Has Darling missed an opportunity?

Published on Friday 14 March 2008 20:31

ON WEDNESDAY, the Chancellor delivered his inaugural Budget and the general consensus was that he did not do enough to help people buy their first home or save for the future. Now the dust has settled, The Scotsman analyses what Alistair Darling's Budget means in reality and what measures have been left out.

House buying: The threshold for stamp duty was maintained at 125,000, rather than being increased to bring it more into line with house-price inflation, or even scrap it for first-time buyers. David Watson, head of independent mortgage broker Savills Private Finance's Edinburgh office, said: "The Chancellor ignored the opportunity to make life easier for first-time buyers, who are in danger of becoming extinct."

Many are sceptical about Darling's consultation on the feasibility of more borrowers opting for long-term, fixed-rate mortgages of up to 25 years. "Most borrowers … feel more comfortable tying themselves into a mortgage for two or five years, not ten or more," said Watson.

Some good news was the announcement that the Office of Fair Trading is to review the "sale and leaseback" market. Such schemes involve a company buying a house from someone who is often struggling to meet their mortgage repayments and renting it back to them for a set period.

The danger is tenants are not being paid enough, are paying too high a rent and can only stay in the house for a limited period. Many commentators hope the Financial Services Authority will regulate sale and leaseback.

Savings and investments: As expected, individual savings accounts (Isas) will have higher contribution limits in the tax year 2008-9. People will be able save up to 3,600 in cash Isas and up to 7,200 in stock and shares. But is this enough? Malcolm Cuthbert, managing director of financial planning at Killik & Co, said: "If the government is serious about encouraging people to save, they should push up this limit to 10,000 a year per individual."

&#149 Investment trusts and venture capital trusts were given a boost. From October, VAT will no longer be chargeable on investment management expenses.

&#149 Child Trust Fund recipients will not have to lodge vouchers for account opening from April 2009. It is hoped that by increasing flexibility on how accounts can be started – for example, by phone or internet rather than in person – more parents will take advantage of the scheme.

Pensions: Darling merely tinkered with the intricacies of pensions, rather than making major announcements. One change will affect "trivial commutation rules" for people with small pension pots in occupational pensions. Those with up to 2,000 per occupational scheme can transfer the amount for cash and up to 25 per cent will be tax free.

But Rachel Vahey, head of pensions development at Aegon UK, said: "This just serves to create an uneven playing field between personal pensions and occupational pension schemes."

Green measures: Drivers of "gas guzzlers" will have to pay a new "showroom tax" of 950 in the first year, while drivers of zero-rate emission vehicles will pay nothing in the first year. Free supermarket plastic bags may become a thing of the past.

And finally – expenditure: Anyone who likes a tipple will be worse off – and you will have to start counting the pennies if you're also a smoker. From midnight, a pint of beer rises 4p, cider 3p a litre, wine 14p a bottle and spirits 55p a bottle. A packet of 20 cigarettes will cost another 11p and five cigars 4p.