Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
Finance Act 2009
#1
Budget 2009

[Image: ukpga.gif]

Finance Act 2009

An Act to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.


Most Gracious Sovereign

We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, towards raising the necessary supplies to defray Your Majesty’s public expenses, and making an addition to the public revenue, have freely and voluntarily resolved to give and to grant unto Your Majesty the several duties hereinafter mentioned; and do therefore most humbly beseech Your Majesty that it may be enacted, and be it enacted by the Queen’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
Chancellor of the Exchequer (2009-Present)

Labour MP for Great Grimsby (2001-Present)

Media Darling/Campaigning Guru/Finite Resources
Reply
#2
I call the Chancellor of the Exchequer.
Reply
#3
*Selena takes a sip from her wee dram of Scotch Whisky

Mr Deputy Speaker,

Today’s budget comes in the middle of a deep recession, one caused by a global economic downturn, and we need to all prepare for the future, as this recession will end. Today’s budget will take Britain through the most serious global economic turmoil for over 60 years, the impact of which is being felt in every continent, every country and every community.

At the end of 2007, problems in the international mortgage markets began to put a damaging squeeze on credit. In early 2008, we also saw dramatic volatility in many commodity prices, adding to uncertainty and putting pressure on growth. Last autumn, the dramatic failure of one of the top investment banks in America, Lehman Brothers, shattered already fragile confidence and brought the international financial system to its knees.

Today’s budget will seek to restore that confidence, heal wounds and help people, home owners and families.

Mr Deputy Speaker,

Make no mistake, we had to make difficult decisions and we had multiple options available to us, it is down to this Government to make choices we believe will be the most helpful to people who will have seen their house price collapse, who will have seen their wages shrink, who have lost their jobs through no fault of their own and who are looking to us for help.

The decisions this Government has made reside around purchasing power, tax cuts and infrastructure spending, with investment in job creation and economic activity. I can confirm the Government will spend an additional £38.2 billion, with tax reforms worth £50.8 billion, meaning a deficit of £159.9 billion, or 11% of GDP.

Today’s budget will help the people of Britain get through this recession, because it will give them the power and the means to support themselves and their families despite the downturn caused by the banks and mortgage markets.

*Selena takes another sip of Whisky

Mr Deputy Speaker,

Let us get into the detail of what we are doing to help people.

Our main priority is ensuring people have the money they need to live on, for their rent or mortgages and for their families. We are raising the personal allowance for everyone earning under £100,000 a year to £8,200, meaning people will have £2,400 more tax free income this year, an increase of 41%. We are also moving the higher rate threshold to £40,000 a year and freezing the tax rates themselves, this means people can earn an additional £3,810 before becoming a higher rate payer, an increase of 10.5%.

On National Insurance, we are lifting the lower threshold to £100 a week and reducing the rate to 10%, then we are going to raise the weekly amount at which the upper threshold kicks in to £1,000, with a small increase on the rate to 4%. This means people can earn an additional £780 a year before paying national insurance, and that insurance will be lower than it was last year and it means the higher rate does not kick in until you have earned £16,640 a year more than last year too.

Today’s budget recognises that jobs need to be protected, with 1 million more people unemployed we have to do more to both promote job security, whilst securing an economic, tax and investment environment that creates jobs. To do this, the employer rate of national insurance will see a threshold increase to £100 and a 1% cut too, this means every employer will pay £780 less a year for every single employee they have over that threshold, to help secure their futures, and their employees future too.

We have taken the decision to impose a bank levy in the face of the economic downturn they helped to create Mr Deputy Speaker. It is an annual tax on the value of all of the debts of the UK banks, including money deposited with the banks; except those retail deposits which are covered by the Financial Services Compensation Scheme, borrowing which is backed by UK Government debt, the first £20 billion of a banks taxable debt and they will only pay half the rate on long term debts they hold. The reason for this decision is simple, it will discourage banks from relying on risky forms of borrowing again.

UK Banks are not unwitting victims of an unforeseen financial collapse but enablers that bankrolled the type of lending that threatened the financial system. They invested enormous sums in lending due to demand for high-yield, high-risk bonds backed by mortgages, they made huge profits whilst their Directors and Shareholders collected handsome bonuses, right until the housing market collapsed, contributing to the average house price going from £183,700 to just £156,329 in a single year. We are asking them for 0.15% of the taxable debts, equivalent to £3 billion this year.

Mr Deputy Speaker, let me send this message to UK banks, if Lehman Brothers was not too big to fail in the US, you are not too big to fail in the UK. I will prioritise the bank deposits, homes and futures of people rather than shareholders and unscrupulous lenders who did not think of holding a reserve against their high risk gambles over years and years. I hope they take this opportunity to get their banks in order; lest we have to step in with reserve requirements, limits on assets, stress tests and a Government failure resolution regime.

We are introducing a small 5% additional Capital Gains Tax rate but retaining the tax free £11,100. Our reasoning for this is simple, capital gains is a tax on profit from the sale of a non-inventory asset; mostly from the sale of stocks, bonds, precious metals, real estate, and property, with the market as it stands, this would do further harm. The additional rate is meant to discourage extra high profit sales at the expense of the economic recovery we are undertaking.

*Selena takes another sip of Whisky

Mr Deputy Speaker,

The housing and mortgage markets attributed to the economic downturn significantly and we can see this in the 14.9% decrease in house prices this last year, to an average of £156,329. We have decided that home owners and buyers, especially those first time buyers, need a leg up to help the market both stabilise and recover swiftly. To provide this, today's budget will make every property under £160,000, stamp duty free, saving buyers of properties around and under the average house price over £580 million this year alone. We will reduce the normal rate threshold to £200,000 whilst retaining the 3% rate, the higher rate shall remain at 4% but on £400,000 properties, and a new rate for houses over £600,000 shall be introduced at 5%.

We need to empower peoples pockets, and ensure they can buy the essentials, provide for their families and keep themselves fed, watered and housed. We can do this by reducing taxes, therefore pursuant to Council Directive 2006/112/EC, we will reduce the rates of VAT at standard from 17.5% to 15%, and at reduced from 8% to 5%.

I can also confirm that the Government will use Article 99 and Annex III of the same directive to begin the process of reducing the rate of VAT on all repairs, maintenance and management of residential property from 20%, to the 5% reduced rate. This will cover all extensions, renovations, internal repairs, external repairs, replacement work, upgrade work, conversions, alterations and redecorations. Of the 28 EU countries, 12 member states charge a reduced rate of VAT in the social housing sector, with the lowest rate is currently in Luxembourg at 3%. At present 12 countries also have reduced VAT rates on the renovation and repair of private dwellings, with Cyprus and the Isle of Man with the lowest rates of 5%.

We are undertaking a £5 reduction in vehicle excise duty, a 1p decrease in the fuel duty, a 2p increase on a pint of beer, an 11p increase on a glass of wine, a 15p increase on spirits, an 11p increase on tobacco and a 3.25% increase to gambling duty. We will introduce a £10 per kilo carbon price floor to power generators, along with a 10% increase on petroleum revenue tax, which is charged on pre-19923 oil fields, to fund increases in renewable & green energy investment and research grants.

I will speak for a moment on public sector pay. The Government has decided to grant a 3% public sector pay rise. With wage growth at -2.5% but this offset with deflation of 1.2%, which we are working actively to combat immediately, this means a real terms pay rise of 1.7% this year for public sector employees.

*Selena finishes her Whisky

Mr Deputy Speaker,

I said this was a budget of tax reductions, but also increased investment. Along with the aforementioned revenue changes, today's budget also increases department spending substantially.

On trade and industry, we are investing £236 million in the regional development agencies, research councils, discretionary grants and export credits. We are increasing higher education research funding by £153 million, creating 6,585 additional new entry places at university and increasing funding per student by £193. We will create 475,000 new apprenticeship places, and increase every apprentice fee by £250, an increase of £514 million to ensure that those who choose the apprentice pathway, have the funding, the options and choices available, whilst companies have the support and funds to make it possible.

On transport, we are investing £800 million in new road construction & expansion, £132 million in existing roads, £284 million into Network Rail and we will fund the Getting Britain Moving Transport Plan with an additional £358 million, meaning spending will be at more than £2.1 billion this year for this vital expansion, improvement and new opportunity plan.

In the Home Office, we will spend an additional £212 million on police and crime prevention, whilst putting an additional 9,150 personnel into the police, fire services and law enforcement. We will create 1,000 new prison places and increase rehabilitation programmes by £110 million. We are going to invest £100 million into legal aid and £145 million into the Court system to cut delays and case times.

For the NHS, we are going to invest over £10 billion this year, which is real terms given deflation levels too. So let me tell the House what we are going to do for our public healthcare, we are going to recruit 5,882 more staff members including 528 doctors and 3,322 nurses, and we are going to build new hospitals and clinics across the country. An investment of £5.6 billion in 128 new facilities including the 5th major hospital in England, 4 more large hospitals, 12 more town hospitals and 16 new village hospitals. We are going to cut the prescription charge by 65p an item to a flat £7, we are going to put £107 million into dentists and opticians, and we will spend £704 million on commissioning healthcare services for the population of England. We will invest an additional £53 million into medical research, £70 million in medical education and £31 million in public health campaigns.

On education, we will increase the funding for every single student by £177 and increase grants to schools to over £5.2 billion, an increase of £172 million. We are then going to put an additional £100 million into sure start and spend £3.5 billion more on free childcare, to ensure those that can work, can go to work. This means 10 free hours for 1 - 2 years olds, 30 free hours of 2 - 3 year olds, 25 free hours for 3 - 4 year olds and 20 free hours for 4 - 5 year olds. We are then going to invest an additional £303 million into further education through per student funding and grants.

On defence, and in light of the recent terrorist attack in Pakistan, it is entirely appropriate that we recognise the threat to our country, both at home and abroad. We are therefore going to recruit an additional 17,150 regular military personnel, 8,280 TA & reservists and 5,000 non-combat personnel. We will back this up with an additional £519 million in equipment and procurement. We will spend an additional £932 million on overseas commissions, £33 million on the overseas territories, £41 million on NATO Operations, £70 million on the Strategic Nuclear Force and £126 million more in the MoD provision of research, training and civil defence.

When it comes to welfare, we have decided to provide a 2% real term increase on all benefits and tax credits; including the state pensions, winter fuel payments, pension credits, ESA, attendance allowance, DLA, carer allowance, JSA, working tax credits, income support, housing benefit, child benefit, children tax credit and the guardians allowance to name but a few. Today's budget will protect those who need our help, those who are vulnerable and those who have fallen on hard times during this recession. We will work to fix it so those that can, can return to work, and we will ensure those that need support, have it.

We will increase the investment in renewable energy by £550 million, in insulation & energy services by £250 million and in climate change research by £200 million.

To protect households from council tax increases, today's budget will make an additional £2.65 billion available to local authorities, and an additional £1.97 billion available to local education authorities. We are allowing for a council tax freeze, encouraging all councils to take this opportunity to freeze the tax, but also highlighting the Treasury have ensured that a potential decrease of 0.47% on current rates can be undertaken with no risk to funding thanks to central grants. I encourage all authorities to take this opportunity to cut council tax, if not freezing it at least.

Today's budget will increase the spending in other Departments, such as communities by £348 million, culture, media & sports by £73 million, and the HMRC to tackle tax avoidance & evasion with £198 million.

We are also committed to the devolved nations of the United Kingdom, and will ensure the block grant increases by 5% to all 3 devolved administrations, a real term increase of 6.2% to allow them to make the necessary challenges to this recession. This means an additional £1.5 billion for the Scottish Government, £788 million for the Welsh Government and £554 million for the Northern Ireland Executive.

Today's budget is about recovery, about protecting those who need it, about investing in the future and about releasing the spending power of the people.

I commend this Budget to the House.
Chancellor of the Exchequer (2009-Present)

Labour MP for Great Grimsby (2001-Present)

Media Darling/Campaigning Guru/Finite Resources
Reply
#4
Order! I call the Leader of the Opposition! (Seeing as this is a bit out of nowhere Marty can have as much time as he needs to get his response done for no disadvantage, just don't take the mick with it)
Reply
#5
Mr Deputy Speaker,
 
Let me first congratulate the right honourable lady on presenting her first budget. She fills an important role as the economic storm is now well and truly breaking and it is her choices that will shape the route our economy takes for the coming years.
 
That having been said, were it not for the reshuffle, I would have to try very hard to refrain from starting my speech saying "Mr Deputy Speaker, I hate to say I told them so". A year ago on budget day, I stood at this very same despatch box counselling the right honourable lady's predecessor to make the right choices - to bolster consumer confidence to cushion the depth of the recession we find ourselves in now. I counselled him to make cuts to VAT, rather than raising the tax burden. I counselled him to support our businesses.
 
He did not listen, and we find ourselves here. It would be disingenuous to blame the current situation entirely on the government's adamant refusal to make the right choices last year when the budgetary breathing space was still available to do so. But the government's lack of intervention previously has certainly made the situation worse, and now we find ourselves with less money to spend, a tighter budget and a bad economic situation. That kind of situation once more requires the right choices to be made to protect our public services, restore confidence in our economy and ease economic pressures on ordinary hard-working Britons.
 
Mr Deputy Speaker, my diagnosis of this budget is this: last year, the government adamantly refused to make the right choices.
 
Now, faced with the consequences of those choices, it is adamantly refusing to make any choices at all.
 
In fact, those just tuning in to the latter part of the Chancellor's address can be forgiven for thinking we were in a situation of boom rather than bust, going just on the policies. Tax cuts everywhere, spending up in almost all departments, a deficit that doubles in size as a consequence - in normal economic times, the expectation of higher economic growth might yet cushion the impact of increased spending on the national debt. Increased tax revenues as a result of higher economic growth might offset spending and perhaps make the deficit a bit lower when we get round to the final figures. However, this budget would be out of place even in a booming economy - it is spending too much, too fast, in a way that even increased tax revenue from economic growth cannot compensate for it. Even if we ignore the conventional wisdom to fix the roof while the sun is shining, this budget quite rightly raises some eyebrows.
 
And to make things worse, we're not in a boom, we're very much in a recession, and subject to the vagaries of the global economy. And if another shock were to reverberate through the British economy from abroad or even from at home, that will only exacerbate the situation. It will lead to a higher debt even than forecast. And with the way interest rates and credit ratings work, I would not be surprised if the way the government is going all-in with the public purse were to result in less favourable rates of interest in future budgets. The bottom line would be disastrous: just to avoid having to make tough choices this year, the government would force itself and the British people into even tougher choices in subsequent years. In fact, if the government were a home-owner and the public debt a mortgage, I am pretty sure their loans would be the kind of loans that the Chancellor is criticising banks for giving out.
 
And here we are, Mr Deputy Speaker, in the absurd situation that the pro-European government that so valiantly championed the new and deeper European treaty to a referendum victory is immediately choosing to go against the letter of that treaty. I am sure Brussels will frown on this budget, which rides rough-shod over all the limits the Stability and Growth Pact puts on deficits and debts among member states. The House knows I am not the biggest europhile – but I am pro-European and pro-common market. And we on this benches realise that these rules aren’t there for nothing. By taking on so much extra debt, by committing to such a large deficit, the government is endangering economic convergence within the European Union, and the stability of the common market through inflation. And that is, to say the least, unwise.
 
Mr Deputy Speaker, the House should not get me wrong: I am glad that the government, is, in fact, pursuing a more extreme version in many ways of the Shadow Budget. Flattered, even, that their cuts in VAT, their investment in Apprenticeships, their Climate Change commitments, all mirror priorities we already set to mitigate the recession in our last budget. But this budget can be characterised as “too much, much too late” in that regard. You cannot fix the short-sighted way in which the government failed to reassure consumers by blowing the public purse on it – in fact, by mortgaging (in an almost sub-prime way, I should add) trust in the public finances, they risk fanning the flames of economic uncertainty.
 
By all means, a recession-time government should seek to bolster consumer confidence in its budget. But in order not to shoot itself in the foot, the government should do so in a sustainable way. It simply does not do, in what is only the first full year of a recession, to empty the public purse so spectacularly in the hopes of kickstarting consumer confidence to such an extent that the economy will start growing again. People are losing their jobs, afraid to lose their house and their savings (and I will not hesitate to remind the House that the Chancellor herself hinted that more British banks might fail). They are afraid that they’ll be asked to pay for more nationalisations without a plan for the future, like Northern Rock, even though the perfectly sensible alternative of re-mutualisation is available to work towards.
 
I would not gamble on those odds, and I certainly would not gamble this much on it. Because if consumer confidence does not improve to the extent the government seems to be expecting and the recession continues or even deepens regardless, the revenue the government is denying itself and still spending at the very same time will come back to haunt the taxpayer. If the government plan fails, it cannot increase the deficit to the same extent yet another time. It will be forced to make real choices – painful ones, in an environment that will make it even harder to protect our frontline public services.
 
The government is mortgaging the future of our public services with this budget, as much as it wants to be seen as a government of courageous investors. It might all sound well and good to provide this amount of investment to our public services in dire economic straits, but if the government’s gamble goes awry, then tax payers will quickly see that investment evaporate and turn into cuts to frontline public services or unattractive tax hikes.
 
The math is simple, Mr Deputy Speaker: if the economic situation does not quickly improve (and there’s a reasonable chance it might not), then revenues will decline. The government will have even less money to spend next year. What will the government do then? It will have to choose between reversing its tax cuts or cutting the public services. The very changes it is harping on about this year will have to be reversed – and perhaps even more than reversed, they will have to turn into painful measures for the pound in the pocket of so many families or the services they rely upon.
 
You know what choices a sensible, forward-looking government would make? It would choose to play the long game. It would ensure that we can afford the investments we propose, not just this year, but the year after that. It would bolster spending power in such a way that we can still take measures next year. It would ringfence frontline public services, but realise that any investment we make on top of that must be sustainable for it to be worthwile and have lasting effect.
 
Mr Deputy Speaker, lest I be accused of being entirely negative: I welcome parts of the government’s investment. We are squarely behind the government’s investment in Defence given the extremely worrying situation in Pakistan. It is quite right to invest in our readiness to intervene as the world stage grows more volatile, and I commend the government for it.
 
I am also glad the government has finally decided to rectify the disadvantage it put Scotland’s devolved assembly at in the last budget, which saw all devolved assemblies except Scotland get a sizeable increase in funding. And I welcome the fact that after last year’s great council tax hike, the government is finally ensuring that it does not get hiked another year, at the very least.
 
But then, I think I could’ve coloured the House surprised if I had not welcomed such steps. After all, they were steps a Conservative government would have taken last year to avoid getting in the situation of some of these fields in the first place. Whether it’s council tax, VAT, apprenticeships, or the disparity of funding between devolved assemblies, and the list goes on a while yet after this, the government is vindicating our choices by echoing them. And while I welcome it, I must still reiterate what I said: it is late. What’s more, it’s too much, too late.
 
Mr Deputy Speaker, in conclusion: the government is showing signs that it is running out of steam. After a year of making all the wrong choices, this year they find it hard to make any choices at all! And that’s a problem, especially in this recession, where tough choices will need to be made to ensure our investment is sustainable, our economy protected and the public finances sound.
 
Budgetting is making choices, Mr Deputy Speaker. Not just that – governing is making choices. And by this budget, the government is showing just how much it is lacking in that department. It shows a profound lack of courage, imagination and foresight. And although I hope I wrong, I am left to imagine standing up next year at this same despatch box, trying very hard to refrain from starting my remarks saying “Mr Deputy Speaker, I hate to say I told them so.”
 
Thank you, Mr Deputy Speaker.
the Rt Hon. Emily Greenwood MP

Deputy Leader of the Labour Party (2019-)

MP for Barrow & Furness (2010-)
Secretary of State for Education (2019-)
Lord Keeper of the Privy Seal and Leader of the House of Commons (2019-)

Shadow SoS for Public Services (2019)


Traits: Media Darling, Campaigning Guru, Constituency Appeal, Finite Resources
Reply
#6
ORDER! I open the floor for three days' debate.
Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)