This piece first appeared in the money section of the Saga website on 12 March 2008
The text here may not be identical to the published text

 

Darling’s Duds of March

I was very hopeful when the Chancellor said towards the end of his speech "one of the key features of this Budget is fairness" that he would address the shocking fact that while better off people will benefit from the reduction in the basic rate of tax in April people under 65 on incomes less than around £15,000 a year will actually pay more income tax in 2008/09 than they did in 2007/08 (for details see point of view Labour’s Tax Secret) But no. Alistair passed over this group of five million low income people in silence.

Instead the rabbit he pulled out was an extra £50 on the £200 winter fuel payment – with an extra £100 on the £300 payment for those aged 80 or more. That will put £575 million more tax-free into the pockets of people over 60. Which is of course good news as far as it goes. But it may not go very far with fuel bills up by 15%, council tax expected to rise by nearly 4% and water bills rising by nearly 6%.

And when the details of this extra money were published later in the day it emerged that it was not an increase in the winter fuel payment – just a one-off supplement which will disappear by winter 2009. And if that rings a bell, Gordon Brown introduced a similar one-off age-related payment in winter 2005.

The problem Alistair faced was that most of the tax changes from April were already announced by Gordon Brown in his last Budget a year ago. The good news for those over 65 is a large rise in their personal tax allowances which will go up from around £7500 to more than £9000. That will make sure no-one over 65 loses out from the changes to basic and lower rate tax and will mean a significant tax cut for many over 65s.

The Chancellor said nothing about meeting the Government’s legal obligation to end fuel poverty among older people by 2010. He did say that those who pay for gas or electricity on a pre-payment meter would "get a fairer deal". Papers with the Budget revealed that they pay around £144 a year more than those who pay by direct debit. But not just yet. Discussions will take place between the energy companies and the regulator Ofgem.

If you drive then the 2p a litre rise in duty which was due to start in April has been put off until October. But that will not delay for long the moment when petrol hits £5 per gallon (110p per litre). from April 2010 fuel duty will rise above inflation every year.

All in all a disappointing debut. Perhaps it will be his last.


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