Is it that time of year again?
Yet again, the staff here at the Money Hospital gathered in the lounge to watch coverage of this year's budget. Everyone fought for prime position on the sofa in front of our useless excuse of a TV to see what we can look forward to in this new financial year.
The name on everyone's lips today was Alistair Darling, the new Chancellor. However, it appears there was not much in the way of sweet nothings being muttered by this particular Darling (and is it us, or does he look a lot like Mr Bean?)
As many of you expected, there were very few surprises in the 2008 Budget and some opinions are already calling it a "hangover budget". But is that true?
Here then are the key points:
FAGS AND BEER
- Cigarettes up 11p on a packet of 20; five cigars up 4p
- Beer up by 4p a pint, wine 14p a bottle, spirits 55p a bottle and cider 3p a litre by Sunday (That will tackle the pandemic of binge drinking won't it?)
CARS, FUEL AND ROAD PRICING
- From 2009, there will be a major reform of the vehicle excise duty. For new cars from 2010, the lowest-polluting cars will pay no road tax in the first year.
- £950 higher first year rate of road tax for most polluting cars (although if you are spending £35k on a Chelsea tractor then you can probably afford it)
- 2p increase in fuel duty is postponed until October this year.
HOUSING
- From April, key workers, such as teachers and nurses, will be able to borrow money from shared equity schemes.
- Stamp duty on shared ownership homes will not be required until buyers own 80% of equity (sounds as if the Govt is encouraging people to reduce their living space with delayed tax incentives. Maybe they hope it will prolong their crucial housing boom?)
- More people should have the chance to have a long-term fixed rate mortgage, which a report shows can reduce the risks for first-time buyers and can keep them on the housing ladder (Sounds like Govt speak for "We will try to force banks to offer lower priced mortgages. We don't know if any of them will like the idea or whether they'll just use it to charge a higher rate over the life of the loan, but it sounds good")
- Sites for 70,000 more houses have been identified (they are just not sure who is going to build or buy them!)
- Council tax bills will rise by an average 3.9% from April (this had already been announced)
PENSIONERS
- Winter fuel allowance will go up from £200 to £250 for the over 60s and from £300 to £400 for the over 80s (now that is some good news)
BENEFITS
- From October 2009, rules for housing and council tax benefit will mean families on benefit are better off in work
- The planned increase in child benefit to £20/week will come into effect from April 2008; as well as the child element of Child Tax Credit rising by £50 a year. These increases have been introduced to try and halve child poverty by 2010.
- From April 2010, all long-term recipients of incapacity benefit will attend work capacity programmes (haven't the Govt tried this sort of thing before?)
SAVINGS
- The government will launch the "savings gateway" nationally with the first accounts available by 2010.
- The Cash ISA limit will rise in April to £3,600 from £3,000 (still could be better though)
THE ENVIRONMENT
- Laws will be introduced by 2009 to tax plastic bags if shops do not do more to charge for their use. There is a threat to introduce legislation to charge for plastic bags unless companies reduce the number of plastic bags in circulation voluntarily, with the charge passed on to 'green' charities and initiatives (because plastic bags are evil and solely responsible for climate change aren't they?)
- £26 million fund will be introduced to help homeowners reduce their emissions and power bills
- New non-domestic buildings to become zero-carbon from 2019
- Consideration is being given to raising the UK target for emissions cuts to 80% by 2050 (i.e. they are thinking about doing something about the pollution)
EDUCATION
- There will be £200 million extra for schools to raise GCSE results. By 2011, every school "will be an improving school"
- £10 million committed to improving science teaching (how about teaching finance skills too?)
POVERTY
- Child poverty must be eradicated in Britain; total of 600,000 fewer children in relative poverty and 150,000 fewer children in absolute poverty (definately a step in the right direction)
- £17 more a week for poor families with one child.
- A family with two children earning up to £28,000 a year will be £130 a year better off. A further £125m to be spent over the next three years to help families.
BUSINESS
- £60 million over three years for equipping people to return to the workplace.
- Corporation tax will fall from 30% to 28% by April this year, with simpler taxes for small companies.
All in all, there were few impressed faces amongst us all after we heard all of this, probably because many experts had already predicted most of the proposals Darling delivered today!
George Osborne, the Shadow Chancellor, called it "a bad news Budget which kicks Britain's families when they're down".
Meanwhile, David Cameron, the Conservative Leader said:
"People watching this Budget will conclude that the Chancellor and the Prime Minister live in an entirely different world from everyone else."
Impartial money site
Fool.co.uk commented on the budget and David Kuo, their Head of Personal Finance said:
"We are disappointed that Chancellor Darling has done nothing in today's Budget to encourage British households to ride out an impending recession through saving.
"Failing to increase ISA allowances further is a poke in the eye of savers who need encouragement to put away money. Increasing ISA allowances by 3% after nine years is not good enough.
"Currently, our savings ratio stands at 2% compared to 8% historically. Or to put it another way, we are only saving £1 out of every £50 that we earn. So, a typical family with a combined income of £50,000 is only putting away £1,000 a year for a rainy day.
"However, just because the Budget has ignored savings doesn't mean that we should too. Fool.co.uk therefore urges homeowners to revisit their household budgets and make cut backs without delay. Any savings should also be parked in ISAs to take advantage of the tax breaks.
"Unlike the Chancellor, who is putting up umbrellas in the face of a hurricane, households need to batten down the hatches for a rainy day."
So, are you happy with Alistair Darling's first budget or has it left you feeling even more uncertain about your finances?
Why not let us know in the comments below?