Budget 1999: Winners And Losers - Families gain but not the very poorest

THE CHANCELLOR yesterday delivered on the Government's pledge to unveil a redistributive Budget, with low income groups - in particular families with children - set to gain substantially.

Gordon Brown's surprise move to cut the basic rate of tax to 22 pence from April 2000 and introduce of a 10p starting rate in a few weeks benefits all.

Those earning at or around the national average, such as the "recent graduate" in the chart, will see net income - after tax, national insurance, rent and fuel bills - go up from pounds 7,265 in this financial year to pounds 7,440 next year. The cut in the basic rate of income tax from April 2000 will push up net income further in years to come. Revenue-raising moves elsewhere - particularly the increased ceiling on National Insurance contributions - mean that those on lower incomes will benefit most from yesterday's income-tax cuts.

The dual income family, for example, will see net income rise to pounds 25,716 next year from pounds 25,604 in 1999. And although they will benefit from the 22p tax rate in subsequent years, they will also face higher NI contributions.

Also among the major winners are families with children, thanks to increased child benefit and the new children's tax credit.

Gordon Brown told Parliament yesterday that every family with children would get more support under the new system - ranging from pounds 780 per annum to pounds 2,000 per annum.

Martin Barnes of the Child Poverty Action Group said: "The increase in child benefit and the children's tax credit represent an important recognition of the need to support families with children."

Others, however, noted that the Chancellor's moves could be of no help at all to those families who did not work. The Women's Budget Group said: "The Budget speech appeared to say nothing about women with dependent children who are at the lowest incomes. The child benefit increases will be cut from their means-tested benefit receipts. If this is so, then the poorest families of all will not be any better off as a result of the Budget."

Top-rate tax payers will be relieved the Chancellor has backed away from plans to tax child benefit, following wide criticism in political and media circles. However, his decision to taper the new tax credit means that here, too, lower income groups fare better than middle-income earners.

The elderly can also include themselves among the winners. The increases in the winter allowance, the minimum income guarantee and their personal tax allowance all add up to a significant improvement in the finances of many of Britain's pensioners.

Those over 50 and out of work will also find the outlook a little brighter after yesterday's Budget. For those unemployed for six months or more, a new employment credit will guarantee a minimum income of pounds 9,000 for their first year back at work.

Losers include married couples without children who will see their married couple's allowance - currently worth pounds 190 - disappear in April 2000, although pensioners will be excepted. Homeowners have also been hit following the scrapping of mortgage interest relief, which is to go in the financial year after next.

Smokers and drivers are generally the perennial Budget losers, and this year is no exception with both tobacco and petrol duties up again. Drivers of company cars will be particularly hard hit under the proposals outlined by Mr Brown.

Drinkers, however, have managed to get away scot-free. To the surprise of many, the Chancellor has promised that there will be no increase in duty on wine, spirits and beer this side of the millennium.

Suggested Topics
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
Voices
voicesApple continually kill off smaller app developers, and that's no good for anyone
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

PROMOTED VIDEO
Sport
Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

News
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
life

News
ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style
fashion

Bomber jacket worn by Mary Berry sells out within an hour

Sport
Andros Townsend is challenged by Vladimir Volkov
football
Arts and Entertainment
Rapper Jay Z performs on the Pyramid Stage at Glastonbury in 2008
musicSinger sued over use of the single-syllable sample in 'Run This Town'
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week