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Alistair Darling defended his first Budget this morning, insisting that it would help people facing financial problems and steer Britain safely through the current global economic turmoil.
In a series of interviews, Mr Darling rejected Conservative claims that his tax hikes on alcohol and cars were bad news for ordinary consumers.
He insisted that the Budget was designed to assist those who are struggling financially, while preparing Britain to face any coming economic storm.
“We are trying to help people who are facing difficulties at the moment,” he told BBC1’s Breakfast News.
“I’m also trying in the longer term ... to take steps now to deal with problems we know we are going to face in the future.”
George Osborne, the shadow Chancellor, attacked yesterday’s package as a “bad news budget” which had “kicked Britain’s families when they’re down.”
“The cost of living is already rising fast and the Government has added to it with stealth taxes on cars and alcohol, when we believe that these kinds of taxes should be offset with tax reductions elsewhere,” he said.
Mr Darling defended individual measures within the Budget, including the so-called “showroom tax” for bigger cars.
From April 2010, there will be a new first year tax rate for new cars, ranging from zero to £950, depending on carbon emission levels. He said the measure would enable people to make “better choices” when purchasing vehicles.
The Chancellor has faced allegations that he has been over-optimistic in his assesssment of the UK’s economic prospects.
He has insisted he can still meet the tax and spending rules set by Gordon Brown when he was chancellor - although his figures depend on a strong economic bounce-back in 2009.
The Institute for Fiscal Studies said Mr Darling had delivered his package “with fingers crossed”.
But Mr Darling insisted his latest forecasts, including a downgraded prediction for economic growth of 1.75 to 2.25 per cent, were “broadly in line” with independent predictions.
He told BBC Radio 4’s Today programme that a rise in public borrowing to £43 billion - an increase of £7 billion on his Pre-Budget Report forecast - was “not surprising” given the global impact of the sub-prime mortgage crisis in the USA.
“When you get this period of uncertainty the right thing to do is to allow your tax policy and your fiscal policy to support the economy; that‘s what we‘re doing,” he said.
“I am taking a cautious view. I said yesterday, at some length, that we are going through pretty uncertain times, but I believe our projections are in line with what people are saying and most people expect our economy to grow.”
Asked if he wished he had more room to manoeuvre, he said: “We are where we are; you can only deal with the economy as you find it.”
The Chancellor defended the decision to delay a 2p increase in fuel duty which had been due on April 1 - a move that pleased motoring organisations and business leaders but infuriated environmentalists.
He said that an alcohol tax hike of six per cent above inflation from midnight on Sunday - putting 4p on a pint of beer, 3p on a litre of cider, 14p on a bottle of wine and 55p on a bottle of spirits - was “a fair and a reasonable thing to do”.
“If you look at the price of a bottle of wine now, it would have cost you more to buy it 10 year ago, if you go into a supermarket,” he said.
Conservative plans to raise duty on alcopops to fund tax cuts on other types of alcohol would push young binge drinkers to other types of drink and be in breach of EU laws, he said.
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Where can I get a DVD of the chancellor's speech - anybody?
I will watch it every night at bedtime. What a wonderful cure for my insomnia!
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Ed Dirben, London, UK
Mr Darling puts up alcohol prices to address child poverty as the Govt targets have not been met. This in an environment of the super rich and non-doms not paying tax. hardly visionary, How did we end up with this bunch of mediocraties posing as a govt?
Margaret Walker, Glasgow, Scotland
Mr "Yes" Darling is out of his depth as Chancellor and frankly he is seen as a puppet doing his master's bidding. He has no credibility and therefore there is no confidence in him.
Roy Race, Bratislava,
The economic illiterates are running thr treasury. Brown dithers and Darling dearn't do what is required. Meanwhile borrowing soars leaving massive problems for the future.
No wonder the young and most able are leaving.
Get the agony over with.
Brown ,you are unelected. If you are sure you are popular hold an election. Or are you scared?
Watt Yyler, London,
So Mr Darling thinks that a 6% hike above inflation on alcohol "was a fair and reasonable thing to do", does he?
I dare him to stand up in front of an audience of independent publicans and repeat that.
Already struggling with soaring overheads, unfair competition from big pub chains and supermarkets with their bulk discount supplies, and loss of trade due to the recent draconian smoking ban, I imagine that a good many will now face bankruptcy in the near future.
Pretty soon the traditional pub will be history, leaving the field open to the town-centre 'drinking machines' with their attendant violence and disorder, while most of us stay indoors.
Incidentally around here the kids are already on high strength cider and lager, not alcopops, judging from the litter in the nearby park.
MikeM, St. Albans, England
Isn't this the man who recently pledged Uk£860 million in aid to India,one of the world's fastest growing economies? I was alarmed at the quote "We are where we are; you can only deal with the economy as you find it.â Surely, he and his government are in a large measure responsible for where the economy is. Or is it just a game of hide and seek?
helen, Norwich,
What about the Housing Market in the UK? Values are falling and it is likely to get a whole lot worse before it gets better. What about abolishing Stamp Day below £250,000 and dropping it from 3% to 2% between £250,000 and £500,000. Interest rates will need to be 4.5% before things improve. Do something now Mr Darling before you've got a catastrophe on your hands.
Ian K, Wiltshire, United Kingdom
He spent all his money on icecreams when the sun was shining and now that it is begining to rain he is borrowing money to buy an umbrella. Perhaps he should look down and he may find the water is already up to his ankles.
Mr G, Leeds , UK
Has he increased income tax threshholds in line with inflation or not? I have emailed the Trerasury but still get no answer. How do I find out what has hit me?
Sue Doughty, Twyford, UK