The Member of Parliament for Edinburgh South-West delivered his first budget as Labour Chancellor earlier today "to secure a strong, sustainable future."
Speaking in the House of Commons, Chancellor Alistair Darling assured that "Britain is better placed than other economies to withstand the slowdown in the global economy" while unveiling hikes in tax on fuel, fags, and booze.
Darling announced that from Sunday, alcohol duty is set to increase by 6% above inflation, adding 4p to the price of a pint of beer, 3p to a litre of cider, an additional 14p to a bottle of wine and 55p more on to a bottle of spirits. Cigarettes have gone up 11p for a packet of 20 and five cigars go up 4p.
The Scotch whisky industry, which represents nearly a quarter of UK and 67% of Scottish food and drink exports, reacted with "extreme dismay" at the "punitive" rise.
Scottish Whisky Association chief executive Gavin Hewitt said, "The Budget will add 59 pence (excise tax and VAT) to the price of a bottle of Scotch Whisky and will push the tax burden on the final price of a typical bottle towards 75%. Today's duty rise is the biggest on Scotch Whisky since 1991."
A touch of green
It was spun as a green budget, but Alistair Darling's battered red box held little to impress environmentalists in its ambition.
Darling reiterated the prior announcement that air passenger duty will be replaced by a charge per plane, rather than per person, to discourage airlines from taking to the air with planes that are not full. The tax, which is to be increased by 10%, is green-tinged, but it also is a response to the fact that more flights are expected under the Open Skies agreement between the EU and US which comes into effect on 30 March. Undermining his green stance, Darling reiterated the government's commitment to airport expansion at Heathrow and Stansted.
Tax at the pump
Darling said the government is considering changing UK targets for emissions cuts from 60% to 80% by 2050 - matching the target made by the Scottish government. One area that will have to be tackled to achieve this is road transport, which represents 22% of UK greenhouse gases.
Darling announced that a major reform of vehicle excise duty coming next year will penalise gas-guzzlers, with an additional band from 2010-2011 for new cars where the highest polluting car will be taxed £950 in the first year. New cars that emit less than 130 grams of CO2 per kilometre will pay no added tax in the first year. Funding would also be set aside for road pricing studies.
"It is right that if people choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost," the Chancellor said.
Liberal Democrat leader Nick Clegg, calling the budget a "green cop-out," criticised the government for postponing the introduction of a 2p fuel duty rise from 1 April to 1 October 2008.
"At the first sign of political difficulty the government has run away," said Clegg. "The fact is that the real cost of motoring has fallen consistently over the last two decades while the real cost of public transport has risen by a third."
Darling also announced that fuel duty rates will rise by 0.5 pence per litre above indexation from 1 April 2010
Bin the bags
The Chancellor joined the growing movement to ban the use of plastic carrier bags, but only by giving a warning that the government will introduce legislation in 2009 to impose a charge on bags if retailers do not take voluntary action to end their use.
While the Chancellor announced a winter fuel payment rise for the over-60s of £50 and for the over-80s of £100, there was little he offered in the way of incentives for making existing homes more energy-efficient apart from a £26 million pledge next year for a Green Homes Service to help people cut their carbon emissions and their fuel bills.
Darling added that new non-domestic buildings will become zero-carbon from 2019, complementing an existing target to make new homes zero carbon from 2016.
The use of smart metres will also be extended to medium and large businesses.
Green shoots
Among other highlights, Darling announced measures to halve child poverty by 2010, and more help for small businesses.
He predicted optimistically that UK growth would be 1.75-2.25 per cent this year, rising to 2.25-2.75 per cent in 2009.
Opposition leader David Cameron criticised the budget saying: "The cost of living is going up and Labour is making it worse."