Budget Woes

Yesterday our man Darling stumped up to the rostrum and delivered his 2009 budget to the house. Amongst the jeers, catcalls and snide remarks Darling stood tall and commended his report to the house. So what’s in store for us all? Well to start with there was the usual tax hike on fags, beer and petrol. Lager swilling smokers have become used to the annual duty increase and our yearly punishment no longer comes as any surprise. All in all, Darling added 2% onto alcohol and cigarette duties making the average pint and a pack of Marlborough’s about 10p more expensive. Mr Darling also added 2p onto a litre of petrol, but again this was hardly unexpected.

As you would expect from a typical New Labour budget there was the usual increase on child benefit, child tax credits, pensioner winter fuel allowance and a 2.5% increase to the state pension. However Mr Darling did pull some rather unexpected rabbits from out of his big red box. First of all there was the increase to 50% on the highest rate of tax. This new rise will only hit the top 1% of earners in the country and will net the government an estimated 1.4bn a year. Personally I’m not too bothered about this as it would take me about 9 years to earn that kind of money. The tax rise does however break Labour’s manifesto pledge and if they are capable of breaking this then what else are the government prepared to ignore.

Aside from the tax rise and benefit increases, Labour also pledged to cut UK carbon emissions by 34% by 2020; great news for global warming campaigners. Mr Darling also pledged to provide an extra £1bn to help combat climate change by supporting low-carbon industries and a further £525m for offshore wind projects over the next two years. The chancellor also announced that £435m would be supplied to support energy efficiency schemes for homes, firms and public buildings and £405m to encourage low-carbon energy and advanced green manufacturing. However, these schemes are a far cry from the big green budget that many eco-campaigners had been expecting.

Throughout the year charities have been hit hard by the recession. Most have suffered from an increasing lack of charity donations, and as a result organisations have struggled to maintain the excellent work that they do around the country. However, the budget provided little good news for organisations experiencing cash flow problems. One piece of good news is that the Chancellor did announce that the government intended to set up a new hardship fund, making 20 million available to those organisations facing hard times.

Over the recent weeks savers have been hit heard by falling interest rates. In an effort to combat this Darling announced that the maximum ISA allowance would be raised to £10,200 from 2010. The Chancellor also extended the current stamp duty holiday to the end of the year. Mr Darling also announced several new schemes in order to help the stagnant housing market.

The UK jobs market has been badly hit in the recent recession, unemployment has now climbed to record figures as Britain struggles with the current economic downturn. In the budget the Chancellor announced a whole raft of schemes and funding in order to help those struggling to find employment. These schemes included a 1.7bn increase in funding for job centres and a new training scheme aimed at under 25’s who have been unable to find work for over a year.

Once again Labour appears to have provided a hodgepodge budget intent upon shoring up their political base, rather than tackling the immediate problems of a Britain facing its’ worst recession since WW2. Quite simply the government has run out of money. In order to keep the country in any working sort of order Mr Darling announced that the country would have to borrow 173bn in 2009 alone. The stats are quite literally shocking. The Chancellor told the house that the treasury would borrow over 606bn over a five year period and he estimated that it will take until 2018 to balance the books. This does of course rely upon everything going right and the UK’s economy recovering. The sheer scale of borrowing announced is frightening especially when you consider that every 10years or so there is another economic downturn or recession.

Unfortunately there is very little that we can do about it. The government is insistent that this is the correct decision and as there isn’t an election until 2010 then we are quite literally up the proverbial creek without any form of paddle, hell we probably don’t even have a canoe just a raft of bank statements instead.