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Darling gets set to hold out tax carrot over fuel
HOUSEHOLDERS will be given tax incentives to sell green electricity back to the National Grid, Chancellor Alistair Darling is expected to announce today.
In what is likely to be a sombre Pre-Budget Report, tax incentives to encourage people to install solar panels on their home and abandon petrol-fuelled cars will be among the few giveaways.
Homeowners who sell power generated through DIY systems like wind turbines and solar panels will no longer have to pay tax on income from excess energy which they sell to the National Grid.
And it is understood the tax for employees who opt for an electric company car will also be scrapped from 2012.
Today's statement is widely considered to be the most important Pre-Budget Report for many years and will be closely scrutinised for details of how Labour will cut a budget deficit of more than 175bn built up tackling the recession.
Mr Darling has pledged to halve the deficit within four years – with legislation planned to ensure any future administration stands by it – although the Government has offered little detail about how it will achieve it.
Bank of England Governor Mervyn King and business leaders are among those who have been calling for a credible plan on how the deficit will be tackled, although Ministers are adamant frontline services will be protected.
Today the Chancellor is expected to propose measures to tax the bonuses of bankers, although it is unclear how this would work, while new measures to secure lending to small businesses are also expected.
There are also reports that in an attempt to reduce the UK economy's reliance on financial services he will reveal policies to encourage manufacturers, including a possible scrappage scheme for central heating boilers. Firms exporting high technology could get extra support.
Tens of millions of pounds are expected to be saved by scaling back parts of the multi-billion pound NHS computer programme, while Mr Darling is likely to confirm the temporary VAT cut and stamp duty holiday will end as planned later this month.
The focus on green behaviour comes as the Copenhagen climate change talks continue this week. Mr Darling wants to see a massive expansion in electric car use. A new range is expected on the market next year, costing around 25,000.
Employees with petrol or diesel company cars are taxed at 35 per cent of the cost price of the vehicle. At present, electric cars are taxed at nine per cent, but Mr Darling is expected to announce he wants to scrap the tax altogether.
The move is designed to stimulate the market for electric cars capable of going for longer without needing to be charged.
The Chancellor will also announce an extra 1bn investment in offshore wind farms. Ministers have previously pledged to generate a quarter of the UK's electricity from turbines around the coast.
With a General Election only weeks away and signs of a Labour fightback in recent polls, today's Pre-Budget Report will be highly political, setting the dividing lines for the campaign ahead.
Amid continuing anger over the size of bank bonus pots, reports yesterday suggested that Mr Darling would announce a one-off tax on the bonuses of tens of thousands of bankers at a rate higher than the new 50 per cent band for earnings over 150,000 due to come into effect in April.
According to The Guardian newspaper, the supertax would be levied on bonuses above a fixed rate, rather than at basic salaries, in order to ensure it does not catch lower-paid workers in City institutions.
But the Chancellor will face anger from the City if he resorts to banker-bashing after research from PricewaterhouseCoopers showed financial firms paid an estimated 61.4bn in taxes in the year to March – 12.1 per cent of the Treasury's total tax take.
Derek Simpson, joint leader of the union Unite, said: "The anticipated super tax on wealthy bankers would be very welcome, but the Government needs to do everything possible to stop them from attempting to avoid paying it."
Shake-up in social care roles denied
The Government last night denied it was poised to hand the NHS greater responsibility for social care.
The Health Service Journal (HSJ) yesterday claimed councils would have less involvement in social care as part of a package of reforms to be unveiled by Health Secretary Andy Burnham in the wake of today's Pre-Budget report.
It would lead to much closer integration of hospital and community care – which critics claim leads to poor services and inefficiencies.
The HSJ said a White Paper due to be published next year would include options for ways in which the NHS and councils would work more closely as part of the "most radical change to the NHS in decades".
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Weather for Yorkshire
Saturday 26 May 2012
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