Budget at-a-glance

[wellinghall]

Cigarettes and Alcohol
• Alcohol and cigarettes taxes to go up 2% from midnight - one estimate is that it would put 5p on the average pint of beer
• Fuel duty to rise by 2p per litre from September

Car scrappage scheme
• From next month until March 2010 motorists to get £2,000 discount on new cars if they trade in cars older than 10 years

Income tax
• Income tax for those earning more than £150,000 to rise to 50% from April 2010
• Tax relief on pensions to be reduced for people on more than £150,000 a year

UK Economy
• Economy forecast to shrink 3.5% in 2009
• Growth expected to pick up in 2010, expanding by 1.25%.
• Economy to grow by 3.5% annually from 2011
• Public borrowing to increase to £175bn this year
• Borrowing levels to rise by £173bn, £140bn, £118bn and £97bn in years after
• Consumer price inflation to fall to 1% by end of year.

Jobs and Training
• Government support for economy to protect 500,000 jobs
• All long-term unemployed under 25s to be offered job or training
• £1.7bn additional resources for Job Centre network
• £250m funding to help people get work experience in growth industries
• Funding to create 54,000 new places in sixth form education

Housing
• Scheme to guarantee mortgage backed securities to boost lending
• Stamp duty holiday for homes up to £175,000 to be extended to end of year
• Extra £80m for shared equity mortgage scheme
• £500m to kickstart stalled housing projects
• £100m for local authorities to build energy efficient homes
• £50m to upgrade housing for the armed forces

Government Savings
• An extra £9bn in efficiency savings is planned
• Public spending to be cut from 1.1% next year to 0.7% in 2011-2012

Benefits
• Child tax credit to rise by £20 by 2010
• Child trust funds for disabled children to rise by £100 a year, £200 a year for severely disabled children

Savings
• Annual limit for tax-free ISAs to rise to more than £10,000

Environment
• £525m for offshore wind projects
• £435m support for energy efficiency schemes

Help for Business
• Loss-making companies to be able to reclaim more taxes paid in the last three years

Pensioners
• Grandparents of working age who care for their grandchildren will see that work count towards their entitlement for the basic state pension
• Winter fuel allowance to be maintained at higher level - £250 for over 60s and £400 for over-80s - for another year
• The basic state pension will be increased by at least 2.5%, regardless of inflation

http://news.bbc.co.uk/1/hi/uk_politics/8011882.stm

Comments

[piqueen.livejournal.com]

Interesting. I didn't catch the detail on the pensions provisions over £150k. Did you?

[wellinghall.livejournal.com]

A colleague has just said:

"from April 2011, tax relief on pensions contributions will be restricted for those with incomes of £150,000 and over, and tapered down until it is 20 per cent."

[bunn.livejournal.com]

"• Economy forecast to shrink 3.5% in 2009
• Growth expected to pick up in 2010, expanding by 1.25%.
• Economy to grow by 3.5% annually from 2011 "


LOL. How terribly convenient.

DOOooooownnnnny uuuuuUUUUUUPPPPY! Do you think he designs rollercoasters too?

[wellinghall.livejournal.com]

You cynic, you ...

(Nice happy Az, by the way! :-) )

[parrot-knight.livejournal.com]

I'm not convinced by this forecast either, given the amounts of debt which may still be swilling somewhere around the economy.

[bunn.livejournal.com]

It's the sheer neatness of it that amused me. I mean, not even trying! If he's gone for 'shrink 3.29%, up 3.56%' then at least there would be an air of verisimilitude and we'd all think he had some secret source of information. Or he could have said 'we think it will go up a bit' which would have an air of honest endeavour about it. But no.

4/10, See Me.

How timely:

[bunn.livejournal.com]

Re: How timely:

[parrot-knight.livejournal.com]

Do you remember one of the Spitting Image election night sketches, where politicians were strapped to their chairs and injected with truth serum, on the grounds that at 3am things needed livening up?

Re: How timely:

[bunn.livejournal.com]

That does ring a faint bell yes!

[nineveh-uk.livejournal.com]

Hmm, if they would give me £2000 for the environmental benefits of not having a car, I could save the environment further by buying a new instead of a second-hand one.

The 50% tax is interesting - I hadn't seen that coming although it is possible I wasn't looking. In any case, my punching the air may suggest that the local party is not completely off-base when it keeps sending me emails beginning "Dear Comrade".

[wellinghall.livejournal.com]

Last year's budget announced a rise to 45% from 2011; this year's budget has (reather unexpectedly, I think) made it 50% from 2010. It's being seen as a challenge to the Tories: do they back it, or reverse it? And David Cameron has said that they won't necessarily reverse it.

[nineveh-uk.livejournal.com]

Clearly I haven't been paying attention!

[arda-unmarred.livejournal.com]

good news about the 50% (although not nearly enough %). Now just re-introduce hanging* for those with off-shore bank accounts in tax havens (who don't pay us tax on them) and we might be on the way to recovery.

*if I offended anyone's feelings on here, good, I mean sorry.

[gramarye1971]

I'm inclined to agree -- with the economic indicators where they're at right now, a 3.5% growth rate is a disconcertingly blithe assumption, even for a three-year forecast.

[muuranker.livejournal.com]

I couldn't possibly comment. The words 'efficiency savings' would appear, and I would dissolve into rant.

But thank you for posting this.

[wellinghall.livejournal.com]

Should keep you going for the rest of the week, then ... ;-)

[philmophlegm.livejournal.com]

Point of information (and an important distinction): It should say "Public spending GROWTH to be cut next year". In other words public spending will still increase.

Some other thoughts:

The economy growth predictions are what we in the trade refer to as a 'J-Curve' or 'Hockey stick projection'. They are at the most optimistic end of the forecasts I have seen. Don't get me wrong, I see no reason why the world economy won't recover strongly from this recession. This isn't the 1970s and the supply-side reforms which Britain and the US had in the 80s and which most other western countries had in the 1990s are for the most part still in place. In a way, the fact that we are going towards deflation in the short-term rather than stagflation is evidence of this. Where I think the Chancellor's forecasts are out is that there is probably a missing year in 2010 where growth will be at about 0%, before the recovery proper kicks in in the latter part of that year.

As I think I demonstrated with the cars spreadsheet I posted about recently, £2,000 isn't really a lot when buying a new car. Even on a cheap new car, it's probably the difference between brand spanking new and "a few hundred miles on the clock, ex-demo". The intention presumably is to aid the car manufacturers (without the government having to be seen to give aid to the likes of Tata, which would be politically difficult to say the least). Ignore the "environmental" angle - that's just spin. I wouldn't like to predict what effect it will have on the market, but it seems likely that making brand new cars cheaper will have knock-on effects on used cars, and that will be counter-productive. It might also create an interesting market for owners of bangers offering their services to better off people about to buy a new car.

The 50% tax band for the more productive members of society will no doubt appeal to the more heavy-browed, knuckle-dragging members of his own party while pissing off people who wouldn't have voted Labour anyway. Pretty morally questionable though, especially when it looks like it is being used to fund continued public sector expenditure growth and increased benefits for non-productive members of society. Oh, and it breaks a key manifesto pledge too.

Can't get quite as excited by the changes to tax relief on high-end pension contributions, which were arguably pretty generous in the past. This may see a switch from pension investments to say property investments for people in this bracket, which might be seen as good for the housing market.

I've said it before, but it still strikes me as strange that in a very overcrowded country, the tax system rewards people for having children. And because the benefit is a flat rate, it rewards poorer people more - arguably the very people whose children are less likely to grow up to be high tax-paying members of society.

[bunn.livejournal.com]

It might also create an interesting market for owners of bangers offering their services to better off people about to buy a new car.

That's a very interesting idea. If I were less lazy, I'd create a social networking tool around that idea right now... :-p

[arda-unmarred.livejournal.com]

Thanks - you just persuaded me to vote Gordon (I voted LibDem before). Because misguided and out of touch opinions like yours must neve be allowed to come back out of the dustbin of history

[philmophlegm.livejournal.com]

While I don't earn enough to pay income tax at 50%, I am in the 6% of the population that contributes more than half of the country's income tax revenues*. I don't ask for much, but it would be nice if the other 94% said thank you occasionally.

Tragically, it seems it's "out of touch" to believe something as simple as "If person A earns twice as much as person B, he should pay twice as much income tax". Gordon's hero Adam Smith believed this, but he doesn't seem to.





* And of that 6%, some will be public sector employees whose fiscal contribution is negative (i.e. they pay less to the government in tax than they receive from the government in salary).

[arda-unmarred.livejournal.com]

"If person A earns twice as much as person B, he should pay twice as much income tax".

of course not, person A should pay more. There are many reasons, but the main one to me is that no one needs more than 150k a year. On 150k one can have a wonderful lifestyle, and that should be enough for everyone.

oh and maybe let's mention the fact that most people who earn >150k a year are in the City, and we i) already gave to the tune of hundreds of billions to bail them out, and would like to see some back and ii) as I've mentioned above most of them avoid tax anyway.

I could also mention things like pity, sympathy and a sense of comradeship to those less fortunate than oneself. Oh, and the fact that 'productive' rarely equates 'best paid' (cf teachers, nurses, physical labourers - all pretty productive). And the fact that if the poor are invested into they would become less poor (equality of opportunity). These sound all good reasons to oppose the statement in quotes above.

[arda-unmarred.livejournal.com]

oh, and a mathematical point. Percentage is a function, as good as any other. Then why should the tax on earnings be f(x)=qx for some fixed q s.t. 0<q<1, and not any other different function? Why not some other function g(x)=q(x)x, where q(x) is an increasing function of x? ;-) oh and 'The chancellor said spending would grow by only 0.7% per year from 2011 - a lower rate than when Margaret Thatcher was in power.' high spending my backside...

[philmophlegm.livejournal.com]

I'll believe the public sector efficiency savings when I see them. It's difficult to see how to make genuine efficiency savings in the public sector without making thousands of loyal Labour-voting, trade union card waving public sector workers redundant. And that just ain't gonna happen.

"I'm all right, Jack", or rather Alastair.