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Labour 'will get recovery right' Darling targets first time buyers
(10 minutes later)
Chancellor Alistair Darling has warned against "throwing away" the economic recovery as he delivers his final Budget before a general election. Chancellor Alistair Darling has axed stamp duty on house sales under £250,000 for first time buyers in the final Budget before a general election.
He axed stamp duty on house sales under £250,000 for first time buyers, said fuel price increases will be phased in and slapped 10% tax rise on cider. He also said petrol price increases will be phased in and slapped a 10% tax rise on cider and alcopops.
He announced the budget deficit had gone down from £178bn to £163bn - still a record - and cut growth forecasts. He predicted the budget deficit would be £163bn rather than the £178bn forecast, but cut growth forecasts.
And he warned of "toughest for decades" spending cuts after the election. He warned spending cuts after 2011 would be the "toughest for decades" but said earlier cuts would risk recovery.
But in a clear attack on the Conservatives, he warned a policy of immediate cuts to public spending would be both wrong and dangerous and would risk derailing the recovery.
The chancellor forecast the economy would 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.
BUDGET 2010: AT-A-GLANCE Deficit not as big as predictedFirst time buyers stamp duty cutPlanned petrol duty rise staggeredForce state banks to lend moreCrackdown on tax evasionStrong cider and alcopop tax hikeGrowth package to boost jobsBank accounts for all citizensGreen investment fund Live: Text and video At-a-glance: The key pointsBUDGET 2010: AT-A-GLANCE Deficit not as big as predictedFirst time buyers stamp duty cutPlanned petrol duty rise staggeredForce state banks to lend moreCrackdown on tax evasionStrong cider and alcopop tax hikeGrowth package to boost jobsBank accounts for all citizensGreen investment fund Live: Text and video At-a-glance: The key points
He revealed that the £2bn proceeds of a bank bonus tax was more than three times what the Treasury forecast in his pre-Budget report. The stamp duty cut will be funded through the introduction of a new higher stamp duty band of 5% on properties costing more than £1m from April next year.
He extended a six month job or training guarantee for under 24-year-olds to March 2012. He also announced that next month's increase in fuel duties will be staged. It will rise by 1p in April, followed by a further 1p rise in October and the remainder in January.
Duty on beer, wine and spirits will increase as planned from midnight on Sunday, including 10% on cider, with further increases to come on high strength cider. Alcohol duties will also increase by 2% above inflation for two further years from 2013.
Tobacco duty will increase from today by 1% above inflation and then increase by 2% in real terms each year until 2014.
He also provoked uproar in the Commons by announcing a crackdown on tax evasion through new agreements with the governments of Dominica, Grenada and Belize - home of Tory "non dom" donor Lord Ashcroft.
In a series of measures aimed at boosting business, Mr Darling announced help for advanced manufacturing and said business rates will be cut for one year from October, meaning a tax reduction for over 500,000 firms in England.
He extended a 6 month job or training guarantee for under 24-year-olds to March 2012, and announced a one-off £270m fund to create 20,000 extra university places
The money for the one-off growth package will be met from existing budgets and savings from a lower than expected unemployment bill, he said.
Mr Darling said that stronger than expected tax receipts meant that government borrowing would be £167bn this year - £11bn down on the £178bn he predicted in the pre-Budget report in December.
He said that the debt would continue to fall faster than previously forecast - dropping to £74bn in 2014-15, down £8bn on his earlier prediction.
The chancellor said he was standing by his forecast that the economy would grow by 1 to 1.5% this year although he slightly downgraded his prediction for next year to 3 to 3.5% compared to the 3.5% in the pre-Budget report. His forecast for the following years is unchanged.
He also revealed that the £2bn proceeds of a bank bonus tax was more than three times what the Treasury forecast in his pre-Budget report.
He also unveiled a guarantee to give everyone a basic bank account, giving up to a million more people access to bank accounts over the next five years.He also unveiled a guarantee to give everyone a basic bank account, giving up to a million more people access to bank accounts over the next five years.
Mr Darling said his Budget would use existing funds to boost growth and jobs and bring down the deficit. Mr Darling said Labour had made the "right calls" during the financial crisis and would make the right choices to secure the recovery.
"The challenge now is to bring down borrowing in a way that does not damage the recovery or frontline services people rely on," he told MPs."The challenge now is to bring down borrowing in a way that does not damage the recovery or frontline services people rely on," he told MPs.
Some of the more controversial measures in the Budget may not make it into law before polling day, which could be just six weeks away.Some of the more controversial measures in the Budget may not make it into law before polling day, which could be just six weeks away.
But the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy.But the planned cut in stamp duty would stay in place whoever wins the election, as it is similar to existing Tory policy.
Mr Darling's announcement on duty on strong ciders and alcopops - another Conservative policy - came after ruling out a minimum price for alcohol.Mr Darling's announcement on duty on strong ciders and alcopops - another Conservative policy - came after ruling out a minimum price for alcohol.
If the Conservatives win the election they will produce an "emergency Budget" within 50 days of taking office which could reverse many of Mr Darling's other measures.If the Conservatives win the election they will produce an "emergency Budget" within 50 days of taking office which could reverse many of Mr Darling's other measures.
The chancellor is not expected to unveil any new tax increases, with the new 50% top rate of income tax expected to come into force on 1 April. The chancellor did not unveil any new tax increases, with the new 50% top rate of income tax expected to come into force on 1 April.
The BBC's chief economics correspondent Hugh Pym said the financial markets - which have to fund the government's borrowing - will not be impressed if Mr Darling does not reduce the deficit as much as he can. The chancellor also outlined plans to boost future economic growth, with billions invested in digital jobs, broadband for all, high-speed rail and biotech industries, using money from existing budgets.
The chancellor is expected to outline plans to boost future economic growth, with billions invested in digital jobs, broadband for all, high-speed rail and biotech industries, using money from existing budgets.
Labour and the Conservatives have clashed over when the government should start reducing spending to tackle the budget deficit, which is among the highest in Europe and is expected to hit about 12.6% of GDP this financial year - well above the EU target of 3%.Labour and the Conservatives have clashed over when the government should start reducing spending to tackle the budget deficit, which is among the highest in Europe and is expected to hit about 12.6% of GDP this financial year - well above the EU target of 3%.
Last week the European Commission criticised the government's plans to halve the deficit in four years, saying they were not ambitious enough.Last week the European Commission criticised the government's plans to halve the deficit in four years, saying they were not ambitious enough.
Conservative leader David Cameron has called on the government to scrap its plans to increase public spending this year and warned that without prompt action to tackle the deficit, Britain risks entering the "danger zone" of rising interest rates and falling confidence on the money markets.Conservative leader David Cameron has called on the government to scrap its plans to increase public spending this year and warned that without prompt action to tackle the deficit, Britain risks entering the "danger zone" of rising interest rates and falling confidence on the money markets.
He said: "The choice is between a government which has completely run out of steam, completely run out of ideas, is not being honest about the mess we're in and has got no plans to clear it up, and a Conservative Party that's got the energy, the dynamism, the leadership to get the economy moving again.He said: "The choice is between a government which has completely run out of steam, completely run out of ideas, is not being honest about the mess we're in and has got no plans to clear it up, and a Conservative Party that's got the energy, the dynamism, the leadership to get the economy moving again.
"That's what we need, is to get this economy growing, get things going again. And that's what our Budget will do straight after the election.""That's what we need, is to get this economy growing, get things going again. And that's what our Budget will do straight after the election."
Lib Dem Treasury spokesman Vince Cable told the BBC on Tuesday: "One of the key tests of the government tomorrow is whether they are willing to be specific, willing to be open about what they are going to cut."Lib Dem Treasury spokesman Vince Cable told the BBC on Tuesday: "One of the key tests of the government tomorrow is whether they are willing to be specific, willing to be open about what they are going to cut."
Meanwhile, the Public and Commercial Services union are staging their first Budget day strike with pickets at key Westminster locations in a row over redundancy pay.Meanwhile, the Public and Commercial Services union are staging their first Budget day strike with pickets at key Westminster locations in a row over redundancy pay.
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