OK, we’ll bite. The Telegraph’s Jeremy Warner has a column with a headline which tends towards alarmist:
Negative interest rates put world on course for biggest mass default in history Read more
HSBC’s chief executive Stuart Gulliver is due to appear before the Public Accounts select committee at 3:15pm amid a scandal over its role in alleged tax-dodging by clients of the company’s Swiss private banking arm
He will be joined by Chris Meares, former chief executive of HSBC Global Private Banking, and Rona Fairhead, a non-executive director of HSBC where she is a member of the financial system vulnerabilities committee as well as the nomination commitee. Ms Fairhead is a former chief executive of the Financial Times Group.
By Mark Odell and Jim Pickard
On Wednesday, December 3, the chancellor will deliver the final Autumn Statement before the 2015 general election.
There will be extensive coverage of the chancellor’s speech live on ft.com. And from 3pm on December 3, a panel of personal finance experts will be on hand to answer your questions about its contents. Submit your questions in the live reader comments field or email the Money team at firstname.lastname@example.org at any time up to and during the live Q&A. We will choose a selection for our panel to answer.
On the panel are:
The discussion will be moderated by James Pickford, FT Money deputy editor, and Jonathan Eley, FT Money editor
One of the government’s main tax-cutting drives has been to encourage councils to keep tax rises to a minimum. Ministers have done this in two ways: firstly, by giving councils a cash incentive to freeze council tax; and secondly, by forcing any council that wants to raise tax by 2 per cent or more to put it to a local referendum.
Since that policy began, Eric Pickles, the local government secretary, has been irritated (but perhaps not surprised) to see dozens of councils raising tax by 1.99 per cent – just below the threshold. So recently, as revealed last week in the FT, he began pushing for a lower limit of 1.5 per cent. Read more
Earlier this year, Danny Alexander told the FT he was going to use the levers of government to get companies to pay their fair share of tax. Specifically, he was going to stop companies from winning big Whitehall contracts if they haven’t complied with tax rules. He told us at the time:
If you work for the government, whether you’re an individual employee or a company that has got a contract with the government, you need to be behaving properly with regard to tax rules.
His comments came after an FT investigation showed some of the world’s biggest IT companies that provide services to the government, use ingenious and somewhat aggressive tactics to avoid paying UK corporation tax. Read more
Talking to a senior Liberal Democrat the other day, talk turned to which of their MPs are at risk at the next election. This person reckoned the party could feasibly hold on to between 43 and 50 seats, which would be a major triumph given the meltdown many have been predicting for the last few months.
One seat this person insisted was safe was that of Danny Alexander. Why, I asked – because Inverness voters like having a political heavyweight (before you criticise, he is a member of the quad) as their MP? To a certain extent, they replied. Because the voters there are died-in-the-wool Lib Dems? Not especially, they said. Why then? Because Inverness has done very well out of Danny Alexander.
On several occasions since Alexander became Treasury chief secretary, there have been small but significant giveaways that help, among other places, Inverness in particular. Read more
David Cameron and Nick Clegg were this morning falling over themselves to claim the credit for helping “hard working families” with news of a new voucher scheme that could be worth up to £1,200 per child.
After weeks of wrangling, the coalition was finally ready to press the button on a tax-free childcare scheme to replace the current “employer supported childcare” system. The new scheme will eventually reach up to 2.5m families – compared with the 450,000 who access the current voucher system – and include the self-employed. Read more
Ed Miliband’s announcement that Labour backs a mansion tax on properties over £2m, with the money used to fund a new 10p rate of income tax, has left the two coalition parties scrambling to trump the opposition with their own progressive tax plans.
For the Lib Dems, this meant leaking a tax document* being prepared in advance of the party’s spring conference. The paper proposed extending the mansion tax from people’s first properties to apply also to additional properties and any other land they may own. It also suggested the more radical idea of taxing assets such as paintings, jewellery and even record and book collections – although this was quickly dismissed by Vince Cable.
The Tories offered their own response on Sunday evening, when Tory chairman Grant Shapps appeared on BBC 5 Live’s Pienaar’s Politics. Shapps told the programme the Tories were considering pushing the income tax allowance beyond the £10,000 level currently planned – something that could go into the party’s 2015 manifesto. Read more
This year is likely to be one of the hardest for the coalition, as spending cuts begin to hit harder than ever before. Tory MPs are warning that the measure that is most worrying their constituents is the removal of child benefit from higher earners, and analysis today from the Institute of Fiscal Studies gives us some inclination as to why.
The IFS has examined how much this will cost parents earning over £50,000 – the point at which the payments begin to be taken away. It has found that the measure will mean that for someone with one child who earns over £50,000, they will have a marginal tax rate of 52.6 per cent. In other words, for every extra pound earned over that level, 52.6p will be taken away. As they continue to go up the income scale, they will lose more and more cash until they hit £60,000 and all the child benefit payments are gone. This results in a marginal tax graph that looks like this:
Welcome to our rolling coverage of the Autumn Statement.
George Osborne has missed his fiscal targets and cut corporation tax.
We’ll bring you all the day’s developments live. By Tom Burgis and Ben Fenton.
15.45: We’re winding up the blog now, but you can follow events as they unfold through constantly updating stories on the front page of FT.com
15.31: A representation of the “flamethrower of uncertainty” can be found in the documentation of the OBR. It is also known as a “fan chart”. I doubt George Osborne is a fan of it, though.
15.24: Chote speaks of the “flamethrower of uncertainty”- a favourite phrase, unsettlingly enough, of the OBR, which is a chart showing forecasts in a wide range that makes the chart lines look like a firebreathing dragon.
15.18: Chote says that the variation in the possible range in the forecast of net debt figures for the UK is a large number, but is “dwarfed by the scale of uncertainties” on the issuance of debt. I think that’s the second time he has said that in his address.
15.12: The Spectator is running a rather scary chart showing the lost output of the current “seven-year slump” in the UK.
15.07: Robert Chote, director of the Office for Budget Responsibility, is live now, going through his department’s figures that underpinned the bad news Mr Osborne has just had to deliver.
15.05: Gavyn Davies has blogged for the FT with his view on the autumn statement while the FT’s Lucy Warwick-Ching has collated some very interesting instant reaction from personal finance experts.
14.49: Hannah Kuchler on the FT’s UK desk has been keeping an eye on business reaction to the autumn statement.
The CBI, the employer’s organisation, urged the government to stick to its guns on deficit reduction to retain international credibility, saying it was no surprise that austerity would last longer than expected.
John Cridland, director-general, welcomed investment in infrastructure and support for exports, but said the proof was in the delivery. He said:
“Businesses need to see the Chancellor’s words translated into building sites on the ground.”
But the British Chambers of Commerce was less positive, declaring the statement not good enough for a country meant to be in a state of “economic war”.
The government is just “tinkering around the edges”, John Longworth, the BCC’s director general said, adding: “The Budget next March must make truly radical and large-scale choices that support long-term growth and wealth creation. That means reconsidering the ‘sacred cows’ of the political class, including overseas aid and the gargantuan scale of the welfare state. Only a wholesale re-prioritisation of resources, to unlock private sector finance, investment and jobs, will be enough to win the ‘economic war’ we are facing. The danger is that our political class is sleepwalking with its eyes open.”
14.40: Lionel Barber, the FT’s editor, just passed by the live news desk so we asked him what he thought of the autumn statement.
The Chancellor is in a hole, but the good news is that he’s stopped digging. The FT supports the government’s fiscal stance, but is there more to be done on monetary policy to boost growth? That’s the question.
14.26 Who says the British don’t like doing things the French way? Might we surmise from this tweet from the BBC’s Robert Peston’s interview with Danny Alexander, Osborne’s Lib Dem No2, that the UK’s crediworthiness might be going to way of its Gallic cousins’?
Others are more chipper:
Being prepared for big economic statements, such as tomorrow’s Autumn Statement, is a must, given the quantity of information released in such a short time. Even though this will be the 41st Budget, Autumn Statement or pre-Budget report I have covered, I try not to be complacent.
Here’s what I think is important (sorry about the length), what type of analysis is relevant to understanding Britain’s economy and public finances, and at the bottom is a moan about the way in which George Osborne has decided to follow Gordon Brown down the road of playing games with numbers.
This morning’s research from the IPPR lays out in thorough detail just how difficult George Osborne will find it to meet his fiscal rules when announcing his spending review for the period 2015-2017 next year.
The think tank has analysed the forecasts from the OBR and the Treasury and calculated the cuts needed to make sure the current structural deficit is cleared by the end of the five-year period and debt is falling as a ratio of GDP by 2015.
Firstly, let’s assume no cuts are made to welfare. If that is the case, the chancellor needs to make average savings of 3.8 per cent from departmental budgets. If spread equally among the departments, that would mean hugely controversial measures such as cutting the NHS budget by nearly £8bn a year and education by nearly £4bn.
Nick Clegg took many by surprise this morning by appearing in the Guardian calling for an emergency, temporary tax on wealth to help pay down the deficit. Why make the call publicly, when he’s a senior member of the government that decides whether this happens or not? And why now, so far away from Budget time?
The obvious answer is that this is not a thought-through policy proposal, but merely a bit of positioning to cheer the troops ahead of next month’s party conference. It will not happen, say many (including the BBC’s Nick Robinson), so there is no need to worry about what Clegg actually means.
But, that analysis ignores a couple of things. Read more
The last session of PMQs before recess today felt, in the words of one Twitter wit, like an “end of season clip show”. Both leaders played their greatest hits as they tried to buoy their troops ahead of the long break and remind the wider public of how they view each other.
For Ed Miliband, this was about tying in last night’s rebellion on House of Lords reform with the problems he’s had over the last few months with the Budget and the economy. The linking device wasn’t subtle (“House of Lords reform isn’t his main problem….”), but the attacks were effective, if not new.
We heard about the “tax cut for millionaires” (the end of the 50p top rate of income tax), paid for by a “tax on pensioners” (the end of preferential tax rates for pensioners), and to cap it all of, the “double-dip recession made in Downing Street”. Read more
It probably seemed like a great idea to David Cameron when he criticised Jimmy Carr’s tax affairs during a round of TV interview in Mexico. His comments – attacking the immorality of avoidance – chime with the public mood. People don’t like to find out that others aren’t paying as much tax at a time of austerity, unemployment, spending cuts and so on.
But the Cameron stance quickly unravelled within minutes of him uttering the words on Wednesday afternoon. First question was why the prime minister criticised a single comedian and not those closer to home (Sir Philip Green, Lord Ashcroft, etc) whose tax affairs have been questioned in the past.
Second question was why the PM attacked Carr but not Gary Barlow, the cuddly Take That singer who supported the Tories before the last election. Asked about Barlow on Wednesday, he said something vague about having not reached his computer yet. By today, it was a matter of no comment.
During a press conference today Cameron sought to shift into reverse gear, saying it was everybody’s right to arrange their tax affairs efficiently and that he wouldn’t provide a “running commentary” on individuals’ tax. Yet the genie is already out of the bottle. The spotlight will now be on members of Cameron’s family, his friends, his donors and his MPs; who else has been a little too efficient in Read more
Journalists were told two days ago in the wake of the u-turns on the pasty tax and caravan tax that there would be no imminent decision on the charity tax. The position is the same, said Treasury officials – there will be some form of compromise with the charitable sector, but not a full u-turn, and it will come after a consultation during the summer.
David Cameron is fond of saying that u-turns are not a problem, they are actually a sign of strength and a government that listens to voters and is willing to change its mind.
He may be right: voters stuck with him through a spate of u-turns early in the government’s life – on selling off national forests, on GP commissioning, on sentencing. But today we have three in one day – will this now start to look like a government that doesn’t know what it’s doing?
The key may lie in the way in which the u-turn is handled. When he announced he was abandoning plans to offer 50 per cent discounts on sentences for offenders who offer guilty pleas, Ken Clarke united the House in laughter by telling MPs:
I have done a few u-turns in my time, and they should be done with purpose and panache when you have to do them.
The data released last night on how much the super-rich paid in tax in 2010-11 was fascinating. As Robert Peston comments on his blog, getting this information out of the last government was nigh-on impossible, as Labour didn’t want to put wealthy people’s tax affairs in the spotlight. So it is an amazing irony that it is a Conservative-Lib Dem coalition that is choosing to do so instead, as it looks to bolster support for its unpopular decision to cap tax reliefs, which will impact on charitable giving.
The Treasury released the data in an attempt to show us how much rich people avoid tax. George Osborne told the Telegraph that when he saw these figures he was “shocked”. And certainly there are some shocking figures within them, such as that thousands of people in the 50p tax band actually pay less than 20 per cent tax. Twelve people who are mega-rich, earning over £10m, even pay less than 10 per cent. Read more
David Cameron today repeated the claim his spokesman made yesterday that one of the reasons for the cap on tax reliefs was that some wealthy people were putting money into bogus offshore charities as a way of reducing tax.
The prime minister said:
I’m quite convinced we can get the balance right increasing philanthropy and charitable giving, which is an important part of our culture which I want to see expanded, and making sure the tax system isn’t abused.
The government’s comments on this have been met with confusion: if bogus charities were in operation, why didn’t the Charity Commission stamp them out?
The answer, strangely, lies in a legal case launched by a German man, Hein Persche, against his local tax office in the province of Lüdenscheid, in 2009. Read more
This morning the prime minister’s spokesman was grilled by the Westminster press pack on why exactly the government was putting in place a cap on tax reliefs when it could reduce charitable giving.
This is the explanation the spokesman gave:
The reason was that certain individuals in this country on very high incomes are exploiting some of these reliefs to reduce their tax burden.
But surely the whole point of offering tax reliefs on charitable donations is to encourage wealthy individuals to give donations by allowing them to reduce their tax burden? The PM’s spokesman explained that it was not just use, but abuse of these reliefs that was concerning the government: Read more
|About this blog||Blog guide|