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| Version 11 | Version 12 |
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| Tories attack 'reckless' Darling | Tories attack 'reckless' Darling |
| (39 minutes later) | |
| The Conservatives have accused Chancellor Alistair Darling of taking a "reckless" gamble with the UK's finances in his pre-Budget report. | The Conservatives have accused Chancellor Alistair Darling of taking a "reckless" gamble with the UK's finances in his pre-Budget report. |
| Shadow chancellor George Osborne said the country faced "huge risks" and a "trillion-pound" public debt. | Shadow chancellor George Osborne said the country faced "huge risks" and a "trillion-pound" public debt. |
| The government says many people will gain from next week's VAT cut and that it will act as a boost to spending. | The government says many people will gain from next week's VAT cut and that it will act as a boost to spending. |
| Mr Darling told the BBC he was not prepared simply to "let the recession take its course". | Mr Darling told the BBC he was not prepared simply to "let the recession take its course". |
| Lib Dem leader Nick Clegg said ministers needed to get "really tough" with banks to force them to increase business and personal lending or to "bypass" them by injecting money into the economy through other routes such as local authorities or the Post Office. | Lib Dem leader Nick Clegg said ministers needed to get "really tough" with banks to force them to increase business and personal lending or to "bypass" them by injecting money into the economy through other routes such as local authorities or the Post Office. |
| It comes as Bank of England Governor Mervyn King told MPs it was essential banks started lending again at normal rates and "in the last resort", the government may need to "intervene directly to ensure the flow of lending continues". | It comes as Bank of England Governor Mervyn King told MPs it was essential banks started lending again at normal rates and "in the last resort", the government may need to "intervene directly to ensure the flow of lending continues". |
| Income tax | Income tax |
| In his report on Monday, the chancellor unveiled plans for record borrowing. | In his report on Monday, the chancellor unveiled plans for record borrowing. |
| He said VAT would be cut from 17.5% to 15% from next Monday for 13 months, to encourage spending. | He said VAT would be cut from 17.5% to 15% from next Monday for 13 months, to encourage spending. |
| To pay for that in future years Mr Darling said that from 2011 National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000. There would also be a sharp slowdown in public spending growth. | To pay for that in future years Mr Darling said that from 2011 National Insurance would rise by 0.5% and there would be a new 45% tax rate for earnings above £150,000. There would also be a sharp slowdown in public spending growth. |
| KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners At-a-glance: Pre-Budget reportAnalysis: A political budgetLansley apology for blog entry | KEY POINTS VAT cut by 2.5 percentage points45% tax rate on earnings over £150,000 from 2011All National Insurance to go up by 0.5% from 2011Economy to shrink by up to 1.25% next yearBorrowing to hit record £118bnPublic spending growth cut to 1.2%Phased increase in vehicle excise duty£60 Christmas gift for pensioners At-a-glance: Pre-Budget reportAnalysis: A political budgetLansley apology for blog entry |
| The Conservatives are demanding a full parliamentary debate on the measures in the pre-Budget report. | The Conservatives are demanding a full parliamentary debate on the measures in the pre-Budget report. |
| They argue that, given its importance, it deserves the same level of scrutiny as a full Budget. | They argue that, given its importance, it deserves the same level of scrutiny as a full Budget. |
| Mr Osborne told BBC Radio 4's Today programme that making banks pass on interest rate cuts to firms was more important than a temporary VAT reduction. | Mr Osborne told BBC Radio 4's Today programme that making banks pass on interest rate cuts to firms was more important than a temporary VAT reduction. |
| He said: "I think you could directly insure - for a premium to protect the taxpayers' interest - lending from banks to businesses to get credit flowing, to keep people in work, to stop businesses folding. | He said: "I think you could directly insure - for a premium to protect the taxpayers' interest - lending from banks to businesses to get credit flowing, to keep people in work, to stop businesses folding. |
| "These measures would do far more than a 2.5% cut in VAT - a temporary cut which would be paid for later with massive tax rises coming down the track." | "These measures would do far more than a 2.5% cut in VAT - a temporary cut which would be paid for later with massive tax rises coming down the track." |
| 'Intake of breath' | 'Intake of breath' |
| Mr Osborne added that he would help families by freezing council tax - paid for by savings within government. | Mr Osborne added that he would help families by freezing council tax - paid for by savings within government. |
| He also said: "They [the government] are taking a huge risk with the public finances." | He also said: "They [the government] are taking a huge risk with the public finances." |
| Mr Osborne added: "I don't believe that the way through this recession is to tell people there is a massive tax bombshell coming down the track. | Mr Osborne added: "I don't believe that the way through this recession is to tell people there is a massive tax bombshell coming down the track. |
| People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes Alistair Darling | People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes Alistair Darling |
| "I think that will have an effect on behaviour. It will make a recovery more difficult... We can see what a mess they have left this country in." | "I think that will have an effect on behaviour. It will make a recovery more difficult... We can see what a mess they have left this country in." |
| The Tories say people earning £20,000 and above will be worse off partly as a result of the National Insurance increase, but the government argues only those on incomes of £40,000 and above will lose out - due to the £145 rebate offered to basic rate taxpayers. | The Tories say people earning £20,000 and above will be worse off partly as a result of the National Insurance increase, but the government argues only those on incomes of £40,000 and above will lose out - due to the £145 rebate offered to basic rate taxpayers. |
| Mr Darling is gambling that an increase in borrowing will diminish the downturn. | Mr Darling is gambling that an increase in borrowing will diminish the downturn. |
| 'Prepared to help' | 'Prepared to help' |
| He denied that the New Labour project - which ruled out raising income tax rates - was dead. | He denied that the New Labour project - which ruled out raising income tax rates - was dead. |
| Mr Darling told Today: "All governments, including the New Labour government of the last 10 years, redistribute money by definition." | Mr Darling told Today: "All governments, including the New Labour government of the last 10 years, redistribute money by definition." |
| He said: "People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes." | He said: "People earning less than £40,000 won't be paying more. The burden really is falling on people on higher incomes." |
| Mr Darling added: "What matters more to people at the moment is are we prepared to help them and their businesses and the country as a whole get through this difficult period. | Mr Darling added: "What matters more to people at the moment is are we prepared to help them and their businesses and the country as a whole get through this difficult period. |
| "Or do we simply say we are not prepared to do that and let the recession take its course?" | "Or do we simply say we are not prepared to do that and let the recession take its course?" |
| Later on BBC Radio 4's World at One programme Business Minister Lady Vadera said she recognised that the temporary VAT cut would be "difficult" for some small retailers in the short term - because of the need to change prices. | Later on BBC Radio 4's World at One programme Business Minister Lady Vadera said she recognised that the temporary VAT cut would be "difficult" for some small retailers in the short term - because of the need to change prices. |
| But she said she expected cuts to be passed on to consumers as "soon as practical". | But she said she expected cuts to be passed on to consumers as "soon as practical". |
| Asked about Mervyn King's comments about intervening to force banks to lend, she said the government would do "everything that it takes and it would be unwise to be talking about things that may happen in the future". | Asked about Mervyn King's comments about intervening to force banks to lend, she said the government would do "everything that it takes and it would be unwise to be talking about things that may happen in the future". |
| HAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your comments | HAVE YOUR SAYI believe the best help would be to cut public transport costs and fuel costs - then everyone benefitsRoy, CroydonSend us your comments |
| But she said there would be a new scheme to guarantee some lending to small businesses from the banks and said the government would be monitoring banks' lending practices and putting pressure on them to support "viable businesses". | But she said there would be a new scheme to guarantee some lending to small businesses from the banks and said the government would be monitoring banks' lending practices and putting pressure on them to support "viable businesses". |
| Liberal Democrat Treasury spokesman Vince Cable said the pre-Budget report measures did not go far enough and that he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost. | Liberal Democrat Treasury spokesman Vince Cable said the pre-Budget report measures did not go far enough and that he doubted that the VAT cut - which will cost £12.5bn - would be sufficient to give the economy a boost. |
| He said the government "had to do something", but added: "Our criticism is about the way they did it. | He said the government "had to do something", but added: "Our criticism is about the way they did it. |
| "We think the tax cuts should have been concentrated on low-paid workers, people on low, middle incomes, cutting their income tax on a permanent basis and financing it from the top end of the scale." | "We think the tax cuts should have been concentrated on low-paid workers, people on low, middle incomes, cutting their income tax on a permanent basis and financing it from the top end of the scale." |