The Chancellor found himself in a difficult position ahead of his Pre-Budget Report – it was hard to ignore the voter-friendly policies proposed by the Tories last week, but any similar proposals were bound to provoke accusations of plagiarism. In the end he chose to go for the jugular, specifically attacking two of their headline policies, on inheritance tax and non-domiciles.
He proposed to raise the inheritance tax threshold for married couples to £700,000 – but said the Tory plan to raise it to £1m would cost £2bn, and only really benefit the wealthiest in that group. He promised to spend the extra £2bn on health and education instead, winning him his biggest cheer of the day from the back-benches.
He also attacked the opposition’s sums on their flat tax on non-domiciles – this would raise just £600,000 rather than the £3.5bn suggested by the Tories, he said, and penalise immigrant workers. However, he did promise to crack down on the current set-up, possibly by introducing an extra charge on non-doms after seven years.
His focus on these areas – plus the axing of the air passenger duty, another policy suggested by the Tories last week – led to huge jeers from the opposition benches, and allowed Shadow Chancellor George Osborne to accuse the Prime Minister of ‘followership... not leadership’.
Darling was also accused by both opposition parties of trying to paper over the economic cracks left by his predecessor – a charge that in the circumstances he was hardly going to own up to.
As expected, private equity bosses were singled out for attention – Darling said he would change the existing arrangements and close loopholes so buyout bosses ‘pay a fairer share’.
He also abolished taper relief on capital gains tax, replacing it with a flat rate of 18%. This may have been lower than the 40% demanded by some trade unions, and will inevitably affect fund managers – but it also means that entrepreneurs and small business owners will be paying almost twice as much tax on the gains on their capital investment.
There were other populist spending increases for overseas aid, the NHS, education and transport – but there’s no doubt that Darling took a few body blows in his first big political bun-fight.