New Labours last budget before the 2010 general election proved to be a holding operation which combined absurd forecasts on the economy that will form the basis for their proposed spending cuts and increased taxes on those on lower incomes.

Darling’s forecast of economic growth for 2010 was 1% to 1.5% and for 2011 3% to 3.5% and up to 3.75% in 2012. This is way above the forecasts by mainstream economists – for instance their average for 2011 is 2.1% which is still likely to prove to be too optimistic.

The main purpose of these wild numbers by Darling is so that the forecast level of the deficit and public debt for the next few years will be lower than if more realistic estimates had been used. New Labour can then put forward cuts in their manifesto which are way below what they would actually have to carry out in practice or what the other parties will be proposing. Of course there is an alternative to the cuts which we have outlined in other articles.

On taxation there are increases on petrol, alcohol and cigarettes which make up a larger portion of the income of lower earners – they end up paying a bigger part of their income in indirect taxes.

There was no change on the tax allowances which again means a real increase in taxes for the lower paid. Any increased income will be taxed at the highest tax rate that an individual pays. With inflation running at between 3% and 4%, any pay rises to compensate for this will be partly taken away through income tax because the tax allowance levels have not been raised in line with inflation.

There are no measures to force banks to lend to individuals or small businesses despite £200 billion of our money being put into the banking system through quantitative easing, only target levels of lending.

There is a one off tax on bank bonuses instead of a permanent one and a tax rate of 50% for earnings over £150,000 instead of a real progressive tax system which could raise an extra £150 billion for public services. No increase in corporation tax either which has been cut under New labour or a tax on bank profits to recoup the money we have ploughed into them.

In summary a budget which continues the habit of Darling making optimistic claims which fail to materialise with the less well off ending up paying for it and increased real taxation for the lower paid while the rich get off the hook again.