George Osborne

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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