One of the arguments made by proponents of a higher minimum wage or a “living wage” is that it would raise more revenue for the Exchequer. Higher wages would, they argue, mean higher income tax and National Insurance receipts, and lower spending on tax credits; the state would pick up less of the employer’s wage bill. It is an argument that encourages some fiscal conservatives to support a wage hike.
But the government disagrees. Read more
Alex Salmond’s speech on Monday was billed as a response to George Osborne’s rejection last week of a formal monetary union between an independent Scotland and the rest of the UK. But this formed no more than a quarter of the first minister’s speech. Mr Salmond was keener on rejecting what Mr Osborne said in 2010 (announce cuts to public sector spending) and what David Cameron said in 2013 (promise a referendum on UK membership of the EU), than what they said in 2014. Read more
In a lecture last year, Sir Nicholas Macpherson, HM Treasury permanent secretary and perhaps the most powerful old Etonian in Britain, explained the “Origins of Treasury control”. Sir Nicholas said that Treasury’s power came from three sources: conflict, links to Parliament and being able to outwit the rest of officialdom. All three were in evidence this morning, as George Osborne cited his top official’s advice and told Scots they can have independence or the pound – but not both. Read more
On Saturday, Ed Balls announced that a Labour government would bring back the 50 per cent tax rate on incomes over £150,000. His main justification is that it would raise more revenue than government estimates suggest. Is the shadow chancellor correct? Read more
On Thursday evening, George Osborne said that “I think Britain can afford a higher minimum wage”. Reports suggest that the chancellor would like to see the rate paid to adults over 21 years-old rise to £7 per hour from £6.31 per hour, a jump that could benefit more than 3m employees, at least according to this estimate. Read more
This morning, the chancellor announced that there would be a further £25bn of spending cuts by 2017-18, and that in order to not increase the pace of current departmental spending cuts, a further £12bn would have to be eliminated from the “welfare” budget.
The Venn diagram from Flip Chart Fairy Tales summarises the choice facing Mr Osborne, and includes an apocalyptic assumption about the collapse of some public services. At the Autumn Statement, by targeting a return to surplus in 2018-19, the chancellor implicitly committed himself to finding about an additional £25bn in savings or revenue. Read more
These charts show public sector net borrowing excluding the accounting treatments of Royal Mail and asset purchase transfers. Revised growth forecasts mean that the deficit is projected to fall sooner than previously expected – and there might be a surplus in 2019.
These changes provided the backdrop George Osborne’s Autumn Statement, a confident defence of his economic strategy in the past, present and – crucially – future. The latter included arguably the most clear-eyed articulation of supply-side reforms in recent memory. But the frame was the improvements in the economy relative to March. In this sense, seven months have made a huge difference. Read more
On Wednesday morning, the National Audit Office published a report on government efforts to increase UK exports. Under the coalition, foreign policy has acquired a greater emphasis on trade and investment. The government has two targets for 2020: to double exports to £1tn from £500bn in 2012, and to have 100,000 more companies exporting than was the case in 2011. Here is how the first one is going. Read more
If you alight at Hackney Central railway station, there is a good chance you will slope on to the platform amid one of London’s glorious human hodgepodges. There will be first and second-generation migrants, white working-class people, scraggly bearded-hipsters, advance armies of gentrifying families – and dozens of Chinese shoppers. Rather than pay high prices in central zone one, this latter group – middle rather than upper-class Chinese tourists – have come east for the retail outlets of Burberry, Pringle and Aquascutum that are nestled outside of the London Overground station. Following the liberalisation of the UK’s rules for tourist visas, there will probably be more Oyster Card adventurers. Read more