Category: Treasury

Lib Dems go after high-earners’ pensions

February 14, 2012 1:05 pm by Kiran Stacey

The Liberal Democrats have a problem. They have staked their colours clearly to the mast when it comes to raising the minimum threshold for income tax to £10,000. Most expect it to be done by the end of the parliament, if not by 2014.

The problem is, this will cost money – £4bn if it’s done by 2015, £5.5bn if it’s done by 2014 – and there isn’t much of it floating around. Lib Dems will tell you they are keen on two options to pay for this: one is to clamp down on tax avoidance; the other is to tax the pension contributions made by higher earners.

Both options are likely to make some kind of appearance in the Budget in March. But it is the latter that raises the serious money, and carries potentially serious risks for the coalition.

Continue reading: “Lib Dems go after high-earners’ pensions”

Tags: Pension contribution tax relief
Posted in Coalition, Conservatives, Lib Dems, Nick Clegg, Tax, Treasury, UK economy, UK politics | Permalink

IFS: Darling would have borrowed more than Osborne

February 2, 2012 5:01 pm by Kiran Stacey

When George Osborne told the country last November that he was going to miss the target of eliminating the current structural deficit by 2015, Labour were quick to tell everyone how the chancellor’s economic gamble had failed.

Not only was Osborne having to borrow more to pay for this failure, the opposition claimed that he was even now having to borrow more than Alistair Darling would have done under his deficit reduction plan. That claim was illustrated by this graph, showing the course of borrowing under Darling’s 2010 plan and Osborne’s modified 2011 plan:

Continue reading: “IFS: Darling would have borrowed more than Osborne”

Posted in Coalition, Conservatives, Deficit, Tax, Treasury, UK economy, UK politics | Permalink

Whoops: Vince Cable says Project Merlin has not succeeded

December 8, 2011 3:28 pm by Kiran Stacey

Sitting in the Commons chamber for business questions today, I was startled to hear an apparently frank admission from Vince Cable to a question from Gordon Banks, the shadow business minister.

Other ministers (including the chancellor) have insisted that Project Merlin, the deal between the government and the banks to increase gross lending to businesses, has been a success. But Cable apparently disagreed.

Here is the full exchange:

Continue reading: “Whoops: Vince Cable says Project Merlin has not succeeded”

Tags: Project Merlin, Vince Cable
Posted in Lib Dems, Treasury, UK economy, UK politics | Permalink

Autumn statement: Live blog

November 29, 2011 12:00 pm by FT

Welcome to the Westminster blog’s live coverage of chancellor George Osborne’s autumn statement. One of the most eagerly anticipated statements since the coalition government took power was expected to offer a gloomy prognosis on the economy. Michael Hunter and Gordon Smith from the FT main newsdesk covered the statement live from 12.30 with additional comment from FT colleagues.

14.10 Thanks for joining us. You can find much more, including the full text of the chancellor’s speech and comprehensive analysis, including video interviews, at www.ft.com/autumn2011.

Continue reading: “Autumn statement: Live blog”

Tags: Autumn statement, Budget, Chancellor, economic crisis, George Osborne
Posted in David Cameron, Home affairs, Tax, Treasury, UK economy, UK politics, Unions | Permalink

Who will suffer from a cut in tax credits? The squeezed middle

November 28, 2011 5:40 pm by Kiran Stacey

Unless there is a last minute U-turn in Whitehall tonight, one of the ways which George Osborne will pay for the various jobs and infrastructure schemes in Tuesday’s growth review will be to squeeze tax credits.

This is a result of protracted bargaining – Osborne wanted to freeze benefits, but the combined efforts of the Lib Dems and Iain Duncan Smith put a stop to that. Eventually the compromise was made that credits would come under the axeman’s blade instead.

So who suffers if these are frozen or cut?

Continue reading: “Who will suffer from a cut in tax credits? The squeezed middle”

Tags: Benefits, George Osborne, Iain Duncan Smith, tax credits
Posted in Coalition, Conservatives, Deficit, Lib Dems, Nick Clegg, Recession, Tax, Treasury, UK economy, UK politics | Permalink

Is PFI dead? Don’t be so sure

November 15, 2011 11:21 am by Nicholas Timmins

The private finance initiative – or at least the PFI as we know it – is dead. That’s what the fiercest critics will hope given the Treasury’s announcement of a “fundamental reassessment” of the model.

But don’t be too sure.

George Osborne, the chancellor, is looking for a model that “is cheaper, accesses a wider range of private sector financing sources, and strikes a better balance of risk between the private and public sectors.”

Continue reading: “Is PFI dead? Don’t be so sure”

Tags: George Osborne, PFI
Posted in Coalition, David Cameron, Treasury, UK economy, UK politics | Permalink

Cable: Benefits will rise in line with inflation

November 13, 2011 3:58 pm by Kiran Stacey

We revealed earlier this month that George Osborne was considering slashing the benefits bill by linking them to earnings (which are stagnant), rather than inflation (which is rising fast).

Since then, the chancellor has been locked in a battle, not only with Nick Clegg, but also Iain Duncan Smith, the Tory work and pensions secretary, about whether the government should do this, having previously said benefits would rise in line with CPI.

If Vince Cable is to be believed, it looks like IDS and his Lib Dem allies have won this one. The business secretary told the BBC’s Politics Show:

Continue reading: “Cable: Benefits will rise in line with inflation”

Tags: Benefits, Iain Duncan Smith, Inflation, Vince Cable
Posted in Coalition, Conservatives, Lib Dems, Nick Clegg, Treasury, UK economy, UK politics | Permalink

It’s hard to draw up a growth review with no money

November 13, 2011 11:43 am by Kiran Stacey

We reported last week that George Osborne and Vince Cable were pushing for a new toll road scheme on the heavily congested A14 near Cambridge. Today, the Sunday Times suggests that road tolling will play a central role in the government’s growth review on November 29.

The paper says Osborne and Cable want £50bn from the private sector, mainly pension funds and insurance companies, to fund new infrastructure, including roads, homes and power stations. In return they will get a share of tolls, rents and energy bills.

The problem is that ministers can’t force private companies to spend their money on such schemes: all they can do is put the incentives in place for them to do so. But these carry their own risks.

Continue reading: “It’s hard to draw up a growth review with no money”

Tags: George Osborne, growth review, Vince Cable
Posted in Coalition, Conservatives, David Cameron, Deficit, Lib Dems, Nick Clegg, Treasury, UK economy, UK politics | Permalink

Labour attacks Osborne for hurting pensioners

November 3, 2011 12:50 pm by Kiran Stacey

Labour is in a slightly difficult position about how to respond to the news in the FT today that the Treasury is looking to slash benefits by linking them to earnings or even freezing them temporarily.

Although Cameron said he wouldn’t “balance the books on the back of the poor”, Labour knows that attacking the government for hypocrisy on this point could make it look like they are standing up for benefits’ claimants – or “scroungers” as they are thought of by many people.

Instead, the opposition will want to pick its battles. At the moment, the Treasury is still actively considering applying this change to all benefits and pensions, which would affect a lot of people who don’t fall into the “scrounger”.

Continue reading: “Labour attacks Osborne for hurting pensioners”

Tags: Benefits, George Osborne, Liam Byrne, Pensions
Posted in Conservatives, David Cameron, Treasury, UK economy, UK politics | Permalink

BBC issues extraordinary apology to Andrew Tyrie

November 1, 2011 6:56 pm by Kiran Stacey

During party conferences, the BBC broadcast a piece of footage showing Andrew Tyrie, the chair of the Treasury select committee, talking in hushed tones to Steve Hilton and Craig Oliver before being interviewed by one of their reporters. The Beeb noted that after meeting the pair, Tyrie gave a much more positive assessment of George Osborne’s economic strategy than he had done just a few days before. We noted the encounter here on the blog, as did a number of other media outlets.

The coverage infuriated Tyrie, who says his independence was being called into question unfairly. Well now the BBC has issued a fairly extraordinary on-air apology, stating:

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Tags: Andrew Tyire, BBC
Posted in Conservatives, Treasury, UK economy, UK politics | Permalink

Has Andrew Tyrie been silenced?

October 4, 2011 3:42 pm by Kiran Stacey

Last week Andrew Tyrie told The Times the government’s growth strategy was not coherent or consistent. In remarkably outspoken comments, the chairman of the Treasury select committee said policies such as the Big Society or the green agenda were “at best irrelevant to the task in hand, if not downright contradictory to it”.

His reaction to George Osborne’s speech on Monday however had a very different flavour:

You can see some consistency in this speech and I think it will be widely welcomed not only by the party but by people across the country, who also need a growth strategy to help them move forward.

Was Osborne’s speech so dramatic that it completely changed Tyrie’s mind, or did his comments have more to do with this incident, caught by the BBC, when Tyrie was led briskly away by those two Number 10 heavies, Steve Hilton and Craig Oliver?

Tyrie unsurprisingly denied being “nobbled” by Number 10, but it is telling that he didn’t attend a fringe event on growth this afternoon at which he was billed to attend. In his place, rising Tory star and Osborne uber loyalist, Matthew Hancock.

Tags: Andrew Tyrie
Posted in Conservatives, Deficit, Treasury, UK economy | Permalink

Osborne’s problems with the US and Eurozone

August 15, 2011 1:05 pm by Kiran Stacey

Amid the frenetic activity surrounding the response to last week’s riots, a cautiously-written, but telling article by George Osborne and a group of other finance ministers in today’s FT risks slipping by unnoticed.

The piece is moderate in tone, but has the chance to be controversial on a number of levels:

1) It calls for other countries to follow broadly the UK deficit reduction plan. When the ministers write that there should be “credible fiscal consolidation in countries with large deficits”, it is a clear message to western economies: cut your deficits now.

Continue reading: “Osborne’s problems with the US and Eurozone”

Tags: George Osborne
Posted in Conservatives, Deficit, Treasury, UK politics | Permalink