As I reported today, the Treasury is looking seriously into the idea of adopting German-style “mini jobs”, a scheme long championed by free market Conservative MPs. The model is that workers can earn up to €400, or £314, tax free each month, while their employers benefit from flexible labour with minimal bureaucracy: they pay a flat rate of wage taxes, insurance and pension contributions.
It is easy to see why companies and jobseekers might be clamouring for the government to pick this up, but there is actually a serious political case as well. Tories who were frustrated by the Liberal Democrats’ opposition to radical labour market reforms put forward by Adrian Beecroft have been calling for ministers to come forward with some new deregulation measures for some time.
The Lib Dems themselves are keen not to be seen as too obstructionist on this issue given the drive for growth, and party officials have assured me that they are not pushing back against the mini jobs idea. Could this be the middle way? Read more
Prime ministers aren’t supposed to engage in reshuffle speculation. Once they answer one question about a reshuffle, not only have they admitted it is going to happen, they invite a whole load of others.
We reported this morning on high-level discussions in the government about the possibility of buying out the remaining 18 per cent of RBS that taxpayers do not already own.
The argument for doing so runs like this: we are already exposed to the vast majority of the bank’s hugely damaged balance sheet, and the losses only look like getting worse as we find out more about its distressed debt.
Given that, would it not be better to take advantage of our holding and actually use the bank to pump some credit into our stagnating economy?
At the moment, the problem with doing this is that it means making loans the bank does not currently consider commercially viable. That would be a dereliction of duty to the remaining private shareholders, who would have every reason to sue. The answer therefore is simply to buy them out, and actually use the government’s stake to achieve what it is trying to do. Read more
David Cameron’s interview with the Telegraph this morning was interesting for lots of reasons. But the main one was his big hint of having to cope with austerity until 2020. Asked if there was likely to be a decade of cuts, the prime minister said:
This is a period for all countries, not just in Europe but I think you will see it in America too, where we have to deal with our deficits and we have to have sustainable debts. I can’t see any time soon when…the pressure will be off.
I don’t see a time when difficult spending choices are going to go away.
Welcome to our live coverage of Marcus Agius’ testimony to MPs. The outgoing Barclays chairman faces questions on rate-rigging by the bank’s traders and his defence of Bob Diamond. By Tom Burgis and Ben Fenton in London. All times are London time.
12.53 That’s that for our live coverage of Agius’ evidence. That was brutal — even if the outgoing Barclays chairman somehow contrived to compare himself to Donald Rumsfeld and his bank to Roger Federer.
Three key nuggets from what we heard today:
After points in Agius’ testimony contradicted Bob Diamond’s comments to MPs, some members of the Treasury select committee are convinced that Bob Diamond misled them
Diamond will walk away with £2m in salary and cash in lieu of pension, inlcuding being paid double his contractual entitlement of six months’ notice. He has waived bonuses worth up to £20m
FSA chairman Lord Turner wrote to Agius in April and told him that the regulator’s “cumulative impression” is that “Barclays has a tendency continually to seek advantage from complex structures or favourable regulatory interpretations”
12.41 Here’s a last thought from Chris Giles, the FT’s economics editor:
Most amazing Agius moment: Barclays: the Roger Federer of banking
Welcome to our live coverage of Paul Tucker’s testimony to MPs probing the Libor scandal. The deputy governor of the Bank of England faces questions about his actions at the height of the financial crisis. By Tom Burgis and Ben Fenton in London with contributions from FT correspondents. All times are London time.
19.00 That’s that for our live blog. There are three main points from Tucker’s testimony.
Did Labour ministers lean on him to get banks to lower Libor in the middle of the financial Crisis, as alleged by George Osborne? “Absolutely not.”
Was Libor considered an ideal measure of interbank lending, even before the rigging revelations? Nope.
Is the FSA board engaged in contingency plans should Libor collapse? Yes.
Thanks for reading. See FT.com through the evening for anaylsis of Tucker’s words. Tomorrow its the turn before the committee of Marcus Agius, Barclays’ outgoing chairman. Read more
It may mean that the members of the committee tone down their attacks: it is less edifying watching a panel pillorying someone who has just resigned than someone who is refusing to do so.
But more importantly, it may mean that Diamond now feels free of his shackles and goes after other people he feels were complicit in the Libor scandal.
So who else could be in his line of fire? Read more
Is the government in danger of handing over its reputation for being pro-business to Labour?
William Hague’s message in yesterday’s Sunday Telegraph that businesses should “work harder” to promote growth was certainly bold.
At a time when the economy is stagnating and the government’s strategy is increasingly being questioned, turning round and blaming the sector of the economy you’re relying on to turn that round seems like a reckless strategy.
Before we get on to why it’s not a good idea to blame business for not supporting growth, let’s mention why Hague has a point:
Embassies around the world are pushing UK trade as their top priority, and the prime minister has taken huge business delegations on state visits with him on several occasions.
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
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
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. 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.
Cameron gives 14,000 millionaires (him & Osborne included) a £40k tax cut funded by grannies. Shameful #giveitbackdave#grannytax
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
big…
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.
Jim Pickard is the FT's chief political correspondent, having joined the lobby team in January 2008. He has been at the FT since 1999 as a regional correspondent, assistant UK news editor and property correspondent.
Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.
Older entries
Jim Pickard
Kiran Stacey
