CHANCELLOR Alistair Darling is gambling on a rapid economic recovery to rebuild Britain’s battered finances – as he revealed that borrowing this year would hit a record £175bn.

In a grim Budget statement, he outlined the full depth of the economic crisis – warning that output would shrink by 3.5% this year, more than doubling his previous forecast.

He also revealed that borrowing this year would soar to £175bn – with another £173bn in 2010 – as the country battled with the worst global downturn in 60 years.

Despite the bleak figures, Mr Darling insisted public finances would get back on track with borrowing to be halved within four years as the economy begins to recover from the end of the year.

Tory leader David Cameron launched a scathing attack on the Government’s handling of the economy, saying: “As of today any claim they have ever made to economic competence is dead, over, finished.”

Among major Budget measures, the Chancellor said the planned new top income tax rate of 45% on incomes above £150,000 will be increased to 50% and take effect from next April – a year earlier than planned.

And from April 2011, pension tax relief would be restricted for those with incomes over £150,000.

Mr Darling defied calls from transport and motoring groups to announce a 2p per litre rise in fuel duty in September and then by 1p a litre above inflation each April for the next four years.

But he confirmed the Government would attempt to kick-start the ailing motor industry by introducing a £300m car scrappage scheme.

Anyone with a car registered before December 31, 1999, will get a cash incentive of £2,000 to trade in their old vehicle for a brand new one.

Drinkers and smokers have been hit with alcohol duties going up by 2% and a similar 2% rise in tobacco duty.

TUC general-secretary Brendan Barber welcomed measures in the Budget to tackle youth unemployment, create a fairer tax system and provide help for construction.

He said: “This budget clearly acknowledges that the Government has a central role to play in turning the UK into a competitive low carbon economy.

“But it is does not bring the same boldness and vigour to getting the real economy right as the Government showed in dealing with the banking collapse. The biggest drain on the public finances will be continuing mass unemployment and we needed a bigger and better targeted stimulus to the economy.” .


TRAINING chiefs welcomed the Budget pledge of £260m in funding to boost the work skills over people aged under 25 – but said more needed to be done.

Jack Matthews, chief executive of the Yorkshire-based food and drink sector skills council, said industry sectors were in “dire need” of direct assistance to help fund training – and claimed extra funding for skills would only be effective if it was left to industries to decide where it should be deployed.

Lisa Harker, of the Institute of Public Policy Research, welcomed the extra resources to guarantee a job or training for all long-term unemployed people under 25, adding: “Extra money for JobCentre Plus should be used to guarantee one-to-one support from a personal adviser at pre-recession levels.”


MOTORING group the AA welcomed the Chancellor’s plans for a vehicle scrappage scheme to encourage motorists to buy new cars.

But AA president Edmund King called the unexpected plan to hike fuel duty by 2p per litre in September as a “bombshell”.

Said Mr King: “Drivers will be delighted that a scrappage scheme has been given the green light. However, motorists will be furious that he has landed a fuel duty bombshell to pay for it.”

Chris Stern, of Paddock-based petrol retailer CJ Stern (Oils) Ltd, said the 2p rise in duty in September followed this month’s fuel duty rise, adding: “We seem to have moved into an era of twice-a-year increases under this Government. We already have the highest duty in the European Union as it is.”


PUBLICANS will have to work even harder to get customers through the doors after Chancellor Alistair announced a 2% rise in alcohol duty, it was claimed.

Tony Payne, Brighouse-based district organiser for the Licensed Victuallers’ Association, said: “He has gone for the soft target. The pub is very important for local communities and he has hit it again.”

Mr Payne said: “The only thing publicans can do is to look at other opportunities to attract custom. We have to make the pub a more attractive option than sitting at home drinking cheap beer from the supermarket.”

Mike Benner, chief executive of CAMRA, said: “It is disappointing that the Chancellor has ignored public concern about the plight of Britain’s pubs and decided to press ahead with an increase which will result in yet more valued community pubs closing.”


ALISTAIR Darling was branded a “Robin Hood” Chancellor with tax measures in the Budget designed to rob the rich to feed the poor.

Graham Barber, head of financial planning at stockbroking firm Rensburg Sheppards, said: “While the poor, retiring and elderly are looked after in the Budget, the rich were dealt the triple blow of a new 50% income tax rate, a cut in personal allowances for those earning more than £100,000 per year and a reduction in pension tax relief for those earning £150,000.”

Lesley Sutton, tax director for accountants Revell Ward in Huddersfield, said: “While endeavouring to promote the growth of the economy, the Chancellor gave out some scary numbers.

“Public sector debt is still increasing and the predictions for future growth are ambitious by most standards.”


CHANCELLOR Alistair Darling has missed a big opportunity to help house buyers, said a Huddersfield estate agent.

Budget measures to kick-start the housing market include extending the stamp duty holiday on homes up £175,000 to the end of the year.

But a spokesman for Simon Blyth said: “The Government has missed a major opportunity to get the economy moving by flunking a chance to make stamp duty on property sales fairer.

“Extending the period of grace to the end of the year is not unhelpful, but isn’t going to do anything to increase confidence in the market.

If the Chancellor had made the threshold £200,000 and added stamp duty at the rate of 0.25% every £25,000, people would have taken it on the chin and the Government would have lost very little in tax.”