Budget 2012: Expert reaction
Miliband said that last year the Chancellor promised a growth of 2.5%, but today he told the UK that it will be just 0.8%, which proves that "his plan failed" according Miliband.
He claims Wednesday's Budget will mean that a banker earning £5 million will get an extra £240,000 a year as a result of the reduction in the top rate of income tax, while families on £20,000 a year are going to be £253 worse off per year.
"Let's call this what it is - the government's very own banker's bonus," Miliband commented
The FTSE reaction
Mike McCudden, head of derivatives at Interactive Investor
"The Budget was widely leaked in advance and again there has been little overall impact here for equities. The FTSE-100 was still stuck below the 5,900 level as the Chancellor sat down but there are a couple of stand-outs worth mentioning.
"Earlier support that had been seen for banks after the tax changes were set to leave the sector in a neutral position has been eroded with broad based selling here. Also, oil stocks have largely reversed their earlier gains - BP crept positive at one point, but this was short lived.
What did other industry experts have to say?
Jeremy Cape, partner at SNR Denton UK LLP
"The Chancellor did not say that the 45% income rate was temporary, or that he aspired to remove the rate altogether. It may be that the 45% rate is here to stay. He is pushing ahead with the general anti-avoidance rule and has made it clear that retrospective legislation may become more common.
"Availability of enhanced capital allowances for new enterprise zones is likely to give a considerable and welcome boost to investment in these areas."
Simon Denham, chief executive of Capital Spreads
"This budget was one of the Chancellor's biggest chances for him to make a mark in the history books as being a radical economic reformer. Unfortunately once again it has been a missed opportunity and a budget to grab vote winning headlines as opposed to growth boosting measures."
"Businesses will be happy to see that corporation tax has been reduced further than previously planned and the hope is that this will give them the confidence to start investing and hiring whilst taking advantage of the higher growth forecast from the OBR.
"In order to bring unemployment down businesses need to start bringing on new staff and so this tonic from the Chancellor might just be enough to see an improved jobs market."
Personal Tax Allowance
Brian Green, advisory partner at KPMG
"The decision to raise the personal tax allowance next April to £9,205 and move towards £10,000 in the future is generally welcome and will provide consumers with a little more disposable income to spend on goods and services.
"However, whilst this is helpful in the long term, it is too little too late for those retailers already in distress, some of which may see March's quarter date rent payments push them into complete failure."
Tony Bernstein, senior tax partner at HW Fisher & Company chartered accountants
"This increase will make the headlines but in reality it puts just £18 extra each month into a typical person's pocket. Yes, this is to be welcomed in the current climate but it's by no means a game-changer for people on average incomes."
Ian Naismith, pensions expert at Scottish Widows
"We welcome the announcement that the single £140 per week state pension is to go ahead. We look forward to seeing the detailed proposals, and in particular how the government proposes to deal with contracted-out pensions in a way that is fair to all consumers.
"We also welcome the announcement that state pension age increases in the future will be automatic and presumably linked to life expectancy, which will remove these from the political arena."
Suren Thiru, Lloyds housing economist
"The impact of the increase in the stamp duty rate for homes sold for over two million pounds on the housing market is likely to be very limited. However, strong demand from wealthy cash rich buyers, as well as limited supply of such properties, is likely to continue to boost the level of activity at this end of the housing market."
Ben Thompson, managing director at Legal and General Mortgage Club
"It can only be a good thing when tax loopholes are closed and any additional tax receipt in this regard will no doubt be very welcome indeed at this time. However, we would like to have seen this money channelled towards helping another 7,000 first time movers through an extension to Stamp Duty relief for them."
Joanna Elson OBE, chief executive of the Money Advice Trust
"There are several measures the Chancellor has announced which are likely to have a positive impact on the lives of some of Britain's more vulnerable families, such as bringing more low earners out of income tax. However, the broader economic reality is likely to supersede these measures for the majority of those struggling to make ends meet."
Our research indicates 1.7 million people will turn to free debt advice agencies this year - one in every 28 adults, and yet even this doesn't reflect the full scale of the problems, as there are a large number of people who will struggle in silence, without seeking help."
Venture Capital Trusts
Ian Sayers, director general of the AIC
"We are delighted that the Chancellor recognises the role that VCTs have to play in delivering increased economic growth and employment. The proposed rule changes allow VCTs to invest in a wider range of companies which is a welcome boost to the sector and businesses desperately seeking finance."
The Chancellor's removal of the £1 million limit on VCT investment in a single company will ensure more efficient support to smaller businesses in the UK. Due to the withdrawal of banks from small business lending, there is an increase in the range of companies which are unable to secure development capital from traditional sources. VCTs are able to help address this issue, stimulating enterprise."
Gareth Kloet head of car insurance at Confused.com
"Put simply, this fuel duty hike is yet another blow to the cost of running a car. Fuel price increases coupled with vehicle tax rises will certainly impact on people's lives and we may see people being driven off the roads."
Julia Stent, director of telecoms at uSwitch.com
"The government remains set on rolling out super-fast broadband to 90% of the UK, bringing faster speeds to digitally isolated rural areas that suffer from such sluggish speeds and poor connectivity that it's hardly worth having a broadband service at all.
"But it was clear from the Budget that top of the broadband agenda for the government is the quest to become fastest in the world, and not just Europe."
"Whilst funding earmarked for ultra-fast broadband in 10 UK cities is both ambitious and heartening, and will undoubtedly benefit technology companies looking to develop and expand in the UK, the primary concern should be the provision of a quality service to rural areas before pursuing the title of fastest broadband in the world."
Ian Simm, Impax chief executive
"Although the Chancellor didn't say much on the green economy, that's probably a good thing at this stage. Crucial policies such as the Electricity Market Reform, the Green Deal and details around how the Green Investment Bank is going to work are still being finalised, and the market would definitely prefer to receive a complete package of information on each of those initiatives rather than be fed piecemeal an incomplete picture."
Mistakes over the solar feed-in tariff and now the possible scrapping of the Carbon Reduction Commitment highlight the point that getting policy right takes time and patience."
This article was written for our sister website Interactive Investor
Venture Capital Trusts were introduced in 1995 to encourage private investments in the small-company sector by offering tax relief in return for a minimum investment commitment of five years. A VCT is a company, run by a fund manager, which invests in other companies with assets of no more than £7m that are unlisted (not quoted on a recognised stock exchange) but may be listed on the Alternative Investment Market (AIM) or plus with the aim of growing the companies and selling them or launching them on the stock market. Investors in new VCTs are offered desirable tax advantages and VCTs themselves are listed on the London Stock Exchange, with strict limits laid down by HM Revenue and Customs on what they can invest in and how much they can invest.
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An interchangeable term for shares (UK) or stocks (US). Holders of equity shares in a company are entitled to the earnings and assets of a company after all the prior charges and demands on the company’s capital (chiefly its debts and liabilities) have been settled. To have equity in any asset is to own a piece of it, so holders of shares in a company effectively own a piece proportionate to the number of shares they hold. (See also Shares).