Darling's £2.7bn 'may not help right people'

Published on Wednesday 14 May 2008 10:37

ECONOMIC experts are questioning the impact of Chancellor Alistair Darling's surprise announcement of £2.7 billion to compensate people who lost out from the abolition of the 10p income tax rate.

Some commentators suggested that the extra borrowing to fund increases in personal tax allowances could force the Chancellor to breach his own fiscal rule that national debt should stay below 40% of GDP.

Others calculated that the bulk of the money promised by Mr Darling would not go to the low-paid workers worst-hit by the loss of the 10p rate.

Francesca Lagerberg, head of Grant Thornton's national tax office, said: "It does not offer full compensation to those worst hit by the abolition of the 10p rate.

"Furthermore, and rubbing further salt into the wound of those low income earners who have not been helped by today's announcement, is the fact that a large number of middle-income earners will benefit from the raising of the personal allowance by 120."