The Budget in Brief

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Growth forecasts were revised down to 1.75-2.25 per cent this year and 2.25-2.75 per cent in 2009 while inflation is expected to hit 2.5 per cent this year before falling back to the 2 per cent target next year. Borrowing is set to rise to £43bn next year


The first rise in duty on spirits in a decade takes effect from midnight on Sunday, with 55p added to a bottle of spirits. Duty on wine rises by 14p a bottle and on cider by 3p a litre, while a pint of beer will attract 3p more duty. Alcohol duties will then rise by inflation plus 2 per cent for the next four years.


The Chancellor hiked the tax on a packet of 20 cigarettes by 11p from last night, while a pack of five cigars will cost 4p more. But the tax break on nicotine replacement products, with VAT cut from 17.5 per cent to 5 per cent, has been extended beyond June.

Petrol and fuel duties

The planned 2p tax rise on a litre of petrol that was due to take effect in April has been delayed until October. But, on environmental grounds, fuel duty will rise by 0.5p in real terms from 2010. The tax break for biofuels is also set to end.

Car excise duty

The Chancellor will lobby Europe to cap emissions at 100g of CO2 per km, and will introduce a new band of vehicle excise duty for new cars from 2010. The most polluting vehicles will attract a higher, £950 rate of tax in the first year, while cars emitting less than the EU cap will be exempt for a year.

Fuel poverty

The Chancellor demanded that energy companies triple their spending on social tariffs to £150m a year in a move that will benefit the 5 million energy customers on pre-payment meters. Pensioners' winter fuel allowances will also rise by up to £100 this year.


The duty hikes on alcohol and cigarettes will be used to raise child benefit for a family's first child to £20 a week from 2009, a year earlier than planned, while child tax credit will be increased by £50 a year. Together, the Chancellor says, these measures will take 250,000 children out of poverty.

Training and skills

The Chancellor has earmarked £200m to improve underperforming schools, and is putting £10m into a £30m training scheme for science teachers. An extra £60m has been promised for adult training schemes over the next three years.


Mr Darling refused to back down on plans to introduce a £30,000 annual charge from next month on non-domiciled individuals who have lived in Britain for more than seven years. But plans to look at taxing off-shore trusts have been abandoned.


An extra £8bn for affordable housing over the next three years should see 70,000 homes built. Shared equity schemes for key workers and first-time buyers will now cover up to 50 per cent of house purchases, rather than 75 per cent. Long-term fixed rate mortgages are also being examined.

Personal tax

The 2p cut in the basic income tax rate, announced last year, takes effect next month, but charities will be able to claim tax relief on donations at 22p in the pound for a transitional period. The ISA limit is confirmed at £7,200, £3,600 of which can be cash, while Savings Gateway plans will be rolled out.

Small firms and entrepreneurs

The Chancellor appointed Anne Glover, co-founder of the venture capital firm Amadeus Capital Partners, to look at the viability of introducing a target to give small and medium-sized firms 30 per cent of public sector business within five years. A £12.5m fund to encourage women entrepreneurs is also being set up. An extra £60m will be put into the small firms loan guarantee scheme.