… And we’re off!
Liveblog of Alastair Darling’s Pre-Budget Review 2008
Can we take the Chancellor’s words about the lack of compensation schemes in off shore jurisdictions – ie tax havens – as a sign of a shift away from the UK’s quiet support for its dependent taxhavens such as the Channel Islands?
Inflation down to half per cent next year!
And the economy could shrink as much as 1.25% next year – though will start to recover in the third quarter.
It’s a £20 billion stimulus. Big in historic terms – but not as big as some think necessary given the depth of the downturn. It’s one per cent of GDP. One and half per cent would have been better.
It means the fiscal rules have been suspended – no suprise there – and that debt will start to fall in 2015/16 after rising to eight per cent next year.
The Chancellor now says that he has exceeded the Gershon efficiency savings targets, but intends to achieve another £5 billion of “savings” next year. It is hard to see how this can be done without hitting front line services. Job Centre Plus is going to be much busier as unemployment rises, but it is still expected to make savings.
Spending is also to slow sharply after 2010.
So the briefing about VAT cuts were true. But perhaps it would have made more impact coming as a real tax bombshell in the midst of the PBR speech.
The 10 p tax compensation moves are being made permanent. Good news, but is this the limit of help for the lower paid?
And we are to get a 45 per cent rate for those above £150,000 after the election as predicted, plus an unannounced change to personal allowances that will collect more from anyone earning more than £100,000. This latter will be harder to avoid!
Now it’s help for small business.
The first technical announcement about foreign tax dividends is help for big business and is a huge victory for a business lobby that started well before the credit crunch. We will return to this one!
There is praise for RBS’s commitment to keep credit flowing, but only vague talk of action to make other banks follow suit. But watch this space!
And there are several billion pounds for small business loans from Europe – though that won’t stop the anti_europeans among them.
The small business corporation tax increase has been postponed. This is only paid from profits, so may not be that well targetted.
There is an extra £100m for home insulation. Ofgem is to be asked to look at energy prices, but I think we all know now that energy prices go up when oil prices rise – and stay high when the oil price falls.
There are good words about renewables and low carbon, but we will need to look at the small print here.
There’s a new panel to monitor lending by banks to business and consumers. We will need to see if it has teeth.
There’s to be a welcome three month wait before repossession proceedings can start, better mortgage benefits for the unemployed and other help.
And a £1 billion plus package to build social housing. This is probably not enough to meet government targets but welcome nonetheless.
There is to be more help and training for the newly unemployed, but it does not look like the manifesto pledge to increase redundancy pay is going to be honoured today.
Pension credit is to increase above indexation, and the basic state pension is to increase by almost £5 because of the high RPI figure, and the increase will be paid from January. And every pensioner is to get £70 extra. This adds up to real help for people who will mostly spend it.
And he has finished!
More detail soon!