George Osborne

Kiran Stacey

George Osborne with Jun Azumi, the Japanese finance minister

Osborne with Jun Azumi, Japanese finance minister

George Osborne has been in the far east this week – probably the best place to be when the IMF announced it would ask member countries for an extra $500bn in funding. This would probably involve another €30bn from the UK – a request that would have to be approved by parliament.

This request is tricky for the chancellor. He wants to play his role as a responsible world leader and help the Fund fight the various economic crises gripping global markets – after all, a collapse of the eurozone (for instance) would have serious implications for the UK too.

The problem is, his own MPs see this as a backdoor bailout for the eurozone. They say that as the UK is not a part of the currency bloc, it shouldn’t be forced into rescuing it when it fails. And Cameron and Osborne have both made much political capital out of not signing up to the expanded European rescue fund, the EFSF. Many Tories therefore see this as both a cop-out and hypocrisy. Read more

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 more

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? Read more

Kiran Stacey

The unemployment stats on Wednesday triggered a new round of speculation about whether George Osborne was likely to meet his two fiscal targets: balancing the structural current deficit and having debt falling as a ratio to GDP by the end of the parliament.

Neither target is quite as tough as you might think, however, as the Guardian has pointed out today. On the debt target, technically, the government could borrow billions more than it is currently planning and still not breach it, as long as it slowed borrowing towards the end of the parliament and showed debt was falling by 2015. This is unlikely to happen (partially because it could breach the other target), but it is possible. Read more

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.” Read more

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. Read more

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”. Read more

Kiran Stacey

George OsborneAmid 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. Read more

Kiran Stacey

It never looks Traders at the NYSEgood for a politician to gloat in the middle of the turmoil, and George Osborne isn’t doing that. But he is pointing out, unsurprisingly, that the swift cuts to eliminate the deficit have made bond traders less likely to turn their sights onto the UK.

In the Telegraph today, he writes:

In retrospect, the use of political capital to implement immediate efficiency savings, pass the emergency Budget, agree the most difficult Spending Review for generations and put in place long-term fiscal reforms to pensions was an excellent investment in our country’s economic stability. Thanks to these decisions, the credit rating agency Standard & Poors took the UK off negative outlook and reaffirmed our AAA rating.

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Kiran Stacey

George OsborneChancellors have always seen the all-important GDP numbers a day before they are formally published, which makes any event involving the chancellor on that day a fascinating game of bluff and second-guessing.

So what could we tell from Monday’s press conference with George Osborne, which was ostensibly about the UK-India trade relationship?

Osborne walked slowly and confidently into the room, his head held high and smiling. But read nothing into that: others have commented before on how he always manages to grin, whatever storm he is facing. Read more

Kiran Stacey

Top stuff here from Bloomberg’s Rob Hutton (@robdothutton).

Since the coalition government took over, and particularly since George Osborne laid out exactly which cuts he would make, confidence of UK consumers in the economy has nosedived.

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Kiran Stacey

George Osborne has just announced that, for the first time since 1760, the royal household will be paid not by a set grant from the government but through a proportion (15 per cent) of the net revenue of the crown estate.

It is a change Prince Charles has been campaigning for for years, and if the crown estate has a good year, could provide a bumper pay out for the royal family. Read more

Jim Pickard

We’ve already reported the cabinet row ahead of Monday’s decision over carbon targets, with Vince Cable among those warning about the implications on Britain’s economic competitiveness.

David Cameron and George Osborne have a complex decision to make in weighing up their promise to be “the greenest government ever” and their desperate need to get the economy on track again.

And now Ed Miliband has weighed in, saying he is “dismayed at the news that the recommendations (from the committee on climate change) may be watered down.

I’ve seen a letter that the leader of the opposition is about to send to the prime minister, suggesting that any such dilution would mark an end to the cross-party consensus on climate change. Read more

Jim Pickard

The coalition’s promise to be the “greenest government ever” is now rather under strain after environmental groups reacted with hostility to Wednesday’s Budget – given that it provided tax relief for motorists and air passengers.

I was surprised that George Osborne, the chancellor, repeated his regular claim that the government would raise the proportion of green taxes on individuals.

Yet this is still a realistic ambition, according to the Institute of Fiscal Studies in its Budget analysis yesterday.

Having said that, the IFS said that while the target was “still on course”, the Budget had put progress back by cutting fuel duty by the equivalent of £2bn a year.

Green groups, which welcomed the commitment of £3bn of capital towards the Green Investment Bank, were disappointed that the

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Chancellor’s red boxThe FT’s Westminster blog is running live commentary on the Budget. Join us here from 12.30pm, London time. This post will update every few minutes, although it will take longer on mobile devices.  Read more

Jim Pickard

The fog is lifting – and the shape of tomorrow’s Budget is becoming more clear.

My expectation is that this will not be a time for huge giveaways or takeaways given the extraordinary spending review we had last October. (Here is a reminder of the upcoming tax and benefit changes, with 16 alone in April – as illustrated by our Austerity Calendar).

Leaving aside the inevitable surprises, here is what we already know – or expect – in the showpiece event.

UPDATE on Wednesday morning:

i] £250m for housebuilding. The government will replace its old Homebuy Direct (£275m) – which effectively ended last autumn – with a new Firstbuy Direct (£250m) which will help 10,000 first-time-buyers. (The old scheme also helped 10,000 first-time buyers.). The housebuilders are delighted but others may simply see this as filling a vacuum in the shared-equity market.

ii] Rumours on corporation tax. The government is due to cut the rate from 28 per cent to 27 per cent next month (as part of a plan to lower the rate to 24 per cent by the end of Parliament) but could go further – or signal its intention to go faster.

iii] George Osborne will announce a further £600 rise in the tax threshold from April 2012 to £8.045 – on top of the £1,ooo rise taking effect next month. Bear in mind, however, that this threshold should have risen by inflation (4.4 per cent) anyway.

1] George Osborne will signal his medium-term intent to merge National Insurance and income tax. The idea is to convince the British public that they pay too much tax – preparing the way for a more low-tax future.

2] Fuel duty escalator. The chancellor is set to reduce or cancel the 5p a litre rise. But a “fuel duty stabiliser” – being considered by the Treasury – seems unlikely after being criticised by the OBR.

3] Aviation tax:

a] The government has cancelled plans to shift aviation duty from a per passenger to a per plane duty which would have stopped half-empty planes paying less tax.  Officials claimed that the change would have been thwarted by the Chicago Convention from 1944.

b] Air passenger duty will be frozen, according to reports – instead of being raised in line with inflation.

c] Lear Jet levy – passengers in private jets will pay duty for the first time in a small but symbolic hit on the rich.

4] Employment tribunals. Could change rules so that staff at SMEs must work at a company for two years – up from one – to be eligible.There are also plans to charge for visits.

5] More support for apprenticeships, including 100,000 work placements.

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How transparent is Merlin? George Osborne says it will make London the most transparent financial centre in the world on remuneration.

But that won’t mean the public will be able to gawp at the pay packages of the top earners at Britain’s biggest banks. Watch out for Merlin’s sleight of hand. Read more

Jim Pickard

We reported yesterday that David Cameron had joined Nick Clegg in warning of new action against banks which did not show bonus restraint.

David Cameron warned banks on Friday that they faced higher taxes if they continued to pay “unjustified” bonuses, adding to a growing political and regulatory pressure on the City before the industry’s bonus season early next year.The prime minister, speaking after a European Union summit in Brussels, said that the public found such payments “galling”, adding: “Every decision the banks make like that makes it more difficult to keep a tax regime that they might favour.” Read more

Transparency on high-end pay is good for Whitehall but not yet for the City – that is the conclusion emerging from the Treasury.

But what about the Lib Dems? Weren’t they billing themselves as the slayers of City excess? Tackling “obscene” banker pay was one of Nick Clegg’s top four priorities in the election campaign.

Yet it seems the element of the four point plan where the Lib Dems have made least progress.

Just compare what has happened to the proposals Clegg unveiled during the election.

Cash bonuses? Uncle Vince says £2,500 is your limit. Board level bonuses? Banned outright. (Vince made a joke about how the bank directors can make do with free golf club membership.) Working at a loss making bank? No bonus at all.

There was more. The one measure that really stood out was transparency. Cable and Clegg wanted to require banks to publish the names of all staff on a pay and bonus package greater than the prime minister’s salary. This would not only have ensnared top traders — it probably would have included their PAs as well.

When we asked Clegg about this recently, he dismissed the question, saying the Walker review was being implemented. When we pointed out that the legislation had been delayed, he seemed a bit taken aback.

Now George Osborne wants to impose such transparency rules on high pay “internationally rather than unilaterally” — which is an all too transparent code for shelving the reforms. Sir David Walker, the City grandee who proposed the tighter disclosure rules, has given the chancellor some convenient cover.

What will Clegg do? This will be a fascinating test of Lib Dem resolve. Read more

Here is a fine example of the dangers of politicians writing seemingly innocuous op-eds for newspapers.

Ahead of a trip to Dublin in 2006, George Osborne used an article in The Times to pay homage to the Irish boom. The opening paragraph about Ireland’s “shining example” to economic policymakers is a classic:

A generation ago, the very idea that a British politician would go to Ireland to see how to run an economy would have been laughable. The Irish Republic was seen as Britain’s poor and troubled country cousin, a rural backwater on the edge of Europe. Today things are different. Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.

The conclusion is almost as cringeworthy:

The new global economy poses real long-term challenges to Britain, but also real opportunities for us to prosper and succeed.  In Ireland they understand this.

They have freed their markets, developed the skills of their workforce, encouraged enterprise and innovation and created a dynamic economy. They have much to teach us, if only we are willing to learn.

To be fair to Osborne, many of his arguments are still valid even after the crash.

A well educated workforce, top notch R&D investment, and competitive tax rates to encourage investment are all as important now as they were during the boom years.

But there is not a word of caution about potential imbalanaces in the economy. No mention of the racy property market, reckless lending, or his views on the dangers to Ireland from having joined the Euro. Read more