Live blog of the Pre Budget Report

Click here for the live blog of George Osborne's repsonse!

4.24pm Alistair Darling sits down.

4.23pm Increases in child benefit will be brought forward to January, and at the same time pensioners will get a one off bonus of £60.

4.22pm Pension credit to increase next year. State pensions will increases with the highest rates of inflation this year.

4.20pm People saving through the "Savings Gateway" will get additional contributions from the Government.

4.19pm The expansion in vehicle excise duty bands will be introduced but they will be phased in and at a slower rate.

4.15pm £775 billion to be spent on new social homes.

4.13pm New lending panel to monitor loans to businesses and individuals; more government funding for free debt advice announced.

4.06pm It's still important to protect the environment, he says, before announcing a reform to the air pasenger duty, which will vary depending in the length of the flight.

4.04pm Deferral of the increase in small business rate of corporation tax.

4.03pm £1 billion of credit to be offered to small businesses under a temporary small business finance scheme.

4.02pm HMRC will allow firms to spread their tax payments over a schedule they can afford.

4.00pm Spending will only rise by 1.2% in real terms after 2011. It had been 2.1%.

3.59pm Tory deputy chief whip Andrew Robathan told off by the Speaker for heckling.

3.59pm Duties on tobacco, alcohol and fuel to be raised in order to offset the cut in VAT.

3.58pm Confirmation of new 45% income tax rate from April 2011 for those earning £150,000 and over.

3.57pm From April 2011 there will be a 0.5% rise in all rates if NI contributions.

3.56pm The £120 increase in the personal income tax allowance will be permanent, and increased to £145 from next April.

3.54pm Confirmation of VAT being cut from 17.5% to 15% until the end of next year, coming into effect on December 1st. He asks for retailersvto pass it on as soon as they can.

3.53pm £3 billion of capital spending brought forward to next year.

3.51pm Announces an additional £5billion in efficiency savings.

3.50pm "Allowing borrowing to rise is the right choice for the country," he says.

3.46pm The fiscal rules will be temporarily suspended.

3.45pm There will be "significantly" lower tax revenues in the short to medium term.

3.43pm He says there will be a £20 billion fiscal stimulus between now and April 2010.

3.41pm Output will continue to fall for the next two quarters and will then recover, he claims, with inflation falling to 0.5% by the end of next year.

3.38pm Darling announces a review of arrangements in Crown dependencies and of international compensation arrangements on the wake of the collapse of the Icelandic banks. 

3.37pm Tory MP Michael Fabricant told off by the Speaker for too much heckling.

3.36pm Again, not sign of accepting blame for the problems as he says the roots of today's problems are failings in the global banking system.

3.34pm He lays the blame for the beginnings of the current crisis on the US sub-prime market.

3.30pm Alistair Darling gets to his feet to deliver the Pre-Budget Report. He begins by talking of economic difficulties "not seen for generations".

Comments

[NorthernMonkey]

Feeling nervous Tories?

[ToryCityBoy]

No.

[Cleethorpes Rock]

Yeah, nervous at all the money we're going to have to pay back to clean up the big Brown mess.

[Mapa]

ps
Spread the wealth! go for it...

[James Maskell]

Im assuming that kicking 4p on fags and booze is going up a little further now.

[Western Star]

Darling claiming he "did fix the roof when the sun was shining"! Dear God, what planet is this man on???!!

[James Maskell]

"We did fix the many roofs when the sun was shining."

And thats why we employ Poles to do roof fixing nowadays.

[james]

COMMENT OVERWRITTEN.

[Western Star]

No James, what they find funny is the Chancellor's total loss of grip on reality! Actually you're right - it's not funny. One should never mock the afflicted!

[Paul D]

Borrowing to hit £118bn next year? Wow, and to think I find my £85k mortgage daunting enough

[Vincent Wall]

Brown can't stop fidgeting. He keeps looking around the Commons. He looks like he's suppressing a smile. This is all politics for him.

[Western Star]

And he's come out with the much-vaunted and much-trailed decrease of VAT - for 13 months!!! Not going to be much use to people and those that are having to change their accounting software (and then change it back again in 13 months' time) are going to be roundly cursing him...

[chrisblore]

National Insurance is going up yet again. Disgraceful!

[chrisblore]

He's also increasing fuel, alcohol and tobacco duty to pay for his VAT "cut" to keep prices in line with how they have been of late. How exactly are we "benefitting" from this then?

[Neil Reddin]

"The £120 increase in the personal income tax allowance will be permanent, and increased to £145 from next April."

So it goes from 6,035 to 6,060 next year - an increase of 0.4% !? Fiscal drag, anyone?

[Western Star]

Smoke and Mirrors!!

[Steve Green (Daily Referendum Blog).]

James,

What were you saying lastnight about the Tories putting up the price of fuel?

[David (One of many)]

First stolen Tory idea - delayed tax payments for businesses.

[Malcolm Dunn]

What was that about telling Parliament first? The salient points are already in the public domain. It's onbvious that Mandelson and Campbell are back. Politics will be debased yet further it seems.

[David_at_Home]

The Stock Market, albeit from a vey low base, has taken off like a rocket and is up nearly 8%. The commentators will take this as a sign that "Business is backing the Government" so the Tories have lost the argument, at least in the short term.

Serves you right, my Tory friends, since we will never get this country back on its feet again until we are prepared to derail the Public Sector Gravy Train, confront the State Education Dragon, see off the Benefits Griffon and slay the Mass Immigration Phoenix.

[NigelC]

What was the complex announcement about income tax allowances for those earning over £100k?

[Umbrella man]

Hopefully we'll win the next election and will find it impossible to reverse these tax cuts :)

[Malcolm Dunn]

The market often makes mistakes during the day David at home. If the stockmarket is still up by the end of the week you may have a point.

[chrisblore]

David_at_Home, let's just hope the long term pain is a price worth paying for the short term gain then. I fear the next Tory government will once again be faced with the huge challenge of righting the short-termism and political opportunism of another waning Labour government.

[NigelC]

David_at_Home.
FTSE is following Wall Street up- nothing to do with Darling.

[michel imperi]

David the stockmarket is up because all of the world indices are reacting to a low , they are all rocketing up . Nothing to do with PBR . The Pound though is below 1.18 again and CDS sovereign UK spreads above 80 for the first time .

[Jennifer Wells]

I hope we will support these measures but we'll fund them by eliminating waste and cutting spending now.

[GB£.com]

Well no sign of obvious election bribes like free chocolate for women so we may be stuck with them until 2010.

All very uninspiring.

[David_at_Home (UKIP Supporter)]

"FTSE is following Wall Street up- nothing to do with Darling."

Probably (though the Dow has been flat since 3.30 whilst the FTSE continues to rise) but I bet you that, tonight, the BBC will report the rise of the Stock Market as a sign of approval of the Government’s strategy!

PS. I am no fan of this totally useless government but I fear that the Cameroons have no answers either (or, if they do have, they are keeping them well hidden).

[Jonathan Galbraith]

They still haven't learned the most obvious solution to the problem:

STOP SPENDING OUR MONEY ON CR*P

The notion that we can afford ever higher public spending and that there's minimal scope to slash spending is ludicrous.

I wish the Party could see past the headlines in the left-wing newspapers and speak this truth to the nation.

[Owen Meredith]

This budegt is locking in tax rises until 2015, and STILL hugely increasing borrowing...

[Neil Reddin]

"What was the complex announcement about income tax allowances for those earning over £100k?"

NigelC,

I'll do my best!

Increasing the personal allowance will "disproportionately" benefit those in the higher tax rates because it reduces the total taxable income, which means that the size of the top slice of income (being taxed at 45%) will reduce. Therefore, increasing the PA by (say) £100 would reduce a high earner's tax bill by £45, whereas someone on low income (in the 20% tax band) would only see a £20 reduction.

That's what he is getting at, though it will inevitably mean yet more complexity in the system. As to whether it is really "disproportionate" is a political point - it's no more disproportionate and unfair than a so-called "progressive" tax system is in the first place.

[David (One of many)]

FTSE on its way down now...

[Tanuki]

A coming hike in NI contributions - that's a sure way to make employers more reluctant to take on staff in the unlikely event this 'fiscal stimulus' does anything but deep, pervasive harm.

[chrisblore]

I do wish Darling would stop talking about "modest incomes".

Yet again, there is no help for students like myself whose utility bills and rent continue to soar with minimal increases of student loans in line with inflation, especially for those of us whose parents have incomes above the means testing bracket. It is us who will be paying the price for Darling's tax bombshell, to the tune of £1 trillion.

[Dorian Stalin]

Excellent, old Labour is alive and kicking with its size tens. It’s the command economy:

Retailers, you WILL pass on the full VAT change.

Banks, you WILL lend to whosoever we dictate.

Mortgage lenders, you WILL not repossess.

Power suppliers, you WILL lower prices or we will intervene.

[gezmond007]

Calm down Osborne , you will make yourself ill !!

[David_at_Home (UKIP Supporter)]

The FTSE 100 has flattened at around 4,100, up nearly 9% on the day.

Eat drink and be merry.....

[Owen Meredith]

There's a lot of passion in Osborne's delivery. He is genuinely angry!

[Ray Gillespie]

So:

1) NI contribution will increase
2) Fuel duty will increase
3) Alcohol duty will increase

Darling thinks that a 2.5% drop in VAT (of which only a fraction may actually be passed on to consumers) will cover these tax increases for most people? The man's clearly insane. Him and his stupid black eyebrows.

[Mark Fulford]

1. We are increasing the tax threshold by £145
2. We are increasing all NI by 0.5%.

This is sold as a tax cut yet yields the Treasury £238 more per average employee, more than reversing the combined headline PAYE reductions of 2006, 2007 and 2008.

[NigelC]

Neil,
I understood the basic concept of the allowances change over 100K but not how he will implement it.

I presume pension contribution will attract the higher rate rebate if tax is paid at 45% - or is there something in the small print

[chrisblore]

Darling goes on the "Tories have nothing to say" line. Brown, Balls and Darling are grinning like Cheshire cats.

[Neil Reddin]

NigelC,

Indeed, the small print will be the rub, as always. It may be some sort of tapering process, as with the older person's allowance. Maybe the PA will become an actual reduction in tax payable, rather than taxable income, as MCA was before it finally died.

Pensions contributions tax relief is already subject to a clawback at higher rates - I expect the same mechanism will catch relief at 45%.

[David_at_Home (UKIP Supporter)]

Though to Dow seems to have flattened, the FTSE 100 is on the rise again, now above 4140.