutting corners while providing the tax cut
Bhavesh, Harrow, UK
The poll merely shows how little the surveyed people understand about economics. Brown's recession will be deep enough, but this way out will undermine the Uk recovery. Other nations signing up have sound debt levels and economies. We don't.
Kerrin Tansley, Guildford, England
A pre-Christmas give-away bribe. The last thing Gordon wants is an austerity Christmas & melt-down on the High Street when he's planning a General Election in May 2009. After that, if Labour wins, you'll be paying it all back again & more to pay for his profligate spending plans. You've been warned
Donna Walker, Effingham, England
If it is only a several hundred pounds per family it is unlikely to stimulate the economy as the poorer families are striving to keep a roof over their heads, food on the table and keep warm. Similar injections in the USA had little or no effect. £16B divided by 6M families equals £2,500 each!!.
Richard, Torrevieja, Spain
And whose going to pay for this???? Especially when UK ltd., is already in debt on-balance and off-balance to the tune of how many hundreds of billions!!!
Louis, Liverpool, UK
I am all for tax cuts and helping the "lower paid", but does anyone anymore care for the "Middle Classes" who seem to be suffering more than most .
Hamad Lone, London, England
Using the Tax credit system means how many will be excluded from Browns big givaway? Browns plans are weak. 50% of mortgages are fixed rate so no benefit. The tax credit system removes another 40% of people. Yet he is happy to take 100% of everyones taxes. Fairness, I think not!
steve tea, manchester, cheshire
I do wish that the government would stop giving my taxes away to familys with children. I have to do 2 jobs to pay my way and do not receive anything in return!! Why do families who earn up to £66,350 get any tax credits at all? Surely a more sensible figure would be at leat half that!!
Carol, Oxford, England
Also, while I agree tax credits in principle, I feel that they should only be paid for the first 2 children - after that you don't get any for having more and more children.
Carol, Oxford, England
Congratulations to Gordon Brown and Alistair Darling ,who have both statesmanship and political courage ,which will not be forgotten when an election comes. The Tories, with the gloss off, have nothing to offer but PR. We live in difficult worldwide times and we need a coordinated approach.
Glen, London,
Tax credits do not help those who do not pay tax . I fall between the workers and the 65 year olds as I am a woman between 60-65. I get the equivalent of pension credit because of a small private pension but this is taxed and does not passport me through council Tax. I would be better off on IS. WHY
Barbara, north east, uk