The Chancellor, Alistair Darling’s delivered his third Budget speech on 24 March 2010. He described the UK economy as being ‘at a crossroads’ and was delivering a Budget to ‘secure the recovery’ and provide ‘targeted support’ where it is needed. The Treasury produced 71 specific Budget Notes detailing the changes set out across 161 pages.
At the centre of this Budget is the £2.5bn package for small and medium – sized businesses, funded primarily by better than expected receipts from the one-off tax on bankers’ bonuses. Banks will still face the one-off 50 per cent payroll tax on bonuses that was announced in the Pre-Budget Report, which is now expected to raise £2 billion. More measures were announced for small businesses, particularly aimed at assisting cash flow. There was also the extension of HMRC’s ‘Time to pay’ scheme. This scheme supports companies in distress struggling to pay their tax bills.
The Chancellor also expressed support for a ‘Bank Levy’ but stressed that international co-ordinated action is required on this so as not to damage the UK as a financial centre. Britain’s record budget deficit remains front and centre for investors after some ratings agencies have suggested the UK’s credit rating could be under threat without a clear plan to cut debt.
The Chancellor said he was able to revise down his forecasts for the budget deficit in the current and next fiscal year. Public sector net borrowing in 2009/10, he said, would come in at 166.5 billion pounds, or 11.8 percent of GDP, compared with a December Pre-Budget report forecast of 177.6 billion pounds.
In 2010/11, borrowing is expected to come in at 163 billion pounds versus 176 billion previously forecast. Future years have also been revised down. Despite the need for the government to reduce its borrowing, the Chancellor did not announce any dramatic tax increases, there was no radical programme of large scale transformation for the public sector and he froze inheritance tax thresholds for four years.
As well as moving to lower borrowing, the Chancellor also found some measures to target the better off. He said he would scrap duty on house purchases of less than 250,000 pounds for first-time buyers and pay for this with a one percentage point rise in duty to 5 per cent for houses worth more than 1 million pounds.
“Those who have benefited the most from the strong growth in incomes in past years should now pay their fair share of tax,” the Chancellor said.
“The recovery has begun, unemployment is falling and borrowing is better than expected. The choice before the country now is whether to support those whose policies will suffocate our recovery,” the Chancellor told parliament. For a more detailed summary of the Chancellors Budget statement, including his intention to continue to help people through the global recession, and secure the recovery.
