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| Tories attack 'reckless' Darling | Tories attack 'reckless' Darling |
| (9 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". |
| Income tax | Income tax |
| In his report, the chancellor unveiled plans for record borrowing. | In his report, 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 budget | |
| 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 said: "I think there was a big intake of breath by the nation when they realised what the bill for the last 10 years is and that we are all saddled with a truly huge debt." | He said: "I think there was a big intake of breath by the nation when they realised what the bill for the last 10 years is and that we are all saddled with a truly huge debt." |
| 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. | 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. |
| 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 for high earners - was dead. | He denied that the New Labour project - which ruled out raising income tax for high earners - 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?" |
| On Monday, the chancellor outlined plans to double the national debt. | On Monday, the chancellor outlined plans to double the national debt. |
| Borrowing was set to reach £118bn by the end of 2009, before starting to come down - with the books not to be balanced again until 2015/16, he said. | Borrowing was set to reach £118bn by the end of 2009, before starting to come down - with the books not to be balanced again until 2015/16, he said. |
| Mr Darling also cut economic growth forecasts for next year from 2.75% to between minus 0.75% and minus 1.25% - the biggest downward revision on record. | Mr Darling also cut economic growth forecasts for next year from 2.75% to between minus 0.75% and minus 1.25% - the biggest downward revision on record. |
| The pre-Budget report contained announcements of a duty rise on alcohol, tobacco and petrol duty, to cancel out the effect of the VAT reduction. | The pre-Budget report contained announcements of a duty rise on alcohol, tobacco and petrol duty, to cancel out the effect of the VAT reduction. |
| Liberal Democrat Treasury spokesman Vince Cable said the 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 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." |