Budget is the worst blow to whisky for 33 years, claims SNP

ALISTAIR Darling was last night accused of slapping the biggest tax on whisky in a generation after he defended the rise as helping to fight poverty.

The SNP published figures showing that the extra 59p on a bottle was the largest since 1975, accusing the Chancellor of abandoning moves to equalise duty on spirits, wine and beer.

Angus Robertson, the SNP's Westminster group leader, whose Moray constituency contains more than half the country's malt distilleries, said the 6 per cent hike – which will be followed by four more years of increases of 2 per cent above inflation – was hugely damaging.

He said: "Alistair Darling has undone any benefit the whisky industry had from the previous duty freeze, and this is a bitter blow for an industry on which so many jobs and rural communities are dependent."

But Mr Darling said the industry had enjoyed a decade of duty freezes and the move would have no effect on foreign trade.

The Treasury's own figures showed the duty per litre of pure alcohol has increased by £1.79 to £21.35, higher than the increases of £1.58 in 1991 and £1.61 in 1992. Mr Darling said: "Increasing the duty on all alcohol has allowed me to increase the money going to families with children, increase child benefit and help families with lower incomes.

"What is also important to Scotland is making sure we get children out of poverty and help elderly people, as well as looking at a wider range of measures – stability in the economy, keeping interest rates down, which keeps mortgage rates down – all of these things are crucially important to Scotland."

The row came as yesterday's Commons debate on the Budget ended 40 minutes early when there were no MPs left to speak – many prefer to leave London early for their constituencies at the end of the week. However, Holyrood debated the whisky duty rise, with Alex Salmond, the First Minister, warning that the Budget would "damage Scotland's economic interests".

Meanwhile, the Institute for Fiscal Studies (IFS) said the Chancellor would have to make an £8 billion cut in spending if Labour's sums were to add up by 2011.

Robert Chote, director of the IFS, said Mr Darling would have to find a further £4 billion in spending cuts in his next review – scheduled for 2009 – on top of £4 billion already pencilled in.

Concerns also grew about the effect of the government's plans to force the UK's 2.6 million incapacity benefit claimants to undergo tests to continue to receive the pay-outs.

Testing will begin in 2010, with people applying for benefits from the autumn being warned they will come under scrutiny.

Danny Alexander, a Lib Dem MP, said: "The government should focus on providing more personalised support for claimants to get them back into long-term work."

'STEALTH TAX' RISE IN NATIONAL INSURANCE

EMPLOYEES earning around £40,000 a year face a shock next month as higher National Insurance payments kick in.

Despite the Chancellor making no mention of the change, an extra £95 a week of income will be paid at the higher 11 per cent tax rate.

This means an extra £543 will disappear on annual salaries for many above-average earners.

The changes are part of the package on personal incomes flagged up by Gordon Brown last year in his final Budget. This included the scrapping of the 10p income tax band and the reduction in the main rate from 22p to 20p.

Mark Pragnell, of the Centre for Economics and Business Research, said the changes were a "stealth tax" that had not been clearly disclosed.

KENNEDY SLATES DARLING'S 'AMAZING DECLINE'

ALISTAIR Darling's reputation has collapsed faster than that of any chancellor of recent times, Charles Kennedy said last night.

The former leader of the Liberal Democrats said Mr Darling's nine months in charge of the Treasury had left his personal standing at "absolutely rock bottom" and was unprecedented in Mr Kennedy's time in parliament.

Speaking on BBC TV's Question Time, Mr Kennedy said: "It's been the most amazing decline of any chancellor I have witnessed there for 25 years."

Mr Darling also came under attack from George Osborne, the Tory shadow chancellor, who said he had been left a "lousy" inheritance by his predecessor, the Prime Minister, Gordon Brown.

Gas-guzzling tax is set to backfire say car dealers

ALASTAIR DALTON
TRANSPORT CORRESPONDENT

ROAD tax hikes to encourage greener motoring will fail to put off buyers of the cars which cause most pollution, luxury model dealers have said.

The apparent backfiring of the Chancellor's attack on gas guzzlers came as analysts predicted that used cars would lose their value quicker.

Alistair Darling has added an extra one-off "showroom tax" from 2010 for new cars producing more than 255g/km of carbon dioxide.

This will double the top rate of vehicle excise duty for the first year of a car's life from £455 to £950. Lower rates of the "showroom tax" – which will cover about a third of new cars – will apply to vehicles producing more than 161g/km of .

But, Pentland LandRover in Edinburgh said last year's top-rate tax disc increase to £300 had not harmed sales.

Gordon Campbell, the sales manager, said: "I don't think it will have a major effect, but it's a contentious issue because other drivers may do three times the mileage in smaller cars."

Kenny Dunn, a Porsche used-car dealer in Edinburgh, said he might benefit from the "showroom tax", but doubted whether it would make buyers of his models, which average £40-50,000, think twice.

EurotaxGlass's, motor industry analysts, said depreciation of three-year-old cars would increase to 8 per cent this year compared to 5 per cent.

Adrian Rushmore, the managing editor, said: "The increased cost of borrowing, stagnant house prices and widespread reports of a UK 'credit squeeze' are all affecting consumers' disposable income and confidence, and these factors will prevail."