Labour’s final Budget before a General Election has been slammed by business leaders who claimed it was designed to win an election rather than help industry.
lan Durham, director of policy at the Coventry and Warwickshire Chamber of Commerce, said: “This was a party political broadcast ahead of the General Election.”
And Birmingham Chamber of Commerce warned: “Businesses in the West Midlands do not feel that they have exited recession and fears of a double-dip remain. It is crucial the investment in business support continues.”
Alistair Darling, the Chancellor boasted of taxing the rich and condemned “the free-marketeers” in a dramatic break with the New Labour approach which won three elections under Blair.
But the Budget statement also contained a stealth income tax increase for people on modest salaries, as documents distributed by the Treasury showed that allowances had been frozen, cutting them in real terms.
Government departments later announced plans for dramatic spending cuts designed to cut the deficit by £11.5 billion a year, including a £1.1 billion cut in education budgets and £4.35 billion cut in health budgets.
They insisted the reductions would not damage services. The health reductions would be achieved by reducing staff sickness, improving procurement practices, saving energy and improving IT, according to the Department of Health.
Despite the planned savings, the Treasury said Britain will borrow £166.5 billion this year and a total of £733.5 billion over six years, in order to balance the books.
Mr Darling confirmed that the threshold for residential property stamp duty would double from £125,000 to £250,000 from midnight tonight.
But to cheers from Labour MPs he also announced that the move would be funded by an increase in stamp duty to five per cent for residential property over £1 million from April next year.
There was further bad news for higher earners – already facing a 50 per cent tax rate on earnings over £150,000 – when Mr Darling confirmed the end of some personal allowances.
He said that for people with incomes over £100,000 a year – the top two per cent – the value of their personal allowances would gradually be removed.
Tax relief on pensions will be restricted from next year, but again only for those with incomes above £130,000 a year.
And the Chancellor said he was freezing the inheritance tax threshold for another four years to help pay for the costs of care for older people.
Katie Teasdale, Birmingham Chamber of Commerce’s head of policy, said: “We are disappointed that the Chancellor did not announce the scrapping of a one per cent increase in National Insurance contributions from April next year, representing what amounts to a staggering £14 billion increase in the business tax bill by 2014.”
Peter Mathews, President of Black Country Chamber of Commerce said “There were some interesting announcements that will support SME’s but overall we did not have the level of detail required. . . the fear is that the real budget will not be revealed until after the General Election”
Alan Durham, director of policy at the Coventry and Warwickshire Chamber of Commerce, said: “The political message appeared to be one where the present Government want to appear to be hitting the rich.”
However, the Society of Motor Manufacturers and Traders praised proposals to force banks to lend to small and medium sized businesses.