Budget draws mixed reaction in Bristol
Chancellor Alistair Darling yesterday unveiled a range of measures to help the unemployed, pensioners and the housing market.
He also claimed the UK economy would start growing by the end of 2009.
But he admitted public borrowing would hit £175 billion this year in a bid to get the UK out of trouble – which led Tory leader David Cameron to describe the economy as an "utter mess".
Mr Cameron said that not enough had been done to get spending under control and "Britain simply cannot afford another five years of Labour".
The Chancellor tore up a key New Labour election pledge by unveiling a new 50p tax rate for earnings over £150,000.
The Budget received a cool reception in the City, with the Confederation of British Industry saying it did not set out a "credible and rigorous" path to recovery.
Mr Darling also cut future spending plans in a Budget which added 2p on fuel, 1p on a pint of beer and 7p on cigarettes.
Fuel duty will increase by 2p a litre in September and then by 1p a litre above inflation each April for the next four years. Alcohol duties went up by two per cent – about 4p on a bottle of wine and 13p on a bottle of spirits – from midnight.
Mr Darling said the various tax-raising measures would raise more than £6bn by 2012.
That would help pay for a boost, in real terms, in pensioners' income – including new pension recognition for grandparents who care for their grandchildren – and help for savers with ISAs.
There will also be a "car scrappage" scheme under which people trading in cars older than 10 years for new ones will get £2,000 to boost the ailing motor industry.
And there will be more help to get people back into work quickly and support businesses and homeowners facing problems.
Everyone under the age of 25 out of work for 12 months or more will be offered a job or a place on a training scheme.
In addition, the Government will create or support up to 250,000 jobs in deprived areas.
Another widely trailed measure confirmed was the extension of the stamp duty holiday on properties sold for less than £175,000 until the end of the year as part of a £1bn package aimed at boosting house sales and building.
But the Budget drew mixed responses from Bristol's business community.
James Durie, of GWE Business West, said he thought the Chancellor was taking a high-risk strategy on borrowing based on some optimistic growth targets and he was disappointed that little had been said which would tackle some of their prime concerns.
"Of course we welcome the increased investment in the environment but there was little in this budget which suggested we would see an improvement in our transport infrastructure, which is a key concern of our members, and we would also have liked to see measures which would help companies to find new foreign markets," Mr Durie said.
"Equally, holding the level of business rates is all very well, but it's not enough and people with empty buildings will continue to feel their pain."
Accountant Julian Cockwell, tax partner at KPMG's Bristol office, said: "This was a Budget of very optimistic forecasts.
"However, given the uncertain times that we currently live in, the confidence that British businesses will have in such forecasts has to be questioned.
"While we all understand the cost of the recent bank bail-outs, to see the true extent of public borrowing in such stark reality is very sobering.
"If the Chancellor's projections are even slightly out, then we can surely expect cuts in public spending or higher taxes – or both.
"On the face of it, the help for small to medium-sized businesses in the South West appears to be rather limited."
Estate agents were also sceptical about help for the troubled housing market.
Adam Offer, managing director of Besley Hill, a Bristol estate agent chain with 16 branches throughout the city and Gloucestershire, said the Budget was unlikely to revive the housing market.
"I am pleased about the extension of the stamp duty holiday on homes under £175,000 and the extension to the shared equity mortgage scheme," said Mr Offer.
He added: "The extra financial support for house building and the £100 million for local authorities to build new energy-efficient housing are also welcome measures.
"But I am disappointed that the Chancellor hasn't done more to cut stamp duty or to provide more help for first-time buyers and property owners facing repossession.
"This Budget is hardly likely to kick-start the housing market."
Richard Belt, Cabot Circus centre director said: "A key announcement today for the retail sector is news of a 'top-up trade insurance credit scheme' that will protect companies that supply goods on credit against the risk that they will not get paid.
"As the recession has taken hold, insurers have been withdrawing loss-of-payment cover, meaning that suppliers have demanded upfront payments which can leave retailers short of stock and create cash-flow problems.
"Retailers had warned of a possible 'domino effect' of bankruptcies amongst the supply chain, so any move to boost confidence should be supported.
"The Chancellor's confirmation that retailers will be given the option of postponing part of this April's five per cent annual increase in business rates is welcome news for the struggling sector, although retailers will face significant increases next April. However, this immediate help will provide retailers with the extra flexibility on payments that they may currently need.
"Confirmation that the VAT cut to 15 per cent remains unchanged is encouraging, although opinion on whether the measure has actually triggered consumer spending is mixed."
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