Top rate tax goes to 50p in Darling’s Budget

Chancellor Alistair Darling today announced the Budget for 2009. Taking account of what is now officially the largest peace-time recession the UK has ever experienced, he unveiled plans to raise the top tax rate to 50p, increase public borrowing to £175bn - 12 per cent of GDP - and offer jobs or training to unemployed under-25s. Darling also said that though he expects the economy to contract by 3.5 per cent in 2009, he believes it will have started to grow again by the end of the year.
 
THE MAIN POINTSTax: The top income tax rate, for those earning more than £150,000, will rise to 50p in the pound next year, instead of the planned 45p.

Tax relief: Also, people earning over £150,000 a year will have tax relief on pension savings reduced.
 
Borrowing: Public borrowing will rise to £175bn this year (12 per cent of GDP), £173bn in 2010, falling gradually to £97bn (5.5 per cent of GDP) by 2013-2014. National debt will also rise, to 59 per cent of GDP in 2009. It will then continue increasing until it begins to fall in 2016.
 
Cars AND FUEL: A car scrappage scheme will offer motorists a £2,000 discount on new cars if they hand in vehicles that are older than 10 years. However, there will be a two pence per litre rise in the price of fuel in September.

Drink and cigarettes: The tax on alcohol will rise by two per cent from midnight tonight - a move that the British Beer and Pub Association has warned could mean a 6p hike in the average price of a pint in pubs. Tobacco duty goes up by two per cent today, meaning an average increase of 7p on a packet of 20 cigarettes.
 
Jobs: Job Centre programmes will receive a £1.7bn funding boost. From January next year, anyone under the age of 25 who has been unemployed for more than 12 months will be provided with either a job, probably in local services, or training. A further £260m will be spent on training and subsidies to get people working in sectors with strong future demand (like IT).
 
Environment: Green economic measures will include £525m funding for offshore wind projects and £435m for energy efficiency schemes.
 
Mortgages: The government will guarantee mortgage-backed securities, and extend for six months a scheme to help people pay their mortgages when they become unemployed.

Housing: Other measures include an extra £80m boost for the shared equity mortgage scheme, a £500m kickstart for stalled housing projects, £100m encouragement for councils to build energy efficient homes and a £50m stimulus to upgrade housing for the armed forces.
 
Stamp duty: The current stamp duty 'holiday' - which means no duty is paid on homes worth up to £175,000 - is extended until the end of 2009.

Savings: The Stocks and Shares ISA limit will go up to £10,200 from next year, and the Cash ISA limit will increase to £5,100. However, the new threshold will be introduced this year for the over-50s.

Tax credits: Child tax credit will rise by £20 by 2010, while trust funds for disabled children will rise by as much as £200 a year.
 
Pensioners: The winter fuel allowance will remain, for at least a year, at £250 for the over-60s and £400 for the over-80s. The basic state pension will rise by a minimum of 2.5 per cent, regardless of inflation.
 
WHAT THEY ARE SAYINGJeff Randall for Sky News: Having done some sums, the Chancellor plans to borrow around £700bn over the next four years, that's one trillion dollars. The Chancellor has to retain the confidence of money markets and they may not like this - these borrowing figures are well beyond anything he has said before.

The Mole for The First Post: Don't believe anyone who says this was not a deeply political budget. It had more than a smack of 1970s, Old Labour "squeeze the rich" about it... Whether David Cameron is ready to engage in a new class war will be one of the fascinating and possibly defining elements of the next election campaign.

George Monbiot in the Guardian: You might have imagined, in these lean times, that the Government would spend what remains of our money carefully. But it has just thrown away £300m. My estimates suggest that the car scrappage scheme saves carbon dioxide at the rate of around £500 a tonne: a gob-smackingly inefficient use of our money. And worse still, it's mostly the automotive industry in other countries that we'll be supporting, as 85 per cent of our new cars come from abroad.
 
Andrew Pierce in the Telegraph: So just why did the cameras cut away to Geoff Hoon, the Defence Secretary, Margaret Beckett, the Environment Secretary, and Jacqui Smith, the Home Secretary, during the passage on the increased money to stimulate house building? Could it be anything to do with the fact that Hoon and Beckett claimed second home allowances while living in grace-and-favour properties, and Smith claims her constituency home, where her husband and two children live, is in fact her second home. Surely not?

Edmund King, AA President in the Independent: No one was expecting another fuel price rise in September. This is a bombshell. More money will be raised from this than will be paid out in the car-scrappage scheme. What this means is that the scrappage scheme will be paid for in a year by motorists at the pumps.

David Cameron in the Commons: As of today, any claim Labour have ever made to economic competence is dead. Over. Finished. This Chancellor has just told us he will be doubling the national debt... What stands out most about today's Budget is how every single argument and every single prediction they told us about has turned out to be wrong. In two words: it is completely inadequate.  ·