Budget reaction

Responding to the Government's Budget yesterday Meg said,

"Today's budget will hit growth and jobs by cutting back Government support for the economy too quickly.

Families on low and middle incomes will loose out, losing their tax credits, and Child Benefit cut by £129 a year. I am concerned for families in Hackney and will be working hard to fight further cuts.

The Budget announced that VAT will rise from 17.5% to 20% in January 2010. Labour rejected a VAT increase as part of our deficit reduction plan, and chose to increase National Insurance Contributions instead, because VAT hits everyone, especially the poorest and pensioners.

The choice was made today between protecting jobs and growth or reckless cuts with no strategy for growth. The Government made the wrong choice."

Key announcements:

VAT increased from 17.5% to 20% (zero-rated items remain exempt)

No increases on tobacco, alcohol or cider

A two-year pay freeze for public sector workers

Capital gains tax to increase to 28% for higher earners, to remain at 18% for lower-rate tax payers.

Child benefit frozen for next three years

Tax credits reduced for families earning over £40,000

Housing benefit capped at £400 a week

Pensions linked with earnings from April

Corporation tax will be cut next year to 27% and by 1% annually for the next three years until it reaches 24%. The small companies' tax rate will be cut to 20%.