David Cameron, the Tory leader, said that the public faced a
harsh reality whereby every time they got a new mortgage, filled up their
car or shopped at the supermarket, they had to pay more. "People
watching this Budget will conclude that the Chancellor and the Prime
Minister live in an entirely different world from everyone else," he
said. "The cost of living is going up and Labour is making it worse.
High debt, high interest rates, high taxes and now lower growth. Those are
the facts that this Budget cannot hide."
Nick Clegg, the Liberal Democrat leader, described the Budget as
an act of political ventriloquism."The Chancellor is the Prime
Minister’s creature, struggling to clear up the mess left by his boss under
instructions from Number 10. What we have seen today is an act of political
ventriloquism. I would like to compliment the Prime Minister, I watched him
very closely, his lips barely moved all the while the Chancellor was
speaking."
Scotland's nationalist government dismissed the budget with
Stewart Hosie, an SNP MP, saying: "This is a sub-prime Budget from a
sub-prime Chancellor. This is a Budget with no new ideas, just
disappointment and more dither and delay."
Business groups questioned the Chancellor’s economic forecasts,
claiming they were too optimistic. David Kern, economic adviser to the
British Chambers of Commerce, said: "The Chancellor's Budget economic
forecasts remain unduly optimistic. The growth forecasts of 1.75 per
cent-2.25 per cent for 2008 and 2.25 per cent to 2.75 per cent for 2009
remain somewhat too high, even though the Chancellor was right to reduce the
previous forecast he made in the pre-Budget report."
Richard Lambert, director general of the CBI, said: "The
Chancellor didn't set the Thames alight, but then he didn't have anything to
set it alight with. On the surface there are no nasty surprises, but his
growth assumptions are optimistic and leave him with little room for
manoeuvre should things take a turn for the worse. Borrowing also looks set
to rise by a further £20 billion over the next four years, which is a cause
for concern.” But Mr Lambert welcomed moves to stimulate enterprise. “The
Government has much to do if it is to win back its enterprise credentials,
but the measures announced today are a credible first step on the road,” he
said.
David Frost, director general of the British Chambers of Commerce,
said: “This Budget will be seen as one that saw a number of tax increases
which failed to help businesses overcome the difficult conditions they
currently face rather than one that restored the relationship between the
Government and the business community. The pre-Budget Report last October
brought in a series of changes that complicated the tax system, increased
taxes and made the UK a less attractive place to come and do business.
Unfortunately the Chancellor has not repealed the bulk of these measures and
the business community will still feel that the Government has used them as
an easy target for the Treasury.”
Martin Temple, chairman of the EEF manufacturers’ organisation,
said: "The lack of any announcement on the future direction of business
tax strategy failed to impress. The UK’s tax competitiveness is heading in
the wrong direction and this still needs to be addressed if other positive
measures are not to be undermined.”
Hauliers welcomed a delay to the 2p increase in fuel duty but said it
needed to be delayed further. Geoff Dossetter, of the Freight Transport
Association, said: "As the price of oil continues to rise, he must
continue to keep his foot off the fuel duty accelerator – the proposed half
pence per litre above inflation increase from 2010 can be no more than
speculative. FTA will seek a further deferment after 1 October."
Unions signalled more unrest over pay, with increases being capped at 2
per cent in the public sector. Dave Prentis, of Unison, said: "Darling’s
limited room for manoeuvre is clearly hampering progress towards a fairer
Britain. Public Service workers such as nurses, teaching assistants, dinner
ladies, care workers, cleaners and nursery nurses are bearing the brunt of
the squeeze on public services."
Brendan Barber, general secretary of the TUC, backed Alistair Darling’s
claims about the robustness of the economy, but attacked the Chancellor for
failing to crack down on non-doms. “While there was limited scope today for
major changes, the Chancellor should have done more to tackle child poverty.
While there are welcome measures today, the Chancellor has not done enough
to meet the target of halving child poverty by 2010, but neither has he made
it impossible. But to do so will require much more bravery in making the
super-rich pay their fair share of tax. While the Chancellor has stuck to
his non-dom guns, he was wrong to rule out further changes when the
threatened talent exodus fails to materialise. The richest non-doms will
hardly be troubled by this £30,000 poll tax,” he said.
Small businesses gave a cautious welcome to the speech. John Wright,
chairman of the Federation of Small Businesses, said: "Finally it seems
we may have an announcement from the Chancellor that doesn’t spring any
nasty surprises on small businesses. The deferral of plans to change income
shifting rules, which would have forced tens of thousands of family
businesses to create and maintain a massive amount of extra paperwork on
individuals’ contributions to their business, is welcome news. The plans
should now be abandoned permanently."
Alcohol awareness charities welcomed the rise in alcohol prices. Don
Shenker, acting chief executive of Alcohol Concern, said: "The
Government’s tax plan to finally address the issue of alcohol becoming more
affordable with every passing year is welcome, and overdue. There is broad
international agreement that price has a crucial part to play in
substantially reduce harmful drinking. However, for moderate tax hikes to
work, Government must also force the big retailers to stop discounting
drinks so deeply so that any rate increases can actually be passed on to
consumers. We call on ministers to use their considerable powers to achieve
this."
The smoking lobby criticised his decision to increase tobacco taxes.
Christopher Ogden, Chief Executive of the Tobacco Manufacturers’ Association
(TMA), said: "The increase in tobacco tax announced today will do
little to reduce the level of tobacco smuggling and cross border shopping
which lost the Treasury £4.5 billion in revenue last year. The decision
helps to maintain the UK’s position as one of the world’s most profitable
destinations for tobacco smugglers and this is of great concern to the TMA
and its member companies."
Retail chiefs attacked the Government’s decision to press on with plans
for a plastic bag levy. Stephen Robertson, director general of the British
Retail Consortium, said: “It’s outrageous to suggest carrier bags are a
major cause of climate change. There are many more significant contributors.
Customers took a billion fewer bags in the last 12 months and retailers are
over half way to achieving the target on cutting the use of new plastic.
This shows bans or taxes are not the only way.”
Airlines greeted with dismay plans by the Chancellor to make aviation
pay more to meet environmental costs. Paul Charles, communications director
at Virgin Atlantic, said: "Air Passenger Duty will already raise around
£3 billion for the Treasury this year, more than enough to cover the cost of
emissions of the UK aviation industry. Further increases look as though they
are merely propping up the Government’s finances. The whole of Britain wants
to know from the Chancellor which environmental projects are actually
benefiting from these tax increases, as so far he has been noticeably quiet
on the issue."
Environmental campaigners, however, were not pleased with the moves,
claiming that the Government's airport expansion plans rendered them
meaningless. Anita Goldsmith, transport campaigner for Greenpeace, said: "Increasing
the revenue from flight taxes is hypocritical posturing from a Chancellor
who wants to see Heathrow and Stansted almost double in size. The modest
carbon savings that might be achieved by bumping up fares by a few pounds
will be wiped out in no time by a third runway at Heathrow. A truly green
Chancellor would have told the aviation industry their tax subsidies worth
billions are being cancelled and the money is being channelled into the
railways."
Duncan Sedgwick, chief executive of the Energy Retail Association, said
the Budget did not present an adequate strategy for tackling fuel poverty. "We
need to be clear how the Government plans to work with energy companies to
target low income families. It needs to get better at sharing the
information it has in order to target those most in need. Energy companies
are willing to support the Government, but we need a complete re-think on
how to tackle fuel poverty. That doesn't mean tinkering around the edges.
There is a danger that despite the Chancellor's warm words and continued
actions from the industry many families will remain in poverty. The industry
is keen to work with government to tackle fuel poverty, but in order to do
this a long term, coherent strategy is urgently needed. Millions of fuel
poor customers are still not claiming their full benefit entitlement and are
living in poorly insulated homes. Government must work together with
industry to identify those at risk and help them out of fuel poverty,"
he said.
