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Darling aims for bank account for all in pre-election Budget

Up to 1 million more people will have access to bank accounts, the Chancellor of the Exchequer Alistair Darling announced in the Budget. The measure ‘guarantees bank accounts for all and will combat financial exclusion’, he said.

In a speech designed to delineate the dividing lines between Labour and the Conservatives before the General Election, expected on 6 May, the proposal ironically fits with the Opposition’s idea to move towards switching the PAYE system away from employers to the banking system.

Under the Tories’ plan, more individuals would have to have a bank account in order to have income tax and National Insurance Contributions deducted.

There was relief for busy payroll managers when he announced that there would be no further changes to income tax or National Insurance. A new top rate of 50% tax is due to come in next month, and higher NICs from next year.

A second Budget in 2010 is likely if there is a change of Government in next month’s General Election. At last autumn’s Payroll World conference, the Shadow Treasury Minister David Gauke said that the Conservatives ‘didn’t like’ this higher top rate, but that reducing the deficit would take priority over reducing higher earners’ income tax.

The Chancellor skirted around the implications of the public deficit, set to be around £167bn – some £11bn less than initially expected, but still a peace-time record in terms of proportion of GDP.

Mr Darling said the UK economy was emerging from the deepest global recession in over 60 years; UK GDP contraction was 6% from peak to trough. But he claimed that ‘the right calls were made’ and that the recession has ‘not turned into depression’.

There were many measures aimed at boosting employment. The Government is considering ending the default retirement age, despite supporting a recent court case that upheld the right of employers to set an age at which to retire. Mr Darling also pledged that older workers will have more opportunities to work while receiving benefits, and that no one aged under 24 should be out of work for six months without being offered a job.

• See April 2010 issue for conference coverage.

24/03/2010