Treasury

The civil service talks cuts

Jonathan Baume is fast becoming one of the political celebrities of the LibCon era.  If you recall, he’s the union chief who revealed that the senior civil servants had written letters to Labour ministers in concern at spending decisions made close to the election.  And now he’s popped up again, with more unflattering comments about the previous administration.  Speaking at his union’s annual conference, he said that “new ministers and MPs must begin to display the personal and moral integrity that was so obviously lacking in the previous Parliament, even within the Cabinet.”  Hm, I wonder who he could mean. The most revealing comment Baume makes, though, is about public

Osborne’s inflationary problem

Only a week into his new job, and George Osborne has already had to exchange letters with Mervyn King about inflation.  And here’s why: the CPI index hit 3.7 percent in April, up from 3.4 percent in March.  Which is worrying enough when looked at in isolation – but when put alongside headline rates from other countries, it becomes damning.  In China, it’s 2.8 percent.  In France, 1.9 percent.  In Germany, 1 percent.  In the Eurozone as a whole, 1.5 percent.  And in the US, 2.3 percent (for March, with the latest figures out tomorrow).  Indeed, thanks in part to quantitative easing and the removal of the VAT cut, inflation

Working side by side

George Osborne and David Laws’ press conference this morning gave some hints about the chances of the coalition making it. The Treasury is where, I suspect, this coalition will succeed or fail. If the two parties can keep it together on how to reduce the deficit and how fast to do it, then I expect that they’ll be able to deal with the other issues that are thrown at them. Encouragingly from this perspective, Osborne and Laws seemed comfortable sharing a platform; there were no attempts to score points off each other. It appeared to be a harmonious double-act. But Osborne didn’t refer as many questions to Laws as he

Osborne rolls his sleeves up

Just in case you didn’t see the front cover of the Guardian, let me tell you: it’s a big day for George Osborne.  This, after all, is the day when he finally launches the Office for Budget Responsibility’s audit of the public finances – zero hour for the age of austerity.  Accordingly, then, Osborne has given his first major newspaper interview since becoming Chancellor.  Here, from that, is a quartet of observations for you: Office for Budget Responsibility.  The more I hear about it, the more I like this Office for Budget Responsibility.  Sure, it’s another quango of sorts.  But anyone who has lamented the government’s wildly optimistic growth forecasts,

Osborne’s Big Choice: how much of our debt to reveal

The cover of today’s Sunday Times spells out what we all suspected anyway: that the Labour government left behind acre upon acre of scorched earth for the Tories to contend with.  There’s the £13 billion contract for tanker aircraft, the £1.2 billion “e-borders” IT project, a £420 million spend on schools, and so on – most of them put in place just before the election.  As James said earlier, Sir Alan Budd’s audit of the public finances is likely to show that things are much worse than the last Budget dared admit. All this throws open the wider question of our debt position.  Even by Labour’s measures, our national debt

Darling socks it to Balls

The election is six days away, Labour civil war is seven days away. And Alistair Darling has today delivered a rather nice put-down to Ed Balls for BBC Campaign Straight Talk. Here is his conversation earlier today with Andrew Neil: Andrew Neil: Has Mr Brown given you any indication that you’d stay as Chancellor if he wins? Alistair Darling: Yes he has, and I would. AN: You would? AD: Yes. AN: And you’d be happy to do so? AD: Very happy. AN: So Ed Balls should not be packing his bags to move into Number 11? AD: I don’t think Ed has got any intention of doing that. AN: Well

The Axeman Cometh

Fed up with how all the political parties emphasise the need for spending restraint while promising increased investment in popular services? Fed up too with all the talk of “savage” or “Thatcher-level” spending cuts without any clear indication where these savings may be made? Well now, thanks to the Financial Times, you can play Fantasy Treasury, swinging an axe through Whithall to find billions of cuts to reduce the deficit while avoiding huge tax increases. Ticking the boxes is easy: it becomes a little harder when you the FT tells you what each of these cuts actually means “on the ground”. In other words: most of the cuts will be

How Brown would get Darling out of the Treasury

After reading Brown’s claims in the Guardian today, this Kill A Minister mechanism in his speech today rather jumped out at me: “I will set out a clear and public annual contract for each new Cabinet Minister, detailing what I expect them and their department to deliver to the British people, and that their continued appointment is dependent on their delivery just as it would be in a business or any other organisation.” I mean, you can just imagine what Alistair Darling’s first “contract” would look like: You, the Chancellor, will undertake to deliver the following to the British people: i) Economic growth of 5 percent in 2010-11 ii) A

What did Darling mean by his “deeper and tougher” cuts claim?

There’s been some hubbub on the good ol’ blogosphere about Darling’s claim that Labour spending cuts would be “deeper and tougher” than Thatcher’s.  Did Thatcher actually cut spending?  What would that indicatate about Labour’s plans?  And so on. Part of the confusion is caused by the different metrics that are referred to as “spending”.  So here’s a quick guide to what Darling might have had in mind: OPTION 1: Real-terms total spending.  As the below graph from the IFS shows (taken from this excellent blogpost by the FT’s Alex Barker), real-terms total public spending only fell in two years of the Thatcher premiership.  In all the other years it rose. 

The two sides of Alistair Darling

After delivering an insipid, insufficient Budget yesterday, Alistair Darling has now smuggled a little bit of honesty into the fiscal debate.  In interview with Nick Robinson, he has claimed that if Labour is re-elected its spending cuts “will be deeper and tougher” than Thatcher’s.  Needless to say, that’s a message which will not sit well with his Cabinet colleagues like Ed “investment vs cuts” Balls. And this is precisely why Darling is such a confusing figure.  Yes, he deserves some praise for being more upfront about the public finances than his predecessor ever could be, and for restricting the wilder excesses of Brown and Balls.  But it’s hard to forget

Darling’s phoney Budget doesn’t change anything

Was that a Budget sufficient to the fiscal nightmare that we face?  Well, I think we all could have answered that question before Alistair Darling stood up at the dispatch box, but now we can at least be sure: no, it wasn’t.  The government’s overall spending plans remain roughly the same as they were in the PBR, there aren’t many tax increases to raise much money for the Treasury, and we’re meant to be all excited that borrowing is £11bn lower this year than previously forecast – at £167bn.  It’s a shame that Darling increased alcohol duty, or we’d all be be out celebrating that particular success, I’m sure. If

Darling’s Budget takes shape

Yep, it’s that time of the year again – when the government starts briefing about the contents of the Budget.  First up, there’s the news that Alistair Darling may cut projected borrowing figures by £5-10 billion, thanks to higher-than-expected tax receipts.  And then there’s Peter Mandelson’s claim that new tax rises would have to be considered a year from now – implying, perhaps, that there won’t many in this year’s Budget. Many folk around Westminister were surprised that the government was putting out a pre-election Budget – especially given the sorry state of the public finances.  But Labour’s plan is becoming clearer now: lower borrowing figures, no significant tax hikes,

Brown faces the horror of the petrol pumps

Yes, I know, cause and correlation aren’t the same thing – but Mike Smithson’s latest graph over at Political Betting is still incredibly striking.  It shows that the Tories’ strongest poll position over the last few years coincided with a high in the petrol price.  It also shows that the smallest gap between Labour and the Tories coincided with when petrol prices were at their lowest.  Which all makes today’s Telegraph story about petrol potentially hitting a new high of 120p a litre, as the election approaches, very resonant indeed. The problem for the government is twofold.  First, rising petrol prices are something which millions of people will understand and

The Budget will be on 24 March

So now we know.  Gordon Brown has just announced that the Budget will be on 24 March – which strongly implies an election date of 6 May.  Brown could dissolve Parliament on 6 April, the manifestos would be published on 12 April, and then we’d be into the campaign proper.  Which means even more speeches, polls and dread speculation than we’re getting now. As for the Budget’s general flavour, we’ll probably get an idea of that today, too.  Brown’s currently giving a speech in which he’s brushing over recent tremors in the markets, to say that we are “weathering the storm; now is no time to turn back”.  Which comes

Brown faces his interrogators

Tick, tick, tick … there’s only an hour or so to go before Brown’s appearance in front of the Chilcot Inquiry.  And, athough I generally feel that this whole process is a waste of time, effort and newsprint, there’s still something grimly fascinating about today’s proceedings. Brown has, after all, always tended to keep a low profile when it comes to Iraq.  Let’s see whether Chilcot & Co. can trudge their way through the murk of tractor statistics and other obfuscations. We all know, broadly, what they’ll be asking.  How did Brown feel about the Iraq War?  And did he, as Chancellor, provide enough money for it?  In which case,

A ceasefire in the VAT war?

Has another dividing line faded into the sand?  It sure looks like it, going off this Times report on how both Labour and the Tories are considering hiking VAT to 20 percent.  If you recall, it was thought that Brown blocked Alistair Darling’s plan to introduce the rise in last year’s Pre-Budget Report – and all so he could attack the Tories over reports that they would do similar.  The PM will find it a lot harder to stage that attack after this morning. A few weeks ago, the rumour was that Labour would make keeping VAT at 17.5 percent a “main election pledge”.  Whether that pledge now appears, or

Darling talks sense on public sector pay

How things change.  A few months ago, Alistair Darling would only go so far as to not rule out a public sector pay freeze.  By the time of the Pre-Budget Report, that became a 1 percent cap on pay rises.  And now, in an interview with the Sunday Times, he’s talking explicitly about public sector pay cuts.  He cites the example of the private sector, where workers have accepted cuts to hang onto their jobs. It certainly makes sense.  Wages make up such a hefty proportion of public spending, that any serious plan to cut the deficit will have to take them into account.  Besides, there’s the fairness point as

Shining a light into government

I wouldn’t normally start the day by linking to a public sector website – but this one is actually worth your time.  It’s the launch version of data.gov.uk, created with the help of Tim Berners-Lee among others, which aims to present statistics about government performance in a straightforward, easy-to-access way.  You’ll get a sense of what’s there by rummaging around this page: there’s stuff on benefits, deaths, immigration, traffic, and so on. Ok, so it’s not perfect.  You’d hardly call the current crop of data exhaustive, and you could complain that much of it was available previously if you knew where to look for it.  But this is the earliest

Darling’s honesty is good news for the country – but tricky news for Labour

Well, well, well – Darling’s Times interview, which James reported earlier, sure is a significant moment, and one which more than deserves a place on the spending cut timeline which I put together last week.  In fact, let’s see what it would look like alongside a few of the most recent entries: 9 December 2009: Pre-Budget Report 2009 forecasts Public Sector Net Borrowing of £176 billion, and Public Sector Net Debt of £986 billion, in 2010-11. 10 December 2009: Alistair Darling puts in a bizarre performance on the Today programme, claiming that the PBR implies that departmental budgets would remain “pretty much flat.” 10 December 2009: The IFS works out

The year in cuts

As we’re still in that period of the year for looking back as well as forward, I thought I’d share with CoffeeHousers a political timeline I put together. It’s not everything which happened in the political year, mind – but rather the important events in the debate over spending cuts. This debate has, at very least, been in the background to almost every political discussion in 2009, and it will dominate the years ahead – so this kind of exercise probably has some posterity value. But, aside from that, you can also draw a couple of conclusions from the timeline (and I do so below). Anyway, here it is, starting a bit before