Highlights from the Budget 2009

21 April 2009

Alistair Darling is today delivering his second Budget report to Parliament amid a dismal economic outlook, rising unemployment and a deflated housing market.

Addressing a packed and rowdy House of Commons, the chancellor started his report at 12.30pm with a prediction that the economy will start growing again before the end of 2009. He said the Budget would help get people back into work and support business and homeowners amid the most serious turmoil for over 60 years.

"This Budget will speed the recovery," he said. "We have good grounds for confidence."


ISA allowance to increase

* New £2,000 car scrappage scheme

* Stamp Duty holiday extended by three months

* Statutory redundancy pay will increase from £350 to £380

* Fuel duty to increase by 2p

* New 50% rate of tax for people earning over £150,000.

* Personal allowances scrapped for people earning over £100,000

* Restricted pension tax relief for those with incomes over £150,000 so it is gradually tapered to 20%.



*  Expectation that the economy will start growing again before the end of 2009.

"There can be no quick fix or overnight solution," said Darling.

* He forecast that the economy would shrink by 3.5% during 2009 - in line with predictions. 2010 will see 1.25% growth, he added, with 3.5% growth from 2011.

In the pre-Budget report, Darling forecast a 0.75% to 1.25% slowdown in economic growth in 2009, with 1% growth in 2010.

Help for people: 

* Darling promised to ensure short-term  job losses don't turn into a "lifetime on benefits".

* Additional £1.7 billion of funding for JobCentre Plus.

* Additional support for people out of work for 12 months.

* Help for young people - from January people aged under the age of 25 who are out of work for 12 months will be offered a place in training or employment.

* The creation of 250,000 new jobs for young people with £260 million of new money invested in training opportunities for young people. Plus extra investment (£250 million this year and £400 million in 2010) to ensure people aged 16 and 17 can stay in education or training.

* Introduce new scrappage scheme giving drivers a £2,000 discount on new cars if they trade in old cars (10-years-old vehicles only).


* Stamp duty holiday extended until the end of 2009

* Mortgage Interest Scheme extended by six months

* Introduce mortgage security backed guarantee to help banks lend

* Invest £80 million to shared ownership HomeBuy scheme

* Reduce restraints on new construction to help meeting demand for housing

* £500 million of support for house building firms to deliver 1,000s of new homes, including £100 million for 'green housing'.

* £50 million to modernise homes for people in the armed forces.


* Automotive industry will benefit from new scrapage scheme giving drivers £2,000 if they trade in old cars for new vehicles.

* Allow loss-making businesses to reclaim tax on lossed profit for the last three years until 4 November 2010.

* Double main capital allowance to 40% - enhanced tax relief to support investment

* Extra funding for digital investing, extending broadband network to everyone

* £750 million investment fund to provide support for emerging technologies science to encourage export, research and development.

Public finances

* Halve budget deficit in next four years

* £175 billion borrowing this year, £173 billion from 2010,  £140 billion in 2011, £118 billion in 2012 and £97 billion in 2013

"We need to help people now," he said. "This is the best way to drive up economic growth."

Pensioners and savers

* From April 2011, pension tax relief for those with incomes over £150,000 will be restricted so it is gradually tapered to the same 20% rate the majority of people receive.

* New 50% rate of income tax for people earning over £150,000 from April 2010.

* People earning over £100,000 will stop benefiting from personal allowances from next April.

"A quarter of all pension spend goes to the top 1.5% of the population," he said.

* Child poverty: from April 2010 £20 increase in child tax credit, and up to £200 extra  to child trust funds for disabled children

* Statutory redundancy pay will increase from £350 to £380

* Grandparents with caring responsiblities will now be able to use this towards their state pension

* State pension will increase by 2.5%

* ISA allowance will increase from £7,200 to £10,200, of which £5,100 can be saved in cash

* Personal allowance for pensioners will increae to £10,000 from November this year

* Winter fuel allowances will increase by £250 for the over 60s and £400 for over 80s

* Crackdown on tax evasion

"We've found loopholes that, when closed, will save £1 billion of extra revenue over the next three years," he said.

Other measures

* 2% increase in alcohol (from midnight) and cigarette duty (from 6pm)

* Reform to regulation of financial firms including banks

* Fuel duty will increase by 2p from September

* World's first ever carbon budget to cut emissions by 34% by 2020

* Energy efficient homes: £435 million of extra support to help homes, businesses and public buildings reduce energy usage




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