Posts Tagged ‘alistair darling’

The main points of the Budget as announced are as follows:

ECONOMY

• The economy is expected to grow between at 1 and 1.5% in 2010
• Growth forecast for 2011 revised to between 3% and 3.5%
• VAT, income tax or National Insurance to remain at present rates
• Borrowing will be £167bn this year - £11bn lower than the forecast of £178b
• Debt will be £100bn lower by 2013/14 than predicted at last year’s Budget
• One third of civil service jobs to be located away from London 

TAX:

• Stamp Duty threshold will be raised to £250,000 - nine out of ten first-time buyers will not be liable for Stamp Duty
• Stamp Duty on homes worth £1m increased to 5%
• The planned 3p increase in fuel duty will be phased - up by 1p in April, 1p in October and 1p in January 2011
• Alcohol duty will rise by 2% above inflation by 2013
• Duty on cider will go up by 10% above inflation from Sunday
• Duty on tobacco will increase by 1% above inflation immediately, then 2% in subsequent years
• Inheritance tax will be frozen for four years
• Tax agreements extended to three additional countries - Dominica, Grenada and Belize, to target tax evasion

PENSIONERS:

• The Government will consider scrapping the compulsory retirement age
• Pensioners’ higher winter fuel payment will continue next yea

BANKS:

• Everyone in the UK is to be guaranteed access to a bank account
• The Royal Bank of Scotland and Lloyds will lend £94bn to business - at least half to small and medium-sized firms.
• The Government will set up a Green Bank controlling £2bn of equity to focus on investing in greener, cleaner energy and transport

BUSINESS:

• Business rates will be cut for a year from October bringing a tax reduction for 500,000 small firms in England
• £2.5bn support for small business to boost skills and innovation
• Investment allowance for small firms doubled to £100,000
• £385m will be invested to maintain road network

FAMILIES:

• Families with one and two-year-olds will receive an extra £4 a week in child tax credits

More reaction to follow.

Well today is the day of the long-awaited pre-election budget. It is a budget presented in the backdrop of a slowly recovering UK economy, just weeks before a General Election. For both Labour and the Conservatives it is a chance for some heavy hitting and potential national poll gains.

Alistair Darling is undoubtedly in a difficult position for today’s Budget as the UK is recovering from a severe recession and is saddled with a heavy budget deficit. To reflect this he has said that today’s budget will be a ’sensible, workmanlike’ set of proposals.

This suggests there may not be pre-election giveaways, although there are some potential vote winning measures being suggested in the press. It is thought that the Chancellor will propose a halt in the rise of petrol duty and scrapping stamp duty on house sales above £250,000 as well as creating a £1bn green fund for nuclear and wind power investment.

In terms of difficult and potentially unpopular decisions Mr Darling is likely to announce the removal of tax credits for people earning above £100,000 and a freezing of all income tax bands, which will mean people pay more tax on their earnings. This comes on top of the 50p higher rate of income tax, which comes into force next month.

Ruder Finn will be looking out for key proposals as they are announced and you can follow this via twitter at @ruderfinnuk.

As a final comment on today’s budget I would suggest that the big question to bear in mind for this budget is: with a General Election just weeks away can the Conservatives effectively critique today’s budget and increase their poll rating, particularly on the economy, or will Labour come through this potentially tricky budget unscathed?