The PBR as expected read like a manifesto, in an attempt to exploit perceived Conservative weaknesses on the economy. As expected the Chancellor outlined a super tax on bankers’ bonuses, he also decided to freeze inheritance tax allowance at £325,000 for the next year and outlined measures against offshore accounts.
- The chancellor confirmed that VAT is going back up on 1 January to 17.5%, but says he has no other announcements on VAT. This may surprise some commentators who had suspected it could go up further.
- Confirmation too that the 1p rise in corporation tax is being postponed.
- From next month no-one under-24 needs to be unemployed for longer than 6 months before being guaranteed work
- Basic state pension to rise in April and a cut in Bingo Duty
- Child benefit and disability benefit to rise by 1.5% in April.
- Forecasts: Growth return this quarter. 2009/10 growth minus 4.75%. Next year 1.5%, 2011 on 3.5% i.e. not much change
- Chancellor revised provision for any potential impact from financial interventions on the public finances from £50bn to around £10bn
- Public Sector Net Borrowing - forecast next year £176bn which as a share of GDP will be 12%
- Inflation will rise to three per cent, the Chancellor predicts, partly because of the VAT reintroduction
- National Insurance to rise by a further 0.5% from April 2011 on incomes over £20k
The shadow Chancellor - George Osbourne MP
"We were promised a pre-budget report and what we got was a pre-election report - they have lost all the moral authority to government today.
National insurance is a tax increase worth £40bn, he says, adding that Darling has confirmed that “all Labour governments bring the country to the verge of bankruptcy”.
He also accused Darling of "setting one part of country against another" and "turning his back" on enterprise.
Liberal Democrat Economic Spokesperson – Vince Cable MP
He questioned the Chancellor’s assumption that Britain would return to growth in 2009.
"What we needed was a national economic plan and what we have got is an election manifesto." "The economy is now being rebuilt on sand. The only real sign of recovery we have are rising house prices and booming bank profits, at a time when industry is continuing to decline."