Chancellor Alistair Darling has introduced a series of redistributive measures in a pre-election Budget designed to cheer the Labour party faithful.
Stamp duty on homes under £250,000 for first-time buyers will be axed, but it will rise on homes worth £1m or more from 4% to 5%.
Delivering his Budget statement to the Commons on 24 March 2010, Mr Darling said he was freezing the inheritance tax threshold for another four years in order to help pay for the costs of care for older people.
He also announced the end of some personal tax allowances on those earning more than £150,000 and a cut in tax relief on pensions for those with incomes above £130,000 a year.
Mr Darling said the budget deficit was now expected to be £167bn this year rather than the £178bn forecast.
"I believe that governments have the ability to act and the responsibility to reduce the length and severity of the recession, which is why we took decisive action to stimulate the economy," he told MPs.
UK unemployment is lower than predicted "because of the choices that we made", the chancellor asserted.
But Tory leader David Cameron accused Mr Darling of stealing Tory policies on stamp duty and an extra tax on strong cider.
He said Labour should be "ashamed" of the state of the nation's finances, claiming: "The biggest risk to the recovery is five more years of this prime minister."
Lib Dem leader Nick Clegg said both the chancellor and David Cameron were "in denial" about the scale of spending cuts needed and dismissed the budget as "a political dodge not an economic plan".
"This isn't the preface to a new government but a footnote to 13 years of failure," he added.
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