The Budget In Detail

Mr Darling said: “Increasingly, grandparents play a big role in family life and in looking after their grandchildren. To reflect this, we will, for the first time, ensure these caring responsibilities for grandparents of working age will count towards their entitlement for the basic state pension.”

Last year’s one-off winter fuel allowance will be maintained this year at £250 for people over 60 and £400 for people over 80.

The basic state pension will be increased by at least 2.5 per cent, regardless of inflation, and the amount of savings pensioners can have before their Pension Credits are reduced will be raised from £6,000 to £10,000. Mr Darling said that would mean an extra £4 a week for the average pensioner.

For disabled children, Mr Darling announced that child trust funds would rise by £100 a year. For severely disabled children, the funds would rise by £200 a year.

Climate

THE Chancellor outlined a series of green stimulus measures as he set the world’s first “carbon budget”, which will require the UK to cut its emissions by more than a third by 2020.

Saying Britain’s economic recovery must be sustainable and protect the environment, Mr Darling announced £1bn to tackle climate change.

He committed millions of pounds of extra funding and financial incentives for energy- saving measures in homes and businesses, offshore wind and low carbon technology.

Alongside the conventional Budget, the Chancellor also outlined his carbon budget, legally required under the Climate Change Act, which will lead to cuts in the UK’s emissions of 34 per cent by the end of the next decade.

He said the budget would “give industry the certainty needed to develop and use low-carbon technology – cutting emissions, creating new businesses and jobs”.

And he announced £405m to encourage the development of low-carbon energy and green manufacturing in the UK.

There was also £435m of extra support to deliver energy efficiency measures in homes, businesses and public buildings, which he said would save carbon and money.

With the credit crunch putting the squeeze on attempts to further develop the UK’s offshore wind capacity, the Chancellor said an extra £525m over the next two years would be raised through the Renewables Obligation, which funds clean energy through an industry levy.

And in an attempt to tackle the emissions from coal and gas-fired plants, the Chancellor said a new funding scheme would finance about three projects that tested the use of technology which captures and stores carbon underground.

The 34 per cent emissions reduction target for 2020 is in line with recommendations from the Government’s climate change committee, which also recommended the target should rise to 42 per cent if a global deal on cutting emissions was agreed in December.

But green groups and aid agencies reacted angrily to what had been promoted as a green budget.

They said the Government had missed an opportunity to lead the world on climate change and put green measures at the heart of financial policy.

Jobs

THE Chancellor announced plans to create or support 250,000 jobs as part of measures to stem the rise in unemployment and help jobseekers, particularly the young, find jobs.

Alistair Darling said the Government was determined not to return to the days when a whole generation of young people found themselves “abandoned to a future on the scrapheap”.

The Jobcentre Plus network will receive an additional £1.7bn, on top of £1.3bn previously announced so “everyone” can receive better support.

He said most people, even now, continued to find work within weeks, and unveiled additional support for people who have been out of work for 12 months.

From January, everyone under 25 who has been out of work for 12 months will be offered a job or a place in training, and those in work will receive a wage.

Those in training will receive additional money on top of their benefits.

Mr Darling said: “To provide these extra opportunities, we are working with employers to create or support as many as 250,000 jobs.

“This will include delivering local services, traineeships in social care, and other high-demand sectors – as well as jobs for people of all ages in particularly badly hit communities.”

Schools and colleges were told that £250m will go towards creating more sixth form places this year, plugging a funding gap.

It will come as a welcome relief to colleges and school sixth forms, which had been told by the Learning and Skills Council earlier this month that they would not be funded in line with their predicted rises in student numbers for the coming academic year.

Across the country, there was a funding shortfall of up to 3.7 per cent - an estimated £200m. As well as the £250m for this year, £400m will be provided for 2010-11. This will help to create 54,000 more sixth form places, Mr Darling said.

He said the Government would provide extra investment to deliver on a guarantee enabling every 16 and 17-year-old who wanted to stay in education or training to do so.

He also announced £260m for training and subsidies to help youngsters gain skills.

Housing

THE stamp duty holiday on properties costing up to £175,000 has been extended until the end of this year.

Alistair Darling said the exemption meant that 60 per cent of homebuyers would not be liable for the tax.

The threshold at which the tax kicks in was increased from £125,000 to £175,000 for a year in September last year.

The extension was among measures to boost the housing market and the beleaguered construction sector.

Mr Darling also announced £500m of extra financial support to kick-start building on housing projects that have stalled because of the credit crunch, including £100m for councils to build energyefficient housing.

Many private developments have either been mothballed or not started as builders struggle under the problems in the financial markets, which have made it harder for people to raise a mortgage to buy a new home.

Building companies have seen their share prices plummet amid concerns that they could breach their banking covenants, while they have also been forced to write down the value of their land banks, and the sector has shed thousands of jobs.

The problems in the housebuilding sector have put pressure on Government targets to have 240,000 homes a year built by 2016, with only 105,000 homes started in England last year.

The Government also said that it was allocating an additional £80m to Home Buy Direct, its shared equity mortgage scheme, which aims to help people get onto the property ladder.

Other measures to help homeowners include increased support for mortgage interest payments for people who have lost their jobs and are looking for work.

The National Housing Federation said the Government had taken a step in the right direction but had not been bold enough, and called for it to invest £6.35bn in social housing over the next two years.

Income tax

THE Budget hit top earners with a new 50p income tax rate and the withdrawal of personal allowances.

The move broke Labour’s 2005 General Election manifesto pledge not to raise the basic or top rates of income tax in the next parliament.

Mr Darling said the new 50 per cent tax band would be brought in for those earning more than £150,000 from next April.

That means the rise will almost certainly take effect before voters go the polls to choose the next Government.

The Chancellor also said he would tighten the screw on high earners further by amending plans he announced in the Pre-Budget Report to gradually reduce the personal income tax allowance for those on salaries of more than £100,000 a year.

Mr Darling said he would now fully withdraw the benefit of the personal allowance from next April.

Chief Secretary to the Treasury Yvette Cooper defended the 50p move as the right response to “exceptional circumstances”.

Asked whether the hike represented a breach of the manifesto commitment, Ms Cooper told Sky News: “Well, it is.

We never expected that we would have this kind of global financial crisis on a scale not seen for almost a century.”

She said it was right that high earners should shoulder the burden of tax rises.

Pensions

THERE were plans to restrict tax relief on pensions for people earning more than £150,000.

Alistair Darling said that from April 2011, the amount of money the Government contributed to the pensions of high earners through tax relief would be gradually tapered so it was the same as the 20 per cent rate the majority of people receive.

Mr Darling said that while it was important to encourage people to save for their retirement, he wanted to “address the anomaly” in which a small proportion of workers took a large slice of the money the Government gives to help people save. He said: “It is difficult to justify how a quarter of all the money the country spends on pensions tax relief goes, as now, to the top 1.5 per cent of pension savers.”

Exact details on how the change will work were not available, but it is understood that people earning up to £150,000 will continue to get 40 per cent tax relief, while those earning more than £180,000 will get only 20 per cent, with the level of tax relief tapered for people earning between those amounts.

Motors

THE Government was accused of giving with one hand and taking with the other after announcing a “bangers for cash” carscrappage scheme and then giving details of an unexpected 2p hike in petrol.

The car-scrappage scheme, costing the Government £300m, will enable owners of cars and vans ten years old or more to get £2,000 towards the cost of a new vehicle.

But the AA said the scheme will effectively be paid for by motorists at the pumps with the 2p fuel duty rise in September, as well as inflation-plus-1p rises each April for the next four years.

And environmental groups were upset that the scrappage scheme will involve participants being able to purchase any new vehicle rather than, as has been expected, only lesspolluting ones.

Also, the Government will only pay for £1,000 of the £2,000 available to owners of cars registered on or before July 31, 1999, with the other £1,000 coming from the motor industry.

Car manufacturers will run the scheme, which will be optional and which is expected to start from mid- May and last until March next year or until the £300m is used. Vans of up to 3.5 tonnes are eligible for the scheme.

AA president Edmund King said: “Drivers will be delighted that a scrappage scheme has been given the green light. However, motorists will be furious that Mr Darling has landed a fuel duty bombshell to pay for it.

“In petrol alone, the UK consumes 64.5 million litres a day. A 2p rise in prices produces £1.3m extra tax per day or nearly £475m over a year. So petrol sales alone will more than pay for scrappage.”

Mr King added that there had been no hint of the September 2009 2p fuel duty rise in the pre-Budget statement last autumn.

Savings

SAVERS who want to shelter their cash from the taxman were given a boost after the Chancellor announced an increase in the allowance under tax-free ISAs to more than £10,000 a year.

The total annual allowance will rise from £7,200 to £10,200, taking effect for those aged 50 and over from this year and extending to everyone next year.

Alistair Darling said the cash limit within the overall allowance would rise from £3,600 to £5,100.

The Chancellor said nearly £290bn had been saved in taxfree ISAs since their launch ten years ago, with 18 million people having taken them out.

At present, savers can put up to £7,200 in equities or a combination of equities and cash, with all money held in an ISA growing free of tax.

Yesterday’s move marks the second ISA allowance increase since their introduction in 1999 to replace Peps and Tessas.

The total allowance was increased last year from £7,000 to £7,200.

The new increase will offer welcome help to savers, who have been hit by a series of hefty interest rate cuts by the Bank of England, which has left UK rates at an all-time low of 0.5 per cent.

Mr Darling also offered help to pensioners with “modest”

savings who have been hit by the record low interest rates.

He unveiled plans to increase the capital disregard limit on Pension Credit from £6,000 to £10,000 from November, which will allow pensioners to have more in savings before their level of help under Pension Credits is reduced.

The decision will see the 5.5 million pensioner households with savings of less than £10,000 gain an extra £4 a week on average, according to the Chancellor.

Alcohol & Tobacco

THE pub industry criticised the rise in alcohol duty of two per cent above the rate of inflation, saying it “signs the death warrant” for thousands of pubs and jobs.

According to Treasury figures, the rise, which came into force at midnight, put 1p on a pint of beer or cider, 4p on a 75cl bottle of wine, and 13p on a 70cl bottle of spirits.

But the British Beer and Pub Association (BBPA) said the “final impact” on a pint in the pub was more likely to be 5p.

Chancellor Alistair Darling also announced a two per cent rise in tobacco duty, which will add 7p to a pack of 20 cigarettes.

The BBPA said 2,000 pubs had been forced to shut in the past 12 months after tax rises aimed at combating binge drinking were introduced last year.