With Alistair Darling set to issue the gloomiest budget in a generation, nobody would actually like to be in the Chancellor’s shoes. But put yourself there for a moment and ask yourself, what would your Budget look like?

With a gaping hole in the country’s finances, Darling looks set to admit the economy will shrink at its fastest rate for 60 years. The Budget statement will also come just after new figures are expected to show another 120, 000 signed on for unemployment benefits last month.

Possible measures the Chancellor hopes will return the economy to growth include an increase in individual savings account (Isa) limits, the introduction of a subsidy for trading old motors for low emission cars, changes to the stamp duty threshold and the introduction of a new 45% top-rate income tax band.

What would your Budget include? Which taxes would you cut or raise? How would you help job seekers, homeowners and savers?

-- Neil Collins is a Reuters columnist. The opinions expressed are his own --

LONDON, April 16 (Reuters) - Poor old Alistair Darling. The Chancellor is girding himself to deliver a truly ghastly Budget, and lined up a crowd-pleasing headline-grabber to distract attention from the financial horrors ahead.

Then his colleague transport minister Geoff Hoon goes and grabs the headlines for himself, revealing plans to bribe motorists to ditch the gas-guzzler for an electric car.

From 2011, buyers are promised 5,000 pounds towards the cost. Smug drivers pottering along in a subsidised electric car, powered by juice generated from subsidised wind farms, can feel in perfect harmony with nature.

This is an illusion. Carbon dioxide, which is all modern conventional cars emit, is generated by electric cars too, but it's out of sight and out of mind at the power station. In terms of the total energy needed to propel the occupants around, there is no saving from going electric.

There are other snags. Sales of the G-Wiz, a toy car which will still cost 4,000 pounds even with the subsidy, are unlikely to be helped by this*. Drivers will be reluctant to venture far from the comfort of a friendly power point, for fear of being stranded. The exotic metals in the batteries present a sitting target for thieves. If enough people go electric, the concessions like avoidance of parking and road use charges will quickly disappear.

Subsidies distort behaviour, and today's subsidy is tomorrow's tax loophole. Cars use valuable public space, and energy of all kinds is going to get more expensive. If Darling has any strategic sense, he will take advantage of the low oil price to raise the tax on road fuel.

But that wouldn't be popular, would it?

*http://www.telegraph.co.uk/news/newsvideo/?bcpid=4464161001&bctid=1655754070
((Edited by David Evans))

Gordon Brown has not said openly that he plans to turn on the taps again in the budget with another package of spending and tax cuts, but his appeals to world leaders to do just that have led to a widespread feeling that more stimulus is to come.

So Mervyn King’s warning against more spending when debt levels are already so high has predictably been leapt upon by the Conservatives as a powerful message of support for their own position. 

Do you believe the way to beat the recession is to stimulate the economy with more spending, as Brown wants, or with  a more cautious, steady-as-she-goes approach as favoured by the Conservatives?

And should the Bank of England governor be straying so far into political territory?

The unusual foray into politics by Bank of England Governor Mervyn King, in suggesting there should be no more tax cuts or spending rises in next month’s budget, has been widely interpreted by the newspapers as a blow to Gordon Brown but a source of secret satisfaction to the Treasury.

Chancellor Alistair Darling, several say, was not happy with Brown’s reported budget plans to offer voters more jam before they had digested the 25 billion-pound fiscal package in last Autumn’s Pre-Budget report.

King’s message was interpreted as bad news for Brown just as the Prime Minister embarks on a whrlwind tour of the Americas to drum up support for agreement at next week’s G20 meeting on a major international programme of fiscal stimulus.

Most papers support the Governor.

“Mr King was right and timely in his message,” said the Times. “Fiscal profligacy by the government since well before the last election has sharply constrained the ability of UK policy makers to borrow and spend more.”

In a comment piece, the paper’s business editor David Wighton notes: “Mr King’s intervention hardly strengthens the Prime Minister’s hand as he tries to rally support for further measures at the G20 meeting.”

Damian Reece in the right-wing Daily Telegraph commented: “King was right to warn the government over further public spending splurges. Given the long-term damage Labour has helped cause to the economy and sterling, we really can’t take much more punishment.

Some papers highlight the extraordinary nature of King’s intervention into the world of politics.

“His warning yesterday about the dangers of a further fiscal stimulus, which he said would increase the already alarming levels of public borrowing, was unprecedented,” noted Daily Mail City Editor Alex Brummer. “King has trespassed into very dangerous territory. He has placed himself at the heart of the battle over how best to deal with the worldwide economic slump.

“By challenging Mr Brown on budgetary policy the governor has exposed the sharp differences over the conduct of economic policy at the centre of government. This potentially calamitous public row can only add to the nervousness of financial markets about the ability of Labour to navigate through the worst crisis in generations.”

Brummer added: “The governor could well have an ally in the Chancellor, Alistair Darling, who is known to be less gung-ho than the Prime Minister, who is desperate, as host of the forthcoming G20 summit, to follow President Obama’s lead in advocating more public spending.”

The Independent said “nothing as overt as yesterday’s warning has happened in ages.”

“Reluctantly,” it added, “Brown is being pushed by Mr King into the same camp as Germany and France, both of which have already enacted quite big fiscal packages but insisted they won’t go any further. ”

“Should King be saying these things? Letting the public finances go to hell in a handcart is surely a matter for Government and voters? Well, maybe he should be keeping his counsel, but Mr King was asked a straight question, and it would have been disingenuous to have given an answer he didn’t believe in. What was he supposed to say? Go for it boys?”

“It’s only a pity Mr King didn’t sound these same warnings three years ago when they were still capable of doing some good. Instead of which the Government was allowed to go for broke, when it should have been reining in.”

The Financial Times noted: ”Mr King’s warning puts him in a position where he could be accused of constraining the options of elected politicians and puts the Treasury on notice that the Bank might feel the need to take offsetting action if a second stimulus package was proposed.”

The Daily Mirror was critical of King. Under the heading “Merv’s far too Nervy,” it said the Bank of England was in no position to lecture Brown.

“If (it) had cut interest rates faster we might not be in such a deep recession,” it said in a leader column. “The caution and indecision of the country’s chief banker … has been a handicap in this global financial crisis.”

“Tough times demand bold action — not the caution and delays that are the hallmarks of King’s governorship of the Bank of England.”

    One thing looks certain after Alistair Darling’s speech to
the Labour Party conference on Monday — he’ll be Chancellor of
the Exchequer for a while yet.

    Prime Minister Gordon Brown is expected to reshuffle his
ministerial team next week and there’s been a lot of speculation
that Darling could lose his job and be moved to another
department.

    The silver-haired finance minister has had a rough ride
lately. The economy is on the brink of recession and his
comments in a magazine interview saying the economic challenges
were the greatest in 60 years caused a furore and were blamed
for sinking the pound.

    But delegates at the Labour conference today just loved him.
They stood and clapped and then they clapped some more after
Darling hit out at unfettered capitalism and the huge payouts
given to bankers that he said helped cause the credit crunch.

    Darling looked genuinely embarrassed. He called for them to
stop but the delegates just went on. Besides modesty, the
finance minister had another reason for wanting them to stop.

    He had another type of conference call to attend to. A G7
one. The finance ministers and central bankers of the rich
nations club were having a hastily-arranged telephone chat at
1230 London time to discuss the latest bout of market turmoil.

    Given London’s position as one of the world’s top financial
centres, Darling could hardly miss out and he rushed off the
stage to get on with his G7 buddies.

    The crisis also looks to have cemented Darling’s position.
It would seem odd to remove the finance minister when the whole
world financial system is in the middle of the biggest upheaval
in a generation.

    With Brown making his economic experience a key selling
point, he needs Darling on side.

When Kath Kelly complained to friends in the pub she was so broke she couldn’t afford a wedding present for her brother, she decided to take drastic action.

She made a bet that she could defy the credit crunch and live on just one pound a day for a year.

After paying her landlord 3,000 pounds in advance for rent and bills, the teacher from Bristol radically changed her way of life.

Out went her mobile phone and clothes shopping, replaced by trips to jumble sales and foraging for berries in hedgerows.

She visited book launches and lectures that had free buffets and scoured supermarkets for discounted food close to its sell-by date.

Shampoo at 27p a litre and bars of soap for 6p each took the place of designer toiletries. 

She rode a bike instead of getting the bus and had a holiday in France by hitchhiking across the Channel.

By walking more and keeping her eyes on the ground, she even picked up 117 pounds in loose change.

Kelly knew that, despite her tight budget, she still had far more than millions of people around the world. But her experiment still changed her view of money and possessions.

She reflected on how she used to waste 25 pounds a week on coffee and once yearned for new shoes and bags which seldom brought her the happiness she expected.

“The experience has changed my philosophy on life,” she told the Scotsman. 

At the end of the year, she had saved enough money to buy her brother a 1,300 pounds wedding present — life membership of the National Trust.

Have you cut back on spending to help meet soaring household bills? Do you think you could emulate Kelly and live on just one pound a day?

Gordon Brown on Wednesday made what the British media and opposition parties widely judged to be the most humiliating and embarrassing policy change of his short career as Prime Minister: a climbdown over concessions to those made worse off by his scrapping of the lowest, 10 pence income tax rate.

Conservative leader David Cameron, hoping to oust Brown and Labour in the next election, branded Brown a “pathetic” figure. Liberal Democrat leader Nick Clegg called him “increasingly pointless”.

Brown, they crowed, was an isolated figure, forced into what the Daily Mail said was a “humiliating U-turn” over tax policies he introduced last year in his final Budget as Finance Minister. Cameron said it was a “massive loss of authority”.

So, is he — and was it?

Undoubtedly, Brown has courted a lot of very bad press over the 10 pence issue. Claims the Labour government have done more than any other this century to help people out of poverty sounded hollow when it became clear that by abolishing a tax band he introduced, Brown was making five million households worse off. The subsequent open rebellion from
Labour backbenchers over the issue just made matters worse.

In the end, however, Brown did — although not admitting a mistake — make changes, stressing he had listened to people’s concerns and acted.

And if Brown can play it right, he may be able to convince voters increasingly turned off Brown and the Labour party that this is the mark of a good leader. “On 10p tax, he listened and acted. That is a sign of strength, not weakness,” the influential Sun newspaper said in an editorial.

Others echoed the line of rebel politician Frank Field, who led the 10p tax revolt, in urging Brown to listen on other unpopular policies. “He can start by scrapping plans to extend
detention without trial to 42 days, a proposal wrong both in principle and practice,” the Daily Mirror said.

If Brown, whom voters view as aloof compared to his populist predecessor Tony Blair, does start to show more of an ability to listen, learn and communicate, however, that may not be enough to silence the low-level chatter that has started to surface about his ability to lead the party into the next election.

Foreign Secretary David Miliband warned Labour at the weekend to stop fighting or it could damage its election chances — a move that raised eyebrows given Miliband is viewed as a possible Brown successor.

Brown has room to reassert his authority. He does not need to hold a general election for another two years, employment remains strong, moves are being made to kick-start the housing market, and the economy is still expected to grow this year.

But first he must weather some major political storms: the biggest work stoppages in a decade, unpopular changes to terror detention laws and local elections on May 1 that will be pored over for evidence of his ability to lead Labour into a fourth successive term in office. No number of visits from George Clooney can help with that.

The Friday night take-away, Saturday shopping spree and summer get-away are in line for the chop, as consumers become increasingly nervous over looming recession. Almost nine out of 10 Britons say they will cut spending on non-essential items to cushion themselves against impending economic downturn, according to a poll of 1,000 people for Web site Fool.co.uk.

A British institution — the good old take-away — is set to receive the biggest blow, with over two-thirds of the nation planning to cut back on curries, fish suppers and late-night kebabs, the survey says. Other planned cutbacks include retail therapy (67 percent) and fewer holidays (49 percent), while 12 percent plan to stop smoking, 4 percent to put pension contributions on hold and 3 percent say they will even cut their kids’ pocket-money.

This is just the latest in a string of evidence pointing to dwindling consumer confidence and increased uneasiness over the state of the global economy. It is, of course, important not to talk ourselves into recession: unnecessary doom and gloom will only serve to exacerbate the situation, something that those with a vested interest in the property market remaining buoyant have long maintained.

But Britons are surely feeling the pinch. The latest figures from Philip Hammond, shadow Treasury chief secretary, reveal that the disposable income of the average working family has dropped to 25,900 pounds today from 26,200 pounds in 2006, and personal debt in the UK is growing at an unprecedented rate — one million pounds every five minutes.

With the cost of living rising while disposable income falls, consumers must feel like they are being squeezed from all sides: failure to make hay while the sun was shining could soon come back to haunt them. It is reassuring, then, that reality is finally hitting home. During a recession, cash is king. And those with the leanest budgets will be best placed to survive.

Few people are more on the pensions money than Scottish Life’s Steve Bee. And he has some strong views in his latest “BeeHive” post following publication of our exclusive story on the soaring costs of setting up “personal accounts” — the government’s brainchild aimed at solving a looming pensions crisis.

Reality seems to be kicking in early on in the dream, says Bee, who finds the whole thing “really depressing”. A chink of light amid the gloom came in this week’s Budget, he says: the extension of the ability of pension fund managers to allow trivial commutation of small pension pots should make things easier and cheaper for occupational pension schemes. But, sadly, such rights are not to be extended to personal pension schemes, a move that only serves to “drive a horse and coaches through the whole idea of our having one simple set of pension rules for all types of pension scheme”.

Others point to the failings of other Budget measures. The formation of a “Savings Gateway”, again aimed at low and moderate earners, might seem like a nice little give-away. It will attract government matching on money saved into the scheme. But, viewed alongside personal accounts, it prompts serious questions, says Tom McPhail, head of pensions research at Hargreaves Lansdown — another leading commentator on the world of pensions. “If the government’s going to match savings pound for pound and your money isn’t locked in until retirement, then surely people will choose that over signing up to personal accounts,” he says. “And the generic advice model proposed by Uncle Otto will simply not be sophisticated enough to cope with these kinds of choices. It strikes me that in themselves these are all good ideas. But throw them together and it’s like cats in a bag.”

Perhaps, then, the answer is something far more simple. Rather than spending billions of pounds on building an “untried and clumsy” pension scheme, wouldn’t we all be better off if those billions could be channelled into directly boosting people’s pension entitlement, asks Bee. This vast sum of money could instead provide a decent basic state pension entitlement for everyone, providing a solid bedrock for private pension saving.

He is not the only one of that mindset. As another leading light, who wished to remain nameless, said to me this week: “If you’re going to spend 2 billion pounds, why not just set up an account and put a lump sum in there for that part of the population (low to middle income earners) that they can’t touch until they’re 65, rather than have all these intermediaries all taking a cut, all making a profit?” Hear, hear.

The dust has settled on Alistair Darling’s first Budget and consumers have been given little reason for celebration. The Chancellor, though announcing various measures designed to increase housing affordability, has done nothing to help the masses.

There were no moves to give a helping hand to hard-pressed householders, already struggling amid rocketing mortgage, food, fuel and tax costs, to ride out an impending recession. Darling did pledge to introduce a savings scheme targeted at low and moderate earners, often least able to save: the “saving gateway” will attract government matching for savings over the duration of people’s participation in the scheme. This has the potential to introduce up to eight million people into mainstream savings in the UK who otherwise might not make thrift a priority.

But the level of take-up of such a scheme, amid record personal debt levels and huge pressure on people’s purse-strings, is debatable. Other such government schemes to encourage the nation to save have hardly been a runaway success: think stakeholder pensions and child-trust funds (CTF). One fifth of parents currently let their CTF expire — the government can’t even give money away.

Individual savings accounts (ISAs), on the other hand, have flourished. They are one of the government’s true success stories. More than one in three adults hold an ISA and almost 215 billion pounds has been invested — making them far more popular than other savings initiatives.

Yet, the limits that savers can squirrel away into these tax-efficient vehicles have sorely failed to keep pace with inflation. The allowance will increase to 7,200 pounds from 7,000 pounds (3,600 pounds of which can be held in cash, up from 3,000 pounds) in the coming tax year — but that means the total threshold has risen by less than 3 percent since the accounts were introduced almost a decade ago. “Failing to increase ISA allowances further is a poke in the eye of savers who need encouragement to put away money,” says David Kuo, head of personal finance at Fool.co.uk.

Other changes to the ISA regime mean people will be able to switch cash holdings into stocks and shares — but the reverse will not be possible. And, once the switch has been made, there’s no turning back. The new rules raise the spectre of “another ghastly financial scandal”, according to Cliff Husband, research director at AWD Chase de Vere. “People could switch their ISA cash savings into investments unaware that they can’t switch back. This looks like another poorly delivered initiative from the government; it would be far fairer to all taxpayers if the switch between cash and investment within an ISA could be easily reversed.”

On pensions, too, there is little to encourage saving. While scrapping the 10 pence income tax rate and reducing the basic rate by 2 pence has done next to nothing to increase people’s take home pay, it has reduced the amount of tax relief they’ll get on their pension savings. The Chancellor has maintain higher level tax relief on gifts to charities, so why not for pensions?

“Frankly, while politicians have gold-plated final salary pensions, they can tinker with regulations which will have no real benefit for real workers,” says AWD’s marketing director Martyn Laverick. “If MPs did not have such generous pensions and they faced the same issues the majority of people in this country face about their pensions we would see more decisive action.”

So, it seems, consumers must face the headwinds and try to ride out the storm alone. From today, they should be tightening their belts.