Posts Tagged ‘Chancellor’

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.

So, the budget has been announced; what was widely reported as Alistair Darling’s greatest test, his biggest budget, the one he daren’t get wrong.

Or was it?

There was the usual figures on growth (or for this year, the lack of it), the usual predictions of annual growth (from 2011) and the tapering of public sector borrowing but where was the real meat of the budget? What was the Chancellor actually setting out?

Well, one thing was clear, he wasn’t setting out a rescue package for the economy, he wasn’t looking to make an example of the banks either, or any other sector. Rather, this was a very careful, steady, conservative budget.

With the economy in the state it is in, you would have thought the Chancellor would go to great lengths to emphasis the Government’s strategy to re-invigorate the economy and get the country back on track.

Yes, I know he said that but the budget didn’t deliver that and as always, it is what he didn’t say that is just as important as what he did say.

But before second guessing the Chancellor and exploring the dark and Brown recesses of his thinking, let’s reflect on what the budget did say.

Some pretty standard, expected increases in progressive taxes, consumables (alcohol, tobacco etc.) and the new upper tax band were announced. These had been pretty well leaked in advance, so no surprises there.

Some additional projects and money to help the unemployed, the housing market and the environment were unveiled, which should be well received but no big shocks, no big bang.

I did wonder why he was going to such great lengths to not really say very much and I started to think about those things he didn’t say.

The real message from this budget is that there is a general election next year.

By the content of his announcement today, the Chancellor all but confirmed that there will be time for a give-away election budget. This would mean, given the timescales needed for this budget to take effect, that there is unlikely to be an election this year.

Darling’s great gamble in this year’s budget was that the effects of this budget will help him to deliver in the next budget in time for the greatest gamble of all - the timing of the General Election.