--Fay Goddard is chief executive of the Personal Finance Society. The opinions expressed are her own.--

As predicted, Budget 2009 was heavy on figures and forecasts and hard on the highest earners. Unsurprisingly it is the latter that the press has picked up on. We all knew that there would be a new top rate of income tax – though some were taken by surprise at the rate of 50 percent and the speed at which it will be introduced.

This wasn’t the only hit taken by those on big salaries with restrictions on pension tax relief for those on over £150K and personal allowances for those earning over £100K. These changes will be of concern and mean that financial advisers will need to review the position of their affected clients. However, advisers will have breathed a sign of relief as the rumoured removal of all higher rate tax relief on pensions did not materialise.

There was better news though for savers. The rise in ISA limits is a welcome move and will be available immediately for those over 50, with everyone else having to wait until next year. Whilst I assume this is aimed at providing some immediate assistance to those who rely on their savings to generate income, with interest rates so low, the increase will not deliver much benefit. At least some pensioners will also receive additional tax credits though.

Help for families came in the form of increased child tax credit, and for those who lose their job in these troubling times statutory redundancy pay has been increased.

Those looking to buy houses under £175K will continue to benefit from the stamp duty holiday – this was extended by a further six months until the end of the calendar year but there was little else to stimulate the housing market.

In terms of more direct measures there was the ubiquitous raise in alcohol and tobacco duty and also the rise in petrol duty. The VAT rate cut will end in December as announced in last year’s Pre-Budget report and so VAT will revert back to 17.5 percent. None of these will be sufficient to top up the Chancellor’s coffers quickly but could further reduce spending for middle England.

This was certainly a Budget for the times with the Government looking to replace revenues lost in the downturn and as I said prior to the Chancellor’s speech it’s the first step towards universal belt tightening.

Chancellor Alistair Darling has made his second annual Budget speech to parliament. Among the measures announced to the House were an increase in petrol duty of 2p per litre in September and a 2 percent increase in alcohol and tobacco duties from tonight.

Darling also announced a scrappage scheme offering £2,000 to people trading in cars older than 10 years for a newer vehicle. From next April there will be a new top tax rate of 50 percent for those earning more than 150,000 pounds a year.

Meanwhile, the annual limit on individual savings accounts has been raised to 10,200 pounds and the Stamp Duty holiday on properties sold for less than 175,000 was extended until the end of the year. There was also money for wind farms and an extra 1 billion pounds to help homeowners and the construction industry.

Darling also forecast that the UK economy will shrink by 3.5 percent in 2009, saying “No country could insulate itself from the world downturn.”

David Cameron, leader of the opposition Conservative party, said: “He is planning to borrow 348 billion pounds over the next two years, that is more — over just two years — than every previous government put together, not just every government since World War Two … but since the Bank of England was first founded more than 300 years ago. This budget does not do enough to bring the public finances under control.”

What did you make of the Chancellor’s Budget speech? Will you benefit from any of the measures? What are your thoughts on the increase in fuel, alcohol and tobacco duties? Do you think the scrappage scheme and new tax rate are a good idea? Finally, do you think it will have a positive effect on the UK economy?

It may not be tax and spend exactly, but it’s definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small ‘c’) economic policies, steadily underburdening itself of the ‘fiscally unreliable’ tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain’s along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April’s budget was a tough one for Labour, but Wednesday’s budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

The numbers tell the story and are in some cases eye-bogglingly huge.

Finance minister Alistair Darling says the government will have to borrow 175 billion pounds this year and almost as much next year (173 billion) as it tries to plug a widening gap in its finances. WIth the Debt Management Office already struggling to raise funds (if one recent debt auction is anything to go by), the borrowing requirement could be a very big ask.

At the same time, tax receipts as a proportion of gross domestic product are going to be down, Darling said, and growth is set to contract this year at the fastest rate since World War Two with unemployment edging relentlessly higher.

To try to boost government revenue, Darling has unveiled a new income tax band, although it’s unclear just how much can really be raised from taxing the richest 1-1/2 to 2 percent of the population an ever larger portion of their income.

From next April, those earning more than 150,000 pounds a year will have to pay 50 percent tax, while their benefits allowances will steadily be cut, as they will be for those earning more than 100,000 pounds.

Those new tax policies represent something of a bust for Labour. For 12 years they’ve kept on the right side of business and the wealthy, encouraging entrepreneurship and positioning themselves as a partner with business. But the new top rate of tax suddenly begins to look like a Labour policy of old —  a “tax-the-rich” gambit.

It remains to be seen how the Conservative opposition – now widely expected to win the next election, which has to be called by June 2010 – respond, but on the face of it the high borrowing and higher taxation would seem to play ever more into their hands politically, while threatening them with a dire economic legacy should they win the next election.

For Darling, it may be the best that can be done with an awful hand. Maybe the borrowing can be met, the spending measures announced will have the desired effect, kickstarting economic activity and getting the wheels of commerce turning. Maybe. But it’s a slim chance will little more than a year to go before an election.

Borrowing and taxing may be what’s needed (or the only means available) to try to right the economy in this uncertain time, but it’s unlikely to help Labour’s prospects of holding onto power.

-- 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))

Losing your job can come as a massive shock, even if it is something you have been worrying about for months. The latest figures show that for the first time in over a decade the number of people out of work has risen above two million.

If you are one of them, you probably want to find a new job as quickly as possible. Here are a number of useful resources to help you.

Redundancy procedure, your rights, unfair dismissal

Directgov

Citizens’s Advice

CAB Advice Guide

The Advisory, Conciliation and Arbitration Service

Debt

Consumer Credit Counselling Service

National Debtline

CAB Advice Guide

Find legal advice

Law Centres Federation

Law Society

Payment protection insurance

Association of British Insurers

Benefits and financial support

Jobcentre Plus

CAB Advice Guide

Directgov

Careers advice and retraining

Directgov Careers Advice

Tax guides

HM Revenue and Customs

** For full coverage of UK politics click here **

One of Gordon Brown’s favourite speech writers is leaving Number 10 to return to the Treasury. That gives Brown the perfect opportunity to draft in someone who has the ability to coin the kind of phrases that chime with the electorate and stick in people’s minds.

To date, that is something Brown, whose dismal year in office was underlined on Friday with a humiliating fifth place by-election finish for Labour, has signally failed to do. Sure, Brown wanted to move away from the accusations of endless spin that soured the public mood towards his slick predecessor Tony Blair.

But the mantras Brown has chosen to repeat ad nauseum since he took up the mantle of Prime Minister have failed to stick. Stressing how many people Labour has taken out of poverty in the past decade, or the need to take “long-term decisions” just isn’t working.

People need reassurance over fuel and food prices, over crime and security, but perhaps more than anything they need to be convinced Brown understands — and cares.

Brown — nicknamed the Iron Chancellor during his decade at the Treasury — is right to focus on the long-term. He wants to ensure people can afford to buy homes, that the country slashes its reliance on non-environmentally friendly energy, and that taxpayers have access to good healthcare, education and welfare support.

But with voters feeling the pinch, it’s the short term that’s key, and if Brown wants his messages about the kind of place Britain needs to become longer-term to stick, he might need to think about the kind of sound-bite approach that Blair used so well.

Brown’s tried a more “man of the people” approach but that hasn’t convinced. Voters are not warming to the serious, unsmiling Prime Minister. And if Brown can’t change his manner, then he needs to change the kinds of words he uses.

Of course, he will also need some luck. No amount of “in tune” rhetoric is going to help if people continue to feel he’s not the man to lead them through the economic bad times. But at the moment, his language and demeanour seem to compound voters’ unease. The Iron Chancellor risks becoming the leaden Prime Minister of British history: dull, inert and potentially poisonous.

Tax: it’s all getting a bit of a drag. The number of people paying the highest level of income tax has almost doubled since Labour came to power, according to recent statistics.

“Fiscal drag” — a fancy name for failing to uprate tax thresholds and allowances in line with wage inflation — has meant that many hundreds of thousands of middle earners (such as higher-paid teachers, nurses, police officers and many civil servants) have been trapped into paying 40 pence to the Exchequer for every pound on some of their earnings.

Around 3.7 million people are estimated to pay higher-rate tax, up from just over two million in 1997.

That figure, estimates the Institute for Fiscal Studies, will rise to more than 4 million by the end of the current tax year, due to fiscal drag alone. Indeed, the individual taxpayer has borne the brunt of Labour’s tax policies, according to a report by accountancy firm BDO Stoy Hayward released to coincide with “tax freedom day” earlier this month.

Higher-rate tax now starts for many at 41,435 pounds (the personal allowance of 5,435 pounds plus the basic-rate tax band of 36,000 pounds). But with some careful planning those dragged into the higher-rate tax net could save some or all of the extra tax levied by paying money into a private pension — and pave the way for a rosier retirement.

You should always try to make a pension contribution which attracts higher rate tax relief. So, if you’re earning 50,000 pound per annum and make a contribution of no more than 8,565 pounds (50,000 pounds minus the starting point for higher-rate tax of 41,435 pounds), this will attract tax relief at 40 percent — boosting your pension contribution by 3,426 pounds that would otherwise have gone to the tax man.

There are other ways, too, to maximise the amount of pension contributions that receive 40 percent tax relief, says Malcolm Cuthbert, managing director of financial planning at independent financial services group Killik & Co: take into account other sources of earned pensionable income — such as bonuses, redundancy payments (if above the first 30,000 pounds, which is tax free), as well as holiday lets (although not rental income).

Most importantly, do not forget to claim back the entitlement for higher-rate relief annually on your tax return. Although basic-rate relief of 20 percent is paid at source on personal pension contributions, the other 20 percent of higher-rate relief must be reclaimed on your tax return.

“Making your personal finances as tax efficient as possible is a no-brainer that will help ensure your money lasts as long as you do,” says Cuthbert. “One of the smartest ways to achieve this is to claim higher rate tax relief whilst you’re working — and then engineer your affairs so you pay basic rate tax in retirement.” Now, that’s a nice little way of getting one up on the tax man.

The over-60s will be able to take a dip at their local council pool for free across England from next year under government plans announced on Friday.

The scheme is costing 140 million pounds over two years, although part of the money will also be available for lifting admission costs for children under-16 and for maintainance work on ageing facilities. A similar scheme is already operating in Wales.

It’s all part of the government’s plan to get 2 million people off their couches ahead of the opening of the Olympic Games in London in July 2012.

Critics say it’s too little too late as Britain heads for an obesity crisis, with the government struggling to meet its target of reducing the proportion of overweight and obese children to 2000 levels by 2020.

What do you think? Is free swimming a good idea? Or just another unnecessary burden on the taxpayer?

Roads into London and Cardiff are expected to be jammed with lorry convoys as part of a protest at the soaring cost of fuel.

Average prices have risen during the past month by their highest margin this century to 114.2 pence per litre of petrol and 126.7 pence per litre of diesel, the AA says.

In January, the national average petrol price was 104.3 pence per litre and diesel was 109.2 pence per litre.

The rise has mirrored the cost of oil as it recently breached $130 a barrel.

The government has staved off one planned increase in fuel duty, but a 2 pence rise is scheduled to go ahead in the autumn, affecting all motorists.

The government blames the rising cost of oil for forcing up prices on garage forecourts, but drivers say the Treasury should reduce levies.

Do you think the government, which was forced into a U-turn over the 10 pence tax rate last month, should be forced into another by reducing fuel levies to help motorists and the haulage industry?

If so, where else could it get its money?

And how would such a tactic fit with its so-called green credentials?

The Daily Mirror is alone among the papers in giving unqualified praise to Chancellor Alistair Darling’s 2.7 billion pound solution to the damaging 10p tax row.

“Once critical Labour MPs hailed it as a masterstroke,” the paper said. “Hopefully it signals the start of a concerted fightback by a prime minister who has been on the ropes for months.”

The Daily Mail says the original decision to scrap the starting 10p rate of tax was “A mistake, yes… but fatal? Hardly.” It says Darling and Prime Minister Gordon Brown “deserve credit for choosing the right means to help those who suffered,” by raising the tax threshhold.

But the Chancellor might want to avoid the rest of the dailies, especially the one printed on pink paper. Darling’s tax announcement “ has shattered any residual idea that Mr Brown’s administration can run an orderly fiscal policy,” says the Financial Times.

The paper concedes that “in policy terms, the plan to put up personal allowances makes sense.” However, it adds that the political cost is heavy — the government will no longer now be able to attack the Conservatives over unfunded promises of tax cuts. “This is a significant weakening of the election campaign armoury,” it says.

The Daily Telegraph, somewhat grudgingly, saying that the Chancellor “deserves congratulations” for doing precisely what the paper had urged last Friday. But it adds that Darling’s statement was “a purely political damage-limitation exercise”, timed “to save Labour’s bacon” in next week’s Crewe and Nantwich by-election.

On a similar theme, the Times suggests that the late MP Gwyneth Dunwoody’s final service to the Labour Party has been in death rather than life. “It’s hard to believe that Alistair Darling would have made the statement he did on the 10p tax rate yesterday if it were not for fear of a massive defeat” in Crewe next week, Dunwoody’s former seat.

The paper calculates that the 2.7 billion pound price is the approximate equivalent of cutting the basic rate of income tax by 1p in the pound.

The Guardian notes that Darling effectively announced an emergency budget that “gave more money away than any real budget since 2001.”

The Independent says the 10p tax saga has been “an object lesson in bad government“. “What began as a cynical attempt to curry favour with the middle-classes has backfired in the most explosive manner,” it says. The Daily Express agrees it is “no way to run a country“.

The Sun asks who will be picking up the tab for the change. Unless Darling raises the money elsewhere, it draws the inevitable conclusion –”We will all pay more tax“.