Uk politics

Wednesday

James Forsyth

The Tories should attack the national insurance increase

From our UK edition

After a tricky few weeks for the Tories, the PBR has come of a bit of a relief for them. It is generating far more bad headlines for the government than good ones.  The Standard’s splash on the national insurance hike is a taste of what the coverage is going to be like for Labour tomorrow. One point the Tories should be hammering home is that the national insurance hike is a far more significant tax rise than the tax on bank bonuses. The one-off tax on banks that pay sizable bonuses will only raise £550 million while in 2010-11 the various national insurance changes will cost taxpayers more than £3 billion and will hit 10 million people, all those who earn more than 20k a year.

Fraser Nelson

The public’s right to know

From our UK edition

The Treasury have just banned transcripts of the all-important briefing they give to journalists after the budget. Coffee House broke the mould after the April budget by producing the first-ever transcript – releasing to the public the spin which journalists are given in the precious few hours they have to write up the Budget. This shows how journalists were wrongly told that there were no spending cuts, when there were in fact cuts of 7 percent over three years. Here is an example of their misleading briefing last year Q: Why are you cutting spending by more? A: By more? (quizzical look on his face) Q: Well not reducing the rate of growth by more than you are.  It is not that big a reduction given the scale of the problems you are facing.

Neil O'Brien

A whole batch of Brownies

From our UK edition

There are some pretty cheeky claims in today’s Pre-Budget Report. One is that “Cyclically-adjusted borrowing is lower than at Budget across the medium-term forecast.” (page 171). That makes it sound like it’s all under got a bit better since the Budget. But in fact the “cyclically adjusted” improvement is entirely because of a redefinition of the cycle - not because of any actual reduction in the deficit.  For example, the PBR forecasts the deficit for 2013/4 as 5.5 percent of GDP - exactly the same as that in the 2009 Budget.   Another claim is that “The annual pace of consolidation set out in this Pre-Budget report is faster than the pace of deficit reduction forecast by the IMF for all other G7 economies” (page 33).

Fraser Nelson

Don’t worry about the tax on jobs

From our UK edition

I’m not that worked up about the National Insurance increase. Sure, a tax on jobs is the best way to choke a recovery – but this is only due to come in April 2011 by which time Darling will be collecting the royalties on his memoirs. It only matters if the Tories support it, which (I hope) they won’t. It is a wee gesture, to help calm the bond markets. The only fiscally significant mive in this budget is the £550m they intend to raise from inheritance tax. The giveaways are all planned from April next year – ie, they are little exercises in forcing the Tory hand. Extension of free school meals (£140m) the benefits uprating (£700m) - all things Brown would like a Tory government to do. And he may succeed.

Lloyd Evans

In his comfort zone

From our UK edition

Today we saw just how tricky the game can be for opposition leaders. The government sets the parliamentary agenda and holds the keys to the war-chest. Cameron’s attempts to upset the PM looked diffuse and repetitive. On Afghanistan he offered support. On Kelly he flannelled about some footling detail of parliamentary timing. And on ministerial pay he drew attention to his gravest difficulty, namely that the pre-budget report was coming up next. Brown never looked in difficulty and he cruised easily towards his Six O’Clock sound-bite. ‘The opposition leader has lost the art of communication but not alas the gift of speech.’ A poor day for Dave. Nick Clegg did much better. Gosh he’s an angry beggar isn’t he?

Fraser Nelson

In a world of their own

From our UK edition

As I suspected, Darling has cooked the figures by laughably unrealistic growth forecasts. He is predicting a sustained economic sprint that will mysteriously come to Britain the April after next. Table B1 of the PBR shows that he expects 3.25% growth every year for a whole four years: from April 2011 to April 2015. How does this square with what the real world thinks? I blogged earlier what HM Treasury’s independent forecasts have to say. Robert Chote from the IFS has just been on TV saying the good news is that the structural deficit isn’t as big as it used to be. Little wonder, when you can concoct growth forecasts like this.  Here is a graph, laying it out. The subtext to this Budget is “securing the recovery”. It should be “once upon a time..

Mark Bathgate

How much more will Darling have to borrow?

From our UK edition

The figure of £178 billion in the Budget – for 2009/10 – is by no means the full story. For that we have to turn to the Debt Management Office, which is in charge of flogging the IOU notes. It just now confirmed that it will need £223.3 billion by the end of this financial year - £5 billion more than expected. And a staggering amount, which I suspect the government simply could not raise if it did not have the Bank of England printing presses working overtime. Why the gulf between the two? Because of the bank crisis. This financial year a further £42 billion has needed to by pumped into the banks in various forms – not just Lloyds and RBS, but the smaller bank failures like Northern Rock and Dunfermline Building Society.

Peter Hoskin

Bad news for the country, bad news for Labour

From our UK edition

Abandon hope all ye who enter here.  While we mostly knew what to expect from Darling's PBR, it's still surprising just how uninspiring, how thin and how insufficient it is in the flesh.  It's pretty much a bad news budget for anyone you could mention.  Bad news, of course, for the bankers who will be hit by the hazily outlined bonus tax.  Bad news for public sector workers, who are already smarting at the frozen pay rise they'll have to accept in a few years time.  Bad news for anyone who cares about the state of the public finances, which look just as grim, if not worse, as they did back in April, with no significant plan for recovery.

Peter Hoskin

One thing to remember today

From our UK edition

As you can probably imagine, plenty of Labour folk are getting excited about the PBR today.  They regard it as a chance for their party to harden their rise in the polls, and hasten the Tories' descent.  But Danny Finkelstein strikes a necessary note of calm over at Comment Central.  As he puts it, a Budget in which the government has to 'fess up to the horrible state of the public finances is hardly going to do much good for them.   To Danny's analysis I'd add one supporting fact: that rarely, if ever, in recent times, has the government received a significant poll bounce on the back of a Budget.  I blogged about this back in April, and Anthony Wells followed it up with an excellent post here.

James Forsyth

Brown’s bonus smokescreen

From our UK edition

If today ends up with the government in a row with the City over plans to tax bank bonus pots with bankers threatening to take the government to court, then it will be mission accomplished for the Labour party. The same goes if we end up in a debate over the merits of a Tobin-style tax. For obvious reasons, Labour would rather talk about anything other than the state of the public finances so anything that distracts attention from that central question is, to use the word of the morning, a bonus for Brown. The Tories know this and will try and turn the debate back to the public finances and the fact that Britain was the first major economy into recession and is going to be the last out. It is imperative for them that they succeed.

Peter Hoskin

One year on | 9 December 2009

From our UK edition

Coffee House will be live-blogging Alistair Darling's PBR statement from 1230 on.  In the meantime, here's a brief video reminder of George Osborne's PBR response from last year – probably the Shadow Chancellor's finest moment at the Dispatch Box.

Fraser Nelson

Your guide to the PBR Brownies<br />

From our UK edition

How can you tell if you’re being lied to on budget day? Normally its easy: Gordon Brown’s lips move. But, today, there's a handy guide. You can compare Darling’s fiction with the independent average calculated by HM Treasury.

Tuesday

Fraser Nelson

Darling carves up the spending pie

From our UK edition

It’s the eve of the Pre-Budget Report, and the lunacy has already begun. Tomorrow's FT says that Darling will copy the Tories’ plans to protect the NHS budget – and throw police and schools in to the protected status as well. This is introduced as "the biggest squeeze in pubic spending for a generation," with the headline figure of 14 percent cuts. How to make sense of that? My guide: 1. Any sentence that starts “A Labour government would...” can be ignored. Darling can promise to fund free beer for everyone after 2011 – he won't be in office. These are decoys for the media: the wilder his claims, the worse he expects to lose. 2.

Peter Hoskin

Ringfence-a-rama

From our UK edition

Just watching Newsnight, and the show's economics editor, Paul Mason, has said we can expect several budgets to be ringfenced from spending cuts in tomorrow's PBR – hospitals, schools and perhaps even the social security budget.  If so, it's another sign of how political the document is set to be.  Ringfenced budgets are the other side of the soak-the-rich coin: sending out the twin message that Labour will batter the "City fat cats," while also "investing" in public services "for the many".  Just a shame that it's all insufficient to the scale of the debt crisis.

Peter Hoskin

Clocking on

From our UK edition

As publicity stunts go, the debt clock the Tories beamed onto Battersea Power Station this evening is quite a decent idea.  Their thinking's pretty clear – get some coverage in tomorrow's papers, and increase the likelihood that the horrendous state of the public finances becomes the story of the PBR – but it's probably no less effective for it.  Anyway, here are some pictures so you can judge for yourself: P.S. Yes, I know it's out of sync with the Coffee House debt counter. We're going to update our numbers on the back of tomorrow's PBR.

Andrew Haldenby

Tackling the deficit

From our UK edition

Reform’s report, The Front Line, focused on the how of the public finance question – how to get the deficit down in practice.  We pointed out that since the public sector workforce accounts for around a third of the total government deficit, it should contribute a third of the reduction in the structural deficit.  That would mean reducing the costs of the public sector workforce by £30 billion, equivalent to a reduction of one million of the six million public sector jobs in the UK.  That would take public sector employment back to the levels of 1999 when the recent period of major spending increases began.

David Blackburn

How long until the plug is pulled?<br />

From our UK edition

Moody’s AAA sovereign monitor was published today, and whilst the UK’s AAA status remains ‘resilient’ the situation is far from rosy. The report states: ‘The UK economy entered the crisis in a vulnerable position, owing to the (overly) large size of its banking sector and the high level of household indebtedness. Both continue to weigh on economic performance. Net bank lending to the UK business sector has continued to contract through Q3 2009, and repairs to household balance sheets (i.e. the rising savings ratio) may weigh on demand for some time to come. The depth of the crisis has been mirrored by the ongoing deterioration of public finances (with gross debt/GDP having risen from 44% at the end of 2007 to an estimated 69% at the end of 2009).

James Forsyth

Tomorrow could be a turning point for the Tories

From our UK edition

The number of polls showing the Tories below forty percent are causing some heartburn for the Tory leadership. When the first poll came out showing the Tory lead down, there was a feeling that this wasn’t all bad, that it would help remind the party that the election isn’t in the bag. But there is now mounting concern at Tory slippage, this is being reinforced by the fact that the party’s own research shows the same trends. Today’s leader in The Times, a paper which is normally editorially supportive of the leadership, was another unhelpful development.

David Blackburn

Luck shines on the brave

From our UK edition

Nevermind the bankers, the UK Border Agency should have been awarded £295,000 in performance bonuses. Phil Woolas’s defence that “brave” border workers deserved remuneration beyond their basic salaries is imaginative, though unremittingly egregious. The agency is plainly maladroit. Keith Vaz’s Home Affairs Select Committee has found: 'There is still a huge backlog of unresolved cases and UKBA simply must get through them faster than they have promised.

David Blackburn

A significant endorsement for Osborne and Hammond

From our UK edition

Bernard Gray, a member of the Tories’ Public Service Productivity Advisory Committee, explains why he has joined forces with the Tories. He writes in today’s Times: ‘From my experience of working in and with the Ministry of Defence over the past decade I know how strong such vested interests are and how much commitment is required to overcome resistance to change. It will take acts of extraordinary political will to take on these entrenched interests. The Shadow Treasury team, George Osborne and Philip Hammond, have persuaded me that they are have the determination, drive and belief in change to tackle this issue at this critical time. That’s why I’ve been persuaded to help them.