'Failure at very heart' of budget

Budget 2014

%VIRTUAL-SkimlinksPromo%Labour has hit back at claims that there is little to differentiate its economic policy from the coalition, insisting a future Labour government would "make different choices".

Labour's shadow work and pensions secretary, Rachel Reeves, said Labour would support the Government when voting on the welfare cap tomorrow, but insisted the party would also "take tough decisions".
She said Chancellor George Osborne's "Wallpaper Budget" was cosmetic and failed to tackle the cost of living crisis.

"I know that the Chancellor comes from a wealthy family of wallpaper manufacturers, and this really was the ultimate Osborne and Little Wallpaper Budget. Paper over the craps, use a zany design to mask the overall structural faults, repeat patterns from last year's range," she said.

"But the truth, is that for all the patterns and effects, people are worse off by £1,600 per year under this Government."

Ms Reeves criticised last Wednesday's Budget, which she said "was certainly dressed to impress, but there was an admission of failure at the very heart of it", after failing to clear the deficit by the end of the Parliament as the Government had set out to do.

"We would get a grip on the failing programmes, like Universal Credit and the Work Programme and focus on the cost of living crisis. We would scrap the bedroom tax, which is both cruel and costing more money than it saves and we would take tough decisions, like scrapping winter fuel allowance for the richest pensioners. And we would get more people into work on decent wages that they can afford to live on," said Ms Reeves.

"Different parties, different values, different priorities."

Ms Reeves's comments come after Labour donor John Mill said there was very little difference between the party and the Tories on economic policy. Mr Mill, who gave Labour more than £1.5 million in shares in 2013, said Labour leader Ed Miliband was "boxed in" on the economy.

But Ms Reeves insisted that "our priorities would control the cost of social security, whilst under the Tories it will continue to rise".

Addressing her Tory counterpart, Iain Duncan Smith, and his fellow Tories, she said: "You have had four years to deal with the cost of living crisis; you failed. You have had four years to help young people and the long-term unemployed; you failed. You have had four years to help those who are disabled and vulnerable and you have failed.

"A tax cut for millionaires, and beer and bingo for the working classes."

Alluding to George Orwell's book about a nanny state, 1984, Ms Reeves said: "Thirty years on, in 2014, it seems that the Chancellor thinks that all he needs to do is cut taxes on beer and bingo and they will be happy. Them and us. How patronising, how out of touch, how very, very Tory.

"The Tories can't deal with the cost of living crisis, only Labour will."

Mr Osborne was not present for today's Commons debate, as he was on visit to a bingo hall in Cardiff to highlight his Budget announcement to cut bingo duty by half to 10%.

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'Failure at very heart' of budget

In a surprise move, the Chancellor announced today that he was scrapping the alcohol duty escalator, which adds inflation plus at least 2% to the price of alcoholic drinks.

He also said that he would be cutting the price of a pint of beer by 1p as he did last year, and that duty on whiskey and ordinary cider would be frozen this year.

The duty on alcoholic drinks has been frozen for Scotch whiskey and cider, and cut by 1p for beer.

The duty on cigarettes, however, will rise by 2% above inflation, adding to the costs faced by people unable to ditch the habit.

The Chancellor told MPs that the number of bingo halls in the UK had "plummeted" by three quarters over the last 30 years.

As a result, he has decided to halve the duty paid on the popular numbers game to just 10%. There was bad news for those who prefer to have a flutter on the horses, though.

Fixed odds betting terminals in bookies will now be taxed at a higher rate of 25%, while the horserace betting levy will be extended to include bookmakers who are based offshore.

"Support for savers is at the centre of this Budget," the Chancellor said at the start of his speech. And he did not disappoint.

The biggest surprise was a revamp for tax-efficient individual savings accounts (ISAs), with the existing cash and stocks and shares accounts being merged and the annual limit being raised to £15,000.

This is up from a planned limit of £11,880 - including up to £5,940 in a cash ISA - and will mean that savers keen to avoid risk can invest up to the full amount in a savings account.

However, older savers will also be pleased to learnt that the government is planning to launch a new pensioner bond available to anyone aged over 65 and expected to offer rates of around 4% over three years.

Not all the announcements made in the Budget were surprises. It was, for example, widely reported earlier in the week that working parents will be given up to £2,000 per child to ease the cost of child care from later this year.

The plans should help to meet 85% of the costs faced by low income families, the government said.

But all families with children under 12 will be eligible, as long as the parents' joint incomes do not exceed £300,000.

All annuity restrictions on how you control your pension pot (if you have one) will be abolished. No longer do you have to buy an annuity.
Instead, people can take more of the money as a lump sum on retirement. The total pension savings that can be taken as a lump sum will be increased from £18,000 to £30,000 on March 27th. 
Tax on cash taken out of pension pot on retirement will be reduced from 55% to 20%.

Everyone aged 65-plus has the opportunity to save with a new NS&I pensioner bond, likely to be 2.8% for a one-year bond, 4% on a three-year bond. There's a maximum £10k per bond limit though.

British drivers have been given some respite from George Osborne. The threat of a fuel duty rise has been banished in the Chancellor's new Budget. Osborne claims fuel prices are now up to 20% lower than they might have been under Labour. 

The Budget included good news for working parents who can now claim a childcare subsidy worth up to £2,000 per child.

However, families where one parent stays at home to take care of the children will not qualify for the new scheme.

There has been a lot of debate about the loophole that allows rich investors to buy properties in the UK through companies, thus avoiding stamp duty.

And now, it seems, the government has decided to take action to stop the practice. "From midnight tonight anyone purchasing residential property worth over half a million pounds through a corporate envelope will be required to pay 15% stamp duty," Osborne said.

He also announced plans to expand the tax to residential properties worth more than £500,000.

The Budget included a number of measures designed to crack down on people who avoid paying tax.

Perhaps the most significant was the announcement that the taxman will be able to take money from the accounts of those who refuse to pay.

Osborne said: "We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries."

"Never again" should the welfare system be allowed to spiral out of control, said Osborne, as he outlined more plans to cap welfare payments - setting the overall limit for 2015-16 at £119bn, excluding state pensions and unemployment benefits.

The cap is in line with official forecasts for welfare spending, but has been highlighted as a very political move as it will require the future chancellor to cut benefits whichever party he or she comes from.


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