Budget fails to inspire industry

Comment by Jeremy Skidmore (www.jeremyskidmore.com)

Alistair Darling’s pre-Budget report will hardly have had the travel industry doing a Mexican wave.

The VAT cut is not going to make any difference to holiday purchases and it’s hardly going to make the man in the street feel richer.

A £500 plasma television would have cost £587.50 with the VAT added before the cut. Now it will be £11.50 cheaper. Whoopie do. Anyone who is out shopping at the moment for anything and can’t negotiate a better discount than that should hang their heads in shame. Personally, I’m looking for 20, 30, 50 and even 70 per cent off before I’ll contemplate buying anyone Christmas presents.

A cut in income tax would have been more welcome because it would have given people more money in their pockets to spend on anything, including holidays.

Instead, anyone earning over £20,000, which I would guess is at least hundreds of thousands, if not millions, of holidaymakers, face a half point increase in tax from 2011, in the form of a national insurance hike.

And if you’re really doing well, you can look forward to a top rate of tax of 45 per cent (on incomes over £150,000) from 2011.

The new policy on air passenger duty is unjustified. There was supposed to be a tax on aircraft which would incentivise airlines to produce more efficient machines. Even if you didn’t agree with it, there was some green logic to that.

Now we are going to have a complicated four band system of tax (this government’s taxes are rarely simple) depending on the number of miles each passenger has travelled.

Within two years, you’ll be paying anything from £12 to £170 in air passenger duty, depending upon how far you travel and in what class. How much of that will be pumped into environmental projects when we’ll be borrowing £118bn by this time next year?

Credit it where it’s due, there are some measures to help struggling small businesses, that may benefit companies in the industry.

But what we really needed was more money in our pockets.

Bookings at the moment are pretty awful but that’s nothing to be too worried about yet – the figures are never pretty in the run up to Christmas.

There have also been some encouraging signs that people are still prepared to fork out for next summer’s trip and hopefully that will be more evident once the turkeys have been eaten.

But this budget hasn’t done a lot to help the cause.