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Issue:- 24/25 March 2010

Chancellor Alistair Darling's 2010 Budget

THIS is a key to winning or losing the general election, as Chancellor Alistair Darling's 2010 Budget became public we have to ask, will it help us or make us worse off? So is the 24 March 2010 Budget good or bad?

The Shop workers' union, Usdaw, welcomed this budget and said that it is "a budget to help get the economy moving and leave the recession well behind." with adding Usdaw General Secretary John Hannett "This budget revealed encouraging news on the economy and demonstrates that the recovery from the recession is well underway. There was better than expected news on Government borrowing and debt and coupled with the recent encouraging news regarding unemployment figures it demonstrated that the economy is in safe hands. The tough decisions taken over the last two years leaves us well placed to recover more quickly than we would have done if we had done nothing as the Tories wanted. This was a budget of a Government with the vision and drive to take the country forward and win a 4th term at the forthcoming General Election."

Yet this Chancellor Alistair Darling's 2010 Budget, which will be the last one before this year’s election has already come under fire. Commenting on Budget, Michael Sale, President, Liverpool Society of Chartered Accountants, said:- “UK businesses have played their part in helping get the UK economy through the downturn, by maintaining employment and revenues. However, they also need certainty and confidence in the recovery. Whilst the focus on jobs and investment is important in the short term, businesses will want to know more about what they can expect in the medium to long term. They need greater clarity on how departmental spending is going to be cut and also if taxes are going to be raised. This will have a direct influence on their plans to invest and grow.” CBI Director General Richard Lambert told the national media that:- "This in my view was a clever, political budget. However, anxiety remains on how the deficit is going to be paid down, and the growth forecasts for 2011 and beyond are still on the optimistic side."

The biggest blow to the public is that Mr Darling should have scrapped the fuel duty increase altogether with some like Plaid Cymru's leader at Westminster, Elfyn Clwyd, saying to the national media that:- "this unfair fuel tax and it is yet another example of an uncaring, out of touch government." Many people feel like the SNP that Mr Darling should have scrapped the fuel duty increase altogether. It has been seen as Labour saving face with the City rather than supporting the public. Yet others have commented that the 3p fuel duty rise being phased in over three stages, between April 2010 and January 2011, rather than in one increases in April, is better.

Anti drink campaign groups are also pleased as duty on cider is to rise by 10% above inflation, from midnight on Sunday, 28 March, 2010. Wine, beer and spirit duties too are going up by 2% from midnight on Sunday, 28 March 2010 and further 2% rise planned over the next two years. Also pleasing health campaign groups is the 1% Tobacco duty rise, which again will take place from midnight on Sunday, 28 March 2010. That is a 2% increase in real terms each year, until 2014.

For house hunters, it is also a slight win, with stamp duty scrapped for homes below £250,000 for first-time buyers, yet that is only for two years! Yet stamp duty on all residential property sales over £1m are to increase to 5% from April 2011. Commenting on this part of the budget announcement, RICS North West spokesperson, John Halman of Gascoigne Halman Residential Estate Agency said:- "Measures to help boost the housing market in the North West are welcome and will benefit a significant number of buyers, removing 50% of transactions from the stamp duty system. Based on our assumptions about activity, RICS estimates that raising the initial stamp duty threshold will cost the Government around £750 million. However, one of the biggest problems first time buyers face is access to mortgages because they are now facing higher interest rates and set up costs." Simon Rubinsohn, RICS chief economist then added:- "Recent surveys of RICS members have suggested that the number of transactions should increase through a cut in stamp duty at the lower end of the house price range. In particular, this change to stamp duty could help transactions rise above 1 million for the first time since 2007, although this is still well below the 1.7 million transactions that were taking place at the height of the market. Any impact on the market will be limited by the ongoing lack of housing supply and restricted mortgage lending. RICS believes that greater reform of stamp duty is still needed. The current slab structure, where a higher rate applies to the whole value of a transaction, should be replaced with a marginal system similar to income tax. This would smooth out distortions in the market and can be done on a revenue neutral basis. The Government should also consider reshaping the tax by introducing a new band for higher value properties."

It is mixed news again for small business, as Alistair Darling introduces a £2.5bn package to boost skills and innovation. Also businesses will be helped, according to Darling, by a 1 year business rate cut from October 2010, which he says will help 500,000 UK companies. Investment allowance for small firms will be doubled to £100,000 and a doubling relief on capital gains tax for entrepreneurs. Also added to the list that is aimed at pleasing the City is that there will be no change to capital gains tax rates.

For the older community, they should be pleased to hear that the Winter Fuel Allowance rates will be extended for further year.

Parents with young children, from 2012, will see a £4 rise in child tax credit.

Darling's 2010 Budget also boasts a guarantee to give everyone a basic bank account! That will mean up to a million more people will have access to bank accounts over the next five years. Yet in the banking report, they are also planning to ring in a new service to adjudicate credit disputes. Again aimed at businesses, RBS and Lloyds Bank Group will be told to provide £94bn in small business loans. Hidden within that is also the aim to bring in a back tax on bank transactions, but stress that it will "be on global basis".

With the economy having contracted 6% during the recession, thankfully some of the more controversial measures in the Budget may not make it into law before polling day, which could be just a few weeks away. But if the Labour Government is not re-elected, it could all change again. What do you, our readers think about the budget? Do you agree with the business groups who are broadly welcoming the measures aimed at boosting enterprise? Do you think we need to do more to lower our National Debt? Email us today to:- news24@southportreporter.com.

F.S.V. - Bringing Schools Together...

FORMBY School's Voices is a group of school council representatives from each Formby school, who meet to discuss issues that are relevant to young people, including the local community.  On Wednesday, 21 April 2010, students, parents and local representatives, including the Mayor and Mayoress of Sefton will meet at Duke Street Park, Formby, at 8am to mark  the first week of this initiative.  Please show your support and pop over!