“A 2.5 per cent cut in VAT will not really have any effect.

To put this into some perspective, someone buying a television for £600 will see this price reduce by only about £13 (when you work out the numbers, interestingly this is actually a reduction of only about 2.1 per cent on the overall price).

My concern is that because VAT has been reduced, people will perceive that they can spend more, but if you couldn’t afford a television before, can you really afford it after a £13 reduction.

Please remember that retailers have been offering reductions upwards of 15 per cent over recent weeks, so I fear that a further reduction of 2.1 per cent will have no effect on consumer spending.

In addition, the decrease in VAT could actually have a negative effect on cash flow for many small businesses.

Because there is a delay between collection and payment of VAT to HM Revenue and Customs, it could mean that expensive overdrafts need to be accessed to fund day to day expenditure.

The higher paid will see the top rate of tax increase by five per cent and their personal allowance diminish.

As many predicted, this has been a Robin Hood event as the Chancellor has redistributed wealth from the rich to the poor, with an announcement that he will inject £15 million into a free debt advice service for all.

On a more positive note, the Government have agreed that those businesses, who are struggling to pay their tax and national insurance bills, will get help from HM Revenue and Customs under a time to pay scheme.

In addition, small businesses will see corporation tax frozen at 21 per cent.

Mr Darling wants us all to feel as though we can “spend again” but will these measures encourage spending?

We are in a recession, that question is in no doubt, but will the pre-budget report stimulate the economy – my worry is that it won’t."

PRE-BUDGET REPORT - THE FACTS

INCOME TAX AND NATIONAL INSURANCE Lower rate – the 10p tax compensation package has been made permanent and increased to £145.

Personal Allowance – from April 2010 those earning between £100,000 and £140,000 will see a decrease in their personal allowance.

High earners – from April 2011, those earning £150,000 will suffer an increase in the top rate of tax of five per cent, to 45 per cent.

National Insurance – all employees will see an increase of 0.5 per cent in national insurance from April 2011.

BUSINESSES VAT – an immediate reduction of 2.5 per cent to 15 per cent until the end of 2009.

Time to pay arrangements — those struggling to pay their tax and national insurance will receive favourable treatment from HM Revenue and Customs.

Corporation Tax – the increase in the small companies rate of corporation tax has been deferred so will remain at 21 per cent.

Losses – businesses making a loss will be able to set this loss against profits made at any stage in the last three years (currently losses can only be offset against profits of the previous year).

INDIVIDUALS Housing – package of support totalling £1.8 billion, including: Repossession – lenders will be encouraged to wait at least three months, before commencing repossession proceedings. This is intended to give the lender and home owner time to negotiate an affordable repayment schedule.

Advice – the chancellor will introduce a further £15 million worth of funding to ensure that free debt advice is available to all. Duty on alcohol, fuel and tobacco will rise.

Cars – car tax will increase by a maximum of £5 in 2009.

Savings – lower paid savers will receive 50p extra for every £1 saved.