‘Independent’ OBR Chairman’s Love-In with Left-Wing Torsten Bell

Now the Office for Budget Responsibility isn’t even trying. This morning, less than a day after the Autumn Statement, the OBR’s Chairman Richard Hughes held a fireside chat with none other than Torsten Bell at the latter’s left-of-centre think tank, the Resolution Foundation. The same Resolution Foundation that spends its days pushing for ever-higher welfare payments and attacking every Tory chancellor since George Osborne.

Why would Hughes appear at the Resolution Foundation, flanked by Resolution Foundation employees and effectively endorsing the Resolution Foundation, when he’s running an ‘independent’ body that blesses every policy coming out of the Treasury? Maybe it has something to do with the fact that he used to work there, spending his days co-authoring reports on the horrors of Brexit and rubbing shoulders with the man who used to be Ed Miliband’s policy director. You can perhaps wonder if Kwasi Kwarteng had legitimate suspicions about the OBR/Resolution Foundation marking his homework. The Resolution Foundation has a left-leaning ideological position, plain as day. Even the BBC thinks so…

mdi-timer 18 November 2022 @ 12:20 18 Nov 2022 @ 12:20 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Sketch: Hunt on the Today Slot, Slots It Reasonably Well

The markets may be relatively calm but Jeremy Hunt’s Autumn Budget has fired up a media storm – Carnage, From Bad To Worse, Tories Soak the Strivers, Years of Pain, the Lost Decade are some of today’s headlines.

On the Today Programme this morning however, there in the vanguard of liberal opinion, Jeremy Hunt got a relatively easy ride from Mishal Husain.

The interviewer’s despondent framing of the situation began:

Another 500,000 people will be unemployed according to the official budget forecaster. At a time when anger over restraint in public sector pay is already feeding through into strikes, people are about to feel poorer and the country as a whole will feel poorer as the economy shrinks over the next year. Is the Chancellor’s plan – which he says will make the recession shallower – the answer?

And then, a characteristic kicker:

Do you accept that what you have done amounts to a raid  on millions of working people?

Hunt, in his reasonable Radio 4 way, eased past that with his bit on inflation and the recovery after the recession ends and so Mishal Husain turned to “the vast swathe of middle-income Britain that will feel more squeezed now.”

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mdi-timer 18 November 2022 @ 09:53 18 Nov 2022 @ 09:53 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Front Pages: Budget Blues Edition

Only one supportive front page from The Express…

mdi-timer 18 November 2022 @ 07:49 18 Nov 2022 @ 07:49 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Sketch: Cool Hunt Denies Austerity With Treasury Billions

It won’t become clear for who knows how long, but that might have been the best Autumn Statement since Gordon Brown’s Find The Lady games in the 2000s.

The event was billed as filling a “fiscal black hole” of £60-odd billion but the only thing that registered on your Gallery correspondent’s ear was ever-higher, ever-greater, ever-more lurid spending commitments. Billions for pensioners, beneficiaries, science research, wind farmers, the nuclear industry, small businesses, the NHS, schools, poor people, cold people, people who can’t afford vests and sweaters, and, gloriously, bicycle assembly enterprises and those who make car seats.

Claimants are to get an extra £10 billion. Pensioners keep the “triple lock”. And there’s an extra £55 billion going to – some group or other, the note becomes illegible at that point, perhaps the will to live, or be sceptical, had crashed.

From the statement, more was being given than taken.

There was talk of £140 billion extra to be spent on energy bills, equivalent to another NHS. There was £6 billion to insulate houses. There was no cut to the £115 billion capital budget. “Instead of being ideological, I’m going to be practical!” he said, announcing £2.3 billion for our world-leading schools superpower.

And the painful parts? The tax take will rise by 1% of GDP over five years. While retaining the most generous tax allowances in Europe.

Masterly.

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mdi-timer 17 November 2022 @ 15:02 17 Nov 2022 @ 15:02 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
Free Market Wonks Recoil at Hunt’s Tax Hikes

Guido once again brings you the lowdown on wonk world’s reaction to the autumn statement. As expected, the free market think tanks aren’t happy…

The TaxPayers’ Alliance Chief Executive John O’Connell slammed the Chancellor for whacking up taxes on working families:

“These plans look set to prolong the crippling cost of government crisis. Taxpayers will take a kicking over the coming years to pay for a raft of spending increases, with most tough decisions seemingly kicked into the long grass. The government should have set out how they will get costs under control, not compounded the misery of sky-high inflation with tax hikes on working families.”

Institute of Economic Affairs Director-General Mark Littlewood was similarly unhappy:

“The Chancellor has put the United Kingdom firmly on track for higher taxes, more spending, and lower growth. This is a recipe for managed decline, not a plan for prosperity […] Jeremy Hunt is right to emphasise the need to bring down our debt burden and slow down the growth in government spending. But the consequence of considerable tax hikes could be a deeper and longer economic downturn – ultimately resulting in less taxpayer revenue over the long-term.”

Adam Smith Institute Head of Research Daniel Pryor declared the statement “a return to managed decline”:

“Entering a recession promising the highest tax burden in three-quarters of a century does not strike the right balance between fiscal credibility and growth. The Chancellor highlighted the harms of inflation, then added fuel to fire by threatening yet more tax threshold freezes—undermining productivity whilst hitting the pockets of people across the income spectrum.”

Centre for Social Justice CEO Andy Cook, meanwhile, wasn’t so brutal :

“The return of ‘compassion’ to the government’s political lexicon is welcome and overdue. Today the Government answered calls from the Centre for Social Justice and others to uprate the incomes of the poorest households in line with inflation, against fiercely competing pressures on the public purse. For this the Chancellor deserves credit. But the cost-of-living crisis is far from over. Many people who are just about managing will, come Christmas, be barely coping if at all. As recession darkens over the UK economy the Government must go further than welfare top-ups and accelerate plans to help people into productive employment.”

Centre for Policy Studies Director Robert Colvile took to Twitter for a brief reaction. Not quite the champagne-popping statement from Kwasi’s plan back in September:

“Notable mostly for the truly awful things that were avoided after being trailed, [especially] on tax […] Nothing there that any one group is going to massively howl about – pain spread evenly (apart from on the rich and no one likes them anyway)”

Onward Interim Director Adam Hawksbee gave Hunt a thumbs up for taking “tough decisions“:

“The Chancellor’s main job today was to begin restoring political stability and economic credibility. He has taken tough decisions in a difficult environment to achieve that goal. And he seems to have done so in a way which limits the impact on the most vulnerable, protecting benefits while taxing high earners and energy companies. Today was not a return to austerity. The difficult task ahead is to boost growth and unlock opportunity across the country…”

Policy Exchange Head of Economics and Social Policy Connor MacDonald also praised Hunt for taking a “balanced approach”

“The Chancellor unveiled a fiscal statement today that took a balanced approach, in the midst of huge economic uncertainty generated predominantly by factors external to the UK. It protected core public services and maintained capital and R&D spending, ensuring that the UK’s growth prospects are not unduly undermined. The decision to uprate benefits was on balance the right one, although a wider discussion needs to be had about the sustainability of the triple lock going forward. The Government made the right moves on energy, including an expanded windfall taxes and will significantly increase efforts around efficiency and maintains commitments to greater energy resilience. This is not an austerity budget.”

Institute for Fiscal Studies Director Paul Johnson said that while the statement wasn’t as grim as had been briefed… it still wasn’t great:

“The next few years look grim in terms of living standards, the biggest reduction in household incomes, possibly on record and certainly within recent generations.”

Plenty of talk this morning from the Chancellor about “unfunded tax cuts“. There are no such thing. There’s only unfunded spending…

mdi-timer 17 November 2022 @ 14:41 17 Nov 2022 @ 14:41 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
+++ Fiscal Statement Live Blog +++

Introduction

  • Priorities are stability, growth and public services
  • Respond to an international crisis with “British values”
  • OBR confirms global factors are primary cause of inflation
  • A made-in-Russia energy crisis”
  • IMF expects 1/3 of world’s economy to be in recession this year or next
  • Bank of England remit will not be changed, government to work in lockstep with the BoE
  • UK “will always pay its way”
  • Credibility will not be taken for granted

OBR

  • Inflation – 9.1% this year and 7.4% next year
  • Inflation will fall sharply from middle of next year
  • UK is now in recession
  • Unemployment to rise to 4.9% in 2024
  • Borrowing – £177bn, next year £140bn then by 2027/28 falls to £69bn
  • Underlying debt as a percentage of GDP starts to fall by 2027/28

Short term

  • As growth slows and unemployment rises, fiscal interventions will be used
  • As a result of these plans, the recession will be shallower – OBR

Longer term

  • As growth returns they increase rate of consolidation, and take pressure off BoE to raise interest rates
  • “A balanced path to stability”

Tax

  • Tried to be fair following two principles – those with more should contribute more, and avoid tax rises that damage growth
  • substantial tax increase”
  • Personal taxes:
    • Reduce threshold of 45p rate from £150k to £125k – an increase of £1200
    • Tax free allowances frozen until April 2028
    • Reforming allowances on unearned income, cutting dividend allowance from £2000 to £1000
    • Electric vehicles will no longer be exempt from vehicle excise duty
    • Stamp duty cuts announced in minibudget will only remain in place until 2025
  • Business taxes:
    • 40% of all businesses will pay no NICs
    • £2.8bn by 27/28 from cracking down on tax avoidance
    • Cutting deduction rate for SMEs
  • Windfall taxes:
    • Any tax should be temporary, not deter investment and recognise cyclical nature of energy businesses
    • Increase energy profits levy from 25% to 35%
    • Electricity generation to be levied on electricity generators at 45%

Public spending

  • Public spending to grow spending lower than inflation
  • Departmental budgets to be protected in cash terms
  • Overall spending in public services will continue to rise in real terms for next five years
  • Department for Work and Pensions will be asked to do a thorough review of issues holding back workforce participation
  • Over 600,000 people on universal credit will have to meet with a work coach to increase hours’ earnings
  • Review of state pension age to conclude in 2023

Defence:

  • UK has given £2.3bn to Ukraine since the start of the invasion, second highest in the world after USA
  • Defence spending needs to increase
  • Integrated review needs updating, ahead of the next budget
  • Will continue to maintain defence budget of at least 2% of GDP

Aid:

  • Won’t be possible to return to 0.7% until fiscal situation allows
  • Remain about 0.5% for the forecast period

Climate change:

  • Now would be the wrong time to step back from climate responsibilities
  • Remain fully committee to the Glasgow pact, including a 68% reduction in own emissions by 2030

Education:

  • Concerns not all school leavers get the skills they need for a modern economy
  • All young people need to leave the education system with the skills they’d get in Japan, Germany or Switzerland
  • Rules out scrapping relief on private school fees
  • Schools’ budget to be increased by £2.3 billion per annum this year and the next

NHS:

  • On staff shortages, the NHS will publish and independent plan for the number of doctors, nurses and other professionals we’ll need in 5, 10 and 15 year’s time
  • Social care sector, the implementation of Dilnot Reforms will be delayed by 2 years, re-allocating the funding to local authorities
  • £1bn of new grant funding for social care this year, £1.7bn next year.
  • A total increase of funding of £2.8bn this year and £4.7bn next year for social care
  • Former Health Secretary Patricia Hewitt asked to advise on how to make sure local NHS bodies operate efficiently and with appropriate autonomy and accountability
  • NHS budget increased by £3.3 billion in each of the next 2 years

Economic growth:

  • You cannot borrow your way to growth
  • Sound money is the rock upon which long term prosperity rests
  • People, capital and ideas are needed
  • Energy, infrastructure and innovation also needed
  • Over the long term, we need energy independence and energy efficiency
  • Nuclear! Sizewell C is going ahead, confirmed. Creating 10,000 highly-skilled jobs
  • New national target: by 2030 energy consumption by buildings and industry should fall by 15%
    • New funding from 2025 of a further £6bn in investment to deliver this
  • Rail, roads, broadband and 5G
    • Not cutting a penny from capital budgets for the next 2 years, and will remain in cash terms for a following 3 years
    • More than double what it was under the last Labour government
    • HS2, Northern Rail, gigabit broadband etc will all proceed
    • Levelling Up fund will be maintained
  • Local leaders have to be able to make things happen
    • New devolution deals for Suffolk, Cornwall, Norfolk and an area in the North East
    • Soon over half of England will be covered by devolution deals
  • Innovation:
    • Changes to EU regulations in our five growth industries
    • Patrick Vallance asked to lead this work
    • Legislate to give the digital markets unit new powers to challenge monopolies
    • Removing import tariffs on over 100 goods used by UK businesses used in their production
    • R&D budget protected
    • Solvency II reforms

Energy Bills/cost of living

  • Price guarantee will continue from April at a higher level of £3000
  • Additional cost of living payments for most vulnerable on means-tested benefits of £900 plus cash for pensioners and the disabled
  • Social rented sector are currently set to see rents rise by 11%. Increase to be capped to a maximum of 7%
  • Minimum wage to increase by 9.7%. Up to £10.42.
  • Benefits will be uprated by inflation, 10.1%
  • Benefit cap to increase by inflation also
  • Pension credit to increase by 10.1%
  • Triple lock protected
mdi-timer 17 November 2022 @ 11:31 17 Nov 2022 @ 11:31 mdi-twitter mdi-facebook mdi-whatsapp mdi-telegram mdi-linkedin mdi-email mdi-comment View Comments
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