Alistair Darling has just presented his third and possibly last budget. He spent his hour long peroration in self-congratulation, amazing himself at how masterfully he has mitigated the global recession – which was wilfully started by the Americans and absolutely nothing to do with Gordon Brown’s inept management of our economy since 1997.
The highlights of the budget are:
Stamp duty: Limit raised to £250,000 for first time buyers. This financed by increasing the duty on houses costing £1,000,000 to 5%. Cue much cheering from the Labour benches. In his response David Cameron pointed out that the government has previously claimed this would be illegal when the Tories had it as a policy.
ISAs: From next month the maximum annual contribution will be £10,200 of which £5,100 may be made in cash. The chancellor pledged to keep the limit rising with inflation.
Growth forecast: Revised downwards slightly, 2010 – 1.0% to 1.5%, 2010 – 3.0% to 3.5%.
Fuel duty: The impending April rise will be staged; 1p in April, 1p in October and 1p in January next year.
Borrowing: This year’s borrowing is expected to be £167bn (11.8% of GDP) rather than the £178bn he forecast this time last year. Borrowing for the coming years is expected to be:
So a few billion have been shaved off the numbers; about £10 billion each year.
Income tax: Notionally no rises, except that anyone earning over £100,000pa will have their personal allowances phased out. (AD forget to mention whether all personal allowances will be indexed for inflation – I’m not hopeful.)
Alcohol: Duty of beer, wine, spirits will rise by 2% over inflation; cider by 10% over inflation. AD thinks cider has been getting away with being undertaxed for years now.
Tax and spend: The tax burden generally will be rising by £19bn; spending will be going up by 2.2% in real terms.
War: £4bn is being allocated to fund the war in Afghanistan.
Housing benefit: This is being made less generous. The most expensive houses in each region will no longer be included in the calculation of how much it’s possible to claim. HB costs us £20bn a year and this measure will save £250m pa.
Asset sales: The government will be raising some cash by selling the Dartford crossing, the Tote and the Student Loans Company – or at least the loan book.
Bonuses for business: There were a few giveaways for business: business rates are being cut for one year, starting in October, SMEs only mind. The R&D tax allowance is being doubled to £100K and entrepreneurs will pay only 10% CGT on the first £2m – 18% on the rest.
University places: Increased by 20,000 from Autumn this year. This should help keep the unemployment numbers down a little. (Labour claimed it was “elitist” when the Conservatives proposed increasing the number of places by 10,000 a while back.) The new places will be for science, technology and mathematics.
Tax dodging: The UK will, in the next few days, sign tax information exchange agreements with three new countries: Dominica, Grenada and Belize. The last causing Labour cheers as Lord Ashcroft, Tory deputy chairman, is thought to be domiciled there for tax purposes.
David Cameron gave a barnstorming response focusing on Labour’s massive debt burden; Nick Clegg for the Lib Dems made a lacklustre speech.