Uk politics

Thursday

Peter Hoskin

Last orders in the last chance saloon?

It’s the set of headlines which Labour must have dreaded after their recent progress in the polls.  The Times: “The axeman dithereth … but the taxman cometh”.  The Guardian: “Darling soaks the rich … and the rest of us too”.  The Mail: “The Buck Passer’s Budget”.  And so on and so on.  It doesn’t look too good inside the papers either.  The FT rails against a  “lack of clarity on public spending plans”, while the Independent says that “rarely has a pre-Budget report promised so much and delivered so little”.  The Sun’s opposition may not be too surprising, but it’s there in bucketfuls: “Britain is staring into the abyss. After

Wednesday

James Forsyth

Has Labour u-turned on protecting defence spending?

Back in July, Lord Mandelson added defence to health and education as an area of spending that Labour would protect from cuts. But looking at page 97 of the Green Book, defence is conspicuously absent from the list of areas of public spending that are protected in 2011-2012 and 2012-2013. The only areas mentioned are NHS spending, schools, sure start, policing and overseas aid. As some of these are only receiving funding increases in line with inflation, it seems reasonable to assume that everything else – including defence – is likely to be cut in real terms.    (There is a commitment to spend up to £2.5 billion from the

James Forsyth James Forsyth

An unhealthy dependence

Few columnists are read more carefully in Conservative circles than Danny Finkelstein. He is extremely well connected in the Cameron circle and enjoys something of a mind-meld with George Osborne. Danny’s column today is the argument for sticking to the modernising message. It does, though, contain one significant criticism of the party, its dependence on David Cameron.   This Cameron dependence has been a problem for a while. But the leadership itself must take most of the blame for this. They have used Cameron for almost every announcement that they view as important and that has sent a message to the media that if it doesn’t come from Cameron the

Fraser Nelson Fraser Nelson

The end of spending

So Alistair Darling today repeated the same trick he used in April’s Budget – referring only to rising “current spending”, so as to hide the full extent of Labour’s spending cuts. Current spending is only one component of total spending, and when you add in some of the other components – as we have done in the table below – the cuts become clearer. The table shows that next year is the last year of any real rise in spending. From 2011, spending either falls or flattens out. But the cuts will be even deeper than the table reveals.  This “total spending” figure is all we could work out from

Andrew Haldenby

What to do if you can’t tax or borrow out of trouble

Today one Finance Minister in the British Isles cut spending, cut borrowing by 1 per cent of GDP compared to his last Budget and cut the national debt by 5 per cent.  It wasn’t Alistair Darling. Brian Lenihan cut Irish public spending by 7 per cent (equivalent to a £40 billion cut in the UK).  He cut the public sector headcount, pay, pensions for new entrants and unemployment and child benefits. Alistair Darling postponed the inevitable reckoning on the finances until the pre-election Budget, the post-election Budget or a currency or debt crisis if that comes first.  Brian Lenihan gave us the flavour of what that reckoning will be and

James Forsyth James Forsyth

The Tories should attack the national insurance increase

After a tricky few weeks for the Tories, the PBR has come of a bit of a relief for them. It is generating far more bad headlines for the government than good ones.  The Standard’s splash on the national insurance hike is a taste of what the coverage is going to be like for Labour tomorrow. One point the Tories should be hammering home is that the national insurance hike is a far more significant tax rise than the tax on bank bonuses. The one-off tax on banks that pay sizable bonuses will only raise £550 million while in 2010-11 the various national insurance changes will cost taxpayers more than

Fraser Nelson Fraser Nelson

The public’s right to know

The Treasury have just banned transcripts of the all-important briefing they give to journalists after the budget. Coffee House broke the mould after the April budget by producing the first-ever transcript – releasing to the public the spin which journalists are given in the precious few hours they have to write up the Budget. This shows how journalists were wrongly told that there were no spending cuts, when there were in fact cuts of 7 percent over three years. Here is an example of their misleading briefing last year Q: Why are you cutting spending by more? A: By more? (quizzical look on his face) Q: Well not reducing the

Neil O'Brien

A whole batch of Brownies

There are some pretty cheeky claims in today’s Pre-Budget Report. One is that “Cyclically-adjusted borrowing is lower than at Budget across the medium-term forecast.” (page 171). That makes it sound like it’s all under got a bit better since the Budget. But in fact the “cyclically adjusted” improvement is entirely because of a redefinition of the cycle – not because of any actual reduction in the deficit.  For example, the PBR forecasts the deficit for 2013/4 as 5.5 percent of GDP – exactly the same as that in the 2009 Budget.   Another claim is that “The annual pace of consolidation set out in this Pre-Budget report is faster than

Fraser Nelson Fraser Nelson

Don’t worry about the tax on jobs

I’m not that worked up about the National Insurance increase. Sure, a tax on jobs is the best way to choke a recovery – but this is only due to come in April 2011 by which time Darling will be collecting the royalties on his memoirs. It only matters if the Tories support it, which (I hope) they won’t. It is a wee gesture, to help calm the bond markets. The only fiscally significant mive in this budget is the £550m they intend to raise from inheritance tax. The giveaways are all planned from April next year – ie, they are little exercises in forcing the Tory hand. Extension of

Lloyd Evans Lloyd Evans

In his comfort zone

Today we saw just how tricky the game can be for opposition leaders. The government sets the parliamentary agenda and holds the keys to the war-chest. Cameron’s attempts to upset the PM looked diffuse and repetitive. On Afghanistan he offered support. On Kelly he flannelled about some footling detail of parliamentary timing. And on ministerial pay he drew attention to his gravest difficulty, namely that the pre-budget report was coming up next. Brown never looked in difficulty and he cruised easily towards his Six O’Clock sound-bite. ‘The opposition leader has lost the art of communication but not alas the gift of speech.’ A poor day for Dave. Nick Clegg did

Fraser Nelson Fraser Nelson

In a world of their own

As I suspected, Darling has cooked the figures by laughably unrealistic growth forecasts. He is predicting a sustained economic sprint that will mysteriously come to Britain the April after next. Table B1 of the PBR shows that he expects 3.25% growth every year for a whole four years: from April 2011 to April 2015. How does this square with what the real world thinks? I blogged earlier what HM Treasury’s independent forecasts have to say. Robert Chote from the IFS has just been on TV saying the good news is that the structural deficit isn’t as big as it used to be. Little wonder, when you can concoct growth forecasts

Mark Bathgate

How much more will Darling have to borrow?

The figure of £178 billion in the Budget – for 2009/10 – is by no means the full story. For that we have to turn to the Debt Management Office, which is in charge of flogging the IOU notes. It just now confirmed that it will need £223.3 billion by the end of this financial year – £5 billion more than expected. And a staggering amount, which I suspect the government simply could not raise if it did not have the Bank of England printing presses working overtime. Why the gulf between the two? Because of the bank crisis. This financial year a further £42 billion has needed to by

Peter Hoskin

Bad news for the country, bad news for Labour

Abandon hope all ye who enter here.  While we mostly knew what to expect from Darling’s PBR, it’s still surprising just how uninspiring, how thin and how insufficient it is in the flesh.  It’s pretty much a bad news budget for anyone you could mention.  Bad news, of course, for the bankers who will be hit by the hazily outlined bonus tax.  Bad news for public sector workers, who are already smarting at the frozen pay rise they’ll have to accept in a few years time.  Bad news for anyone who cares about the state of the public finances, which look just as grim, if not worse, as they did

Peter Hoskin

One thing to remember today

As you can probably imagine, plenty of Labour folk are getting excited about the PBR today.  They regard it as a chance for their party to harden their rise in the polls, and hasten the Tories’ descent.  But Danny Finkelstein strikes a necessary note of calm over at Comment Central.  As he puts it, a Budget in which the government has to ‘fess up to the horrible state of the public finances is hardly going to do much good for them.   To Danny’s analysis I’d add one supporting fact: that rarely, if ever, in recent times, has the government received a significant poll bounce on the back of a

James Forsyth James Forsyth

Brown’s bonus smokescreen

If today ends up with the government in a row with the City over plans to tax bank bonus pots with bankers threatening to take the government to court, then it will be mission accomplished for the Labour party. The same goes if we end up in a debate over the merits of a Tobin-style tax. For obvious reasons, Labour would rather talk about anything other than the state of the public finances so anything that distracts attention from that central question is, to use the word of the morning, a bonus for Brown. The Tories know this and will try and turn the debate back to the public finances

Peter Hoskin

One year on | 9 December 2009

Coffee House will be live-blogging Alistair Darling’s PBR statement from 1230 on.  In the meantime, here’s a brief video reminder of George Osborne’s PBR response from last year – probably the Shadow Chancellor’s finest moment at the Dispatch Box.  You imagine his address today will be similar in tone, at least:

Fraser Nelson Fraser Nelson

Your guide to the PBR Brownies<br />

How can you tell if you’re being lied to on budget day? Normally its easy: Gordon Brown’s lips move. But, today, there’s a handy guide. You can compare Darling’s fiction with the independent average calculated by HM Treasury. I have pulled out the relevant tables:

Tuesday

Fraser Nelson

Darling carves up the spending pie

It’s the eve of the Pre-Budget Report, and the lunacy has already begun. Tomorrow’s FT says that Darling will copy the Tories’ plans to protect the NHS budget – and throw police and schools in to the protected status as well. This is introduced as “the biggest squeeze in pubic spending for a generation,” with the headline figure of 14 percent cuts. How to make sense of that? My guide: 1. Any sentence that starts “A Labour government would…” can be ignored. Darling can promise to fund free beer for everyone after 2011 – he won’t be in office. These are decoys for the media: the wilder his claims, the

Peter Hoskin

Ringfence-a-rama

Just watching Newsnight, and the show’s economics editor, Paul Mason, has said we can expect several budgets to be ringfenced from spending cuts in tomorrow’s PBR – hospitals, schools and perhaps even the social security budget.  If so, it’s another sign of how political the document is set to be.  Ringfenced budgets are the other side of the soak-the-rich coin: sending out the twin message that Labour will batter the “City fat cats,” while also “investing” in public services “for the many”.  Just a shame that it’s all insufficient to the scale of the debt crisis.

Peter Hoskin

Clocking on

As publicity stunts go, the debt clock the Tories beamed onto Battersea Power Station this evening is quite a decent idea.  Their thinking’s pretty clear – get some coverage in tomorrow’s papers, and increase the likelihood that the horrendous state of the public finances becomes the story of the PBR – but it’s probably no less effective for it.  Anyway, here are some pictures so you can judge for yourself: P.S. Yes, I know it’s out of sync with the Coffee House debt counter. We’re going to update our numbers on the back of tomorrow’s PBR.