Treasury

Blame Bob Diamond. Until the “unacceptable face of banking” (© the utterly acceptable face of politics, Peter Mandelson) was appointed chief executive of Barclays, the issue of banking reform was trundling along noiselessly in the background. But now it has spilled, violently, back out into the open. Critics of Diamond say that his very presence makes the case for splitting the retail and investmet divisions of banks – you can’t, they say, have someone who made their money via “casino banking” presiding over a high street banking chain. But the banks are warning that any such split would force them, and their tax dollars, abroad.   The government’s official position is

This is the latest of our posts with Reform looking ahead to the Spending Review. The first six posts were on health, education, the coalition’s first hundred days, welfare, the Civil Service, and the New Zealand and Canadian experiences. Ireland As Colm McCarthy, Chair of Irish Special Group on Public Service Numbers and Expenditure, noted at a recent Reform conference the macroeconomic downturn in Ireland has been more severe than in almost any other European country: — The budget deficit, excluding the Exchequer cost of the banking collapse, went from near zero in 2007 to 11.5 per cent of GDP in the current year, despite fiscal cutbacks which began in

This is the latest of our posts with Reform looking ahead to the Spending Review. The first six posts were on health, education, the coalition’s first hundred days, welfare, the Civil Service, and the New Zealand experience. Canada In a forward to Reform’s alternative 2010 Budget, Rt Hon Paul Martin, Canadian Finance Minister from 1993 to 2002 and Prime Minister from 2003 to 2006, noted that when a new Liberal government was elected in Canada at the end of November 1993 the deficit and debt-to-GDP ratios were, with the sole exception of Italy, by far the worst of the G7. In 1998, just 4 years later, Canada’s deficit was no

This is the latest of our posts with Reform looking ahead to the Spending Review. The first five posts were on health, education, the coalition’s first hundred days, welfare and the Civil Service. International examples of public finance rescue missions Other countries can provide important lessons on what does, and what does not, work in devising a plan to bring government spending down. Several countries have undertaken major programmes of reform that have set out to restore fiscal credibility and improve the quality of their public services. Examples include New Zealand, Canada and Ireland. Reform has drawn on the experiences of senior figures from these countries, and lessons from the

Insightful work by the FT’s George Parker, who traces the choreography of the spending review in an article for the paper today. What’s striking is how much the coalition expects to achieve by what Parker calls “peer pressure”. Ministers who get through their spending settlement quickly and successfully will be held up as examples to their colleagues, and will be drafted into the the “star chamber” to cast an axeman’s eye over other departments’ plans. Ken Clarke, we are told, “can hardly wait”. According to Parker, the process is already producing its darlings. Jeremy Hunt has exceeded the Treasury’s demands by identifying 50 percent cuts in the budget for running

Infamously, George Canning and Viscount Castlereagh fought a duel over a policy disagreement; Iain Duncan Smith and George Osborne will follow suit at this rate. I had thought they’d resolved their differences over the upfront costs of IDS’ welfare reform; but the Mail on Sunday reports otherwise, glorying in the glares, savage bon mots and expletives. This is the conundrum: if IDS doesn’t find £10bn in savings, he will not get the £3bn needed to enact his reforms to make work pay. There is something quite heart-warming about IDS’ fight against the institutionally overbearing Treasury, but George Osborne is right: it is unacceptable to give one department, however well intentioned,

There were hints of toughness in his article at the weekend, but now David Cameron has rolled up his shirt sleeves and pulled out the baseball bat. In a combative piece for the Manchester Evening News the PM outlines out a zero tolerance approach to welfare fraud and administrative error. The two problems “cost the taxpayer £5.2 billion a year,” he says, “that’s the cost of more than 200 secondary schools or over 150,000 nurses. It’s absolutely outrageous and we can not stand for it.” And so IDS is going to prepare “an uncompromising strategy for tackling fraud and error,” which will be published this autumn.    Two things are

There’s a lot of economic speculation swirling around the Westminster washbowl at the momment, but little of it is as eyecatching as today’s report from the Chartered Institute of Personnel and Development. Its finding that a third of employers are expecting to cut jobs in the next quarter is bound to spark double-dip fears, even if that expectation is more keenly felt in the public sector than in the private. 36 percent of public sector employers foresee job losses, against 30 percent in the private sector. Perhaps more worryingly, both sectors are expecting more redundancies than they did in last quarter’s report. Look below the headline figures, though, and there

Among the most eyecatching, and potentially important, stories of the day is this one in the Telegraph. It suggests that various departments have “failed” to outline a “worst case scenario” of 40 percent cuts that was demanded by the Treasury. And it even names and shames Caroline Spelman’s Department for Environment, Farming and Rural Affairs as one of the offenders. Mrs Spelman, we’re told, has now “been forced to use the time before her holiday to work up the projections with her officials and permanent secretary.” Nothing like a last minute job, then. To be fair to Whitehall civil servants, there is a general sense that they have set about

The front cover of the Times (£) provides a dreary snapshot of what the coalition can expect once the cuts start to bite. Unison have responded to job losses in the NHS by arguing that the government is “conning” the public over the impact on frontline services. And they’re threatening to all get all litigious about it. As one of the union’s spokeswomen tells the paper, “If we are not happy with the [government’s reply], we are reserving the right to issue urgent judicial review proceedings.” You wonder whether they’d have done the same against Labour’s proposed 20 percent cuts. And this will be just the start of it. As

In interview with the Sunday Telegraph today, George Osborne stresses that the banks have got to start lending again – and he’s right to do so. The easy availability of cheap credit may have done much to get us into this mess, but now we face a converse problem. As a recent Bank of England report shows, net lending from the banks to businesses remains negative – or, in other words, more is being paid back than given out – and the situation is getting worse. With small and medium businesses so reliant on credit to get themselves off the ground, this doesn’t augur well for a powerful recovery. But