Small Change at Crewe

The Chancellor of the Exchequer Alistair Darling is to borrow £2.7 billion pounds to reverse a slide in the Labour government's popularity.

The Treasury will lift the threshold at which it begins taxing income by £600 to £6035 pounds to compensate 80 percent of the 5.3 million households hurt by a decision to scrap the lowest income tax bracket. Darling said he will raise government borrowing to finance the decision.

The tax changes will be back-dated to the start of the fiscal year and come into force in September. That means basic rate taxpayers will get an extra £60 pounds in September and 10 pounds a month until April 2009. Voters are deserting the Labour party as rising inflation and falling house prices eat into their wages.

Darling's changes were timed to defuse a revolt over finance legislation in Parliament and to head off the prospect of a defeat in the Crewe by-election, formerly safe Labour seat on 22nd May.

All this is happening as the Bank of England announces that the official annual inflation rate soared to 3% in April. Increases in food and fuel costs led the cost of living rate to surge from the 2.5% recorded in March, to well above the 2.6% forecast for last month.

So how do you pay your bills between now and September and what happens after April next year.
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