George Osborne will use his Budget on Wednesday to announce a further squeeze on public sector spending and pay to shore up government finances and provide some money for his pet projects.
Changes to the state pension announced at the weekend will bring the exchequer a stealth windfall of almost £6bn a year from 2016-17, mostly paid by public sector employers and employees in the form of increased national insurance contributions.
By banking much of the money generated, the chancellor will be able to challenge Labour to match his tough attitude to public sector workers or face a further black hole in the public finances.
Officials have indicated Mr Osborne will bank £3.3bn, more than half the windfall, with the remaining £2.2bn used to fund projects such as the Dilnot proposals on social care and other Treasury initiatives.
Mr Osborne’s windfall will come from the small print of the plan to introduce a single-tier pension at a minimum of £144 a week in 2016-17.
The chancellor said on Sunday the new pension would be a “huge boost” for pensioners but did not add that associated changes would see steep rises in national insurance bills Read more
The chancellor has drawn up plans to find fresh savings from the public sector payroll by ending the historic system of “pay progression” enjoyed by millions of workers.
Teachers, NHS workers, police and civil servants in six departments currently enjoy regular pay rises along a sliding scale for their pay grade, so long as they meet career appraisals.
That explains why public sector pay has continued to rise despite a headline “freeze” to salaries since 2010.
But the Treasury has just set out new plans for departments to propose an end to “automatic time-served progression” as a way to save costs in the 2015-16 spending review, scheduled for June. Those changes would apply to the six departments which still Read more
Speculation is growing in Westminster that Gordon Brown may hang up his boots as an MP in 2015 after taking a back seat in the Labour party.
Mr Brown’s spokesman, when pressed, said the former prime minister was “not proposing to stand down”. But I did not get a simple yes-no answer to one specific question of whether Mr Brown “will stand for Parliament in 2015.”
Two well-placed sources have told me that they do not expect the former Labour prime minister to remain the MP for Kirkcaldy and Cowdenbeath after the end of this Parliament.
Mr Brown has been a rare speaker in the House of Commons and has left his former protégée Ed Miliband largely alone since he replaced him as leader.
Other allies of Mr Brown, however, claim not to have heard anything about this. And Charlie King, his spokesman, has tried to dismiss the speculation, telling me that “Mr Read more
The biggest irony of Eastleigh is that voting was dominated by an anti-immigration surge on precisely the same day that statistics showed that net migration to the UK had fallen by a third.
The anti-EU, anti-immigration Ukip came second and almost seized its first ever by-election success. Had the party poured more resources into the contest – and perhaps fielded leader Nigel Farage as candidate – it could have had its own Galloway/Bradford moment.
And yet as voters went to the polls in the nondescript Hampshire town yesterday, new ONS data showed net migration at 163,000 in the year to June 2012. That was a big fall from the peak of about 250,000 in late 2010.
The coalition is still failing to hit its promise to bring down annual net migration to “tens of thousands” – but this pledge was only for 2015, so ministers can argue they are on track.
But has the public noticed? These statistics are almost certainly lost with voters, many Read more
Attention is focusing ever more on the Liberal Democrats and their former election strategist Lord Rennard, (pictured*) who denies claims of sexual harrassment. Against this backdrop we have been offered an account from a female party worker who has asked to remain anonymous.
Like many women working inside Westminster the current LibDem scandal has prompted me to reflect on the culture within the bubble. I started working there in 1996. During this time I have been propositioned by members of all three parties, a couple of journalists, a senior No 10 advisor, party donors, one or two MPs and handful of peers. Some even have nicknames which should be a warning to stay clear. There were invitations in for coffee after shared taxis, bottom patting, innuendo and blatant
The government faces a pincer movement from an array of opposition parties to its “bedroom tax” tomorrow with the potential to expose splits within the coalition over the controversial plan.
It’s a taste of how Gordon Brown’s “umbrella coalition” could have worked had the defeated prime minister been able to cobble together a desperate union of Labour with the Celtic fringes and the solo Green MP back in 2010. (No one, including those involved in those half-hearted talks, has since mourned their failure.)
The SNP, Plaid Cymru and Greens will use an opposition day motion to call on the Read more
The bruising Commons encounters between George Osborne and Ed Balls are often a pleasure to watch – albeit from a safe distance. And none more so than today’s bout, with its characteristic “rapier v sledgehammer” quality.
It was Balls who called the encounter through an urgent question to inquire about the loss of Britain’s cherished AAA credit rating. But it was Osborne who got to speak first.
The chancellor observed that the markets had not shown much volatility today, with 10-year gilts steady at 2.1 per cent and the FTSE slightly up. (He ignored the fact that at one point sterling hit a two-year low in reaction to the news.)
Waspishly, he observed that the downgrade was “worrying” to anyone who thought that Read more
It was an awkward moment for George Osborne this morning when the results of the 4G broadband auction appeared. The sale has raised just £2.3bn – against an estimate of £3.5bn which had been factored into the government’s accounts for this year.
That missing £1bn may be a drop in the ocean compared to the £212bn of extra borrowing which the coalition is having to make compared to its ambitious 2010 forecasts.
Yet the figure is of fierce political significance. That is because it could make the difference to whether the deficit is rising or falling this year.
Two months ago Ed Balls accused the Treasury of manipulating the public borrowing figures by taking account of 4G spectrum proceeds before the auction had taken place.
That, you may recall, was the reason for his stumbling performance when he responded in the autumn statement in December. Balls simply couldn’t believe that the chancellor had been able to say that the deficit was still going down and not up. Read more
The shadow cabinet may have been kept in the dark but Ed Miliband did have a policy to announce on Thursday; and it was a big one which made the front of today’s FT.
With one stroke he has seized the political initiative, at least temporarily. The politics and fiscal implications are both worth examining in detail.
Clearly the promise of a new mansion tax is an attempt to steal the Lib Dems’ big idea and neutralise any lingering attraction between the third party and left-leaning voters. Labour is still vague about how the tax would work, however: it could still consist of a new upper rate of council tax on the most pricey homes. (Ed Miliband’s is said to be worth about £1.9m, incidentally).
Meanwhile by promising to reinstate the 10p tax band – albeit only in a limited way – Labour hopes to close down any attempt by the Tories to make a similar move. The party also wants to end any lingering anger at the original scrapping of the rate by Gordon Brown.
It was in the spring of 2008 that the changes kicked in as a way to make up for Read more
Cynics have long worried that the “Mary Portas Review” of the high street, commissioned by the government, was largely a PR exercise. I pointed out last autumn that there were concerns that the review’s recommendations were just a drop in the ocean compared to the wider global trends forcing the closure of countless retail chains.
And now it has emerged that eight months after £1.1million was awarded to the first wave of Portas Pilots – to “kick start a renaissance” in town centres -only 12 per cent of the money has been spent.
The figure emerged from an Foi request by Paul Turner Mitchell, a retail commentator and fashion boutique owner. This suggests that only £136,000 has been spent so far with some pilots having spent none of the funding allocated.
Some of this has gone towards DCLG meetings, project co-ordinator salaries, charges for Read more