Darling budget sets out election battle divide
Updated on 24 March 2010
Chancellor Alistair Darling unveils plans to help first-time buyers and targets higher earners in his final budget before the forthcoming general election.
Mr Darling's budget was highly political just weeks before the expected poll date of 6 May.
In Alistair Darling's third budget, he also announced a 10 per cent rise on cider.
And he said the budget deficit would be £163bn, not the projected £178bn.
The chancellor offered good news for first time buyers - from midnight tonight he double the stamp duty limit for first-time buyers, from £125,000 to £250,000.
The measure, which will apply this year and the next, will mean nine out of 10 first-time buyers will not be liable for the tax.
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The move is to be be funded by a new stamp duty band of 5 per cent on homes costing more than £1m, introduced from April next year.
The level at which inheritance tax is payable will be frozen for four years and the extra income generated by this will be used to meet the costs of care for elderly people.
Taxes on fuel are to rise, but the increases will be phased in. Fuel duty will go up by 1p in April, with a further 1p rise in October and the remainder in January 2011.
Tobacco taxes will increase from today by 1 per cent above inflation, while duty on beer wine and spirits will go up, as planned, at midnight on Sunday.
However, cider, which has traditionally had low levels of duty, will see rates rise by 10 per cent on Sunday. The chanceller said that this was to correct "a long-standing anomaly which has meant cider has been under-taxed incomparison to other alcoholic drinks."
Alcohol duties will increase by 2 per cent above inflation for two more years from 2013.
The one-off tax on bankers' bonuses has raised £2bn, which is twice as much as the Treasury had originally forecast. This extra money will go towards a £2.5bn one-off growth package to help small businesses access credit and fund job creation schemes.
The chancellor has pledged to make it easier for everyone to access banking services.
He has proposed a guarantee that everyone can have a basic bank account, saying that the measure would allow over a million more people to open an account over the next five years.
The chancellor also announced £100m of central government funding for local government road maintenance, to tackle the spate of potholes on local roads around the country after the severe winter weather.
Political editor Gary Gibbon said the budget shows that Labour is trying to neutralise attacks from the Conservatives.
"The government is trying to wrestle the mantle of optimism off David Cameron in the belief that he has shot some of his credibility on that with talk of swingeing cuts and an age of austerity," he said.
"There's a political battle going on with the Tories over whether capital allowances are better than tax cuts for businesses … not sure that will actually shift many votes though." Read his blog in full here.
