Darling plans super-tax on bank bonuses
Updated on 07 December 2009
As the Chancellor Alistair Darling considers hitting bankers with a windfall tax on bonuses, Gordon Brown announces plans to cut the public spending by £12bn over the next four years.
The windfall tax is one of the measures being considered by the government ahead of Wednesday's Pre-Budget Report.
The chancellor was said to be keen on the idea which will appeal to taxpayers angered at bonus payments expected to reach £6bn this year. The move has dismayed the City which has said bonuses are important for businesses to remain competitive.
The measures come as Darling is expected to admit the annual budget deficit will now top £175bn, largely because of plummeting tax receipts due to the recession.
As well as a windfall tax on bankers' bonuses, Darling is thought to be considering widening the inheritance tax net and increasing capital gains tax.
Any move by the Conservatives to oppose such measures could enable Labour to portray the party as looking after the rich. Yesterday David Cameron hit back at comments about his schooling insisting it does not matter whether politicians had privileged backgrounds.
Public spending cuts
Gordon Brown has promised to curb a "culture of excess" in senior public sector pay and bonuses. The prime minister outlined plans to cut the budget deficit in half by 2014. By cutting public spending the government aims to cut £12bn over the next four years - £3bn more than planned in the Budget.
The "efficiency savings" will cut the senior service pay bill by 20 per cent. The government will also have to approve salaries over £150k.
Other measures include cutting Whitehall consultation spending and moving services online in order to improve efficiency.
It is hoped the move online will cut bureaucracy by providing 24 hour assess to crime maps and school reports.
But a leading economist has warned Channel 4 News that any moves to shrink the budget deficit by raising taxes or cutting spending could push the economy back into recession.
