Emergency Budget 2010: The good, the bad and the downright ugly

AnnieM, June 22, 2010

It has been dubbed the most significant budget for a generation.  The news-reading general public have been drip-fed budget-related leaks for the past few days to prepare us for the cuts that would, we were told, have to be made. It was a clever trick.

Preparing us for the worst case scenario would undoubtedly colour our perception of reality: in contrast to our fears, the actual budget would not seem so bad.

And indeed there was some good news, although it will be cold comfort to those on benefits and those receiving child tax credits.

Despite Osbourne’s protestations that the emergency budget protects the poor, some of these new measures will undoubtedly affect those most worst off.   In the words of Nick Robinson, political editor of the BBC: “the honeymoon period from this coalition ends today with this budget”.


  • Increased: VAT: from 17.5% to 20% (from January 2011)
  • Increased: £1000 in income tax allowance by April 2011 (£7,475 tax free) resulting in 80,000 people taken out of income tax all together.
  • Incentives: Councils with low council tax increases will be given extra funds so they are able to freeze tax from April 2011 onwards.
  • Increased: Capital gains tax for higher rate tax payers to rise to 28%. It will remain at 18% for low and middle income savers
  • Abolished: Landline tax – (so called ‘broadband tax’)
  • Reduced: Tax credits to be reduced for families with a total income of 40k.
  • Increased: National Insurance threshold, by £21 per week

Welfare and Pension

  • Increased: Tax credits, benefits and public sector pensions to rise in keeping with the CPI (Consumer Price Index) rather than the Retail Price Index, (from 2011 onwards).
  • Increased: From April 2011, basic state pension is to be linked to earnings, earnings prices or 2.5%, whichever is greater.
  • Introduced: Medical assessment for DLA to be carried out from 2013 for new and existing DLA claimants.


  • Increased: Capital Gains Tax entrepreneur relief of 10 per cent:  extended from 2 million to 5million.
  • Introduced: Levy imposed on banks.
  • Reduced: Corporation tax to be cut next year to 27% and by an additional 1% annually for the next three years until it reaches the 24% cap.
  • Reduced: Small companies tax rate cut to 20%.
  • Abolished: tax relief for the video games industry.
  • Reduced: New South East England businesses and those from the East of England will be exempt for £5,000 of National Insurance payments for the first ten employees.


  • Increased: tax credits for low income families
  • Abolished: Health in Pregnancy grant.
  • Abolished: Sure start maternity grant for 2nd/ 3rd/4th etc child.
  • Introduced: Lone parents expected look for work when child goes to school
  • Frozen: child benefits (for three years).

Public  Sector

  • Increased: Public sector workers earning less than 21k will get flat pay rise of £250 for both years
  • Frozen: public sector wages over 21,000 (for two years).


  • Frozen: alcohol, tobacco and fuel duties remain the same.