A modest budget for stormy times
Updated on 12 March 2008
With economic storm clouds on the horizon, Alistair Darling's first budget is designed not to be radical, but to steady the nation's nerve.
The budget has hit drinkers, smokers, and drivers of high-polluting cars.
From midnight on Sunday, the tax on alcohol will go up by 6 per cent above the rate of inflation. That means an extra 14p on a bottle of wine.
And from 6 o'clock this evening smokers have had to fork out an extra 11p on a packet of 20 cigarettes. As was widely trailed, the chancellor has deferred the 2p hike in the tax on petrol until October.
But there's pain on the horizon for the buyers of more polluting cars. The newest measure is a showroom tax based on CO2 emissions from 2010 - a one-off payment for new cars depending on their emissions.
Cars like a Ford Focus diesel, emitting less than 130gms, will be exempt. But a mid-range car like this VW Passat will pay a one-off charge of £155. A high emissions car like the Volvo XC90 will be taxed almost £1,000 extra. That's on top of the cost of the tax disc - up to £455 more for cars in the top band.
A budget predicated on a rosy view of the economy.
You can watch our economics correspondent Faisal Islam's piece on the budget, here:
Watch the report
At the heart of the budget maths is more borrowing. Alistair Darling's predecessor's budgets never predicted government borrowing would go up, even if that's what sometimes happened. Today's budget projected government borrowing up by £20bn over the next four years.
The borrowing helps the chancellor weather the difficult times but he still wants more taxes, not much this year, things are too shaky for that but £2.5bn more in tax over the next three years.
Alcohol now has its own escalator tax - going up by 2 per cent above inflation for the next four years but kicking off on Sunday with a 6 per cent rise.
But with the 2p extra on fuel postponed until October, he just wasn't sure the economy was strong enough to take it.
There are hiked up vehicle excise duty payments for the most polluting cars - nearly £1,000 duty for the first year when you buy a new, high performance car in the top band. But the green lobby seemed under whelmed by it all.
Channel 4 News studio discussion on the budget
We invited chief secretary to the Treasury, Yvette Cooper; Conservative opposite number Philip Hammond; the Liberal Democrats' Treasury spokesman Vince Cable and Robert Chote from the Institute for Fiscal Studies.
Watch the report
Mr Darling did impress campaigners for child poverty - they'd asked for £4bn in this budget - but were grateful for what they got in a lousy economic climate.
Where Gordon Brown used to produce a rabbit from the hat at the end of his budgets the chancellor produced a bit of a gerbil - a one off £50 extra on the pensioners' winter fuel allowance.
But Mr Darling hopes he's done enough to keep things stable - a modest budget for difficult unpredictable economic times.
