The Chancellor of the Exchequer (or what they boringly call "Finance Minister" in other countries), Alistair Darling, yesterday delivered his first Budget since becoming Chancellor in June last year, taking over from Gordon Brown when he became PM.

For the first time since 1996, the Chancellor used the original red Budget Box first used by William Gladstone when he was Chancellor of the Exchequer in 1860. It has been used by every Chancellor since 1860 with the exception of the previous one, Gordon Brown (who held the post from 1997-2007), who used one that was made in 1995, and James Callaghan (1964-1967)

The practice of having a red Budget Box dates way back to to the reign of Queen Elizabeth I.

Britain's first Chancellor of the Exchequer was Hervey de Stanton, who held the post between 1316 and 1327.

It is a tradition that on Budget Day, before travelling to the Commons to deliver the Budget, the chancellor stands outside his home, 11 Downing Street, holding aloft the red Budget Box, containing the papers with the Budget written on, in front of the cameras.

Also, Britain has many quirky and unusual traditions of State and one of them is that the only time alcohol is allowed to be consumed in the House of Commons is on Budget day when the Chancellor is offered an alcoholic beverage.

This time, though, the Chancellor, a Scotsman, refused a dram of whiskey and opted for just a glass of mineral water instead.

In his Budget, the Chancellor is trying to tackle Britian's alcohol problem by increasing the price of beer and spirits (beer is rising 4p a pint and spirit is rising 55p a bottle).

Britain is the world's second-largest defence spender after the United States, and the Chancellor will increase defence spending.

Despite glooms over the world economy, the Chancellor has said that Britain is better prepared than most other countries to weather the economic storm.

Britain is the only country in the G7 (the US, Britain, Germany, France, Italy, Canada and Japan) to have NEVER suffered a recession since 1997.

And last year, Britain's economy grew by 3%, faster than every other G7 country.

520 a year National Insurance 'stealth tax' as Darling 'plans to cut spending by 4 billion'

13th March 2008
Daily Mail

• Beer to go up by 4p a pint
• Bottle of wine to rise by 14p
• 11p added to packet of 20 cigarettes
• Government forces supermarkets to charge for plastic bags
• New showroom tax on gas-guzzlers, zero tax on 'green' cars
• Child benefit to rise to 20 a week a year earlier
• Low-income families get 50 child tax boost
• Winter payment for pensioners to rise by 25% to 250
• Fuel payment for over-80s boosted to 300
• 70,000 new homes to be built
• Fuel duty rise frozen until October
• 2bn of extra funds promised for British troops
• Darling cuts growth forecast by 0.25%
• Inflation to rise before returning to its 2% target in 2009
• Air passengers face paying an extra 10 on flights

Darling poses before the cameras outside his home, 11 Downing Street yesterday, with the traditional red Budget Box, as is custom on Budget day. The current Budget Box has been used by every Chancellor since William Gladstone in 1860 with two exceptions, though the use of a red box dates back to Elizabeth I

The Chancellor was today accused of inflicting a 520 National Insurance "stealth tax" on middle-class workers as well as plotting to cut spending by 4 billion.

Alistair Darling did not even mention National Insurance (NI) in the Commons yesterday but it has now emerged the ceiling for the contributions has been raised by 100 a week, up to 770.

Workers earning around 40,000 will have to pay 520 a year more due to the increase, putting them among the biggest losers of the Budget, according to analysts.

It will be worth almost 2 billion a year in revenues to the Treasury, and comes on top of sharp tax increases on alcohol and motoring which will leave the middle classes feeling the squeeze.

Mark Pragnell, managing director of the CEBR economic think tank, said the NI changes were a "stealth tax" that had not been clearly disclosed in public.

He said: "The NI clawback was pre-announced but it is very difficult to find exactly when."

It has also emerged today that the Chancellor is planning a 4 billion spending squeeze after the next general election.

In its annual Budget analysis, the Institute of Fiscal Studies worked out the Chancellor plans to cut the rate of growth in spending to 1.8 per cent in 2011/12 and 2012/13.

The projected figure, buried deep the "red book", is lower than the current three-year-spending round of 1.9 per cent growth in public spending.

Privately, the Tories are said to believe the 1.8 per cent figure is the most important statistic in the whole Budget.

It will mean six years of a very tight spending squeeze, and is likely to fuel claims of the "hangover" that voters will face as a result of what the Tories claim was Gordon Brown's mismanagement of the economy.

Mr Darling is already under fire from the Tories for gambling on Britain sailing through a global crisis despite warnings from the City.

The Chancellor presented a rose-tinted picture of the economy to disbelieving MPs and forecast steady long-term growth.

But Shadow chancellor George Osborne today claimed his Budget left the country "ill-prepared" for a slowdown and was hitting people when they were already struggling to cope financially.

He said: "In other countries there are big tax cuts for businesses, and big attempts to put money in the pockets of families.

"But in Britain there are tax increases on hard-working families and businesses. They are paying more for their drink, more for their cars. People are being kicked when they are down."

Mr Darling's changes will see duty on alcohol will increase from Sunday night, with 14p added to a bottle of wine, 4p on a pint and 55p on spirits.

For cars, a new emissions scheme slapping 950 on the price of a gas-guzzler will be implemented from 2010.

The price of 20 cigarettes rose 11p last night.

The worst of the rises come into force next year and in 2010, when Mr Brown is likely to call an election.

He hopes Britain will be through the worst by then - and voters will be used to paying more.

But economists accused the Government of underestimating the dangers facing the economy, and said the Budget may fail to deliver a much-needed shot in the arm.

Tory leader David Cameron said Mr Brown and Mr Darling were "living in an entirely different world from everyone else" and the Institute for Fiscal Studies said the Chancellor had delivered his Budget "with fingers crossed".

Labour's defenders, though, pointed out that Mr Brown repeatedly confounded his critics with his forecasts over the past ten years.

Mr Darling had to revise downwards his previous growth predictions, however, and admit the public borrowing situation will worsen sharply next year, to a whopping 13billion more than Mr Brown forecast a year ago.

He said public sector net investment was set to rise from 33billion next year to 37billion in 2010 - the highest in three decades.

Darling said that funds available through the Small Firms Loan Guarantee scheme will be increased by 60million for the coming year and the scheme will be extended from next month to small- and medium-sized firms.

The Chancellor, Alistair Darling, gets a congratulatory pat on the back from Prime Minister Gordon Brown after his speech

Mr Darling stressed that extra investment in public services must be matched by reform.

"This Budget therefore confirms the spending plans set out in last year's Comprehensive Spending Review, and makes an assumption for continuing real growth in public spending after 2011 at a rate of 1.9 per cent a year."

He added that the test for public services in the future was "whether they are as good as they can be".

The Chancellor now expects the economy to grow by between 2.25 per cent and 2.75 per cent in 2009 - compared with the 2.5 per cent to three per cent anticipated six months ago - as the effects of the credit crunch that began in the U.S. last year linger on.

But Howard Archer, Global Insight chief UK economist, said the predictions "still looked too high".

Mr Archer said: "Mr Darling highlighted weaker global growth, financial market turmoil and tighter lending conditions influenced markedly by the U.S. crisis.

He also argued that UK growth is likely to be higher than the Eurozone, U.S. and Japan in 2008.

"This skates over the fact that the UK economy has serious problems of its own - notably including high household debt levels and an over-extended housing market."

If Mr Darling's own forecasts are blown off course, he will have to break Labour's own rules on borrowing - or put up taxes.

The 51-minute Budget offered little comfort to households struggling with soaring food and energy prices that have put an average 800 extra on domestic bills every year.

Mr Darling made no secret of his need to raise nearly 3billion more a year in tax.

There was temporary relief for motorists on fuel duty, with the 2p increase planned for April put off until October.

There were even rare cheers when Mr Darling threw his weight behind the Daily Mail's Banish the Bags campaign.

He promised legislation next year to slap a charge on single-use carrier bags.

But with little room for manoeuvre, the Chancellor had no scope for the eye-catching giveaways that were the hallmark of Mr Brown's Budgets.

He managed just a one-off 50 increase in the 200 winter fuel allowance for over-60s - and 100 extra on top of the 300 offered to the over-80s.

The Chancellor put alcohol duty on an upward "escalator" of above-inflation increases which will raise 1.5billion for the Treasury and affect an estimated 43million people.

Critics said the vast majority will be responsible drinkers hit by changes supposedly aimed at binge drinkers, while the price of alcopops and cider will rise by only a few pence.

The Chancellor defended dramatic rises in vehicle excise duty by claiming there would be "catastrophic" environmental consequences if he failed to act.

Families who rely on people carriers such as the Renault Espace will have to pay nearly 1,000 more for their car under the new emissions scheme.

The "showroom tax" will add up to 950 to the cost of high-emission cars such as the Volvo XC90 and the Citroen C6.

Those that generate low emissions will escape tax altogether.

Mr Cameron said the borrowing figures were "truly dreadful" and warned that families would be 110 a year worse off as a result of the tax changes.

He said: "What we need is a Government that helps people when times are tough. Instead we have got a Government that kicks them when they are down."

Liberal Democrat leader Nick Clegg dismissed it as a Budget designed to fill a "black hole" in the public finances while "masquerading" as one that was good for the environment.

Under pressure from Labour MPs to do more for the poorest, Mr Darling mustered enough cash for a 950million-a-year package of benefit changes to take a further 250,000 children out of poverty.

Elsewhere in the Budget, Mr Darling contradicted recent attempts to scrap road pricing plans by announcing he was providing funding to develop a national scheme.

And he confirmed controversial plans to go ahead with a new 30,000 tax on wealthy "non-dom" foreigners who have been living in Britain for more than seven years.

• A row broke out last night after Mr Cameron accused Schools Secretary Ed Balls of shouting "So what!" when the Tory leader claimed Britain had the highest tax burden in history.

Mr Balls, a close ally of Mr Brown, insisted he had said "so weak" in response to Mr Cameron's performance.

He was backed by the Hansard record. But Tories seized on the spat as evidence that Labour was out of touch with ordinary voters.

What is the red Budget Box?

Francis Throckmorton

The Chancellor traditionally carries his Budget speech to the House of Commons in a particular red briefcase. The Chancellor's red briefcase is identical to the briefcases used by all other government ministers (known as ministerial boxes or "red boxes") to transport their official papers but is better known because the Chancellor traditionally displays the briefcase, containing the Budget speech, to the press in the morning before delivering the speech.

The original Budget briefcase was first used by William Gladstone in 1860 and continued in use until 1965 when James Callaghan was the first Chancellor to break with tradition when he used a newer box. Prior to Gladstone, a generic red briefcase of varying design and specification was used.

The practice is said to have begun in the late 16th century, when Queen Elizabeth I's representative Francis Throckmorton presented the Spanish Ambassador, Bernardino de Mendoza, with a specially constructed red briefcase filled with black puddings.

In July 1997, Gordon Brown became the second Chancellor to use a new box for the Budget. Made by industrial trainees at Babcock Rosyth Defence Ltd ship and submarine dockyard in Fife, the new box is made of yellow pine, with a brass handle and lock, covered in scarlet leather and embossed with the Royal initials and crest and the Chancellor's title.

In March 2008, Alistair Darling reverted to using the original budget briefcase.

Last edited by Blackleaf; Mar 13th, 2008 at 01:23 PM..