Budget 2010 – Live coverage

 

Simon Ward, MSN Money’s Senior Editor:

 

That’s the end of our live coverage. Thanks for joining us. For full Budget reaction and analysis, head to our Budget 2010 special

 

1.35pm; "Darling is just Brown with a face lift, a puppet, as we all know Brown just tells him what to do!" says mrwhiskers on our Budget messageboard. Have your say here.

 

1.34pm: In response, David Cameron says the stamp duty cut is a Tory policy. He also derides the higher duty on cider and more university places as policies previously being dismissed by Labour. "Labour have made a complete mess of the British economy and they have done nothing to clean it up," he says.

 

1.33pm: The chancellor sits down.

 

1.32pm: The higher winter fuel payment to be extended.

 

1.30pm: Child tax credit to rise by £4 a week for one- and two-year-olds from 2012.

 

1.29pm: The chancellor prefaces his policies on tax avoidance with a jab at the opposition benches. He says £500m will be raised via his measures. Tax information exchange agreements to be signed with Dominica, Grenada and Belize. This causes uproar in the House as it’s clearly aimed at a certain Tory peer.

 

1.27pm: £35m to be put into university enterprise fund to encourage innovation. £270m to create university modernisation fund. 20,000 more university places to be created for subjects such as maths and sciences.

 

1.25pm: New help for computer games and film industries.

 

1.24pm: The chancellor has reiterated his support for universal high speed broadband access by 2017.

 

1.22pm: £2bn to be set aside for new green investment bank for developing green energy.

 

1.18pm: Some transport plans. Plans for high-speed rail link from London to Midlands and Scotland to continue. £100m for motorway and road repairs. £285m to be allocated for improvement to motorways.

 

1.16pm: Moves to help entrepreneurs set up their own businesses with doubling of entrepreneurs’ relief for capital gains tax.

 

1.14pm: £200m for new fund for business. Business rates to be cut for small businesses.

 

1.12pm: Now onto growth. RBS and Lloyds TSB to provide £94bn of business loans to small- and medium-sized companies.

 

1.09pm: £11bn of efficiency savings promised, including 15,000 civil service jobs relocated from Central London. £4bn to be cut from public sector pay and pensions. £5bn cuts in lower spending priorities.

 

1.07pm: £4bn will be allocated from next year’s reserve to pay for military operations in Afghanistan.

 

1.05pm: Inheritance tax threshold to be frozen for four years.

 

1.04pm: Bad news for cider drinkers. The duty will rise by 10% above inflation from midnight on Sunday. Tobacco duty will rise by 1% above inflation from today. Duty on beer, wine and spirits will rise by 2% from Sunday.

 

1.02pm: No further changes to VAT or national insurance.

 

1.00pm: The 50% income tax level is to remain at £150,000 when it is introduced. Tax relief on pensions is to be restricted for those earning £130,000 or more. Popular with Labour.

 

12.56pm: The borrowing forecast is revised down from £178 billion to £167 billion for the financial year 2009/10. Borrowing is forecast to be £163bn in 2010/11 and £131bn in 2011/12.

 

12.55pm: The 3p fuel duty increase is to be staggered. 1p in April, 1p in October and the final penny in January 2011.

 

12.54pm: The chancellor is sticking with his growth forecast of 1-1.5% for 2010. He’s forecasting 3-3.5% in 2011.

 

12.53pm: Some better news for savers. ISA limits will rise in line with inflation after this year.

 

12.52pm: Here’s a big one. As widely predicted, stamp duty will be scrapped on properties costing under £250,000. This will be paid for by an increase in stamp duty to 5% on properties over £1 million.

 

12.51pm: The higher rate of mortgage repayment support will be extended for those having problems meeting their repayments.

 

12.49pm: Tax credits will be extended, the chancellor says. People over 60 will be able to claim working tax credits. He says the government is looking at scrapping the minimum retirement age. All under 24s out of work for six months will be able to get a job or get training.

 

12.47pm: The chancellor says the unemployment claimant count is lower than "when we took over in 1997". This wakes the opposition benches up.

 

12.46pm: Unsurprisingly, the chancellor is repeatedly pointing to the action taken by the government as being "decisive".

 

12.45pm: The chancellor says the car scrappage scheme has boosted new car sales by 30%.

 

12.42pm: The predicted measure to provide basic bank accounts for all is announced. The chancellor says it will provide access for "more than a million people" who don’t currently have one.

 

12.40pm: The chancellor says the bankers’ bonuses tax has raised £2 billion – more than double what was forecast.

 

12.39pm: "Improved global financial regulation must be a priority." The chancellor talks about the nationalised banks and how the government plans to "get all taxpayers’ money back".

 

12.37pm: "Economic disaster was averted," the chancellor says.

 

12.36pm: Spending will be switched to focus on small businesses and key skills.

 

12.35pm: The chancellor says that borrowing is lower than forecast last year. "This will be a Budget to secure the recovery."

 

12.33pm: "It has been a testing time," Alistair Darling begins. "The record shows the right calls were made."

 

12.30pm: OK, we’re ready…

 

12.20pm: A quick round-up of the latest rumours doing the rounds ahead of the speech itself – stamp duty to be scrapped for house purchases under £250,000; the 3p increase in fuel duty to be introduced in stages; and increases in duty on alcopops and strong cider.

 

12.15pm: Much derision after a question on the alleged ‘cash for influence’ MPs being stripped of their peerages. Gordon is in a fiery mood, saying he wants to be remembered for "winning the next election".

 

12.10pm: Some fiery jousting in Prime Minister’s Questions ahead of the main event. David Cameron: "The cab meter’s ticking". The Tories are "wrong, wrong, wrong" is Gordon Brown retort.

 

12.00pm: Alistair Darling is in a blue tie – the bookies’ favourite.

 

Hello and welcome to MSN Money’s live coverage of Budget 2010. We’ll be blogging the build-up, the speech and the reaction as it happens.

 

If you want to keep in touch via Twitter, head over to MSN Money’s feed, where MSN Editor-in-Chief Matt Ball will be tweeting live throughout.

 

You can have your say on our Budget 2010 messageboard.

Growth should be Darling’s top priority, but Branson should be chancellor

Simon Ward, MSN Money’s Senior Editor:

Those of us on the Money side of the MSN office have an extra spring in our step this week as we gear up for arguably our biggest event of the year. Yes, it’s Budget time again.

In theory, this year should be particularly tasty, coming as it does ahead of a general election. The reality is likely to be a lot more sober, as the chancellor attempts the equivalent of root canal work on the economy while trying to cause as little pain as possible.

Many predictions are pointing to the public sector bearing the brunt of his ‘surgery’ in the form of spending cuts.

And while in the past many of us would be looking at how we as individuals could benefit from the plans unveiled from that battered red box, this year a different picture is emerging.

Your priorities, Darling
In a recent poll we ran here on MSN Money, you voted stimulating economic growth as Alistair Darling’s top priority in this year’s Budget.

29% of you wanted Darling to encourage growth ahead of everything else. Cutting Britain’s growing deficit came in second with 27% of the vote.

21% voted for reducing unemployment, while only 15% of you want him to cut taxes in Wednesday’s speech. Addressing public sector pay was some way behind in fifth place, with 8% of the votes.

Of course, you can’t achieve some of these bigger goals without tackling the others. For instance, cutting the deficit is likely to mean addressing public sector pay. But it says it all about the current hole we’re in that we’re all wondering about the bigger picture this time around.

Branson in pole on our poll
And talking of polls, we’re currently running one on who you think is the ideal chancellor. We’ve put forward the three political parties’ moneymen – Darling, Osborne and Cable – plus a selection of crack businessmen and thinkers, including Richard Branson, Alan Sugar, Stephen Hawking and Robert Peston.

Branson is currently leading the way. Of the three politicians on our list, only Liberal Democrat Treasury spokesman Vince Cable, in second, is receiving strong support. Alan Sugar is third, with George Osborne a distant fourth and Alistair Darling tied with Bank of England governor Mervyn King in joint fifth position.

So it would appear you think Sir Richard is more trustworthy and competent than any of the current MPs in the running for the keys to Number 11 Downing Street.

More intriguingly, Vince Cable coming in second raises some very interesting questions about who would be the people’s choice as chancellor in the event of a hung parliament.

The days and weeks ahead are going to be fascinating…

I’ll be blogging live throughout Alistair Darling’s 2010 Budget speech, so bookmark this page and I’ll see you from 12.30pm on Wednesday.

In the meantime, you’ll find Budget 2010 previews, news, games and more here

Why Portsmouth’s administration will cost more than relegation

Simon Ward, MSN Money’s Senior Editor:

So the unthinkable has finally happened – a football club from the Barclays Premier League has gone into administration.

In the short term, it means Portsmouth live to fight another day. Their long-suffering fans will almost certainly be watching Coca-Cola Championship football next season. Many of their players will move on to lucrative contracts elsewhere.  And if relegation follows, they at least have the Premier League’s parachute payments to give some sort of basis to rebuild.

From winning the FA Cup in 2008 to this current sorry state of affairs, much has been made of the chairmen that have walked through the revolving door at Fratton Park, the players (rumoured to collectively earn £1.8 million a month) not being paid on time and the fans not knowing what was really going on.

The biggest losers
But what about the losers who haven’t merited many column inches? The creditors, with the honourable exception of HM Customs & Revenue, whose action arguably precipitated today’s events, are the biggest of all. They’re the ordinary people who are unlikely to see much, if any, of the money they are owed.

Latest reports suggest creditors could get as little as 10p of every pound they’re owned. Local builder Terry Clark, who’s owed tens of thousands of pounds for work he carried out on the dressing rooms and toilets at the stadium, has been informed that he’s firmly at the back of the queue. “I was told, ‘You’re a small fish,’” he said.

This same scenario has now played out many times over the last decade at clubs across the country. And, time and again, the same organisations form the same weary line to see what they claw back from the ashes. Usually at the back, and often missing out altogether, are the charities.

Take St John Ambulance. They’ve missed out on a small fortune over the years as clubs call in the administrators – £9,000 from Darlington, £5,000 from Bradford City, to name just two examples. Small beer, you might think, but this is a volunteer-run charity that only charges expenses.

Football writer David Conn estimates that, since 2002, “£200m due to creditors has been left unpaid, including money owed to the police, local ­councils, hospitals, universities and other public bodies.”

And let’s not forget that whatever HMRC isn’t paid is money that should be going into the public coffers.

It’s for these reasons that, even as a supporter of Portsmouth’s bitterest rivals Southampton, there’s no elation at today’s news – just an all too familiar feeling of weary resignation.

More on money and football

Can a 3,000% iPhone loan ever be worth it?

Posted by James

 

There’s outrage on the streets: headlines scream about 3,000% loans and iPhones, bloggers talk of "usury in hyperdrive".

What’s it all about? Well, to put it bluntly, Wonga.

Wonga, a short-term loans firm, has launched an application for the iPhone. This company has been around for a couple of years and lets people borrow up to £1,000 (£400 for new users) for up to 30 days.

And for people in a tight spot, it even promises to get the money into your bank account inside 15 minutes or take £10 off the cost of your loan. Wonga estimates almost 750,000 applications have been made to it in the last two years, although doesn’t yet know how many people have downloaded its new iPhone application.

 

Why the headlines?

The problem is the APR, or annual percentage rate. Because Wonga’s typical annual percentage rate, as stated openly on its website, is 2,689%.

Combine that with an iPhone application, which means you can apply for a loan from anywhere with a mobile phone signal, and newspaper editors have been getting excited.

Much of the coverage suggests that the idea that someone can take out their phone and get a loan at any hour of the day or night and then head to a cash point to collect the money almost immediately is frightening.

People are being exploited, say the papers. And this naughty firm is making thousands of per cent interest from this vulnerable group.

Free online debts counselling from the CCCS

Is it really a bad deal?

The problem here is the "A" in APR. Because of the nature of a short-term loan, you simply can’t take it out over a year: 30 days is the maximum Wonga offers. But the way APRs are calculated doesn’t reflect this.

A look at the cost of a loan, rather than a theoretical "annual" rate, puts things in a different light.

A £200 loan, taken out for four days, costs you £13.61 in charges and interest – £8 interest and £5.61 in charges. That’s not cheap, but it’s also not extortionate. Considering banks and credit cards charge you either one-off fees for going over your credit limit (between £12 and £40) or a set charge each day (typically £5), Wonga compares quite well.

 

Taxi for one

The way to think about services like this is using taxis. Let’s say you mistakenly left your rail season ticket in the office before going out for the night. It’s now 11pm and you need to get home, but a black cab, in London at least, will cost you as much as £12 for a journey of two miles.

That’s a lot, but it’s still cheaper than jumping on a train without your ticket and being charged a penalty fare of £25 (rising to £50 if you don’t pay it quickly).

Of course the sensible thing to do is to plan and make sure you have your ticket to get home, but for those stranded, the taxi is cheaper than a penalty fare.

Short-term loans should be looked at like that.

No one would suggest that you should compare the cost of taking a taxi 24 hours a day, 365 days a year, and then not take it because that would cost you more than your annual train ticket.

But that’s effectively what the headline-writers have been doing over the new Wonga iPhone application: applying an annual rate to a short-term solution.

 

Targeting vulnerable people

Another criticism is that this short-term loan targets vulnerable people. Lending to those who can least afford to pay the money back. It’s a concern that many have, especially as this deal is arranged and completed so quickly.

Wonga defends itself on this charge by pointing out that it rejects between eight and nine people out of every 10 that apply for a loan. It only forwards cash to those that can most afford to pay it back and only lets people borrow larger amounts after they have already used the service and paid the money back in good time.

The site is "still super-selective about who we lend to", Wonga communications director John Moorwood told MSN Money in a telephone interview today.

Of course there’s another point to make here. To use the iPhone device you need to own an iPhone. Not something many people struggling to make ends meet can say.

 

Fees

Wonga charges interest 1% a day – plus £5.61 arrangement fee – to people borrowing money from them. There is no penalty to paying cash back early.

The late fee is £10, with interest of 1% a day continuing to accrue. If you still don’t pay the money back fees go up again, with total fees capped at £105 for failure to pay back debts.

However, Wonga denies that it is exploiting people.

"We would basically freeze interest and fees as soon as possible on anyone who’s having difficulty repaying and engages with us to agree a sensible/reasonable repayment plan," Moorwood told MSN Money.

"Maybe split a £235 balance over a few months for example, as long as both parties are happy."

 

Should I use this then?

Is this service a good option? Probably not, unless you have no real alternative. Like the taxi example above, the most sensible thing to do is plan ahead in the first place.

If you have cash, savings or spare capacity on your authorised overdraft or credit card then all of these options are cheaper. If you have friends or family willing to lend a bit of cash for a few days that could also be cheaper (depending on the friends or family in question, of course).

If you don’t have any cash reserves, then I would strongly recommend you take action now rather than waiting until an unforeseen event catches you out.

However, if you do find yourself in a tight spot, and are accepted by them, Wonga is far from the worst option in the world and certainly not deserving of the tabloid ire it has seemingly provoked by creating an iPhone application for an existing service.

How to beat festive debts

The 2009 pre-Budget report as it happens

Welcome to MSN Money’s live coverage of the 2009 pre-Budget report.

We followed chancellor Alistair Darling’s speech as it happened.

The key points of his report were:
Economy predicted to shrink by 4.75% this year and to grow by 1-1.5% in 2010

One-off levy of 50% on any banker’s bonus over £25,000, in addition to paying income tax on the bonus

VAT to return to 17.5% on 1 January

All National Insurance rates to rise by 0.5% from April 2011 for people who earn over £20,000 a year

Higher rate of income tax frozen

Stamp duty holiday to end on 1 January

Basic state pension to rise by 2.5% from April

Child and disability benefits to increase

50p tax on landline phones to support the development of superfast broadband

Inheritance tax threshold frozen until 2011

Changes to pensions and pay for public sector workers

Bingo duty to fall by 2% from April

HAVE YOUR SAY: Join the debate on our pre-Budget report message board

—

Live coverage:

Response from the Liberal Democrats
Vince Cable, shadow chancellor, said:
”It’s good for bingo and boilers.”

”What we needed was a clear-long term way forward; what we got was tax.”

Response from the Conservatives
The shadow chancellor George Osborne said:
”We were promised a pre-Budget report; what we got was a pre-election report. They have lost all the moral authority to govern today. The biggest debt we have ever known, spending cut, higher interest rates to pay for the higher borrowing.”

“We are the only G20 country still in recession.”

“No-one will believe a word they say about the economy again.”

”If you want to get on in life, then the Labour party is not for you.”

”As the debts get bigger, so the government’s response gets smaller.”

”No confidence, no credible plan.”

—

The chancellor sits down.

“A springboard for long-term growth” is how the chancellor sums up his report.

School meals
Free school meals to be extended to parents on low incomes.

National Insurance
All rates to rise by 0.5% from April 2011. However, those who earn under £20,000 a year or less will be protected from the increase.

Afghanistan
£2.5 billion set aside for the military operation.

Public spending
Total public spending to grow by 2.2% in 2010/11.

Pension contributions for public sector workers to be cut by £1 billion. Pay settlements to be capped at 1% for two years from 2011.

Some quangos to be abolished in a drive for “greater efficiency” in the public sector, including widespread cuts elsewhere, planned to raise £4.5 billion.

“We take these decisions from a position of strength”, says the chancellor, to widespread derision from the opposition benches.

Tax
A string of anti-avoidance measures to be introduced.

Highest rate of income tax frozen.

As widely predicted, inheritance tax threshold frozen at £325,000 until 2011.

Reduced pension tax relief for those earning over £150,000.

Chancellor says he has “decided against windfall tax”. He says banks can use profits to build up their capital base. However, there will be a one-off levy of 50% on any banker’s bonus over £25,000, in addition to income tax.

Corporation tax
New rate of 10% for profits derived from patented products.

Landline phone tax
New 50p tax on landline phones to support the development of superfast broadband.

Energy efficiency
£200 million to be made available for the warm front scheme. Much-predicted ‘boiler scrappage’ scheme for 125,000 homes to come into force. Sales of solar and wind power to National Grid to be tax free.

Small businesses
£500 million growth fund for small businesses.

Economy
Predicted to shrink by 4.75% this year. Growth predicted to be between 1-1.5% in 2010 and 3.5% in 2011 and 2012.

Public borrowing
Darling predicts net debt as share of GDP to peak by 2015/16. Borrowing forecast up from £173 billion to £176 billion in 2010/11. Borrowing to fall to 4.4% of GDP in 2014/15. This provokes lots of gasps in Parliament.

Net debt to be 56% of GDP this year.

Inflation
Inflation to hit 3% before falling back to 1.5% next year.

Taxpayer losses from collapse of banking sector
Revised down from £50 billion to £10 billion. Darling says the aim is to recover all of the money.

Economic growth
Growth forecast for 2009 downgraded to –4.75%. Chancellor predicts growth of 1-1.15% in 2010 and 3.5% in 2011 and 2012.

Disability benefit
This will rise by 1.5% from April 2010.

Child benefit
This will rise by 1.5% from April 2010.

Bingo duty
This will fall from 22% to 20% in April.

Pensions
Basic state pension to rise by 2.5% from April.

Employment
Package of education or training for 16- to 17-year-olds to be extended. From January, no-one under 24 “will need to be unemployed for longer than six months”. More help for over-65s wishing to work.

Chancellor: “Unemployment can never be a price worth paying”.

Stamp duty holiday
This will end on 1 January 2010.

Corporation tax
2010 rate to remain.

Tax for small businesses
The Time To Pay tax deferment scheme will be extended “for as long as is needed”.

VAT
VAT will return to 17.5% on 1 January 2010 as planned.

12.36pm: The chancellor says he’s confident that the UK economy will start growing by the turn of the year.

The chancellor says “global confidence is returning”.

The chancellor: “This pre-Budget report is about a fairer society and creating opportunity for all”.

The chancellor says a key theme of the report is “to promote growth”.

12.32pm: The chancellor gets to his feet to address the house.

With a huge hole in public finances and a General Election on the horizon, it’s safe to say that this speech has never assumed so much importance.

Speculation has been rife about a windfall ‘supertax’ for the banking sector, income and inheritance tax freezes, possible VAT and National Insurance increases, plus increases in duty on fuel and cigarettes.

“Growth, jobs and fairness” are set to be the themes the chancellor will cover.

All in all, it’s going to be a fascinating speech.

—

Before the speech, you told us that tackling unemployment is the number one priority you’d like the chancellor to address in his report.

See MSN Money users’ pre-Budget wishlist

Visit MSN Money’s 2009 pre-Budget report special for a comprehensive preview of today’s speech

Follow MSN Money on Twitter

Budget 2009: what the papers thought

The Sun

You’ve got to love The Sun for finding a silver lining amongst all the Budget bad news. Its front page leads with "At least it’s sunny".

 

Flick back to p5 where its Budget coverage begins, and the lead story starts thus: Chancellor Alistair Darling hammered the nation with painful tax hikes yesterday to pay for the gaping black hole in Britain’s finances. To give the Sun its dues, it has discovered that the Budget measures will hit the bingo industry with an extra £5 million in new taxes.

 

George Pascoe-Watson’s political column flags the end of Labour’s term in government.

 

For those curious about what today’s Page 3 Girl thinks: Keeley, 22, from Burnley fears that hard-working, low-earning Brits will be victims of yesterday’s Budget. "Those battling to pay the bills will be hit further with tax hikes on small luxuries like the odd drink at the local."

 

The Times
The Times leads with the headline “Red all over", and the picture is of Darling with red eyebrows. It’s one of the better headlines of today’s coverage referring both to the extent of public borrowing and the return to old Labour policies of taxing the rich.

 

The focus is on those 350,000 people who earn more than £150,000 a year who will be paying a higher rate of tax, will see their personal allowances wiped out and their pensions tax relief reduced to 20%.

 

MPs “gasped”, it writes, as Darling revealed that Britain’s debt will amount to 79% of GDP in 2013/14 at £1.4 trillion. Even these dire figures were "based on a gamble". Growth predictions, it points out, “were dismissed as over-optimistic by the City and dishonest by the Conservatives”.

 

One of the leads dismissed the Budget as “a terrific Budget for Switzerland” (implying that highly paid bankers could just move there) and claims that Darling failed to explain how public finances could be restored.

 

Daily Mail

The Mail’s headline is “Alistair in wonderland” and says that Darling has "gambled Britain’s future on a 1970s-style tax raid against the rich and a wildly optimistic forecast of economic recovery".

 

The tabloid’s headlines make it personal, which is a trait of the Mail after all. It writes of "scorn at Darling’s optimism", how Cameron condemns "Labour’s living dead" and stoops to taking issue at personal appearances: the premier apparently, has a "goofy visage" and a “vast banana grin".

 

That about sums up the Mail’s considered political commentary.

 

Daily Mirror

There was some good news for Darling in the Mirror: "Robin Good" screamed the front page next to an image of Darling in Lincoln green with a bow and feathered cap. "Alistair Darling’s Robin Hood Budget will help the poor – by taxing the rich," the front page story explains.

 

Lindsay Lohan, Frank Lampard’s ex, Emma Watson, Bruce Grobbelaar and Simon Cowell all have stories about them (along with one on MP expenses) before the Budget coverage resumes on page 6.

 

The Mirror is true to its roots and looks for positives in the Budget. A "Just the Job" headline for the unemployment measures; "The Robin Hood chancellor aimed a few well-placed arrows at the rich"; "Saving the day" screams a two-page spread on pages 8 and 9.

 

Is there any criticism at all? Well, there’s a bit of anger about the "booze and cig" prices, green groups "slam" the £1bn as not enough and on the front page it mentions "debt set to soar to £175bn" . But it’s hard to escape how out of kilter this coverage is with everyone elses.

 

The Telegraph

Labour’s broken election promise of raising taxes for those earning more than £150,000 signals a return to class warfare, the front page lead says.

 

The loss of tax breaks on pension contributions also hits Britain’s high earners and the Telegraph reckons these tax grabs on high earners will bring in £5.5 billion for the government. Many of our high earners will pay up to 61% tax on their earnings, with concerns of a "brain drain" – the departure of our best paid and brightest workers to countries with more relaxed tax regimes – mentioned in the commentary.

 

In other coverage, The Telegraph says the Budget was "the last will and testament of a defeated man", sounding the death knell for Darling and indeed Labour at the next election.

 

The Guardian

The Guardian’s focus is on public spending on Darling’s “great squeeze”. Squeezing the rich for £7 billion along with a “brutal freeze on public spending” was Darling’s method of dealing with “the worst year for economic growth since 1945".

 

While Darling has brought forward public spending as part of a “£5 billion boost to the economy this year”, future plans for spending are “more severe” than under Margaret Thatcher with spending growth at just 0.7%.

 

With the level of national debt where it is, the Guardian points out, the government will be paying more than the entire schools budget just on interest repayments. It’s a telling point that’s made in other papers as well.

 

The Guardian goes on to outline how some of Darling’s measures will help young unemployed, pensioners, the car industry and help combat climate change. But the lead story on its Budget supplement delivers the final judgement on the Budget, stating that "this package delivers a poison pill to the next government".

 

The Independent

"That’s rich!" (their exclamation mark and underlining) screams the front page of The Independent, following it up with "PM tears up New Labour script with 50p tax rate for highest earners".

 

Inside there’s a piece on the "Seventies revival? From Healey to Darling – the life and death of New Labour" on pages two and three. The "battle lines" are now drawn for a general election, the paper’s political editor states. Darling’s speech is described as a "going for broke" Budget. Borrowing figures, the 50p tax rate and the pensions changes for the rich are also featured heavily.

 

Page four has a piece on the chancellor’s growth predictions: "IMF punctures chancellor’s optimism". Britain’s recession will last deep into 2010 and Alistair Darling is hopelessly optimistic, IMF chief economist Olivier Blanchard is reported as saying.

 

Economics editor Sean O’Grady has his say on page 5, in a piece headlined: "Our new world: borrowing billions before breakfast". "Shock" and "disbelief" are said to sum up the City’s reaction to yesterday’s Budget. Shock at the borrowing figures and disbelief at the predictions for recovery.

 

The Independent also has a 20-page Budget 2009 special. This has policy detail and a couple of features – including Jeremy Warner’s Outlook: "A bogus Budget that ducks the inevitable pain of spending cuts".

 

Financial Times

The Financial Times calls the “austere” Budget a “gamble on growth” and devotes much of the front page to Labour’s “broken pledge” on taxing the wealthy.

 

It also devotes a lot of space to the Lib Dems and the Tories’ dismissal of Darling’s "absurdly optimistic growth figures".

 

It points out that economists have predicted that “levels of borrowing were so high that Britain would be at the mercy of government bond markets for the whole of the next parliament".

 

It devotes 28 pages to the Budget with the key focus on how the measures will affect businesses.

 

Daily Express

"They’ve ruined Britain" wails the Express. It writes of how Britain was "braced for a decade of merciless tax rises", of how pensions have been "plundered" to foot the bill for the "rampant borrowing of Labour that has ruined the country".

 

Cue the Express editorial staff moving to Marbella then. After a few paragraphs of this, it tells you to turn to pages two and three, as if we needed telling what to do with a newspaper. On the other hand, you could not turn to pages two and three, that would be ok too.

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Live blog: The Budget 2009 point by point

– “You can grow your way out of recession you can’t cut your way out of it,” says Darling, closing his Budget speech.

 

– Tax-free ISA limit to rise to £10,200 for over 50s this year and for everyone else next year.

 

– Pensioners with £10,000 in savings to get interest tax relief.

 

– Winter fuel allowance increase to be maintained for a further year to support pensioners.

 

– Child element of Child Tax Credit to rise by £20.

 

– Darling says Budget  underlines vision of a “confident and successful Britain” and the need to offer people support now and hope for the future.

 

– £525m for new offshore wind power projects.

 

– New Carbon Budget aims to cut emissions by 34 per cent by 2020.

 

– New £750m investment fund.

 

– UK government to extend broadband access to “almost every community” as part of recovery plan.

 

– Darling offers oil industry tax changes to promote exploration and extraction of smaller North Sea fields and also conversion of North Sea fields into energy stores, carbon capture and wind power generation.

 

– £500m to fund stalled housing projects.

 

– Strengthening the banking system is crucial to recovery, Darling says.

 

– Darling says determined to retain London as a major financial centre but with a new and more effective regulatory regime and reduce impact of failures.

 

– Government to realise up to £16bn in property and other sales of assets, Darling says.

 

– Public sector to deliver additional efficiency savings of £9bn a year by 2013/2014.

 

– Fuel duty to rise 2p per litre from September.

 

–  Alcohol duty to rise by 2 per cent from midnight. Tobacco from 6pm today.

 

– Top rate of tax to rise next April to 50 per cent for those earning over £150,000, Darling says. Scrapping personal allowance for those over £100,000.

 

– Pension tax relief to be restricted for those earning £150,000 to the 20 per cent offered to others.

 

– Government to gain £1bn in extra revenue from closing loopholes and cutting tax avoidance, he says.

 

– UK borrowing to hit £175bn this year, next year £173bn, then £140bn and £118bn and £97bn in following years, Darling tells parliament.

 

– Darling says to cut deficit faster would “prevent us helping people now and choke off recovery”.

 

– UK economic easing to amount to 0.5 per cent of GDP, turning to a tightening over the next few years to halve the budget deficit within four years, Darling says.

 

– Darling says government economic support during recession will amount to around 3.5 per cent of GDP.

 

– £2000 “scrappage” subsidy for cars over 10 years old traded in on new vehicles until March 2010 – Darling

 

– Darling extends small business ability to write-off current losses against future profits.

 

– Stamp Duty holiday on homes under £175,000 extended to the end of the year.

 

– Major UK banks to increase mortgage lending by around £20bn supported by new debt backing from government.

 

– Darling to fund 54,000 further places in sixth form and higher education colleges in the next year.

 

– From January everyone unemployed for more than 12 months under 25 will be placed in a job or training.

 

– £1.7bn extra funding for Job Centres, plus more for those out of work for 12 months or more and for young jobless.

 

– Budget deficit to halve within four years, Darling says.

 

– Darling forecasts RPI-inflation of minus-3 per cent by September this year, returning to 0.0 per cent next year.

 

– Inflation target for Bank of England to remain at 2.0 per cent, he says.

 

– From 2011 economy will continue to recover with growth of 3.5 per cent “from them on” – Darling.

 

– Darling says expects economy to shrink around 1.6 per cent in the first quarter of this year, around the same as the last quarter of last year.

 

– UK economy to decline by 3.5 per cent this year but growth to resume by the end of the year, Darling says.

 

– Darling: “no quick fixes, there is no overnight solution” to recession but government will work to restore confidence, save jobs and bring the economy out of downturn.

 

– Average family with a tracker mortgage is now saving £230 a month thanks to lower UK interest rates to deal with recession, he says.

 

– VAT cut will remain until December, Darling confirms.

 

– Darling says UK Budget against background of global recession with spiralling unemployment and falling trade and a financial sector crisis in all countries.

 

– “I expect the economy to start growing again towards the end of this year,” Darling says.

 

– Darling says Budget guided by “fairness and opportunity” and a determination to “invest and grow our way out of recession”. He says is the downturn is the worst in 60 years.

 

– Darling says Budget will support investment for the future, protect investment in schools and hospitals and work to rebuild financial services.

 

– Chancellor Alistair Darling stands to deliver Budget speech.

 

– “Our decision is to invest not to cut,” says Gordon Brown, moments before the UK Budget speech.

 

– Few minutes to go before Darling stands to deliver Budget speech.

 

– Brown, asked by Tory MP at the centre of the email scandal to apologise, says such emails have “no part to play in the politics of this country. It is wholly inappropriate and unacceptable”.

 

– Brown says “you cannot cut your way out of this recession” and affirms that the government will “invest in the future”.

 

– Opposition leader David Cameron says Brown “as well as bringing the country to financial bankruptcy, he brought his party to moral bankruptcy” in a reference to the Downing Street e-mail scandal.

 

– Brown says government is prepared for extra borrowing to support homeowners and businesses, says UK debt levels lower than the United States.

 

– Prime Minister Gordon Brown, speaking ahead of the Budget, says government is “prepared to spend money where necessary” to tackle increasing level of unemployment.

 

– House of Commons in restive mood ahead of PMQ and the Darling “Recession Budget”

 

– Darling to speak after Prime Minister’s Questions.

 

– Have your say on the Budget and what it means for you on the MSN Money Budget message board. 

 

– Darling arrives at Westminster – Budget speech due to start at 12.30.

 

– Chancellor of the Exchequer Alistair Darling leaves 11 Downing Street carrying 2009 Budget in the “Gladstone” red box.

 

The Conversative repsonse:

 

– “What on earth is the point of another 14 months of this government of the living dead,” Cameron asks, taunting Brown with the prospect of the next election.

– Past Labour governments had left the dead unburied, this government was leaving the debt unpaid in what Cameron called a “decade of debt”.

– “This prime minister has written himself into the history books…he has written a whole chapter in red ink,” Cameron.

– Budget was a missed opportunity to move from borrow and spend to save and invest, Cameron says.

– “There is not one country with a bigger budget deficit,” Cameron says. “They didn’t fix the roof when the sun was shining”.

– Conservative Leader David Cameron derides forecast of recovery, saying “this won’t  be a u-shaped recovery it will be a trampoline recovery”.

 

You can follow MSN Money on twitter: http://twitter.com/msnmoney

 

Full coverage on our Budget special, including the latest articles, previews news and analysis. MSN Money’s full coverage of Budget 2009.

 

And if you’ve got a couple of minutes to spare check out our Budget fun page: Can you tell the difference between quotes from Darling and Yes Minister’s Jim Hacker? Do you know your eyebrows? How would you fare as chancellor? Find out all this and more: Budget fun.

 

 

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February’s interest rate decision – a new record low?

Posted by Katherine

Today, the Bank of England announced interest rates have been cut to 1%, which has beat last-month’s record low of 1.5%.

The Bank of England’s Monetary Policy Committee (MPC) cut the official cost of borrowing as it struggles to find a strategy that works on the bleak economy.

Already, interest rates are at the lowest level in the Bank’s 315-year history.

Traditionally, interest rates are cut to make it cheaper to borrow – a move used to encourage spending. At first glance, then, an interest rate cut seems appropriate: the UK has officially entered into recession, unemployment is expected to hit two million  and the UK is expected to suffer the most from the global downturn.

However, there is no evidence to show that a further cut in interest rates will make borrowing cheaper or more accessible – and savers are already suffering from low returns on their money.

In fact, the only people who have benefited from the successive rate cuts are people with tracker or variable-rate mortgages. However, even some of these borrowers do not automatically receive reduced payments in line with the Bank of England rate. For many, their loans have hit the floor and will not drop any further.

And a further cut could put savers in a worse position. The Bank of England has already been urged to leave rates unchanged over fears for savers, who have seen their returns fall by 75% recently.

A further rate cut would also have bad consequences for sterling. Lowering interest rates devalues the currency, meaning that pensioners who live abroad and holiday makers will find it much more expensive than before.

Indeed, it’s difficult to find proponents of an interest rate cut; some economists predict that the Bank will continue to push rates to zero in order to raise the possibility of quantitative easing – creating money to improve liquidity in the banking system.

Whatever the Bank decides to do, it will be a gamble. What would you do in their position?

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January’s historic interest rate decision

Posted by Katherine

Today, the Bank of England announced that interest rates have been cut to 1.5% – the lowest interest rate in the Bank’s history.

UK interest rate hits record low

The move is sure to please the City, who wanted the Bank of England to slash interest rates 50 to 75 basis points today, though any cut would have made interest rates lower than any other time in the Bank of England’s 314-year history. For context, interest rates during the Great Depression only went as low as 2%.

Chancellor Alistair Darling told the Financial Times that as the rates crept towards 0%, “the operation of monetary policy has to be looked at [more closely]”. Darling also indicated that rates would not drop to zero – at least for this month.

How interest rates are shrinking

Many economists expect that interest rates will be cut in February as well, and will be delivered alongside government assurances that borrowing will stay low for a long time.

If interest rates fall too low, however, the Bank of England would lose its independence: if zero or near-zero interest rates fail to have the desired effect on the economy, the Bank would have to seek approval from the Treasury to print money to buy private and public sector assets. This would essentially force money into the economy, a process known as quantitative easing.

The danger with quantitative easing, of course, is that too much money would be forced in, switching the problem from deflation to inflation. Indeed, shadow chancellor George Osborne called comments about quantitative easing as a sign of desperation: “It can’t be ruled out as a last resort in the fight against deflation, but in the end printing money risks losing control of inflation,” he said.

Besides quantitative easing, the financial industry has asked the government to extend loan guarantees to get credit flowing back through the economy.

Furthermore, further tax cuts and government spending are now more likely to appear in the March Budget, though it remains to be seen whether even these measures would kick-start the economy or ease the fears of jittery banks.

Now that no one is arguing that the UK can avoid a recession anymore, the best that can be hoped for is that it doesn’t get worse: house prices have fallen 20% from their peak, car sales have dived and insolvent businesses are in the news every day. According to the PA, more than 75,000 people signed up for unemployment benefit in November alone.

Have you seen any benefits from the previous rate cuts? Have your say on our message boards

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December interest rate decision

Posted by Katherine

Today the Monetary Policy Committee at the Bank of England announced that interest rates have been cut to 2%.

The Bank of England announced interest rates have been cut to 2% today – the lowest seen since 1951 and the lowest level since the bank was founded.

Despite last month’s cut of two and a half percentage points, economic gloom has failed to be lifted. In fact, all economic data suggests that the recession will be prolonged and far-reaching.

Rising unemployment has caused consumer confidence to sink to its lowest ever levels, and repeated profit warnings and write-offs do nothing for business confidence.

Most economists expect a one point cut to 2%, the third cut in as many months. Such a cut would mark the steepest rate of decline in UK interest rate history, from the 5% prevailing in the summer and would match levels last seen in 1951.

However, the overnight swap index market was trading at levels suggesting an even bigger 1.5 point cut, matching that of last month and taking rates to never-before plumbed levels.

And so severe is the recessionary storm gripping the global economy, interest rates across the industrialised world are marching down to zero, according to MSN Money’s investing expert Nick Louth.

How much do interest rates need to be cut to restore confidence? Have your say here.

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