UK Budget Date Announced
Thursday, March 11, 2010
Chancellor of the Exchequer Alistair Darling confirmed in a Written
Ministerial Statement on March 10 that the 2010 government budget will
take place on Wednesday March 24.
With a general election approaching, and uncertain in the
international markets as to whether the UK can meet its objectives on
the public finances, this will be one of the most keenly-watched budget
statements in recent years. The government has committed itself to
halving the GBP180bn budget deficit over four years, but Darling finds
himself in the unenviable position of treading an unsteady tightrope;
drastic cuts in public spending are needed, while more increases in
taxation seem inevitable, and the Chancellor must be careful not to
choke off an economic recovery, whilst signaling to the financial
markets that the government has a credible plan to cut both deficit and
debt. Also, he must avoid alienating both Labour's core support and the
much coveted middle class vote if the government stands a chance of
With increases in income tax for top earners and a National
Insurance hike already in the pipeline, observers expect that the
Chancellor will turn his attention to other taxes in the budget in
order to raise more revenue. Capital gains tax, which at 18%, is much
lower than both the top rate of income tax and the corporate tax rate,
seems a likely candidate for a rate increase. A rise in the value-added
tax rate, currently 17.5%, could also be on the cards, possibly by as
much as 2.5% to align the UK with the European Union average.
In a speech on the morning of March 10, Prime Minister Gordon Brown
foreshadowed some of the measures the government would use to reduce
the deficit. One of them is a pay freeze for senior staff in the civil
service, senior staff in the military, the
judiciary, senior managers in the health service and the pay of
consultants, doctors and dentists in a bid to shave GBP3bn from the
budget by 2013-14 when combined with pay controls announced in December.
However, he also expressed his determination to protect essential
front line services and leave the health and eduction budgets intact.
He also hinted that there may be more pain for people on high incomes
in the forthcoming budget, with those on annual pay of GBP150,000 or
more facing a 50% top rate of tax from April.
"Fairness will be at the heart of the measures we take to reduce
the deficit," he said. "Unlike the policies of the 1980s and 1990s -
where taxes for the wealthiest people in society came down, as the
burden on people on middle and modest incomes went up - we will not
make those on modest and middle incomes take the greatest strain,"
Brown added, in a swipe at the policies of the previous Conservative
He also took the opportunity to rubbish the Conservative
opposition's proposals to means test tax credits and cut inheritance
"It simply does not make any sense to me to cut tax credits for one
million and a half middle class families on modest incomes - while at
the same time proposing massive inheritance tax cuts worth GBP200,000
to a handful of estates," he argued.
"We will set out in more detail in the Budget in two weeks’ time how
we deliver on our commitment to restore the public finances while
protecting the fundamental public services that we all depend on,"