Budget to put us on the right track
EAST Ham MP Stephen Timms this week discusses the budget in his exclusive Recorder column. He writes: LAST week s Budget was my fifth as a Treasury minister. The backdrop was by far the hardest – it s been dubbed the most important Budget for decades.
EAST Ham MP Stephen Timms this week discusses the budget in his exclusive Recorder column.
LAST week's Budget was my fifth as a Treasury minister. The backdrop was by far the hardest - it's been dubbed the most important Budget for decades.
As well as dealing with the current worldwide crisis, Alistair Darling wanted to ensure Britain can make the most of new opportunities that will come with the upswing, starting later this year.
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The worldwide crisis has required us to work on two tracks.
Track One has been our work in the G20, where Britain has the presidency this year. The world economy is expected to shrink this year, for the first time since the Second World War. So, meeting in Newham earlier this month under Gordon Brown's chairmanship, G20 leaders drew up a Global Plan for Recovery and Reform. They committed to do whatever is necessary to stabilise the world economy.
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The plan includes $1.1 trillion to restore credit and support growth and jobs, trebling resources for the IMF. And firm action against tax havens, to make sure everyone pays their fair share.
The last time the world faced problems like today's - in the 1930s - joint action was too little and too late, plunging the world into depression. This time, Britain's leadership has helped prevent a repeat of that catastrophic failure.
Track Two has been decisive action within the UK. We took steps last autumn - since replicated around the world - to recapitalise financial institutions and restore confidence.
Before Christmas, we announced a �20 billion package to stimulate the economy. The VAT cut, which will last throughout this year, is saving every household on average �20 per month. And the evidence is growing that it's boosting the economy as intended. Co-ordinating with other countries, UK interest rates have been cut to the lowest ever.
The Budget builds on support coming through from both tracks for families and businesses. Eighteen to 24-year-olds will be guaranteed work or training after 12 months unemployment.
Higher capital allowances will encourage businesses to invest now, supporting �50 billion of investment this year.
Extra funding will help ensure universal availability of broadband, and encourage its use. And the first ever carbon budget - 34 per cent cut in emissions by 2020 - will be backed up by public investment to improve energy-efficiency and support renewable energy.
The crisis has meant that countries have had to borrow more. A key part of the Budget was making sure Britain lives within its means. So people earning more than �100,000 per year will pay more income tax.
Above �150,000 per year, there will be a new 50 per cent income tax rate, and less tax relief on pension contributions.
Tax on fuel, alcohol and tobacco will go up too. There will be a crackdown on tax avoidance, with the names of people and companies found guilty of deliberately underpaying published for the first time. And new efficiency measures will reduce public spending.
The crisis in the world economy poses a huge challenge. But it also provides an opportunity for changes, taken up in this Budget, to put Britain on the right track for years to come.