Darling unveils plans to cut UK’s ballooning debt

At today’s Pre-Budget Report, Chancellor of the Exchequer Alistair Darling unveiled measures to claw back money in order to pay off the UK’s spiralling debt.

Mr Darling confirmed there would be a one-off 50% tax on bankers’ bonuses paid above £25,000.

The Chancellor said the banks, rather than the bankers, will pay the tax and the temporary measure will come into effect immediately.

He also confirmed a freeze in the £325,000 inheritance tax allowance. The threshold was planned to increase to £350,000 in April but will now be frozen until 2011.

In the meantime, National Insurance will increase by a further 0.5% from April 2011 but no one earning under £20,000 will have to pay more.

The Chancellor added that Britain’s net debt would rise to 78% of GDP by 2014-15 - it is currently the equivalent of 59% of GDP.

Mr Darling said the public finances were worse than expected with a deficit of £178 billion against the £175 billion he had previously estimated.

The Chancellor said he expects the economy to contract by 4.75% in 2009 - rather than the 3.5% estimated in April’s budget.

In other news, child benefit will rise by 1.5% in April while the basic state pension will rise by 2.5% in April.

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