Budget reveals drinkers and car drivers will pay

Mar 13 2008 by William Green, The Journal

ALISTAIR DARLING was condemned for ignoring the North East’s need for transport improvements yesterday while hitting travellers and drinkers with new taxes in a “stability” Budget.

Boasting in his first Budget of his Government’s prowess in funding transport, Mr Darling drew an angry response after stressing that good links were vital for the economy after “decades of under-investment” – but failed even to mention upgrades to the A1 or rail services to the North East.

Mr Darling said: “In the last 10 years, we have doubled the amount we spend on transport.”

And he pointed to £7bn spent improving the West Coast Main Line, £6bn on the new high-speed rail link from London to the Channel Tunnel and funding provided for Crossrail that will provide new train services across London.

Blaydon Labour MP Dave Anderson said the Government had done a good job on transport across the country but added: “We have been left behind and we need some assurances about the North East.”

He pledged to challenge the Chancellor, as Newcastle City Council leader John Shipley branded Mr Darling’s decision to ignore the region’s transport network a “complete failure”.

The Chancellor risked motorists’ anger by signalling that national road pricing was back on the cards, but he delayed a 2p rise in fuel duty until the autumn.

Drivers of gas guzzling cars also face hefty “green” tax increases and drinkers above-inflation duty rises as they pay the price for a Budget designed to ease Britain through global financial storms.

The Chancellor threatened legislation to impose charges on disposable plastic bags if supermarkets fail to curb their use. This would be part of a package of green measures which could include a new flight tax.

He confirmed plans to reform capital gains tax and impose a charge on rich foreigners living in Britain.

But there were measures to fight child poverty and improve education, help for pensioners with winter fuel bills, alongside proposals to help home buyers and savers on low incomes.

He also announced a big increase in public borrowing – to £43bn – to support the economy through the expected slowdown as he slashed growth forecasts, but insisted he could still meet fiscal rules laid down by Gordon Brown. “In every country in 2008, every Government has one aim – to maintain stability through the world economic slowdown. This is a responsible Budget to secure Britain’s stability in the face of global uncertainty,” said Mr Darling, who strongly defended his handling of the Northern Rock crisis.

Tory leader David Cameron said the borrowing figures were truly dreadful with families £110-a-year worse off.

Liberal Democrat leader Nick Clegg branded it a meagre Budget that did little for the poor or the environment.

Labour MP Sharon Hodgson welcomed action on child poverty and said the increased winter fuel allowance would support nine million households.

“It is a Budget which will ensure stability for the local and national economy both now and into the future,” said the MP for Gateshead East and Washington West.

But Berwick Liberal Democrat MP Alan Beith said: “The Chancellor’s Budget box is nearly empty and he has offered nothing to help families or the elderly with increasing energy and food costs.”

He said it had been a golden opportunity for the Government to tackle persistent inequality caused by the Barnett formula, which hands more Whitehall cash to Scotland than to the North East. “The only big winner from this Budget is the Government – by 2010 they will be keeping an extra £1.86bn for themselves,” he said.

The North East Chamber of Commerce welcomed the freeze on fuel duty, but said firms could be confused by the Chancellor’s “tinkering” with taxes.

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Highlights of the speech at a glance

ECONOMY

Growth and low inflation will be maintained as the economy has expanded for a record 10 years.

Turbulence which started in the US has affected all markets worldwide. This poses a major risk to world economies.

Growth forecasts lowered worldwide, but British economy grew by 3%, fastest of any economy.

This year, growth in the British economy will be between 1.75% and 2.25%, rising to between 2.25% and 2.75% in 2009 and 2.5% and 3% by 2010.

Inflation will rise before returning to 2% target in 2009.

Debt this year forecast to be lower than Pre-Budget Speech at 37.1%.

Public-sector investment forecast to rise to £37bn in 2010.

POVERTY

Housing and other benefits reformed further so families are better off in work. Work capability assessments for all long-term incapacity benefit claimants by April 2010.

Pledge to eradicate child poverty. Total of 600,000 fewer children in relative poverty and 150,000 fewer children in absolute poverty.

Savings Gateway launched nationwide by 2010, offering incentives to more than eight million people on low incomes.

DEFENCE

£2bn increase in spending on frontline troops.

BUSINESS

More help for small businesses, with capital gains tax remaining at 10%.

£60m more for Small Firms Loan Guarantee Scheme, which will be extended to all small companies.

New target of 30% of Government contracts for small firms.

£30,000 charge for non-doms confirmed from April, but no further change for this Parliament and the next.

Government to provide a capital fund of £12.5m to encourage more women entrepreneurs.

EDUCATION

£10m over five years to improve science teaching. Outside contributions will bring this figure up to £30m.

£200m to be invested in schools.

TRANSPORT

Fuel: Planned 2p duty rise postponed to October.

Road pricing could fight congestion, so new funding committed to its development.

New bands of road tax for the most polluting vehicles.

HOUSING

70,000 new affordable homes each year. Shared-equity schemes extended.

More flexible mortgages urged, offering 10, 20 and 25-year fixed rates.

ENVIRONMENT

Target to reduce carbon emissions by 60% may be extended to 80% by 2050.

Legislation to come into force in 2009 to impose a charge on single-use carrier bags if progress is not made on a voluntary basis.

Winter fuel payments for over- 60s rise by £50 and for over-80s by £100.