Quoted from official Government sources:

Mr Speaker, air travel accounts for a growing share of carbon emissions.

So it is right aircraft emissions should be part of the EU emissions trading scheme.

I also propose that aviation makes a greater contribution in respect of its environmental impact.

And for this to be as environmentally effective as possible, from 2009, I intend to levy the duty not on individual passengers but on flights, to encourager more efficient use of planes.

I can also announce a new Environmental Transformation Fund will have a three year budget of £1.2 billion, which will provide investment in new energy technologies here at home, and resources to meet our obligation to support poverty reduction in the poorest countries through environmental protection.

Mr Speaker, it is to the lasting shame of this country that in the 1980s and early 1990s aid to developing countries from Britain fell by almost a quarter.

In 1997 we devoted just £2 billion - a quarter of one per cent of our national income in development aid.

That figure today is over £5 billion.

But today I can announce that overseas aid will rise again to £9 billion by 2010.

In doing so we will meet our commitment to double multilateral and bilateral aid to Africa from 2004 to 2010.

And this puts us on course to meet our European commitment of 0.56 per cent of national income devoted to development aid by 2010; and then to meet our commitment to achieve, for the first time, the United Nations goal of 0.7 per cent by 2013.

I can tell the House we will meet all our international obligations to developing countries in full.

Mr Speaker, in the twenty years up to 1997 child poverty in Britain doubled.

Since then we have lifted 600,000 children out of poverty.

Two and a half million more people are in employment. We believe helping people into work is the best way of cutting child poverty and providing opportunity, which is why we continue to support the New Deal.

For first time in thirty years, the number of people on incapacity benefit is now falling almost 100,000 people taken off incapacity benefit in the last two years. The rollout of Pathways to Work will bring the public, private and voluntary sectors together to help more people into work.

I can confirm with 300,000 more lone parents in employment compared to ten years ago, we can help even more lone parents by extending the top up they receive for the first twelve months they spend back in work.

In addition, I can also announce today further measures to take children out of poverty.

First, I am doubling the amount of child maintenance a family can receive without affecting their family benefits to £20 a week next year and then £40 a week in 2010.

And second, I am increasing the child tax credit by a total of £175 a year from next April, with a further increase in 2010 - so that for families on low incomes, children's benefits and tax credits will be worth at least £3,500 a year for the first child.

Taken together these measures will lift a further 100,000 children out of poverty.

Mr Speaker, next year's rise in the basic state pension and other benefits will be announced later this month.

The Pension Credit for older people with just a small pension of their own will rise by £5 a week from next April - £260 per year - for a single person; and by £7.65 per week and £397 per year for a couple - guaranteeing every person over 60 at least £6,450 a year.

We will bring forward the start date for flat rating the State Second Pension to 2009.

I can announce direct funding for social care will increase to £1.4 billion by 2010. This will help provide new homes for older people and help people with disabilities live independently in the community, as well as offering more services for carers.

Mr Speaker, I can also announce an extra £200 million next year to deliver our commitment in England to every pensioner and disabled person, guaranteed free off-peak national bus travel.

Mr Speaker, today homeownership is 70 per cent - nearly 2 million more than 10 years ago.

But we need to do more. We need to ensure there are homes for people to buy.

Last year the number of homes increased by 185,000 - the largest increase for nearly 20 years.

Planning reforms coming before the House will help the building of more homes in an economically and environmentally sustainable way, as we provide additional investment to increase the level of house building to 240,000 a year by 2016. In total an extra 3 million new homes between now and 2020.

I can announce that we will also spend over £4 billion over the next three years to help people living in poor quality housing make renovations to their homes, so that by 2010 1.9 million of the poorest children and 1.7 million pensioners will have benefited.

As we build more homes, we need to ensure that properties are not left unrented, unsold or unavailable for people to live in. I am introducing measures today to help bring empty residential properties back onto the market.

Buying a home is probably the biggest investment people make in their lives. Fixed-rate mortgages can offer more certainty. And I want to see more fixed-rate mortgages not just for two years but ten years or even longer. And I will bring forward proposals at the Budget on reforms to help lenders ensure that, if it is right for them, more people can fix their mortgages as a matter of routine.

As we prepare plans for more home building, for eco-towns and for shared equity, we will also consider how else we can increase the supply of housing to help first time buyers enter the market.

Mr Speaker, the grants to local authorities for local services in England will increase to £26 billion by 2010. We have provided sufficient resources to ensure local authorities can keep overall council tax rises substantially below 5 per cent.

The budget for the Department for Culture, Media and Sport will increase to £2.2 billion in three years time. This guarantees an inflation increase for the arts, free access to museums and galleries, extra for sport so that every child and young person can take part in five hours of sport a week.

And it will deliver the Cultural Olympiad in the run up to London 2012.

Mr Speaker, I can also set out the total settlements of the devolved administrations in Scotland, Wales and Northern Ireland giving them their full entitlement: * Scotland rising to £30 billion in 2010; * Wales rising to £16 billion; and * Northern Ireland rising to £10 billion.

This is in addition to spending in Scotland, Wales and Northern Ireland that is not devolved - like defence, tax credits and pensions - that benefit all parts of the United Kingdom.

I now come to my final decisions.

In capital gains tax there is currently transferability between spouses, recognising that capital assets are built up jointly over a lifetime.

In inheritance tax there is currently 100 per cent spouse relief, but no transferability of allowances.

I want to ensure that husbands and wives can benefit from each others unused inheritance tax exemptions.

So I will raise the total amount of inheritance for married couples on which no tax is paid. And this will apply to civil partnerships too.

From today, I can announce the combined tax-free allowance for their estates will not be the current £300,000 but up to £600,000.

By 2010, the combined tax free allowance for couples will rise to £700,000.

And I can do more.

To ensure that people who have already lost their husband or wife will also benefit, I will backdate this indefinitely for every widow or widower.

These changes mean: * Certainty for up to 12 million married couples, with up to a £600,000 allowance rising to £700,000; * the same entitlement for 3 million widows and widowers, this allowance worth more than the value of 97 per cent of homes in this country.

And in future years we will take both house prices and inflation into account when setting inheritance tax thresholds.

I now have a further choice to make.

As result of our economic management I can meet both our fiscal rules and invest more - £2 billion in 2010 in addition to the sum proposed at the Budget.

If instead, I was to raise the inheritance tax threshold to £1 million, it would cost a further £2 billion.

In doing this proposal, one billion pounds would go to estates worth more than £950,000, the top 1 per cent only.

Instead I have decided to go ahead with raising the inheritance tax exemption to 700,000 for married couples and civil partnerships and invest the additional £2 billion in health and education.

Let us now have the debate about what is affordable and what is fair in the future of inheritance tax.

I welcome that.

In this statement I have managed to raise the arts and culture budget, give the go ahead for Crossrail and meet our international obligations on overseas aid, double the budget for social housing and expand owner occupation.

I can now announce the final figures for education will be higher than originally proposed.

And I hope all parties will support and match these new plans when I explain where the additional money is going.

The Budget proposed that investment in education and skills will rise to £74 billion in 2010, increasing education spending as a share of national income rising from 4.5 per cent ten years ago to 5.6 per cent.

Today I can also announce, in addition, further investment providing a quarter of a billion fund to ensure all children at school are ready to learn and benefit from personalised support.

And I can do more on the NHS. Over the next three years the money we spend will rise again by more than its historic rate: on average, by 4 per cent above inflation.

This new investment will allow us to ensure a maximum wait of 18 weeks from referral to hospital, increased access to GP services and cleaner hospitals.

With the additional £2 billion of money I have available, I can now announce that investment in health in England will rise from £90 billion this year to a total of £110 billion in 2010.

I could have spent that £2 billion on an inheritance tax reduction for the few wealthiest estates.

Instead I am able to raise the inheritance tax allowance and invest more in schools and hospitals for all the British people.

This means in education to help build a new primary school in every local area by 2010.

And in health, when added to its budget, this will deliver over 20 new hospitals, 150 new walk-in centres open 7 days a week, 100 new GP practices, and aim to ensure a regular check up for every adult by the NHS - improving the quality of patient care across the country.

Not unaffordable tax cuts which deprive public services of the money they need; But an affordable tax cut, improved investment in health and education, founded on economic stability.

I commend this statement to the House.