What they’re saying: the pre-budget report

Alistair Darling announced a tax on bankers' bonuses in his Pre-Budget Report today. The move had been widely expected, but the way in which it will be levied was a surprise - especially as it appears to represent a tax in excess of 100 per cent.

Between now and April 2010, banks will be taxed at a rate of 50 per cent on all bonuses they award above £25,000. Individual bankers will still pay income tax and national insurance on their bonus.

According to Chris Maddock, a City tax accountant quoted on the Times website, this will be a plus-100 per cent tax rate: "On a bonus of £1,000,000, the new tax will be £500,000, National Insurance will be £130,000 and personal income tax is £400,000. This makes a total £1,030,000 for the Treasury," he explains.

Other measures, doubtless less popular, include a 0.5p rise in National Insurance from 2011 and restricting pay rises in the public sector to 1 per cent for two years from 2011.

With the Copenhagen climate summit going on in the background, there were bones thrown to the green lobby, with tax rebates for electric cars and wind turbines and a boiler scrappage scheme along the lines of the popular car scrappage scheme.

Pensioners will also be happy with a 2.5 per cent rise in the state pension next year - and a fall in bingo duty from 22 to 20 per cent.

WHAT THEY'RE SAYING:Alistair Darling, Chancellor of the Exchequer: "There are some banks who still believe their priority is to pay substantial bonuses to their already high-paid staff. So I am giving them a choice. They can use their profits to build up their capital base. But if they insist on paying substantial rewards, I am determined to claw money back for the taxpayer."

Benedict Brogan, the Daily Telegraph: "'We take these decisions from a position of strength,' Mr Darling said, to howls of derision from the Tory side... what is he talking about? The strength that comes from being the party in power, free to use the forces of Government to its advantage. It can be outrageous, it can trash the place, it can do what it damn well pleases because it knows that the mess will be for the Tories to clean up."

George Osborne, shadow chancellor: "Labour has lost all moral authority to govern today. Every family in the country is going to be forced to pay for years for this prime minister's mistakes. No one will ever believe a word they say on the economy again."

Richard Lambert, director-general of the CBI: "The Chancellor has made a serious mistake imposing an extra jobs tax at a time when the economic recovery will still be fragile. Increasing the National Insurance contribution will hold back job creation and growth. He has also missed the opportunity to increase the UK's credibility by reducing the public deficit earlier. We are no clearer today as to how the Government plans to reduce public expenditure."

Dave Prentis, general secretary of Unison: "Our members feel angry and betrayed [over the 1 per cent public pay restriction]. It is just not on to make nurses, social workers, dinner ladies, cleaners and hospital porters pay the price for the folly of the bankers... We are on the same side of the street as our members and I won't let them see their living standards eroded."

Angela Knight, chief executive of the British Bankers Association: "Viewed from abroad, those foreign banks which reward their UK staff with contractually-agreed bonuses are likely to be the hardest hit. London may well look to them now like a significantly less attractive place to build a business."

Alan Downey, head of public sector at KPMG: "It is clear that at this stage in the electoral cycle the Chancellor’s weapon of choice is a butter knife rather than an axe. Those who were expecting a plan for reducing public expenditure will be disappointed."

John Wright, chairman of the Federation of Small Businesses: "The Government has missed a chance to really tackle a difficult credit market by failing to create more options for access to finance, and more competition among high street banks."

Richard Teather of the Adam Smith Institute thinktank: "So the estimated deficit for this year has been increased, from £175bn to £178bn - the biggest deficit ever for the UK government. That's 12.6 per cent of GDP. Frankly we're unlikely ever to pay that off, especially with the government predicting more deficits every year for the foreseeable future, so we'll be paying interest on that debt forever." ·