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| Tory warning over benefit rises | Tory warning over benefit rises |
| (10 minutes later) | |
| The Conservatives have accused the government of cynicism over rises in benefits that it is suggested could be cut again after a general election. | The Conservatives have accused the government of cynicism over rises in benefits that it is suggested could be cut again after a general election. |
| Wednesday's pre-Budget report announced the bringing forward of 1.5% rises in child and disability benefits to 2010. | Wednesday's pre-Budget report announced the bringing forward of 1.5% rises in child and disability benefits to 2010. |
| But the Institute for Fiscal Studies suggests this will need to be funded by cuts of the same amount a year later. | But the Institute for Fiscal Studies suggests this will need to be funded by cuts of the same amount a year later. |
| The government says extra help is being offered when it is most needed and will be reviewed in September 2010. | The government says extra help is being offered when it is most needed and will be reviewed in September 2010. |
| The Treasury said the rises, which had been due in 2011, were intended to help people earlier and smooth out expected changes in inflation. | The Treasury said the rises, which had been due in 2011, were intended to help people earlier and smooth out expected changes in inflation. |
| But the Tories said the public would not be fooled by the government's cynicism. | But the Tories said the public would not be fooled by the government's cynicism. |
| Families and disabled people would be disappointed to learn the benefits increases would lead to real-term cuts later, they said. | Families and disabled people would be disappointed to learn the benefits increases would lead to real-term cuts later, they said. |
| National Insurance anger | National Insurance anger |
| Among Chancellor Alistair Darling's headline proposals were a 0.5% rise in National Insurance and a 1% cap on public pay settlements from 2011. | Among Chancellor Alistair Darling's headline proposals were a 0.5% rise in National Insurance and a 1% cap on public pay settlements from 2011. |
| KEY POINTS OF PBR National Insurance up by a further 0.5% from April 2011Economy to shrink by worse than expected 4.75% this yearNew 50% tax on banker bonuses1p rise in corporation tax for small firms scrappedTax rebates for electric cars and wind turbinesState pension to rise by 2.5% At-a-glance: The key points Pointers for election fight Nick Robinson's view Q&A: What it means to you | KEY POINTS OF PBR National Insurance up by a further 0.5% from April 2011Economy to shrink by worse than expected 4.75% this yearNew 50% tax on banker bonuses1p rise in corporation tax for small firms scrappedTax rebates for electric cars and wind turbinesState pension to rise by 2.5% At-a-glance: The key points Pointers for election fight Nick Robinson's view Q&A: What it means to you |
| The National Insurance increase - which will raise about £3bn a year - has angered the business community, which says it is a tax on jobs when the focus should be on economic recovery. | The National Insurance increase - which will raise about £3bn a year - has angered the business community, which says it is a tax on jobs when the focus should be on economic recovery. |
| The increase, limited to those earning more than £20,000 a year, will hit about 10 million workers. | The increase, limited to those earning more than £20,000 a year, will hit about 10 million workers. |
| According to Treasury estimates, someone earning £30,000 will be £90 a year worse off and someone on £40,000 will be £190 worse off, while someone earning £10,000 a year will be £110 better off. | According to Treasury estimates, someone earning £30,000 will be £90 a year worse off and someone on £40,000 will be £190 worse off, while someone earning £10,000 a year will be £110 better off. |
| Ministers said their target of halving the deficit by 2013 meant "difficult decisions" but insisted that 60% of the burden of extra taxes would fall upon the top 5% of earners. | Ministers said their target of halving the deficit by 2013 meant "difficult decisions" but insisted that 60% of the burden of extra taxes would fall upon the top 5% of earners. |
| Unions have protested that low-paid workers are being penalised for a recession not of their making and warned of "problems" ahead. | Unions have protested that low-paid workers are being penalised for a recession not of their making and warned of "problems" ahead. |
| Bonuses call | Bonuses call |
| Treasury minister Stephen Timms denied the tax rises and spending cuts outlined were a "drop in the ocean" compared to what was needed. | Treasury minister Stephen Timms denied the tax rises and spending cuts outlined were a "drop in the ocean" compared to what was needed. |
| "These are large numbers. They will deliver for us this halving of the deficit which is absolutely essential over the next four years," he told the BBC. | "These are large numbers. They will deliver for us this halving of the deficit which is absolutely essential over the next four years," he told the BBC. |
| Mr Timms said he was confident the economy would return to growth by the turn of the year. | Mr Timms said he was confident the economy would return to growth by the turn of the year. |
| It really is holding off the pain until later Robert ChoteInstitute for Fiscal Studies | It really is holding off the pain until later Robert ChoteInstitute for Fiscal Studies |
| However, Labour forecasts for future economic growth - which will influence the amount it has to borrow and how quickly the deficit is cut - have been questioned after the chancellor was forced to revise earlier figures. | However, Labour forecasts for future economic growth - which will influence the amount it has to borrow and how quickly the deficit is cut - have been questioned after the chancellor was forced to revise earlier figures. |
| In his statement, he said the economy was likely to contract 4.75% this year - far worse than the 3.5% decline predicted in April - while borrowing would be £3bn higher than earlier estimated. | In his statement, he said the economy was likely to contract 4.75% this year - far worse than the 3.5% decline predicted in April - while borrowing would be £3bn higher than earlier estimated. |
| Mr Darling also unveiled a one-off tax on bank bonuses over £25,000, to be paid by the firms rather than individuals, which he said would raise £550m. | Mr Darling also unveiled a one-off tax on bank bonuses over £25,000, to be paid by the firms rather than individuals, which he said would raise £550m. |
| Writing in the Wall Street Journal on Thursday, Prime Minister Gordon Brown and French President Nicolas Sarkozy propose a global one-off tax on the bonuses. | Writing in the Wall Street Journal on Thursday, Prime Minister Gordon Brown and French President Nicolas Sarkozy propose a global one-off tax on the bonuses. |
| The article, calling for a global change in financial markets' operation, argues that bonuses this year are partly the result of governments' support for the banking system. | The article, calling for a global change in financial markets' operation, argues that bonuses this year are partly the result of governments' support for the banking system. |
| Services 'protected' | Services 'protected' |
| The Conservatives, who will launch a new advertising campaign on Thursday warning of Labour's "debt crisis", said projected borrowing of £789bn over the next six years was unsustainable. | The Conservatives, who will launch a new advertising campaign on Thursday warning of Labour's "debt crisis", said projected borrowing of £789bn over the next six years was unsustainable. |
| Mnisters had failed to lay out a credible plan for how they would pay this back, they added, "cynically" ducking tough choices until after the election - which must be held by June 2010. | Mnisters had failed to lay out a credible plan for how they would pay this back, they added, "cynically" ducking tough choices until after the election - which must be held by June 2010. |
| "They have not included anything of significance they are going to do," said shadow Treasury minister Philip Hammond. "They had an opportunity to do it and they have blown it." | "They have not included anything of significance they are going to do," said shadow Treasury minister Philip Hammond. "They had an opportunity to do it and they have blown it." |
| Labour insist that schools, hospitals and the police will be protected from future cuts unlike under Tory proposals which would see the deficit cut faster and further. | Labour insist that schools, hospitals and the police will be protected from future cuts unlike under Tory proposals which would see the deficit cut faster and further. |
| But the Lib Dems said the money raised by tax rises and spending cuts would be used to support spending next year not to reduce the deficit, arguing the plans were "built on sand". | But the Lib Dems said the money raised by tax rises and spending cuts would be used to support spending next year not to reduce the deficit, arguing the plans were "built on sand". |
| Treasury spokesman Vince Cable branded the tax on bank bonuses "pure gesture politics", saying the measure had "more holes in it that a cheese grater". | |
| "We were able to identify several obvious ways in which bankers could not pay it - if they convert their bonus into salary, if they defer the bonus, if the payments are made in kind," he said. | |
| "Any half-competent tax accountant can find a way round this." | |
| 'Phoney budget' | 'Phoney budget' |
| Although ministers did not publish spending details for beyond 2011, economists said it was clear the squeeze on public spending would only begin to bite in the medium term. | Although ministers did not publish spending details for beyond 2011, economists said it was clear the squeeze on public spending would only begin to bite in the medium term. |
| The Institute for Fiscal Studies said the chancellor's figures implied substantial cuts in many areas, potentially including transport, higher education, science and defence, in the future. | The Institute for Fiscal Studies said the chancellor's figures implied substantial cuts in many areas, potentially including transport, higher education, science and defence, in the future. |
| "It really is holding off the pain until later," said its director Robert Chote. | "It really is holding off the pain until later," said its director Robert Chote. |
| "The all important announcements will come after the election, whoever wins it," added Roger Bootle, economic adviser to accountants Deloitte. | "The all important announcements will come after the election, whoever wins it," added Roger Bootle, economic adviser to accountants Deloitte. |
| "This has been the phoney pre-Budget report. The markets realise this." | "This has been the phoney pre-Budget report. The markets realise this." |