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Conservative leader Michael Howard has slammed Gordon Brown's measures as a “credit card Budget from a credit card Chancellor”.
Responding to Brown's Budget speech, Howard criticised the Government's track record on promoting savings, pointing to figures showing the savings ratio has fallen from 10 per cent since Labour came to power in 1997 to 5 per cent.
Howard also queried Brown's borrowing forecasts, saying he is on course to borrow almost five times the amount he forecast at the time of the last election in 2001.
Debt as a proportion of national income stands at 33 per cent and is set to rise to 36 per cent by 2008 despite a forecast of GDP growth at 3 to 3.5 per cent for 2004. But Brown pledged stability and claims to have met his golden rule on borrowing and sustainable investment rule.
Howard said: “This is a credit card Budget from the credit card Chancellor – a borrow now, tax later Budget from a borrow now, tax later Chancellor.”
Brown also came under fire from the Liberal Democrats, with Treasury spokesman Vincent Cable attacking his failure to do anything to tackle rising household debt.
The inheritance tax threshold has been raised by 3 per cent to £263,000 from £255,000. The rate of inheritance tax has been frozen at 40 per cent.
The proposed income tax charge on pre-owned assets will take effect from April 2005 as outlined in last year's pre-Budget report. The Government says it will not affect “legitimate” transactions between family members such as parents or grandparents wanting to help family members get a foot on the property ladder. Although the change does not come in until 2005, it has been criticised by the industry because it retrospectively affects all arrangements put in place since 1986.
Stamp duty on property purchases has been frozen. The Government says recent trends in the housing market have persuaded it to retain stamp duty at 1 per cent for properties up to £60,000, 3 per cent up to 250,000 and 4 per cent up to £500,000. However, the Council of Mortgage Lenders believes the failure to index stamp duty thresholds remains a form of stealth tax.
The Sandler suite of stakeholder products will be on the market from April 2005. The Treasury says the FSA will finish its research by the end of May, with an announcement of the charge cap expected shortly afterwards.
Chancellor Gordon Brown has refused to back down over the abolition of tax credits on equity Isa dividends despite intense pressure from the industry. Plans to cut the annual maxi Isa allowance to £5,000 from £7,000 will also go ahead.