The government has set great store by its £5bn plan to get people who have been unemployed for a long time back into work. David Cameron has called it “the biggest and boldest programme since the great depression”.
Expensive though the scheme sounds, it is actually much cheaper than its predecessor, Labour’s Future Jobs Fund. The problem is, it isn’t working.
Figures out today show the programme has improved since last year, when providers were way off hitting their minimum performance targets – but not enough. Read more
When George Osborne announces the 2015-16 departmental cuts today in the Commons, he will also spell out some more detail about how his plans for an AME cap will work. The idea behind this is that benefit spending will be treated more like departmental spending, where it is given a set limit, and then policies are adjusted to make sure spending doesn’t go higher than this.
In reality, this is little different to what happens now, as Ian Mulheirn of the Social Market Foundation explains here. But in terms of political rhetoric, this is an important tool for Osborne to claim he is clamping down on welfare spending. Read more
Philip Hammond appeared on the Today programme this morning defending his position after being accused of dragging his heels on the spending review.
The defence secretary has not yet submitted his draft plans for how he could cut 5 per cent of his budget in 2015-16 (half of that asked of other departments), but he told the BBC he was not a “hold out” adding that he hopes to have an “adult conversation” about where the axe should fall.
But in case anyone was in any doubt of how willing he is to stand up to the Treasury, he added this:
We should be very clear that there is a difference between efficiency savings, which may be difficult to achieve but are painless in terms of the impact on the front line, and output cuts, which are of a very different order and require proper and mature consideration across government about the impact that they will have on our military capabilities.
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
I was interested to read the piece by Alex Massie in this morning’s Scotsman, in which he argued:
Scots may take an even tougher line on welfare than voters elsewhere in the UK… Visit any working-class pub in Scotland and you will hear opinions that make IDS seem like Polly Toynbee.
If this is true, it makes the SNP position problematic. The party has consistently opposed the coalition’s welfare cuts, and when Johann Lamont, Labour’s Scottish leader, suggested axing certain universal benefits, such as free prescriptions, the SNP called it her “speech of madness”.
So what does the polling suggest? A fairly comprehensive look shows us two things: 1) Scottish voters are less hostile to the welfare system than elsewhere in the UK; but 2) they remain in favour of benefit cuts. Read more
Last month, we mapped out what each department could expect to face in the June spending review given the Treasury’s promise to keep cutting at the same pace as it has done before.
That study showed some of the most sensitive departments were in line for the steepest cuts. Local government was in line for £1.3bn of cuts, the business department, just over £1bn, and most sensitively of all, defence, nearly £700m.
Those calculations, however, only got us up to just over £7bn of cuts. We decided to take a cautious view, sticking to the idea of spending falling at the same trajectory as it has been so far, rather than striving to hit the £10bn figure. 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
This morning we reported in the FT that bishops in the House of Lords are leading an attempt to exempt children from the below-inflation rise in benefits. This follows on from the comments of Justin Welby, the Archbishop of Canterbury, over the weekend, who said:
By protecting children from the effects of this bill, they can help fulfil their commitment to end child poverty.
But just as interesting as the bishops’ response to government attempts to slash the welfare bill has been the reaction of Tory MPs to the archbishop’s comments. Read more
Labour continues to pile the pressure onto Iain Duncan Smith over reductions in housing benefit to those who have one or more spare bedrooms in their social housing. At DWP questions today, Labour MP after Labour MP stood up to ask a question about what they call the “bedroom tax” (Tories hate the label but their “spare room subsidy” label misses the point).
Amid the barrage of questions, it became clear that DWP is about to offer a concession. IDS told the Lib Dem MP Greg Mulholland that guidance would be going out to councils tomorrow about what they can do for severely disabled children. 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
The coalition’s mid-term “mid-term” parliamentary programme – which is hogging the headlines today – may seem rather thin compared with the original coalition agreement of 2010, which ran into hundreds of pledges.
What’s striking is today’s PR stunt (sorry, renewal of political vows) also includes one or two areas where an agreement is by no means pinned down between the Tories and Lib Dems.
One of these is the attempt by George Osborne and others to inject billions of pounds into the road network, preferably by a privatisation of the motorways and trunk roads. 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: