Budget leaves little room for manouevre
YVONNE Graham from accountants and management consultants Ensors said Mr Darling had very limited room for manoeuvre in the budget.
YVONNE Graham from accountants Ensors said there was little room for manoeuvre in Alastair Darling's budget speech - and he had few surprises up his sleeve.
The budget speech confirmed how deeply the economy had sunk into recession - and despite promises that the government would try to invest its way out there were few major schemes announced.
The Chancellor looked back to the world's response to the depression of the 1930s and said governments took too long to act - and he would not make the same mistake again.
However there were few concrete proposals that would have a major impact on the recession in this speech.
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The government has already spent tens of billions of pounds propping up the banking system and Mr Darling has been warned by the Bank of England not to increase borrowing further.
He did announce help for the house-building sector and a much-heralded “scrappage” incentive to encourage people to buy new cars.
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But the only new finance for such schemes came from tax increases for top-earners, changes to their pension arrangements - and the usual increases in alcohol, tobacco and fuel duties.
And despite telling MPs that he would help middle-income families, there was little on offer to help those on average incomes.
His promise to help people under 25 to find jobs would be welcomed across the country.
Mrs Graham said there was a real problem for people starting out on a career - but there were few details revealed about how the scheme would work in practice.
Increasing the top tax rate for those earning more than �150,000 to 50 per cent was unexpected, but Mrs Graham wondered whether the move would survive the next general election which has to be held by June 2010.
There are three specific measures that will hit the high-earners: Their tax rate has been increased, they will lose the benefit of having a personal tax allowance, and tax relief on pension contributions is being more than halved.
Mr Darling said only one per cent of taxpayers would be affected by these changes.
There are some changes which should be good for businesses - especially the decision to extend the ability to carry back losses.
This should benefit basically-sound companies who have encountered difficulties during the current recession.
But overall the budget, as presented, had little obvious excitement.
For many in middle England there will be a feeling of: Is that it? What was there for me, personally?
Mrs Graham said: “Mr Darling has a very difficult job to juggle different pressures. He has an election to prepare for next year, so he would like to give something away.
“But he has made a huge commitment to supporting banks - and at the same time is suffering from reduced tax receipts.
“He has to pay more in unemployment benefit, we have seen unemployment numbers increase today, and firms are finding it more difficult to pay their tax bills.
“There is very little he can do and I'm glad I'm not in his shoes today.”