Uk politics

Wednesday

Peter Hoskin

IFS: there could be deeper cuts to come

An unfamiliar mood before the Institute for Fiscal Studies’ Budget briefing today: many of the gathered journalists, economists and policymakers had decided that, for once, this wouldn’t be an exercise in spotting the Chancellor’s deceptions, because, quite simply, there aren’t many. And they could well be right. In his introductory remarks, Robert Chote, the director of the IFS, said that “the government is certainly to be congratulated for the transparency with which it presented [yesterday’s policy announcements].” What we’ve heard, so far, backs up that tribute. There will be an extra £50 billion of fiscal tightening by 2015; there is a 77-23 split between spending cuts and tax rises; and

Lloyd Evans Lloyd Evans

Loving Hattie

The unthinkable has happened. I’ve started to admire Batty Hattie’s performances at PMQs. Her career may be over, her party may be trashed, her movement may drift leaderless, and her colleagues’ reputation may have been shot to pieces but Hattie always turns up and gives it everything. Nature has not overburdened her with talent. She can’t count. She can hardly speak. She reacts to events about as quickly as a self-timing oven but she has epic quantities of pluck. Every week she pounds out into the surf, like a battleship equipped for the last war but two, and heads for the centre of the fray where she refuses to sink

James Forsyth James Forsyth

Cameron settling in nicely

David Cameron was on punchy form at PMQs today. He jibed that in Harriet Harman’s case the Budget Red Book should be called ‘the unread book’ and called Labour backbenchers ‘dunces’ who didn’t know what the last government was planning. The Cameron Harman exchange was interesting. Harman had come armed with some classic follow-up questions using the details in the Red Book. Cameron didn’t want to engage on the detail, suggesting that Harman might have had a point. But his ability to attack Labour for having got the country into this mess allowed him to win the exchange on points quite comfortably. Bob Russell, a Lib Dem MP who said

Fraser Nelson Fraser Nelson

The road to recovery | 23 June 2010

This is a slow-burning budget. Not because Osborne has concealed, like Gordon Brown did, but because the reverse is true. The budget is, as Osborne says, a third of the size but with three times the amount of information. It has layers: some policies and language are there just to assuage the LibDems. Some are pure Tory. James has a brilliant cover piece in tomorrow’s magazine which spells out the political, rather than economic, forces at work in this budget. Osborne, that great player of three-dimensional chess, sees in this budget plans to restore a Tory majority government. The Red Book itself is, for wonks like myself, a joy to

Mark Wallace

The EU must face cuts too

This is a balancing act Budget. At every stage and on almost every topic there’s a bit of good news and a bit of bad news for taxpayers. Spending cuts are (finally) on the way, but at over £30 billion by 2014-15 they aren’t large enough, and there is plenty of dead wood that the Coalition intends to leave in place. Similarly, the rise in the income tax threshold is extremely welcome, but the VAT hike will hit the poorest hardest of all. And so it goes down the list of Government financial activities. Indeed, the theme the Government are keen to communicate is one of leaving no stone unturned,

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

Ed Holmes

A credible start

Today’s Emergency Budget announced the most ambitious fiscal consolidation programme in decades.  It sets out a framework returning the government broadly to a state of fiscal solvency by 2014.  To do this, George Osborne announced a deficit reduction programme amounting to just over £100 billion in real terms – entirely in line with our recommendations.  The ratio of spending cuts to tax rises – 74:26 is largely in line with the international best practice model (which we also endorsed) of 80:20.   Instead of government living well beyond its means for the next four years, we estimate that the Chancellor’s plans will reduce the structural deficit – in other words,

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

Andrew Haldenby

Slice not structure

Two weeks ago, when launching the Spending Review, George Osborne called for a once-in-a-lifetime debate about the shape of government in the UK.  He implied that there is a right and a wrong way to cut the deficit.  It would be right to cut spending by addressing the structural causes of the deficit – i.e. public sector inefficiency and the UK’s unwillingness to cut its pensions and health entitlements.  It would be wrong to leave the shape of public services and welfare unchanged, but limit their costs temporarily – “salami slice” – with public sector pay freezes for instance.   Today George Osborne opted for the slice: a two year

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

Matthew Sinclair

George Osborne must put spending cuts ahead of tax rises

In 2009, Britain borrowed more, as a share of its national income, than any country that isn’t being bailed out by the IMF and the Eurozone (Greece) or already making drastic spending cuts (Ireland).  That huge deficit is the critical challenge to our economic stability that George Osborne needs to tackle with the Budget today.  We have got away with high borrowing so far on the understanding that cuts are coming now the election is out of the way.   If you think tax hikes are the answer, then you’re asking the wrong question.  Our present fiscal crisis is built on a decade of bumper rises in spending, not tax

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

Peter Hoskin

Nick Clegg’s Big Week

With the cuts comes the candy: the sweet-tasting morsels which, it is hoped, will prevent tomorrow’s Budget from being too much of a collective downer for the nation.  We’re already hearing that a council tax freeze will be pencilled in for next year, and you can expect a few more treats besides. National insurance, for instance, is looking like an obvious candidate. From George Osborne’s perspective, these sunnier measures will serve a two-fold purpose.  Like I say, it will be hoped that they keep the public on board with the government’s project: stick with us, the message will run, and you’ll get more of this in future.  But they will