by Keith Richmond
ALISTAIR DARLING, the Chancellor of the Exchequer, set out the full extent of Britain’s economic problems when he announced his Budget in the House of Commons on Wednesday.
He admitted that the country is in the grip of the worst recession since the Second World War and that borrowing would soar to £175 billion this year. He also said that the national debt would rise to 59 per cent of gross domestic product this year – and would rise again to 79 per cent by 2010/2011. And he forecast that the British economy would shrink by 3.5 per cent this year.
But he was at pains to point out to a packed Commons that the achievements of the Labour Government since 1997 meant Britain went into this global recession in a stronger position than many other countries around the world.
Mr Darling said: “This Budget will take Britain through the most serious global economic turmoil for 60 years.” He said that in the 1930s governments did too little, too late, but that this Government had taken action promptly to deal with the problems. And he said clearly that his Budget was guided by core Labour values of “fairness and opportunity”.
Key proposals include a new top rate of tax of 50 per cent for those earning more than £150,000 – a move which, while it won’t raise much revenue, is clearly designed to appeal to the left and put David Cameron’s Conservatives on the back foot. Do they back it or promise to reverse it and leave themselves open to charges of “looking after their own – the very rich”?
Pension tax relief is also to be limited for those earning £150,000 or more, but there was recognition for grandparents who help care for their grandchildren and help for older people who supplement their pensions with savings by raising the tax free ISA limit to £10,200.
There was more help to get people back to work quickly – including the guarantee of a job or place on a training scheme for everyone under 25 out of work for 12 months or more – and the government will create or support 250,000 jobs in deprived areas.
He also announced a £2,000 “scrappage scheme” for drivers trading in cars 10 years old or more for a new vehicle.
The Budget was welcomed by union leaders. Unite joint general secretary Derek Simpson said: “Alistair Darling had to deliver the toughest Budget in decades, but he has positioned Labour as the party for jobs and social justice while exposing the Tories for being the party of cuts and inequality.
“The Chancellor’s announcements on tax, the scrappage scheme and employment puts Labour back on the side of working families. Borrowing to shorten the recession is the right action to protect our economy and our members’ jobs.
“We welcome the Government’s action but manufacturing workers need more support now because once those jobs go they will go for good.”
And Tony Woodley, Unite’s joint general secretary, said: “Those on the right who believe it is time for cuts are simply wrong. If they are allowed to have their way. we will come out of this recession with a manufacturing base not fit for purpose.”
Christine Blower, acting general secretary of the NUT, said: “I am glad the Chancellor has stated that he remains committed to spending on schools and hospitals. Slashing investment in public services would have been counter-productive, feeding poverty and inequality.”
