Monthly Archives: March 2012

Kiran Stacey

One of the biggest announcements from the Budget was one that may not happen, and if it does, is unlikely to be implemented for several years. George Osborne told parliament:

If in the next spending review we maintain the same rate of reductions in departmental spending as we have done in this review, we would need to make savings in welfare of £10bn by 2016.

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Kiran Stacey

We reported in this morning’s FT that wealthy Conservative backers are increasingly anxious about giving money to the party, worried they will end up in the headlines when the next donor scandal breaks.

In the last six months, these donors have been exposed to the media spotlight twice: first in the controversy over who was paying for Adam Werritty, Liam Fox’s unofficial adviser, and now in the scandal prompted by allegations that prospective donors were offered access to Number 10 in return for cash.

One prominent backer told the FT he was adopting a “hedgehog” policy – retreating behind his spines rather than giving more money and exposing himself to this level of scrutiny. He said: Read more

The government has given in to pressure today for more disclosure of David Cameron’s meetings with wealthy Conservative party donors amid the “cash-for-access” storm. Read more

Helen Warrell

The two police chiefs who attracted so much controversy earlier this month with a plan to open up their forces to a £1.5bn private sector contract were summoned to the home affairs committee yesterday to explain their ideas to MPs. But anyone hoping this would help to clarify which elements of policing might be carried out by private staff and which would remain the remit of police officers and their civilian officials would have been sorely disappointed.

Confronting the committee, Chris Sims, chief constable of West Midlands police, and Lynne Owens, chief constable of Surrey, were keen to distance themselves from the idea that they were privatising the police force. Ms Owens said:

We will not give our crown jewels to a private sector company.

Mr Sims even denied that the procurement process was an outsourcing project – claiming that while Cleveland, Lincolnshire, Avon & Somerset, Cheshire and Northamptonshire police forces had all entered into contracts which effectively hand over services to a company, this was not the model West Midlands and Surrey would follow. Read more


Welcome to the FT’s rolling coverage of the UK Budget.

By Kiran Stacey at Westminster and Gordon Smith, Michael Hunter, Darren Dodd, Tom Burgis and Ben Fenton on the FT news desk.

All times are GMT.

16.45 So, that is about it for the live blog. The main FT coverage can be found in the usual place.

We thought we would leave you with a small image of what life in the Financial Times London newsroom is like on Budget Day. Below, you can see Chris Giles, economics editor, briefing the rest of us on what it all means. This picture was taken less than two minutes after the Chancellor sat down at 13.29.

So, from the FT live news desk, enjoy digesting the ramifications of the 2012 Budget, whether you are an outraged pensioner, a relieved 1-percenter or the Chancellor of the Exchequer. FT Live Blogs will be back just as soon as something big enough breaks. Goodnight.

Chris Giles briefs the Budget team on what it all means. He is the figure in a light grey shirt immediately below the left-hand TV image of George Osborne.
Chris Giles briefs the Budget team on what it all means. Chris is the figure in a light grey shirt immediately below the left-hand TV image of George Osborne.


16.25 John Authers and Martin Wolf parse the 2012 Budget

16.06 The top trending phrase on Twitter in the UK at present is #grannytax.

And one of the main users of Twitter, Lord Prescott, has his say on the Budget.

[blackbirdpie url="!/johnprescott/status/182489902074703875"]

16.01 The FT’s Christopher Cook tweets:

[blackbirdpie url="!/xtophercook/status/182490962516393984"]

15.57 This was a budget, opines the FT’s Philip Stephens
that was in part “about George Osborne’s ambitions to establish
himself as David Cameron’s heir apparent”.


The chancellor talked about a Budget to put Britain back to work, but

the measure most likely to stick in the public mind was the cut from

50 per cent to 45 per cent in the top rate of income tax. It marked a

tilt to the tax-cutting right that he hopes will build his support on

the Thatcherite wing of the Tory party.



15.52 Podcast time.


15.48 Our colleagues over at FT Alphaville have been going through the
Budget documents and have found the official issuance plans for the
Osborne super-long bond.
The question, it seems, is not how long the bond should be, but how


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Kiran Stacey

The quad - David Cameron, Danny Alexander, George Osborne, Nick Clegg

Tim Farron, the Lib Dem president, told me yesterday:

I suspect that we are going to see a Budget which has got more Liberal Democrat stuff in it than Tory. The amount of money being returned to individuals will go overwhelmingly to middle and lower income earners.

He’s right, to the extent that by far the biggest spending measure announced by George Osborne tomorrow will be the increase in the personal tax allowance to around £9,000 – a move likely to cost around £3.3bn. Read more

By Andrew Hill

I’m getting fed up with the UK coalition government’s ritual invocation of Victorian values or visions whenever it wishes to urge a put-upon populace to new heights.

In David Cameron’s latest speech, the prime minister calls on the spirits of Brunel, Telford and Stephenson, to inspire new infrastructure investment in the UK, from nuclear energy to new towns. He accompanies nostalgia for the Victorian era with the inevitable negative comparison with other nations’ superior efforts: the French, Dutch and Swiss have cheaper, less crowded railways than the British; the South Koreans have faster broadband; the Indians have newer nuclear power stations; and the Chinese have bigger airports.

In his speech on Monday, Mr Cameron blamed a failure by governments to break down “vested interests and bureaucratic hurdles” to progress:

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Kiran Stacey

The Lib Dems have made raising the personal tax allowance (what you can get paid without paying income tax) one of their flagship policies. So when George Osborne says at the Budget in two days’ time that he will raise that allowance beyond inflation, it should be a major victory for the junior coalition party.

It is interesting therefore, to take note of a piece of research published today by CentreForum, a think tank with close ties to the Lib Dems, showing that raising the tax threshold* to £10,000 (the eventual aim), would not be especially progressive. It fares especially badly when compared to an alternative proposal, to lift tax credits instead, which would cost the same amount of money.

The think tank produced the following table detailing who benefits from either move, which paints the difference in stark terms: Read more

Kiran Stacey

The most interesting thing about today’s session of prime minister’s questions was not the contest between Nick Clegg and Harriet Harman (although Harman was, as always, an impressive stand-in, and Clegg did better than he previously has), but the reaction of Tory backbenchers, who were given their chance to put the deputy PM on the spot.

Clegg always struggles a bit in PMQs, partly through no fault of his own – his parliamentary party is simply not big enough to give him loud support against the heckles of Labour and the silence of many of the Tories who enjoy seeing him squirm.

But things were even worse today. Not only did his coalition colleagues fail to lend him their vocal support, but several of them openly tried to attack or embarrass him. Read more

Kiran Stacey

They call it Godwin’s Law: as an online discussion grows longer, the probability of a comparison involving Nazis or Hitler approaches one. And before the internet, it was known as “reductio ad Hitlerum” – trying to beat an opponent in a debate by comparing them to Hitler.

Perhaps now we’ll have to call it Hemming’s Law, after the campaign against an elected mayor in Birmingham – led by Lib Dem MP John Hemming - produced an astonishing leaflet entitled “Brummies have always fought back against dictators – don’t elect one”. These words are printed against a picture showing a scene from the Blitz.

In the leaflet, according to the report by the Birmingham Post’s Jon Walker, the No Campaign produces a list of reasons to vote against having an elected mayor. They include: Read more

Kiran Stacey

Ed Miliband and Alistair DarlingI revealed in this morning’s FT that three former political heavyweights will take the lead roles in the fight against Scottish independence. Each is surprising in their own way:

For the Tories, David McLetchie. But what does choosing a former Scottish leader say about Ruth Davidson, the current one?

For the Lib Dems, Charles Kennedy. Having maintained a low profile since the beginning of the coalition (which he voted against joining), it will be a pleasant surprise to many to see the popular former leader return to frontline politics.

But it is the third one, Alistair Darling, who will be Labour’s leading figure in the campaign, that is most surprising. Whereas the other two do not have prominent Westminster roles, Darling only stopped being chancellor two years ago, and has even been talked of as a possible party leader to usurp Ed Miliband. Read more

Kiran Stacey

Last night’s comments from Leon Panatta, the US defence secretary, that the US was considering equipping Syrian rebels, triggered interest on this side of the Atlantic too.

Panetta insisted, as has the UK, that taking military action against Syria without agreement from the UN would be a “mistake”, but he acknowledged the Obama administration was considering providing communications equipment and other “non-lethal” support – something that has not previously been given.

So when William Hague was quizzed by the foreign affairs select committee this morning, it was the perfect chance for the MPs on that committee to ask if Britain would so the same. We have always ruled out arming the rebels – Philip Hammond repeated the view today that to do so would be illegal – but could we provide any “non-lethal” equipment?

Hague revealed that the UK is actually already doing so – to an extent: Read more

Elizabeth Rigby

Labour MP Sharon Hodgson was given short shrift from the prime minister today when she asked David Cameron whether the following statement was true:

The problem is policy is being run by two public school boys who don’t know what it’s like to go to the supermarket and have to put things back on the shelves because they can’t afford it for their children’s lunchboxes. What’s worse, they don’t care either

The prime minister told the MP for Washington and Sunderland West to celebrate the fact Nissan is building a new car in Britain rather that focusing on “whatever nonsense” she had read out.

That “nonsense” actually came from his own benches in the form of the rebellious and outspoken Nadine Dorries – she made the comments to my colleague Kiran Stacey this week when asked to discuss child benefit. Hers is not a lone voice: Mark Pritchard, MP for the Wrekin, also made similar remarks to the FT about the prime minister a few days ago. Read more

Kiran Stacey

After a couple of questions on Afghanistan, following the news that six British soldiers are presumed dead, Ed Miliband turned his attention to more domestic, and combative topics: specifically welfare.

What would the prime minister say, asked the Labour leader, to Tim Howells, a man from Dartford with a wife and three children, who faces losing his working tax credits when the minimum number of hours that must be worked to claim them rises from 16 hours to 24?

David Cameron had a reply: the 24-hour threshold was for couples, meaning each one only has to work 12 hours.

The problem is, replied Miliband, that his wife spends her time looking after the couple’s three children. And Howells simply can’t find the extra hours the government is asking him to do.

Cameron effectively acknowledged the unfairness, but was able to turn it to his own advantage: Read more

Kiran Stacey

I wrote earlier this week about the options open to ministers for solving the child benefit conundrum.

To recap, the government’s current proposals to axe child benefit for higher earners lead to two problems:

  1. Families with one person earning above the threshold (around £42,000) will lose their benefit, but those with two earning just below it will keep it.
  2. The lack of any tapering means it will become a disincentive to earn a promotion that takes you just above the £42,000 mark.

The most likely answer appears to be that George Osborne will find some extra money to move the threshold to £50,000 instead. But that solves neither issue, only moves the problem higher up the income scale.

But another proposal is floating round the Treasury: to reverse the plan altogether and instead cap child benefit at a certain number of children (most likely to be three). Read more

Kiran Stacey

The government is struggling with two problems arising from its decision to cut child benefit for higher earners. They are:

1) The fairness issue. Under the current plans, a family where one person earns £43,000 and the other person receives nothing would lose the benefit, but one where both people earn £42,500 still received it.

2) The cliff edge. If you earn just below the higher-rate threshold, you actually lose money by getting a small pay-rise, because you will suddenly lose all your child benefit.

Various solutions have been floated to these two problems.

The first is that you could lift the threshold for losing child benefit to £50,000, essentially making sure it hits a smaller, wealthier section of the population. But apart from the money it costs, this actually solves neither of the above problems. Ministers might see it as a good and simple way to generate some more positive feeling around this policy, but it doesn’t fix the major issues at all.

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Jim Pickard

This week’s meeting of the cabinet was a robust occasion, with heated argument across the long lozenge-shaped table in Downing Street. Eric Pickles was criticised for failing to transform the planning system quickly enough; Caroline Spelman was taken to task for failing to push back on an EU habitats directive; there was a lengthy debate about whether Vince Cable’s department has done enough to get help to small businesses. We described the occasion as a kind of “star chamber” in our FT coverage. I’m also told there was a discussion over whether the coalition should abandon its pledge to be the “greenest government ever“, although the details on who said what are a bit sketchy.

One issue which came up was infrastructure, and whether the coalition is inching towards Osborne’s grand plan to get £20bn of pension fund money into public and private schemes in transport, energy, communications and so on. Apparently the chancellor asked why progress is not faster on the A14 upgrade – a key arterial route connecting the port of Felixstowe with the rest of the country. The process of getting in private funding to build a new toll is moving slowly, with publication of options not until this summer. Read more

Kiran Stacey

David CameronGavin Kelly, a former adviser to both Tony Blair and Gordon Brown, has written a withering critique of David Cameron in today’s FT. That might be expected, you might think, from a former Labour adviser. But his points are deliberately non-partisan, and worth noting.

Kelly argues that Cameron and his Number 10 operation has little strategic direction, except for a desire to cut the deficit – and a new and intriguing suggestion – saving the union. He says:

Only the lodestar of deficit reduction gives the coalition government a sharp sense of defining mission, though we now need to add to this the future of the union. Both absolutely crucial, neither enough.

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