The Conservatives and Liberal Democrats accused Chancellor Alistair Darling of stealing their policies yesterday in what shadow chancellor George Osborne described as "a pre-election budget without an election".
Mr Darling did not specify an increased tax requirement in his financial statement in the Commons to fund a reduced spending settlement in a comprehensive spending review and pre-budget report, heralding what many analysts suspect will be tougher times ahead for the public and private sectors.
Mr Osborne branded it "a tax-raising pre-budget report", claiming the chancellor's statement would result in a £1.4 billion (€2.02 billion) rise in taxes in 2010, while condemning what he called "over-spun claims, desperate stunts and fake figures" from "a weak and cynical government".
He was reflecting mixed feelings of outrage and delight on the Tory benches after Mr Darling announced his own headline-grabbing plan to double the inheritance tax threshold for couples, widows and widowers to £600,000 - just a week after the government had rubbished the Conservative plan to exempt estates under £1 million.
Liberal Democrat treasury spokesman Vince Cable also accused the chancellor of "scrambling to catch up on the Tories over inheritance tax" while also helping himself to an original Lib-Dem proposal to switch "green" air taxes to flights, not passengers.
Mr Darling echoed prime minister Gordon Brown's attack on the Tory plan to fund the raised inheritance tax threshold by way of a £25,000 charge on foreigners registered as non-domiciled for tax purposes. Mr Darling claimed only around 15,000 "non-doms" would earn enough to make it worth their while staying in the UK and that this would leave a shortfall of some £2 billion in Mr Osborne's budget proposals.
However, the chancellor provoked Tory jeers when he announced that he would bring forward proposals of his own which would see "non-doms" pay a charge after seven years, claiming this would exempt 97 per cent of estates while leaving the government with £2 billion more to spend on schools and hospitals.
Turning his attack directly on the prime minister, Mr Osborne said: "For 10 years, the prime minister has been sucking millions of aspiring families into the inheritance tax net . . . Now, a week after we put forward our plans, the prime minister and chancellor scramble around in a panic trying to come up with something. He talks about setting out his vision of the country - but he has to wait for us to tell him what it is."
As expected, Mr Darling downgraded growth forecasts for 2008 from 2 to 2½ per cent - a cut of half a percentage point - while public sector net borrowing was now expected to come in this year at £38 billion rather than the forecast £34 billion. Growth for 2009/10 was expected to be 2.5 per cent to 3 per cent, Mr Darling said.
With the Conservatives looking to Ireland for inspiration as they prepare the next phase of their detailed tax proposals, Mr Darling announced a 2p cut in the pound bringing the main rate of corporation tax next year to 28 per cent. The chancellor also announced a single 18 per cent rate of capital gains tax.
