Our economics team ran some tests to show the regional impact of cuts and illustrate the challenge of eliminating the deficit without punishing the poor.
If you cut social security payments by 10 per cent, for instance, they found the poorest areas were hit hardest. Household disposable income fell by 3.6 per cent in Merseyside and only 2.1 per cent in Berkshire and Buckinghamshire. Read more
There seems to be a growing appetite to cut the cost of public sector pensions. A year ago, it was basically off the cards — no party would have dared take the political risk. But the coalition are now slowly making the case. There is a strong chance of a levy being imposed, if the government holds its nerve.
The stats in the OBR report today, which for the first time breaks out the annual cost of public sector pensions until 2015, are genuinely concerning. Read more
Cameron has made some striking pledges on how he will cut the deficit. The trouble is that most of them are at odds with his promise to protect the vulnerable.
As this excellent Social Market Foundation report contends, it is hard to see how any of his pledges on ring-fencing middle class benefits, limiting tax rises and increasing health spending will survive, at least if Cameron really isn’t going to balance the books on the backs of the poor. Read more
This is one for the geeks but a telling sign of how power gnarls bold promises on transparency.
For several years, Chris Giles, the FT economics editor, has tirelessly pushed the Treasury to come clean over their fiscal forecasts so the country is told the severity of cuts expected to total departmental spending. Read more
Try it if you dare. The FT deficit buster — an online simulator of the next three year spending round — allows you to choose your own package of cuts. It should definitely carry a health warning.
The project started as a simple question: can we show what it would take to halve the deficit by making £30-40bn cuts? The answer exposes just how little all three main parties are willing to tell you about the looming spending squeeze.
Take the easiest option in the game: acting as your own chancellor, free of party spending commitments. In today’s splash, we include an illustrative package of measures to make savings in the order of £40bn:
A 5 per cent cut in public sector pay; freezing benefits for a year; means-testing child benefit; abolishing winter fuel payments and free television licences; reducing prison numbers by a quarter; axing the two planned aircraft carriers; withdrawing free bus passes for pensioners; delaying Crossrail for three years; halving roads maintenance; stopping school building; halving the spend on teaching assistants and NHS dentistry; and cutting funding to Scotland and Wales by 10 per cent.
Unless you read the financial pages you may not be aware of Corporate Britain’s latest eye-catching payout: a £92m remuneration package for Bert Becht (not to be confused with Bertold Brecht). He is the chief executive of Reckitt Beneckiser, which makes products such as Vanish and Dettol.
To be fair, Becht has set up a charitable foundation to which he has given more than £100m. Even so; isn’t there an issue with this kind of payout just months after the credit crunch?
Vince Cable told me last night this was “extraordinary” and “unbelievable” and showed the often painful differential between the highest and lowest-paid workers. Read more
David Cameron’s Tories seem to have acquired a taste for tax-cutting after the apparent success of last week’s National Insurance pledge.
During intense negotiations between the Tories and Labour this evening (over the “wash-up” of Parliamentary business – horsetrading to see which bills will make it on to the statute book) the latter have been forced to drop three tax rises which were in the Budget. Read more
The betting markets have moved sharply against the Tories today. There was little movement on Budget day. But since 8.45am this morning the odds on a Tory majority have dropped five per cent on Betfair, the online betting exchange. It is one of the biggest one day movements since the non-election of 2007.
Now, Labour still seem well out of the running, at least according to the punters. But the Tory odds are heading towards the critical 50/50 mark, a remarkable shift given that the odds on a Cameron majority were close to 70 per cent just a couple of months ago. The chances of a hung parliament now stand at close to 40 per cent. Read more
A revealing George Osborne interview this morning on the Today programme.
This exchange should put an end to any illusions over this election campaign offering a clear choice between two different approaches to cutting the deficit. The fog of politics is thick. Read more
The Tories are likely to go on the attack tomorrow morning on the freezing of the income tax allowance. This isn’t new, of course; it was in the pre-budget report.
However, the personal allowance for anyone under 65 will remain frozen at £6,475. In other words, if you’re income is rising, you will pay – proportionately – more tax. Read more
It is perhaps telling that there were no big, last-minute fights over the content of this reassuringly dull Budget. The bulk of it was wrapped up more than a week ago.
Given December’s Pre-Budget report was still being negotiated in the early hours of the morning, this is quite a feat. This time Ed Balls’ emissaries weren’t on the phone at 3am arguing about the GDP deflator. Darling and his team managed to get some sleep, which is not something chancellors on Budget day are used to. Read more
As delivered by Alistair Darling on March 24. With “Mr Deputy Speaker” removed. Click on the image to see in full.
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The Treasury has just revealed that the tax increase will fall hardest on super-strength ciders*. Police are preparing for widespread riots across the Westcountry. Read more
Chancellor sits down at 13.30 – FTSE 100 unchanged at 5,673.26. Sterling is down 0.75 per cent at $1.4920 and the yield on the 10-year gilt is up 3.1 basis points at 3.94 per cent.
Please see www.ft.com/budget for all the news and analysis of the Budget – thanks for joining us. Read more
We journalists are never ones to knowingly underplay a political fad. But the Tory plan to “crowdsource” the Budget? Hmm.
The case for the wisdom of crowds is compelling. But what kind of crowd will be attracted by Budget small print? On a Wednesday afternoon? And will this rabble of idlers with hours to spare be any better than the crowd of paid pointy heads at CCHQ? I have my doubts. Read more
This is a political Budget first and foremost, so it makes sense to partly judge it against the Tory’s main economic positions.
1) Prudence, giveaways and the Tory marriage tax break Osborne may want to let rip at any of Darling’s fiscal bungs. But he will be constrained. The Tories need to outline plans to recognise marriage in the tax system. But how can you criticise diverting some savings to a tax break if you’re about to do the same? Read more
I wasn’t at the UK Press Awards last night but apparently Boris Johnson pulled off a brilliant speech that included some comments undermining Cameron’s “Broken Britain” theme.
The mayor said of Stephen Byers, who notoriously compared himself as a cab for hire: “He must have found a devilish route to Heathrow.”
A line-by-line summary of Alistair Darling’s Budget statement, with commentary from FT writers, will be available on the Westminister blog from 12.30 (or just before the Chancellor stands up). Follow the Budget with the FT. Jim and Alex will then be back as usual.
Is it morally right to bribe voters into taking a huge leveraged bet on an asset class which is overvalued? Read more