Big challenge for Darling

Wednesday 22nd April 2009, 10:30AM BST.

POLITICS Budget 1Chancellor Alistair Darling was today faced with producing an austerity Budget against a background of a soaring jobless toll and massive Government debt which will mean future tax increases.

Figures released just hours before Mr Darling presented his Budget to the Commons, showed the jobless toll has risen to 2.1 million, and public sector borrowing at £90 billion.

  • For full budget coverage see this afternoon’s editions of the Shropshire Star

The figures for the last financial year are ahead of earlier Treasury forecasts.

But there was one crumb of comfort for the Chancellor from today’s figures – mortgage lending rose by 16 per cent last month, an indication that the housing market may be slowly beginning to revive.

Before going to the Commons, Mr Darling told an anxious meeting of the Cabinet at 10 Downing Street that he would be producing a “Budget for jobs”.

He outlined proposals which will include a £2.5 billion package designed to prevent tens of thousands of young people spending years on the dole.

There will be immediate tax increases in the hardy annuals like alcoholic drinks, tobacco and some motoring costs.

But most of the pain will be saved up for 2010 and beyond when the Chancellor hopes Britain will be emerging from the worst recession since the second world war – and Labour could be out of office.

Revealing borrowing figures which will be mind-boggling for most of the public, Mr Darling has to convince the financial markets that he is prepared to take the tough measures on spending cuts and tax increases to steady the battered British economy.

His jobs package will guarantee work or training for every young person under-25 who has been out of work for a year.

Other measures, including a long-awaited car and van scrappage scheme offering £2,000 to motorists getting rid of their old vehicles, were expected.

Mr Darling was also announcing a range of measures designed to boost housing, including an extension of the stamp duty holiday for homes costing up to £175,000.

But pensioners could take another hit with Treasury hints that people on high salaries will face a cut in tax relief on pension contributions.

By London Editor John Hipwood


  1. 1
    Peter

    ‘Pensioners could take another hit’? How on earth do you arrive at that conclusion? The only ‘pensioners’ who are likely to take a hit as a result of the cut in tax relief are the very wealthiest, who are probably very well provided for already – I hope we do see as many as possible of the tax loopholes that the greedy rich exploit closed forthwith.

    Let’s hope that Darling’s budget also reverses some (preferably all!) of the huge tax breaks given to the rich in the ’80s. They’ve been subsidised by ‘ordinary’ taxpayers for far too long now.

    Given that the greed of the rich has principally caused the current recession, it’s time to get back to the days of squeezing them ‘Until the pips squeak’ to quote Denis Healey.

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  2. 2
    Stuart

    Well Peter, I as a pensioner have taken a huge hit. The interest on my savings are virtually nil and what has become of Darling’s hint in the spending review that he would help pensioners. Nothing unless one is on pension credit, which I and millions are not, there has been minimal help – for the rest of us, ZILCH.
    Whilst I agree with the hefty tax rise on the rich over £150,000, this was a “political” move designed to bring in a few million pounds but to suck up to the thick electorate who can see no further than their noses and to see the reaction of Cameron.
    It was the bankers that caused this little lot – helped and primarily caused by Brown and Darling, the ordinary business men who are essential for the economic well being of the country had little to do with it – now they will do though, they will leave this sinking ship which Brown has run aground. We see the return of the Labourites of yesteryear, tax, spend and borrow and ruin the country in the process. What became of the manifesto promise not to raise higher rate tax – that was said when Labour were not 20 points behind in the polls of course. What became of “stopping boom and bust”, the bailiffs were not at the door when Clown said that of course.
    Now, we hear for the first time that this “non cutting” government are going to cut £3.5 BILLION from the Education and NHS budget, with a bit of lies, deceit, smoke and mirrors, this was covered up, it took a BBC interviewer to drag it from Yvette Cooper who went green when she had to admit it by way of “efficiency savings”.
    But to satisfy, your Communist ideology Peter, the £175 BILLION borrowings for this year (12.4% of GDP) will ensure that similar amounts for the next 4 years to come will ensure that this country sinks further into the economic pit and morass that we all predicted when Brown and Darling got hold of our finances.
    We are now paying the penalty for the years since 1997.

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  3. 3
    Peter

    Stuart,

    Here we go again – communist ideology indeed – tut tut. Gross exaggeration yet again.

    Are you suggestinng that the greedy bankers are not close to Bullingham club member Osborne? Or old Etonian Cameron? I bet you his pension that Fred the Shred is a Tory voter!

    It’s inevitable that in a recession interest rates will drop – and of course this is helping hard-pressed mortgage payers, as well as reducing interest paid on savings.
    But my original comment related to the inaccuracy of reporting in the original article – which claimed that the removal of tax relief on pension contribution by the richest in society was somehow damaging to ordinary pensioners – which of course it is not.

    It’s good to see that you are finally coming round to the view that it was greedy Tory-leaning bankers who caused the recession. If I were to criticise ‘New’ Labour (and I have), it would be for continung to follow the Tory way of unfettered Thatcherite market Capitalism, which has ultimately utterly failed and left us where we are.

    But we must be wary of the Tories, and their methods of dealing with recession. Only today on the radio I heard it said that most economists agreed that if we had not followed the policies that Labour has put in place and which the Tories have opposed, we would already have a further 1/2 million unemployed.
    But of course historically the Tories like high levels of unemployment – they can use it to the advantage of the wealthy, as they did as a policy in the 80s.

    We need Labour to return to their roots, and distance themselves from the inherited Tory ways of ‘New’ Labour. They should hang on to the now publicly-owned banks and channel their profits into paying off the debt until it is all paid off. But I expect that sort of approach would be a bit too ‘Communistic’ for you eh?

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  4. 4
    Stuart

    Peter, you are certainly not the “thickies” I refer to above but anyone who supports any form of Labourism, Old, New or anything else needs their head looking into after what they have done.
    I am the first to agree, after Brown and Blair took the brakes off banking regulation and let loose total anarchy without any restraints, the bankers took advantage of this (what Labour calls) “LIGHT” economic environment. These pair (Brown and Blair) were as guilty as the bankers and I put Bliar on a par with Fred of RBS fame.
    Our country has been ruined by Labourite misrule, economically, socially, culturally, educationally, militarily and in every single aspect one can mention. You notice how many of these policies, like reducing spending on the public services will not bite until after the election.
    I personally hope that Labour win the next election, not by the lies deceit and skullduggery for which they are renowned but by the British public refusing to vote Tory and letting the Labour gang have it again by default. How could any Government run up debts which are greater than the combined amount of borrowing by every Government for the past 300 years. Close your eyes in a quiet, darkened room and think how monumentally idiotic, incompetent, criminal and culpable any Government of whatever pursuasion could be to do that. There are no comparisons with other countries, there are no excuses which make any sence, just naked, unadulterated “politicking” over the past 12 years which have now caught up with us. Just one parting shot.
    Remember before the last election, the Tories said that they were going to spend £4.5 Billion on public services and the Labourites made an election issue of it. They said that it was non existent money and the Tories would have to borrow to cover the expenditure. Remember £4.5 Billion, many would say it cost the Tories the election. Well, how many £4.5 Billions in TWO TRILLION – you work it out because that is what your mates will have borrowed by the time they have finished and which my children, grandchildren and great grandchildren will be paying back.
    Yes, give me the Bullingham Club rather than the Kirk and the “moral compass” of the village Pastor.
    Labour are a crowd of crooks, charlatans, fraudsters and circus conjurers who’se only justifiable claim to faim is that they brought this country to it’s knees.

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  5. 5
    the cothercot kid

    stuart i agree this budget does little for the average pensioner, but a 5.2% increase on 5.4.09 when inflation was 2% is not to be sniffed at.
    the £175 billion borrowing amount is horrific. but no one not even the government have mentioned the effect of selling off the then profitable banks we own, in the future better days to come. surely this will help to offset some of this borrowing. i suspect unless anything else goes drastically wrong and the economy begins to turn, commonsense people will rather trust the devil they know next may, than another party that has a track record of genuine small booms and large busts.

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  6. 6
    Stuart

    We could have a very long debate cothercote, not least over the 5.2% increase that you talk about. Now this would be great if it was real – which it isn’t. Ask any pensioner what the Government has given them this coming financial year in cash terms, ask them if they are comfortable with what they have. I dont mean those not on benefits and handouts who are on a pigs back, I mean those who are means tested.
    Then the £175 billion, what about the promised borrowings on top of that for this and the next 5 years,you forget that, it starts off I think with another 90 billion this year and goes down to over 50 Billion in year 5 – before we start to pay it back which will take the next 32 years. Total borrowing is predicted to be two trillion after Brown has finished, yes I think that is 2 and 12 Zeros. That is of course if Darlings figures for “growth” stack up which already, all the pundits are openly laughing at as fantasy.
    Unfortunately, the last poll put the Tories 18 points ahead and the Labourites on a par with what they had in Nantwich bye-election.
    We now have the “scorched earth” policy from Labour, ie, if they can’t mend it, destroy it.
    They should be made to pay for this disaster by winning the next election and putting it right, as I say by default and after, being consigned to total oblivion.
    The Tories would never have borrowed as much merely to pour it into bottomless public services, now it all has to be repaid with massive, swinging cuts destined by Labour if they get into power in 2010. Where has that got us.
    The last Tory bust was when Thatcher had to undo all the damage of the Callaghan years, remember winters of discontent, dead bodies unburied, mountains of rubbish in streets, strike after strike until the country was crippled, every Labour Government has produced this scenario as we are now seeing. Cameron – if unfortunately he has to take over will make us live within our means, no Visa Goldcards for the Treasury or printing money like now (quantative easing).
    What Tory government ever had to “print money”, what Tory government ever had to go to the IMF for a loan, Labour under Healey as Chancellor did. How long before Darling asks for the same?

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  7. 7
    Peter

    Stuart,

    You complain about Labour’s ‘tax and spend’ policies, but they have at least spent money on our schools and health service. There was the unnecessary expenditure on US-inspired wars of course, but I don’t recall the Tories opposing that at the time.

    The Conservatives too steadily increased taxes for the working man when in power – and what did they spend the money on? Tax cuts for the wealthy, and job cuts for the rest of us.

    You complain about a lack of regulation – yet the Tories never pressed for more – instead complaining about ‘red tape’. All the evidence is that the Tories would’ve had even less regulation.

    You accuse Labour of selling off gold reserves – but they spent the money on infrastructure. Where did the money raised from the sale of council houses by the Tories go? – certainly not into public housing!
    And where did the money from our utility industries go? And where is the ownership of many of those companies now, and where are many of their jobs now located?

    Cameron now talks about an ‘Austerity Government’ – but fails to say where he will cut costs (and you can bet jobs too!). Boris Johnson and ‘Bullingham’ Osborne are already whingeing about the tax increases for the very rich – so it’s pretty clear where we’d be headed with the Tories…

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  8. 8
    Stuart

    I deal in facts and figures not fantasies and gross exagerations Peter. We are where we are because of Old Labour. All the finance Clown borrowed to boost the NHS and Education only to succeed in achieving nothing, he is going to make them pay it all back after the election, the question is asked, why give it them to start with if they are going to have to pay it back.
    One big thing you choose not to mention, according to the EU Audit Agency, manufacting production in the UK is at it’s worst in it’s history. I wonder who caused this, perhaps you could tell us all.
    As for the unemployed, wait for the end of the year.
    As for gold and infrastructure, what is that, it has collapsed around our ears. You are into Enid Blyton stuff.
    We are back to worse times than Callaghan caused, the total modus operandii of the Old Labourites, he caused a disaster before he handed over and it took a Tory Government to sort it out and Cameron- unfortunately has to sort this lot out, he has even got to find a way to repay Browns borrowing for this year before the election.
    Typical Brown, before an election, makes things good, afterwards, watch out. If Brown gets back in Peter, wait for 2011, it would be bad, of necessity, under the Tories. With Labour in power, 2011 heralds the rebirth of the stone age and sackcloth and ashes.
    Count me out now Peter – or deal in facts and figures.

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