Rich feel the pinch in Darling's election Budget
Chancellor of the Exchequer Alastair Darling used his General Election Budget to increase stamp duty threshold from £125,000 to £250,000 for first time buyers from midnight tonight - and raise stamp duty to 5% for properties over £1 million from April next year.
There was further bad news for higher earners - already facing a 50% tax rate on earnings over £150,000 - when Mr Darling announced the end of some personal allowances. He said that for people with incomes over £100,000 a year - the top 2% - the value of their personal allowances would gradually be removed.
He also said tax relief on pensions will be restricted from next year, but again only for those with incomes above £130,000 a year.
Justifying the moves, he told MPs: "Looking across all the tax rises since the beginning of this global crisis, 60% of them will be paid for by the top 5% of earners. We have not raised these taxes out of dogma or ideology. We are determined to ensure our overall tax regime remains competitive. But I believe those who have benefited the most from the strong growth in incomes in past years should now pay their fair share of tax."
The announcements affecting the better off are likely to be seen as part of Labour's election strategy with the Tories - still seen by some as the party of the privileged - being challenged to oppose the moves.
Mr Darling set out plans to move 15,000 civil servants out of London as part of the efficiency savings the Government will need to achieve to manage down the debt.
Mr Darling also sought to score a political point against the Tories with a reference to the party's Belize-based deputy chairman Lord Ashcroft, who has non-dom tax status.
The Chancellor said measures in his Budget would bring in additional tax worth half a billion pounds each year.
He told MPs, to Labour cheers: "I can also now tell the House that we are ready to sign tax information exchange agreements with three additional countries - Dominica, Grenada and Belize."
- The cost of the £2.5 billion overall one-off growth package will be met from existing budgets and by higher revenues from the bankers' bonus tax. The Budget will bring in additional tax of half a billion pounds each year, said Mr Darling.
- The Treasury has already received over £8 billion in fees and charges from banks and the one-off 50% tax on bankers' bonuses has already raised £2 billion, said the Chancellor.
- A new guarantee will mean everyone can have a basic bank account, giving up to 1 million more people access to bank accounts over the next five years.
- The impact of the economic crisis has meant the UK economy has contracted by around 6% over the course of the recession.
- Nearly 4 million people have been helped off the unemployment claimant count in the last year alone, said the Chancellor, with this year 440,000 families benefiting from extra help through the tax credit system.
- Tax credit support for older workers is to be extended. To make it easier for those over 60 to receive working tax credit, the Government will reduce the minimum hours they need to work to be eligible.
- A guarantee of a job or training for every 18-24 year-old after six months out of work is to be extended until March 2012.
- The Support for Mortgage Interest scheme will continue at the higher rate for another six months. The Stamp Duty limit for first-time buyers will be doubled from midnight tonight to £250,000 for this year and next, to be funded through an increase in Stamp Duty to 5% for houses worth over £1 million from April 2011.
- From next month, the annual ISA limit will rise from £7,200 to £10,200 and ISA limits will increase annually in line with inflation.
- The Chancellor forecast the economy to grow by between 1% and 1.5% this year and between 3% and 3.5% in 2011. His forecast for the following years is unchanged.
- Duty on beer, wine and spirits will increase as planned from midnight on Sunday. Alcohol duties will also increase by 2% above inflation for two further years from 2013.
- Next month's increase in fuel duties will be staged. Fuel duty will rise by a penny in April, followed by a further 1p rise in October and the remainder in January.
- Tobacco duty will increase from today by 1% above inflation and then increase by 2% in real terms each year until 2014. Inheritance tax threshold will be frozen for a further four years to help pay for the cost of care for older people.
- The planned increase in fuel duty and landfill tax will continue for one year from 2014. Duty on cider will increase by 10% above inflation from midnight on Sunday.
- The Chancellor said by the time the full rise comes in, in January, he forecasts inflation to be back below 2% and confirmed the Bank of England inflation target remains unchanged at 2%.
- The Chancellor said he would provide £100 million to pay for vital repairs to local roads throughout the country following the recent bad weather and £285 million to pay for improvements on motorways.
- Borrowing this year should be £11 billion lower than forecast. In 2010/11, borrowing will be £163 billion, falling to £131 billion in 2011/12, then £110 billion in 2012/13. In 2013/14 it will be £89 billion, reaching £74 billion in 2014/15, £8 billion lower than forecast in December.
- Debt will be £100 billion lower by 2013/14 than was expected at last year's Budget. As a share of the economy, borrowing is forecast at 11.8% of GDP this year, 11.1% next year, then 8.5%. In 2012/13 it will be 6.8%, then 5.2%, falling to 4% in 2014/15. Public sector net debt will reach 54% of GDP this year, increasing to 75% in 2014/15, and beginning to fall the year after that.
- The number of civil servants in London is to be reduced by one-third over the long term, with 15,000 posts relocated within the next five years. One thousand posts from the Ministry of Justice will be moved out of central London, saving £41 million. Public pay settlements will be held at a maximum of 1% for the two years from 2011. The next spending settlement, from 2011 on, will be the toughest for decades, warned Mr Darling.
- To boost a low-carbon economy, the Government will set up a new Green Investment Bank, controlling £2 billion of equity. Half the cost will come from asset sales, with the rest matched by private investment. The fund will focus on green transport and energy, including offshore wind power, with £60 million offered to develop ports hosting manufacturers of offshore wind turbines.
- Business rates will be cut for one year from October, meaning a tax reduction for over 500,000 small businesses in England. Small businesses will be helped to expand by doubling the annual investment allowance to £100,000.
- Over the next year, RBS and Lloyds will provide a total of £94 billion of new business loans, nearly half to smaller firms.
- A new national investment corporation, to be called UK Finance For Growth, will streamline and improve Government help to small and medium-sized enterprises, overseeing £4 billion of support for business. A new Growth Capital Fund will provide fast-growing companies with private capital and will eventually provide £500 million of finance - with commercial banks so far agreeing to contribute more than £100 million.
- A new Growth Capital Fund will provide fast-growing companies with private capital and will eventually provide £500 million of finance - with commercial banks so far agreeing to contribute more than £100 million.
- An extra 15% of central Government contracts will go to SMEs, which could mean up to £15 billion of new business across the whole of the public sector.
- The Government will set up a £35 million University Enterprise Capital Fund to support university innovation and spin-out companies.
- A University Modernisation Fund will give a one-off funding boost of £270 million in 2010/11, creating 20,000 more university places starting this September.
- Parents of one- and two-year-old children will be helped by increasing by £4 a week money paid through Child Tax Credit from 2012.
- The pensioners' higher Winter Fuel Payment of £250, and £400 for the over-80s, will be guaranteed for another year.
Mr Darling concluded his statement at 1.30pm.
Conservative leader David Cameron told the Commons that Mr Darling's move on Stamp Duty was already Tory policy, adding: "The only new ideas in British politics are coming on this side of the House."