A month or so has passed since the Bank of England unveiled its £50bn-plus liquidity injection to free up the financial system.
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The Treasury is not happy with the idea that it could scrap its proposed 2p increase in fuel duty AND its new tax on gas-guzzling cars – and still beat the relevant revenue forecasts by more than £4bn if oil prices stay at their current highs.
The Chancellor of the Exchequer reassured the world in the spring that Northern Rock’s assets were “good quality” as he set aside further billions of debt towards keeping the business going.
Even at the time this seemed odd, given the lender’s rush for market share last year at the top of the housing market. Among its products was the notorious 125 per cent loan-to-value mortgage, which has since ceased to exist.
Just got off the phone with Graham Stringer, MP for Manchester Blackley, who has broken ranks and called for a (any) cabinet minister to challenge Gordon Brown for the Labour leadership.
A swing of 17.6 per cent to the Tories cannot be dismissed as “mid-term blues” or, as is often the case, a mildly discontented electorate giving the government a poke.
True, the swing is less than the two big Tory-to-Labour swings of the mid-90s, which preceded the landslide of 1997. Then, Labour took Dudley West (1994) and South-east Staffordshire (1996) with swings of 29 per cent and 22 per cent respectively.
If and when Labour lose Crewe & Nantwich at today’s by-election there will be endless head-scratching about how Gordon Brown can improve his act.
There will be demands from the left of the party; and from the right. There will be debate about Mr Brown’s policy platform and whether it is right or wrong. No doubt his handling of the economic downturn will also be mulled over.
A story this morning by my colleague George Parker about the possible return of Ken Clarke to the Conservative front bench has set the cat among the pigeons.
As always, the charismatic Clarke divides Tory opinion, not least because of his views on Europe. You can get a flavour of the debate on this blog.
There is one statistic that really hammers home how expensive the 10p U-turn is. About £2bn of the £2.7bn in compensation is going to those who had already won from the 2007 Budget. Officials insist this was the only simple and quick solution. But there was another way that was cheaper and more comprehensive.
Ian Mulheirn, chief economist at the Social Market Foundation and a former Treasury official, thinks he has the answer. He believes the chancellor could have compensated all those who lost out for just £1.5bn. By contrast, the chancellor’s plan was almost twice as expensive but only covered 80 per cent of the 10p rate losers.
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