CHANCELLOR Alastair Darling yesterday delivered his Budget speech in the middle of the civil servants’ strike action, starting it by claiming that the UK economy is now ‘emerging’ from the ‘deepest global recession for over 60 years’.
Darling’s Budget signals the countdown to the general election expected to be called for May 6.
According to Darling: ‘Our plans reduce borrowing by £78 billion in cash terms over the next four years’ and ‘Borrowing this year should now be £11 billion lower than forecast, at £167 billion.’
Darling went on to announce: ‘I will double the stamp duty limit for first time buyers from midnight tonight from £125,000 to £250,000, for this year and next.’
Darling said that ‘To ensure this measure does not burden the public finances, this relief will be funded through an increase in the stamp duty to five per cent for residential property over £1 million, from April next year.’
He said: ‘I have decided to stage next month’s increase in fuel duties. Instead of the planned increase, fuel duty will rise by a penny in April, less than inflation.
‘This will be followed by a further one penny rise in October and the remainder in January.’
Darling went on to outline that ‘The one penny increase in the main rate of National Insurance Contributions will not affect anyone earning under £20,000 a year.
‘Nor will it come into effect until April next year’.
He said: ‘The 50 per cent rate of income tax will come in next month, but only affects those with earnings over £150,000 a year, the top one per cent of earners.’
Darling said that ‘duty on beer, wine and spirits will increase as planned from midnight on Sunday.
‘Alcohol duties will also increase by two per cent above inflation for two further years from 2013.
‘And the planned increase in fuel duty and landfill tax will continue for one year from 2014.’
He said ‘cider will increase by 10 per cent above inflation from midnight on Sunday’ and: ‘Tobacco duty will increase from today by one per cent above inflation and then increase by two per cent in real terms each year until 2014.
‘I have also decided to freeze the inheritance tax threshold for a further four years, and this will help pay for the cost of care for older people.’
Darling said that ‘even before the next spending review…. we have already identified cuts and efficiencies of over £20bn, through limiting pay, reducing programmes and making savings.’
The NHS and education are both facing a wave of cuts and closures, while Darling said ‘public pay settlements will be held at a maximum of one per cent for the two years from 2011’ – a pay cut in real terms.
Darling also announced pensions ‘reform’ and said 15,000 civil service posts will be ‘relocated’ out of London within the next five years.
He also said that ‘from October next year the most expensive properties across the country will be excluded from the Housing Benefit calculation in each area.’
Other measures announced included a ‘doubling’ of entrepreneurs relief for Capital Gains Tax and a freeze on the main rate of Capital Gains Tax.
He also guaranteed the ‘higher winter fuel payment for another year’.