Uk politics

Wednesday

Fraser Nelson

The levers that Osborne might pull

Cutting taxes for the low-paid is the most useful thing Osborne can do in what will, I suspect, be a distinctly unmemorable budget. The Mail and The Sun both have competing figures — £205 and £320 — for the annual rebate. Given that the average Brit is paying £310 more due to Osborne’s VAT rise in January, one might forgive taxpayers for not punching the air. And anyone on more than £25k a year is still face a higher tax burden than they did three months ago. But the beauty of Budget day (as Osborne knows) is that you have can just present one side of the ledger. You can

Peter Hoskin

Budget morning

George Osborne couldn’t really have expected a much better set of newspaper covers than the one before him this morning. Despite the dreary background picture – war, confusion, higher inflation, lower growth, the ruinous state of the public finances, etc – a handful of papers are leading on the goodies in his Budget, and specifically the £600 rise in the personal allowance that James mentioned last night. Judging by the movements of the grapevine, this will come into effect in April 2012, and will benefit more people than will the £1,000 rise already announced for this April. While that one was targeted at the least well-off by a reduction in

Tuesday

James Forsyth

Budget eve

In stark contrast to 2003, when Gordon Brown delivered his Budget on the same day that Baghdad fell, the Treasury is phlegmatic about the Budget being overshadowed by Britain’s involvement in a conflict overseas. But the signs are that this will be, within the obvious fiscal constraints, an ambitious Budget. Tonight, we have had confirmation of a raise in the income tax allowance to £8,000, something that will please the Lib Dems . Tomorrow, we’ll almost certainly get at least one unexpected rabbit out of the hat. What we do know is that the Budget and the growth review will be built around four things: deregulation, planning reform, tax simplification

Peter Hoskin

The state of public opinion ahead of the Budget

It’s a point that I’ve made before, but here it is again: Budgets don’t tend to shift opinion polls, at least not the headline numbers. But opinion polls can give some insight into how Budgetary decisions will go down with the public. So by way of a catch-up with some recent polls, and ahead of tomorrow’s Main Event, I thought CoffeeHousers might appreciate a quick overview of public opinion on matters fiscal. Here goes… 1) Who’s to blame? When it comes to the overall flow of British politics, the question of who’s to blame for the cuts carries clear — and dangerous — implications. This graph of YouGov findings suggests

Anthony J-Evans

Three principles that should underpin the Budget

As I see it, there should be three simple principles underpinning George Osborne’s Budget tomorrow. Let’s take them one by one: 1) Variations in household wealth mean that policies aimed at affecting the wider economy will often have unpredictable political effects. Economists have a tendency to imply that changes in GDP affect everyone uniformly, but this isn’t the case. What’s more, journalists are quick to highlight extreme case studies that make good stories, but they can misrepresent the actual picture. Policy will do a lot to influence the economic climate, but the local economic weather will be more relevant to taxpayers. At the same time, the recovery can’t be managed

Peter Young

Confiscation through inflation

Inflation has now reached its highest level for 20 years, today’s figures reveal. But we will suffer not just because of the increased cost of living, but also because the government will penalise us by taxing our illusory gains. The Adam Smith Institute has calculated that about half of the £3.3 billion that the government plans to raise through capital gains tax (CGT) next year (2011-12) will come from taxing purely inflationary gains.   “Fairness” is said to be an attribute of the coalition’s fiscal policy. But it is difficult to see how this can be seen as anything other than extremely unfair. The main CGT rate was raised from

Matthew Whittaker

Spiralling inflation continues to squeeze some more than others

The February inflation figures spell more bad news for living standards in the UK. With average weekly earnings growth standing at just 2.2 per cent, millions of workers continue to get poorer in real terms. However, differences in the make-up of typical “shopping baskets” mean that the spending implications of inflation vary by income group. Since 2007, inflation has been driven primarily by increases in food and fuel prices. Given that such staples account for a larger share of weekly expenditure among lower income households than among higher income ones, the impact is felt more acutely in the lower half of the income distribution. The below chart details the impact

Ed Holmes

Allowing growth, not forcing it

What is a “Budget for Growth,” and how can one be delivered? These questions have been preoccupying civil servants across Whitehall, policy folk in think tanks, and the press since the coalition announced in November that it would be reporting back on its “Growth Review” in the 2011 Budget. While foreign events rightly moved discussion of the impending Budget further back in last weekend’s papers, there was extensive coverage of the potential for targeted tax cuts and reliefs and incentives targeted at particular industries or sectors. The obvious problem with a number of these is that they cost money, and this is something the coalition does not have in spades.

Peter Hoskin

Your five-point guide to tomorrow’s Budget

From rescue to recovery — that’s how George Osborne is selling his Budget ahead of its release tomorrow. But what might we see beyond the rhetoric? Here’s a five-point guide for CoffeeHousers:   1) Growth. It almost feels like a tradition now: a new Budget, and a new set of forecasts from the Office for Budget Responsibility. Chief among them will be what the OBR says about growth. Its previous forecast for 2011, made last November, was for 2.1 per cent growth in 2011 — but that will almost certainly be downgraded after the mini-slump in the fourth quarter of last year. As this graph shows, the average of the

Fraser Nelson Fraser Nelson

Inflationary troubles ahead of Osborne’s Budget

Unwelcome news for George Osborne: he will tomorrow present his Budget against a backdrop of the highest inflation for 20 years. The RPI index — what the nation called “inflation” until Brown changed the definition — is 5.5 per cent. It hasn’t been this bad since the aftermath of the ERM crisis, an unhappy comparison for the Tories. The CPI index is up to 4.4 per. And those who deploy the usual arguments about global food prices are spiking might wonder: why is Britain now even worse off than Greece?     Even the Zimbabwean media is laughing at us (their inflation is now considerably lower than ours). It’s shocking,

Monday

Patrick Nolan

Here’s how Osborne should reduce the tax gap

Some commentators have argued that the right way to reduce the deficit is to take on large scale tax avoidance rather than public spending. The argument goes that large companies are shirking their responsibilities, while families and small businesses carry the burden of rescuing the public finances.  Yet the evidence on who is actually avoiding tax does not support this. For example, HMRC data show that three-quarters of the £40 billion tax gap (the difference between the amount collected and the amount that should be collected) is due to VAT, Income Tax, National Insurance and Capital Gains Tax. Reducing the tax gap not only requires a focus on the big

James Forsyth James Forsyth

Cameron promises that Libya is ‘not another Iraq’

Discussion of military action brings a different atmosphere to the chamber of the House of Commons: quieter, less disputatious, more consensual. In opening the debate, the Prime Minister took a huge number of interventions including a large number from those MPs who are most sceptical of this intervention. All were heard respectfully and answered respectfully. Cameron’s desire to find consensus was part of his broader message that this is ‘not another Iraq.’ He stressed that the action in Libya was necessary, legal and right and that any kind of occupying force is ruled out. He argued that the intervention had been ‘in the nick of time’ to prevent a massacre

Peter Hoskin

Putin rages against the “crusading” West

A gold star for Vladimir Putin, for providing us with one of the most extraordinary interventions of the day. While we knew that the Russian Prime Minister is opposed to military action in Libya — and also that he is no natural friend of the West — it is still striking to hear him talk as he does in the video above. “It reminds me,” he says of the UN resolution at hand, “of the medieval call for a crusade.” Ever the pacifist, he then goes on to rail against the “steady trend in US policy” to get involved in conflicts abroad. Meanwhile, our government is doing its part to

James Forsyth James Forsyth

Targeting Gaddafi

The press is currently making great play of an apparent difference between General Richard and Liam Fox on whether or not Gaddafi can be targeted. The whole debate flags up one of the absurdities of international legal convention. If it is legitimate to hit a Libyan tank crew moving on Benghazi, why it is not legitimate to target the person who is ultimately giving these orders?     Given the whole nature of the Libyan state, the fastest — and, I would say, most humane — way to end this conflict would be to kill Gaddafi. Anne-Marie Slaughter, until recently the head of policy planning at the State Department, argued

Peter Hoskin

Obama’s nervousness makes life difficult for him and his allies

Gingerly, gingerly — that’s how the Americans are approaching the presentational battle over Libya, if not the actual campaign itself. There is no bombast in the official broadcasts from Washington, nor categorical intent. Instead we have Robert Gates emphasising, as he did yesterday evening, that the US will soon handover “primary responsibility” for the mission to us or the French. Or there’s Mike Mullen, the Chairman of the Joint Chiefs of Staff, saying that “potentially one outcome” is for Gaddafi to stay in power (see video above). The idea of regime change, or of deeper US involvement, is being downplayed all round. What’s clear, perhaps even understandable, is that Obama

Sunday

Nick Hayns

Debunking UK Uncut

You may have heard of UK Uncut? They’re certainly good at attracting attention: forcing their way into Barclay’s bank the other week and managing to close a branch of TopShop temporarily.   But what they have in noise they lack in substance. New research by the Institute of Economic Affairs exposes how the ‘grassroots movement’ want Vodafone to pay tax in the UK on the profits it makes in Germany. It’s a reasonable principle – taxing companies based on where they are domiciled is fine. But they also want Boots, a Swiss company, to pay tax in the UK on the profits it makes selling items to Britons, from British shops.

James Forsyth James Forsyth

Why Osborne is so interested in merging income tax and National Insurance

When trying to understand George Osborne Budgets, you need to bear in mind the mantra that he and his team live by: in opposition you move to the centre, in government you move the centre. It is this desire to move the centre ground that lies behind Osborne’s keenness to merge income tax and national insurance. As I say in the Mail on Sunday, the thinking behind it is that if people were more aware of how much tax they really paid, they’d be more inclined to vote for low-tax parties. At the moment, National Insurance is one of the taxes people are least aware of as it is simply

David Blackburn

The allies converge on Gaddafi

George Osborne appeared on the Andrew Marr show this morning to introduce the Pledge of his Budget magic trick. But Marr and his viewers wanted talk about the show of military strength over Libya. Osborne reiterated that the government is committed to enforcing the UN Resolution and had no plans to deploy ground troops at this stage. He refused to rule out the use of British ground forces in the future. Privately, officials are trying to dispel the perception that the UN Resolution forbids the use of Special Forces commandos to assist the bombing campaign. The Resolution does not permit an occupation, but it would be very surprising if covert

Fraser Nelson Fraser Nelson

George Osborne’s Budget magic trick

Spare a thought for George Osborne and Danny Alexander. They had their own budgetary magic show planned for Wednesday, and were yet again planning to be the Paul Daniels and Debbie McGhee of British politics. Now, it looks like they’re going to be competing with exploding Libyan MiGs for the national attention. This Budget was, as James says in his cover story this week, the government’s great hope for getting itself back on track. Grabbing the newspaper headlines, resetting the narrative etc. Now, the budget will be overshadowed by war. These Tomahawks don’t come cheap and Osborne has pitifully few cards to play. He knows that his budget will not live

Saturday

Andrew Haldenby

The government has been the author of its troubles

In his Spectator column this week, James Forsyth painted a picture of a government taken by surprise by enemies who have, in effect, ambushed them – the civil service, the civil service’s lawyers and the European Union in particular. Clearly the government is frustrated by the “forces of conservatism” and the “enemies of enterprise”, but the difficult truth is that a lot the government’s problems are of its own making, and in its own hands to put right. When it comes to the civil service, the government hasn’t simply inherited an uncooperative Whitehall. It has strengthened its position, as a conscious policy decision. Francis Maude said it in terms at