Darling hits back as he denies hiding tax hike

Alistair Darling today defended putting off difficult decisions about the deficit and denied hiding a tax hike for millions with his Budget speech.

The Tories have accused the Chancellor of concealing a tax rise for 30 million workers from a freezing of tax bands.

Opposition MPs and some economists have also claimed he failed to set out a credible strategy for cutting the nation's record debt.

Mr Darling accused the Tories of being "conspicuously silent" on their own plans for taxes and spending cuts.

He said: "If we took public spending away now we'd risk tipping the country back into recession. That is not a risk I'm willing to take."

On tax allowances, he claimed they were frozen because they were set at a time of negative inflation in September. He said increasing them as the Tories have suggested would cost £2 billion.

"If that really is their policy they need to say where the money is coming from," he told GMTV.

The Chancellor's budget drew up the battlelines for a general election expected on May 6 by squeezing the better off to fund help to new homebuyers, the elderly and the young unemployed.

In his final parliamentary set-piece before the country goes to the polls, he said he was determined those who did well in the good years "should now pay their fair share of tax".

However the Tories warned that tens of millions of ordinary workers would be hit by an effective tax increase with a freeze on personal allowances, despite a 3.7 per cent retail price inflation rate.

Shadow chancellor George Osborne attacked the freeze, contained in the detailed figures in the Budget "red book".

"Thirty million working people will be hit by this new Labour stealth tax. The Chancellor said nothing about the biggest tax rise in the Budget," he said.

"That tells you everything you need to know about Labour's cynical tricks and their priorities: the bill for Gordon Brown's economic mistakes is going to be paid by every working family."

The centrepiece of Mr Darling's statement was a two-year stamp duty holiday for first-time home-buyers on properties up to £250,000, paid for by a new permanent 5 per cent rate on homes over £1 million.

He said that lower-than-expected unemployment figures meant that he could extend the guarantee of a job or training place for all 18 to 24-year-olds for an additional 12 months to March 2012.

The inheritance tax threshold would be frozen at £350,000 for four years - the Tories plan to scrap the levy on estates over £1 million - to help pay for care for the elderly, he told MPs.

At the same time the Chancellor sought to reassure the markets of his commitment to tackling Britain's record deficit, with a further £9 billion in savings on top of £11 billion of efficiency measures by 2012-13 in December's Pre-Budget Report (PBR).

Whitehall departments announced their contributions towards the £11 billion savings - many of them previously announced - including £4.35 billion from the Department of Health and the NHS, £1.1 billion from the Children's Department and £700 million from the Ministry of Defence.

But the proposed savings - to come largely from back-office functions like IT, procurement, consultants and administration, or by cutting costs such as staff sickness and energy bills - were ridiculed by opposition politicians who said they were too vague to be credible.

The biggest cheer on the Labour benches came when Mr Darling announced a new clampdown on tax evasion, including an information-sharing agreement with Belize - the Central American tax haven where the "non-dom" Tory deputy chairman Lord Ashcroft reportedly has much of his fortune.

Experts suggested the arrangement - to be formalised at a signing ceremony with the High Commissioner for Belize this morning - would be of far more political than financial value to Labour.



Mr Osborne said Mr Darling was "not being straight with people" over the personal allowances row.

He told Sky News: "He has frozen the personal income tax allowance.

"That is an effective tax rise on 30 million working people, because when he said he was going to freeze it last autumn, inflation was negative. Now inflation is 3.7 per cent on the RPI.

"What that means, in effect, is a tax rise for millions of working people and, if you're someone on the basic rate, that's around £50 extra tax a year, if you're a couple, around £100 extra tax a year, and of course that's not including the National Insurance tax on people's incomes which is coming down the track."

Asked if he would have raised the personal allowances, Mr Osborne said: "I would have got to grips with the waste, the bloat, the excessive spending that got Britain into the problem it faces today.

"I would have set out a credible plan to deal with the debts, that would have protected our country's credit rating, kept interest rates lower for longer, and avoided the ever-increasing spiral of taxes which seem to come from this Government to working people."

Asked if he would raise taxes, including VAT, he said: "No Chancellor or Shadow Chancellor, including Alistair Darling or indeed Gordon Brown before him, would ever rule out tax rises in the future - that would be a totally irresponsible thing to do.

"What I am saying to you is telling you about my priorities and values, which are about trying to avoid tax rises on working people by dealing with bloated government waste that has caused this debt problem, that threatens higher interest rates, that costs jobs, and puts taxes up on working people."

He said his first priority was to avoid the National Insurance rise.

Asked when he would have his own Budget, if the Tories win the election and he is Chancellor, he said: "We'd have it within 50 days of the election."

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
tech
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
life
News
i100
Life and Style
tech
Voices
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
  • Get to the point
2015 General Election
May2015

Poll of Polls

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 General

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Cancer Research UK: Corporate Partnerships Volunteer Events Coordinator – London

Voluntary: Cancer Research UK: We’re looking for someone to support our award ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions