Uk politics

Friday

Leo McKinstry

In defence of Special Brew

From our UK edition

The Prime Minister today introduces plans for minimum pricing on alcohol. In this week's Spectator, Leo McKinstry mounts a defence of Special Brew, the tipple of Kingsley Amis and Churchill. I have a confession to make: I am writing this article under the influence. As I tap away at my laptop, a can of lovely Carlsberg Special Brew sits on the table beside me, acting on my brain as oil acts on a car engine: lubricating the moving parts. Ever since I found that it could help to speed up my word output, strong Danish beer has been essential to my writing career, so it’s a great shock to discover that the government has Special Brew in its sights. Carlsberg Special is perhaps the most notorious of the super-strength lagers on sale in Britain today.

Thursday

Ian Mulheirn

Another voice: Pensioners ought to contribute more

From our UK edition

The pensioner lobby has been predictably and tiresomely strident about George Osborne’s ‘granny tax’. Ros Altmann, Director-General of Saga, called the move to bring pensioners’ tax allowances into line with everyone else’s an ‘outrageous assault on decent middle-class pensioners’. It’s nothing of the sort. In fact, it’s high time that pensioners start to contribute to the unprecedented fiscal squeeze we’re going through — and here are the three main reasons why.   First, they’ve contributed next to nothing to the deficit reduction programme so far. Better-off pensioners are set to lose just over 1 per cent of their income from the changes planned by 2014, according to the IFS.

Jonathan Jones

The IFS gives its Budget verdict

From our UK edition

The Institute for Fiscal Studies’ briefing is always a good place to pick up a few interesting nuggets of detail about the Budget — and this year’s is no exception. Here are five of the most striking points from their presentation this morning: 1. Beyond the next election. In November, Osborne caused a stir by announcing that — in order to meet his fiscal target — further spending cuts would be needed after 2015. Annex A of the Budget gives some more detail on this, and the IFS has crunched the numbers even further. They calculate that the fiscal consolidation from 2009-10 to 2016-17 will total £123 billion and that the overall ratio of spending cuts to tax rises will be 83:17. But where will those extra spending cuts come from?

The Spectator

Transcript: Osborne defends his Budget

From our UK edition

Here's the full transcript of this morning's Today programme interview with George Osborne: Evan Davis: If you believe in using the tax system to cut the incomes of those at the top and in using the welfare system to hand money to the poor, then yesterday’s budget was probably not for you. The Chancellor  hinted at big further cuts to welfare and he clearly thinks the tax system has gone too far in trying to harvest cash from those at the top. Yes, he’s ironing out some loopholes but for him 50p rates don’t work. Believe him, and the game’s over for those who want government to iron out the extremes of inequality in Britain. Oh, and for him too, pensioners can no longer be seen as sacrosanct. A courageous Chancellor or an uncaring one?

Lloyd Evans

Why Osborne saved Wallace and Gromit

From our UK edition

‘It is the determined policy of this government to keep Wallace and Gromit exactly where they are.’ So proclaimed George Osborne in his Budget speech yesterday, as he announced new tax credits for the video games, animation and televesion industries. But what prompted this? Had he been reading The Spectator? In an interview for the magazine a couple of months ago, Miles Bullough — head of broadcast at Aardman Animations, the studio that produces Wallace and Gromit — told Lloyd Evans of the competition that the British animation industry faces from other countries where the governments do offer subsidies, and the need for something similar here. Here's the full interview: Shaun the Sheep is at the meeting too.

James Forsyth

Osborne hopes business will see past the bad headlines

From our UK edition

Today’s front pages concentrate on the so-called ‘granny tax’, the surprise of the Budget. But the real test of this Budget is going to be whether it delivers growth. If it does, then it will make a Tory majority in 2015 more likely. If it doesn’t, then the decision to cut the 50p rate will become even more politically problematic.   Given that the Budget is fiscally neutral, this growth is going to have come from either the couple of supply side measures in the Budget or by finding a way to unleash those elusive animal spirits. Indeed, I think this desire to boost confidence is one of the main reasons that the 50p rate has been cut.

The Spectator

The Spectator’s Budget briefing

From our UK edition

What was really in George Osborne's Budget? Last night we held an event, in association with Aberdeen Asset Management, to discuss just that. Click here for a free pdf copy of the briefing paper produced for the event.

Wednesday

James Forsyth

Tory MPs welcome the Budget

From our UK edition

George Osborne and David Cameron have just addressed the 1922 Committee of Tory backbenchers. They received the traditional desk banging reception and Tory MPs seemed in good spirits as they left the meeting. Interestingly, they were nearly all relaxed about the increase in the personal allowance, believing that they would get the credit just as much — if not more than — the Liberal Democrats. One told me that ‘the public view this as a Conservative government when things are going well and a coalition one when things are going badly’. Perhaps the biggest piece of news out of the meeting is that Osborne offered Tory MPs considerable encouragement that the 45p rate will not become a permanent feature of the tax system.

James Forsyth

Balls goes on the attack against 45p

From our UK edition

Ed Balls committed Labour to voting against the reduction in the 50p rate at his post-Budget briefing. But he wouldn’t say whether or not Labour would pledge to restore it in their manifesto; sticking to the classic opposition line that all decisions on tax will be made in the manifesto and not before. Balls, though, was on typically pugilistic form; few politicians relish a scrap as much as he does. The Labour leadership clearly view the abolition of the 50p rate as a major political opening for them. Balls went out of his way to attack the HMRC report that Osborne used to justify the move. He mockingly declared that he’d ‘never seen a government document with a Laffer curve in it before.’ This 50p fight is a classic Labour / Tory struggle.

James Forsyth

All that matters now is growth

From our UK edition

With every Budget, the early Cameron emphasis on greenery and General Well Being not Gross Domestic Product seems a more distant memory. Today’s Budget showed that, to Osborne at least, growth now trumps these more abstract concerns.   So, we saw an announcement that the planning rules would come into force pretty much as planned from next Tuesday. This means that Osborne has simply overridden all the bureaucratic and legal objections from DCLG. Although, I understand that councils who already have a sufficiently pro-development local plan will have a year to adjust to the new rules.   Sunday trading rules, a classic bit of General Well Being paternalism, are also going on the scrap heap.

Lloyd Evans

A quiet PMQs, ahead of today’s main event

From our UK edition

It started like a bit of good old political knockabout. PMQs opened with a planted question from Mark Menzies (Con, Fylde) asking the PM about Britain’s sick-note culture. Cameron, looking suitably grave, declared that the fake-sniffle problem afflicts even senior management. Ed Miliband, he told us, had recently claimed he was too ill to attend a rally called by health workers. Three hours later he was seen heartily cheering at a football match having been driven to the ground in a Rolls Royce. ‘What was it,’ asked Cameron, ‘that first attracted the Labour leader to the multimillionaire owner of Hull football club?’ This prompted howls and jeers from every part of the house. Ed Miliband ignored them.

James Forsyth

The Lib Dems are happy with what they got

From our UK edition

This Budget told us something interesting about the coalition: that there’s more juice left in it than some of us thought. Judging by recent coalition tensions, one might have expected the two parties to devote their time to blocking each other’s proposals. But, instead, they’ve struck a deal that suits both of their political priorities: the Liberal Democrats have got a sizeable increase in the personal allowance, the Tories a 2p cut in corporation tax and a reduction in the economically destructive 50p rate. Interestingly, close allies of the Deputy Prime Minister are now briefing that ‘differentiation’, pointing out where the Lib Dems disagree with the Tories, will be dialled down a notch.

Peter Hoskin

Behind Osborne’s 50p tax change

From our UK edition

How significant was this Budget? On an economic level, not very. There's no discernible impact on growth: all of the main forecasts have more or less stayed the same since the Autumn Statement. Borrowing is the tiniest bit lower, mainly thanks to a £23 billion accountancy trick with Royal Mail pensions. And even many of the policies announced today will barely rouse the Exchequer's attention. That cut in the top rate of income tax to 45p? It will mean only £100 million a year less in direct revenues. That stamp duty increase for properties worth over £2 million? It will net only £300 million a year. The overall effect is a fiscally neutral document, as expected. The fuss-to-impact ratio for Budget 2012 is pretty high.

Jonathan Jones

The Budget: What you need to know

From our UK edition

1. Growth. The OBR's forecasts are essentially unchanged from the Autumn Statement, but nevertheless represent a much bleaker outlook than we were given a year ago:  2. Debt. Despite Osborne's talk of 'paying down the debt', he's actually adding to it — by 59 per cent over this parliament. He is, though, on course to meet his second fiscal rule to see the debt to GDP ratio falling by 2015-16: 3. Deficit. Ignoring the effects of transfering the Royal Mail pension deficit, there's hardly any change to the borrowing forecasts since November. Progress on deficit reduction will be much slower than announced in Osborne's first two Budgets: 4. Unemployment. The OBR expects unemployment to peak at 2.

James Forsyth

A Budget by and for the coalition

From our UK edition

The coalition has found the second year of co-habitation more difficult than the first and it will find the coming year even more difficult given that House of Lords reform is on the agenda. But today’s Budget is a reminder of the political benefits of coalition. When George Osborne stands up today and announces, for instance, the reduction in the 50p rate he will do so with the support of two parties. Equally, a minority Tory government wouldn’t have been able to get more spending cuts to help finance a tax cut through parliament. It also seems that there should be measures in the Budget to please both Tory and Lib Dem backbenches.

Tuesday

James Forsyth

More advance snippets from the Budget

From our UK edition

The big Budget news tonight is that the personal allowance will rise to £9,205. This is a larger increase than expected and, intriguingly, will be paid for — in part — by a couple of billion more of spending cuts. So, the Lib Dems see considerable progress on their main budget priority, raising the income tax threshold to £10,000, but this will be partially funded by something Tory MPs have been calling for, more spending cuts. It also appears that the coalition will further increase the pace of its corporation tax cuts as well as introducing a new higher rate of stamp duty for £2 million plus houses. There’ll also be a slew of anti-avoidance measures to accompany the reduction in the 50p rate.

James Plunkett

Four tests for Osborne’s Budget


From our UK edition

With the Coalition taking pre-Budget briefing to new levels you’d be excused for thinking there’s little we don’t know about tomorrow’s statement. But here are four questions we can’t yet answer, and that will be crucial to assessing whether this is a Budget for low-to-middle earners as the Chancellor claims:
 1) Will the new increase in the personal allowance be restricted to basic rate taxpayers? When the Coalition raised the allowance by £1,000 back in April 2011 they cancelled out the benefits to those at the top by lowering the 40p tax threshold. The second time around — the £630 increase that kicks in this April — they didn’t.

Peter Hoskin

Why Labour’s 50p tax wobble is dangerous for Ed Miliband

From our UK edition

Why did Gordon Brown wait until the last few weeks of Labour's thirteen-year reign to implement a 50p tax rate? Easy. Because it wasn't so much a fiscal policy as a fiendish trap, designed to cut into a Tory government's flesh. But now, it seems, the trap has snared another victim: Labour itself. The Telegraph's Daniel Knowles has already neatly summarised the politics arising from Sam Coates' report (£) that Labour will neither back the scrapping of the 50p rate nor promise to reinstate it either. But the basic point is worth repeating: if that's the approach that Labour chooses, then they'll be left in a complete mess. They can attack the coalition all they like for cutting taxes for high earners, but the answer will come back, ‘well, would you keep it?

Eamonn Butler

Has Osborne learnt the right lessons from Adam Smith?

From our UK edition

According to Rachel Sylvester in The Times (£) today, George Osborne’s love of soaking the rich — from the non-dom levy to the tycoon tax – stems from the importance he puts on the ‘empathy’ described in Adam Smith’s Theory of Moral Sentiments. If so, he’d better start re-reading his Adam Smith. Certainly, the Chancellor is familiar with Smith’s other great book, The Wealth of Nations (1776). He wrote an introduction to a recent edition of it. That book is a passionate call for free trade and for open and competitive markets, and a stinging critique of the mutual back-scratching between businesspeople and politicians — what today we would call crony capitalism.