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Darling unveils 50% top tax rate Darling unveils 50% top tax rate
(about 1 hour later)
Alistair Darling has announced a new top tax rate of 50% for those earning more than £150,000 from next April.Alistair Darling has announced a new top tax rate of 50% for those earning more than £150,000 from next April.
The chancellor is trying to save the public finances after announcing bigger than expected borrowing of £175bn. The chancellor unveiled the measure after delivering a stark Budget report on the state of the UK economy.
The UK economy will shrink by 3.5% - the worst in modern times, he said in his Budget but he said he expected it to pick up at the end of the year. He said debt would hit a record £175bn this year and the economy shrink 3.5% - its worst performance since 1945.
He also announced a scrappage scheme of £2,000 for people trading in cars older than 10 years for new ones. But he is gambling on a swift recovery and unveiled measures including a £2,000 "car scrappage" scheme aimed at kick starting industry.
Conservative leader David Cameron said the Budget had not done enough to get spending under control and "Britain simply cannot afford another five years of Labour". He is predicting the economy will start to grow again at the end of this year.
But Conservative leader David Cameron said his speech revealed the "utter mess" the prime minister had made of the economy.
KEY POINTS 50% tax rate for earnings over £150,000Growth forecast revised downBorrowing increased£15bn 'efficiency savings'Clawing back tax relief on top earners' pension £2bn help for young unemployed£1bn to boost housing marketCar scrapping scheme Watch live: Video and text At-a-glance: Budget 2009KEY POINTS 50% tax rate for earnings over £150,000Growth forecast revised downBorrowing increased£15bn 'efficiency savings'Clawing back tax relief on top earners' pension £2bn help for young unemployed£1bn to boost housing marketCar scrapping scheme Watch live: Video and text At-a-glance: Budget 2009
The new top rate of tax is a change of plan from the pre-Budget report last year in which he had proposed a new tax rate of 45%. He added that Mr Darling had not done enough to get spending under control and "Britain simply cannot afford another five years of Labour".
Liberal Democrat leader Nick Clegg described the Budget as a "mish mash of recycled announcements from a government skilled in raising false hopes and incompetent at delivering real help".
The new top rate of tax is a change of plan from the pre-Budget report last year in which Mr Darling had proposed a new tax rate of 45%.
It is also being brought in a year earlier than planned "to pay for additional support for people now".It is also being brought in a year earlier than planned "to pay for additional support for people now".
In other measures, petrol duty will increase by 2p per litre in September and then by 1p a litre above inflation each April for the next four years. BBC Political Editor Nick Robinson said Labour had ditched its manifesto pledge not to raise income tax before the next election in an effort to "wrongfoot" its opponents and cheer its core supporters.
Alcohol duties will go up by 2% - about 5p a pint - from midnight. There will be an increase in tobacco duty of 2% from 6pm. Mr Darling said these measures will raise more than £6bn by 2012. It also wanted to raise money, "although the Institute of Fiscal Studies has questioned whether increasing the top tax rate will raise much".
In other Budget measures, petrol duty will increase by 2p per litre in September and then by 1p a litre above inflation each April for the next four years.
Alcohol duties will go up by 2% - about 1p a pint - from midnight. There will be an increase in tobacco duty of 2% from 6pm - adding about 7p to a packet of 20 cigarettes. Mr Darling said these measures will raise more than £6bn by 2012.
That would help pay for a real terms boost in pensioners' income - including new pension recognition for grandparents who care for their grandchildren - and help for savers with ISAs.That would help pay for a real terms boost in pensioners' income - including new pension recognition for grandparents who care for their grandchildren - and help for savers with ISAs.
JobsJobs
There will also be more help to get people back into work quickly and support businesses and homeowners facing problems.There will also be more help to get people back into work quickly and support businesses and homeowners facing problems.
Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. In addition, the government will create or support up to 250,000 jobs in deprived areas.Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme. In addition, the government will create or support up to 250,000 jobs in deprived areas.
BUDGET 2009 Complete Budget report [2.59MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader hereBUDGET 2009 Complete Budget report [2.59MB] Most computers will open this document automatically, but you may need Adobe Reader Download the reader here
Mr Darling also announced an expansion of sixth form and further education places.Mr Darling also announced an expansion of sixth form and further education places.
There will be measures to support investment in the growth and green industries of the future and the government will work to rebuild Britain's financial services. In his speech, Mr Darling confirmed the worst year for the economy since the Second World War with a 3.5% decline in 2009 - far worse than his pre-Budget forecasts.
Mr Darling confirmed the worst year for the economy since the Second World War with a 3.5% decline in 2009 - far worse than his pre-Budget forecasts.
Public borrowing will also soar to record levels as the Treasury wrestles with a toxic combination of falling tax receipts, higher spending and the cost of bank bail-outs.Public borrowing will also soar to record levels as the Treasury wrestles with a toxic combination of falling tax receipts, higher spending and the cost of bank bail-outs.
Stamp dutyStamp duty
But he made clear his plans depended on a rapid economic bounce-back - with a forecast of 1.25% growth next year rising to 3.5% in 2011.But he made clear his plans depended on a rapid economic bounce-back - with a forecast of 1.25% growth next year rising to 3.5% in 2011.
And he admitted that the economy would first face of period of deepening deflation with the Retail Price Index falling to a low of minus 3% by September.And he admitted that the economy would first face of period of deepening deflation with the Retail Price Index falling to a low of minus 3% by September.
There was grim news on the jobs front ahead of the Budget, with unemployment figures showing the number of people looking for work has reached 2.1 million - its highest level since Labour came to power in 1997.There was grim news on the jobs front ahead of the Budget, with unemployment figures showing the number of people looking for work has reached 2.1 million - its highest level since Labour came to power in 1997.
Meanwhile, official figures showed that public borrowing soared to a record £90bn in the last financial year - almost 6.2% of national income and far higher than the £78bn prediction made by Mr Darling in his pre-Budget report last November.Meanwhile, official figures showed that public borrowing soared to a record £90bn in the last financial year - almost 6.2% of national income and far higher than the £78bn prediction made by Mr Darling in his pre-Budget report last November.
Mr Darling is expected to plug part of the gap in the public finances with £15bn of "efficiency" cuts from 2010 - after the next election - provoking anger from public service unions.Mr Darling is expected to plug part of the gap in the public finances with £15bn of "efficiency" cuts from 2010 - after the next election - provoking anger from public service unions.
He also announced he was extending the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year as part of a £1bn package aimed at boosting house sales and building.He also announced he was extending the Stamp Duty holiday on properties sold for less than £175,000 until the end of the year as part of a £1bn package aimed at boosting house sales and building.
From 1pm we will have tax, pension and personal finance experts available to answer your questions about the Budget and how it affects you. If you have a question you can send it to us using the form below:From 1pm we will have tax, pension and personal finance experts available to answer your questions about the Budget and how it affects you. If you have a question you can send it to us using the form below:
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