Coalition

Sunday

David Blackburn

The trimmers mobilise

The Independent on Sunday reports that a cabal of four disgruntled/horrified Lib Dem MPs have held secret talks with Labour to amend contentious elements of the Budget, such as the VAT hike. Four rebels will not be enough to defeat the government, but it is the first indication that Simon Hughes’ call to arms will be answered by the social democrat wing of the party, damaging the coalition’s long-term prospects. Of course, it is healthy that government backbenchers scrutinise and improve government legislation for whatever cause – the odd amendment to public borrowing clauses would have been welcome over the last decade. Scrutiny does not imply revolution, stressed Andrew George, the four

Saturday

James Forsyth

Post-Budget polls show drop in Lib Dem support

ICM’s post Budget poll for the Sunday Telegraph confirms YouGov’s finding that the Lib Dems have dropped after the Budget. It has them down five to 16. By contrast, the Tories are up two to 41. Labour have also risen four to 35. YouGov has the Lib Dems on 16, the Tories 43 and Labour 36. These polls matter because they will add to the jitteriness that some left-leaning Lib Dem feel about such a fiscally conservative Budget. There is a feeling in Lib Dem circles that they could do with some things to please and reassure their base in the coming weeks. The Coalition is planning a policy push

David Blackburn

Cameron and Clegg’s love-in deepens

What began as a coalition of expediency is maturing into a pact of principle – or at least that’s what Cameron and Clegg would have you believe.  Of course, relations may sour and enormous efforts are being made to preserve Cameron and Clegg’s public cordiality. Journalists are being briefed that plans are in progress to enable Cameron and Clegg to speak at each others’ party conferences.   It will be little more than a public relations exercise if it goes ahead, and an extremely hollow one in all probability. What are they going say? It’ll be a cartoonist’s dream, as Clegg is politely applauded by the contemptuous Colonels, and Cameron,

Daniel Korski

Britain’s foreign aid should empower women

Here is a question. Which politician said the following: “We’ve seen too that when women are empowered economically they are more likely to have a voice in the community and to be advocates for other women.” Or “Britain will be placing women at the heart of the whole of our agenda for international development”. Clare Short? No. Hillary Clinton? Nope. Harriet Harman? Wrong. It is former Army officer and International Development Secretary Andrew Mitchell speaking yesterday to the think-tank Carnegie Endowment in Washington DC.   To some, his comments will illustrate how the Conservative Party has moved to far away from its roots. But in fact it is both a

Thursday

David Blackburn

Hughes and Davis fomenting rebellion?

From opposing sides of the coalition’s strait, two warning shots have been fired across the government’s bows. David Davis has challenged Theresa May’s decision to renew the 28-day detention limit for six months pending a review. And Simon Hughes has declared that he and a like-minded posse will seek to amend ‘unfair’ aspects of the Finance Bill. Neither is an outright revolt. Neither move amounts to what Ed Miliband termed ‘cracks appearing in the coalition’. Both Davis and Hughes remain in support of the coalition agreement – Hughes will ‘support the Budget’, and Davis, to his enormous credit, has made excessive and illiberal detention periods his raison d’être. The coalition

David Blackburn

Re-invigorating retirement

The retirement age must rise, timing is the sole contention. Yvette Cooper asserts that the coalition’s acceleration of the planned rise in the state pension age will force those currently in their late fifties to re-plan their retirement. Certainly, but a rise in the state pension age from 65 to 66 is unlikely to be life-changing. So why not bring it forward? Of more interest, I think, are the government’s other pension proposals. ‘Re-invigorating retirement‘ sounds rather jaunty, being forced to pay into less than lucrative company pension schemes does not – especially as those schemes are far from secure. Also, the abolition of the Default Retirement Age limits the

Fraser Nelson Fraser Nelson

The true meaning of Osborne’s Budget

To understand the budget properly, read James Forsyth’s cover story in The Spectator today. Sure, it was about reducing the deficit – but within it lie several political strategies which explain how George Osborne hopes to win a majority Conservative government. James says that those around Cameron will not entertain this notion – they “have been persuading themselves that coalition government is the best possible result”. But Osborne, he says, finds it deeply unsatisfactory and has a twin mission: fix the economy, and win outright next time. “He has been observing recently that Gordon Brown spent 13 years successfully creating Labour voters — mainly through state dependency — and that

Wednesday

Peter Hoskin

How good intentions can be counterproductive

Might the coalition’s emphasis on fairness be making it harder to get people off welfare and into work? Not a question that I can answer with confidence, but certainly one which has been thrown up by the IFS’s Budget briefing. Take the government’s action on child tax credits, for instance. By increasing it at the lower end of the income distribution, and restricting it at the upper, some claimants now stand to lose more, more quickly, by moving up the income ladder. Or, as the IFS put it, their marginal effective rate of taxation has increased. Of course, this will have been offset by other measures such as the rise

Peter Hoskin

Osborne winning the Budget PR battle – but VAT remains a thorny issue

Well, that’s gone as well as can be expected for the coalition.  Most of today’s newspaper coverage highlights the severity of George Osborne’s Budget – but, crucially, it adds that the Chancellor had few other options.  The Telegraph calls it a “brave Budget”.  The Times says that it delivers “the best of fiscal conservatism combined with no small measure of social justice”.  And even the FT – no friend of the Tories in recent years – suggests that Osborne might be “remembered for doing Britain a great service.” The sourest notes chime around the government’s welfare cuts and the hike in VAT.  Already, it’s clear that the latter will be

Tuesday

James Forsyth

A well-crafted Budget but the spending review will hurt more

George Osborne’s Budget today was the first dose of pain. The second will be the spending review in October, which I suspect will put far more of a strain on the Coalition than today did. Non-protected departmental Budgets, everything apart from health and DFID, are going to be cut by 25 percent on average. But Osborne told the House he would hope that the cuts to defence and education would be significantly less than that. The unspoken part of that is that the cuts to some other Budgets will have to be significantly bigger than that; I expect there are a few people at BIS and DCMS looking around rather

Matthew Sinclair

Why must VAT rise? Because not enough will be cut

There is plenty of very good news in the Budget.  A two year public sector pay freeze, the abolition of the Child Trust Fund and cuts in welfare spending are all longstanding TPA recommendations that will be absolutely key to getting the public finances under control.  As a result of all the measures proposed, annual spending will be £31.9 billion lower than planned by 2014-15.   The Government are also scrapping more organisations.  The Emergency Budget report says (page 31) that “Regional Development Agencies will be abolished through the Public Bodies Bill.”  We called for their abolition as far back as August 2008 and the Spectator manifesto included a demand

Peter Hoskin

What Harriet Harman won’t tell you

By her usual standards, Harriet Harman was quite effective in her response to George Osborne’s Budget earlier.  She was clear, direct and had a few gags at Vince Cable’s expense.  And she also benefitted from what, on the surface, was a strong central attack: the Office for Budget Responsibility, she said, has downgraded its jobs forecasts on the back of the Budget.  And so, she followed, this is a Budget which destroys jobs. But there were a few things that Harman wasn’t letting on.  First, as Jim Pickard points out at the FT, the OBR forecasts haven’t shifted by all that much from their previous incarnation.  And, second, they are

Peter Hoskin

Our rising debt burden

Debt may start falling as a share of GDP at the end of this Parliament (see p.2 here), but it’s still going up in cash terms.  Here’s a comparison with Labour’s last Budget:

Peter Hoskin

Unspectacular, but quite effective

Well, that was excitingly unexciting.  There was little in George Osborne’s Budget that we didn’t expect, either in terms of rhetoric or policy.  But it still felt new and different nonetheless.  Here we had a Chancellor setting out exactly how much spending he will cut, and putting plenty of emphasis on both our deficit and debt burdens.  It drew a stark contrast with the Brown years, and was a solidly understated performance in itself. There will be plenty of attention paid to the hike in VAT, and rightly so.  But there were some macroeconomic forecasts which were just as eyecatching.  In his address, Osborne suggested that the deficit on “current

Peter Hoskin

Budget 2010 – live blog

1343, PH: Harman has sat down now, so we’ll draw the live blog to a close.  I’ll write a summary post shortly. 1342, FN: I wish I could trash Harman’s response, but it’s actually quite good.  Many a Tory would be secretly cheering her trashing of the LibDems. “The LibDems denounced early cuts, now they’re backing them – how could they support everything they fought against, how could they let down everyone who voted for them?” Again, a fair point. “The LibDems used to stand up for people’s jobs, now they only stand up for their own.” Her main point – that forecasts for unemployment have risen – is a

Peter Hoskin

Osborne makes the “progressive” case

During the Brown years it was “stability,” but it looks as though the watchword for Chancellor Osborne’s first Budget will be “progressive”.  This is the word that’s being bandied about behind-the-scenes, and the coalition seems confident that it has the policies to match the rhetoric.  As the Guardian reports today, it’s likely that the personal income tax allowance will be raised by £1,000 or so, to help shield the least well-off from tax rises elsewhere.  And the paper quotes a Tory aide saying that the richest will pay more, “both in absolute terms and as a percentage of their income.” Whether he drops the p-word or not, the arguments behind

Monday

Peter Hoskin

Osborne looks to the long-term

There are plenty of details for Budget-spotters to look out for tomorrow, but among the most important is just how far Osborne reaches into the future.  The current expectation in Westminster is that he will offer quite a few glimpses into the long-term.  A possible commitment to reduce the main rate of corporation tax to 20 percent over the next five years, perhaps.  Or similar provisions for making the first £10,000 of income tax-free. There are, of course, economic and political motives behind this.  Economically, the plan will be to reassure the markets that the coalition has a deliberate plan which extends beyond the next few months (which was a

Ed Holmes

Why a public sector pensions levy makes sense

Today’s papers are awash with stories that a public sector pensions levy will be announced in tomorrow Emergency Budget. Trade unions have already issued dire warnings, ranging from the PCS’s promise to “organise the widest possible popular opposition,” to Bob Crow of the RMT’s rather prosaic: “when someone’s winding up to give you a kicking you have a clear choice — you can either take them on right from the off or you can roll over and hope that they go away.”  Public sector workers, however, should not be so dismissive.   In our report, released on Friday, we argue for an “Irish style” graduated public pensions levy of 7.5

Peter Hoskin

The two sides of the VAT question

There are two main aspects to the VAT issue: one distasteful, the other less so.  The distasteful one is the issue of whether the government has a mandate for hiking VAT in tomorrow’s Budget.  Of course, government is often the art of the unexpected, so we shouldn’t be surprised to see measures implemented that weren’t explicitly raised in the election campaign – particularly when it comes to tax rises.  But all the claims that there were “no plans” to raise VAT do jar against reports like: “Osborne insisted the budget measures would be spread fairly across society, suggesting capital gains tax will rise and promising a new banking levy. But

Peter Hoskin

Who is prepared to cut, and who isn’t?

One of the leitmotifs of this Parliament  – and something which, by many inside accounts, is helping the coalition immensely – is the willingness of the civil service to wield the axe within their own departments.  And now, courtesy of Reform and the Institute of Chartered Accountants, a new survey suggests that this mentality may stretch beyond Whitehall.  It quizzes public sector “finance decision makers,” and the headline finding is that: “82 per cent of respondents think further savings can be made within their organisation in the next year without affecting the current level of service they provide.” Far more intriguing, though, is the finding that 84 percent of them