Tag Archives: Ed Balls

£30bn cuts – has anybody actually READ the Charter for Budget Responsibility?

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Why do anti-Labour cultists keep ranting on about assumed crimes against the people that have never taken place?

Last night, This Writer had to endure the ravings of SNP cultists who were adamant that Labour signed up to £30 billion of Tory austerity cuts when the Party supported the Charter for Budget Responsibility. This simply isn’t true, as an examination of the Charter itself will prove. It’s only 20 pages long, and many of them are blank, so it isn’t exactly hard work.

The trouble is, the critics are as this blog has defined them – cultists. They’re not interested in the facts; they want to publicise the lines they’ve been fed by their leaders. Nicola Sturgeon said in last week’s televised leader debate that Labour supported £30 billion of austerity cuts, so to the cultists it must be true.

They are like the Catholic Church, when it imprisoned Galileo for claiming the Earth revolves around the sun. Fortunately for their sanity, the Catholics realised their mistake; it is doubtful the cultists ever will.

Last night, one of them claimed (wrongly) that in the Scottish leaders’ debate, Labour’s Jim Murphy had admitted that Labour has accepted the disputed amount of cuts: “OMG you obviously didn’t see tonight debate they admitted it ! Live on TV Jim Murphy had to admit it because LiBDEms And tory leaders made him… He got pulled up by all parties on his lies.”

This Writer hadn’t seen the debate (was at band practice instead), so had to check the news media for the facts – and found them in the Irish Times: “The Irish Times says he pulled Sturgeon up for lying about it: ‘You might get away with that in England but not here in Scotland.'”

Another cultist then took up the baton and tried quoting from the debate on the Charter for Budget Responsibility – the source of the claim that Labour supported £30 billion of austerity cuts (the claim is that, in supporting the Charter, Labour supported the Tory cuts). It is impossible to bring you a direct quote from this person as they have now blocked This Writer – a common tactic among those who can’t accept their mistakes.

This writer’s response was: “Try reading the charter instead… no mention of ‘£30 billion’ or ‘cuts’… The £30 billion does not exist outside of George Osborne’s own plans… If you read the Charter, you will see that is absolutely correct to say the charter could be supported with no problem.”

The Charter itself – in the version debated in Parliament on January 13 – is available on the web here. It states:

“The Treasury’s objectives for fiscal policy are to:

  • ensure sustainable public finances that support confidence in the economy, promote intergenerational fairness, and ensure the effectiveness of wider Government policy; and  
  • support and improve the effectiveness of monetary policy in stabilising economic fluctuations.

The Treasury’s mandate for fiscal policy for this Parliament, announced in the Budget on 22 June 2010, is:

  • a forward-looking target to achieve cyclically-adjusted current balance by the end of the rolling, five-year forecast period.

At this time of rapidly rising debt, the Treasury’s mandate for fiscal policy is supplemented by:

  • a target for public sector net debt as a percentage of GDP to be falling at a fixed date of 2015-16, ensuring the public finances are restored to a sustainable path.

To ensure that expenditure on welfare remains sustainable, the Treasury’s mandate for fiscal policy is further supplemented by:

  • the cap on welfare spending, at a level set out by the Treasury in the most recently published Budget report, over the rolling five-year forecast period, to ensure that expenditure on welfare is contained within a predetermined ceiling.”

No money figures are mentioned at all.

Shadow Chancellor Ed Balls capitalised on this in his speech during that day’s debate: “Let me explain what is going on here. It is a three-year rolling target, so in 2015the three-year target presumably refers to 2017-18, but in 2016 it is rolled forward to 2019 because that is three years later. In 2017, it rolls on to 2020 and in 2018 it rolls on to 2021.

“It is a three-year rolling target, so it rolls on, which means that the Chancellor could come back to the House in 2020 and say, ‘It is okay. Consistent with the charter, I am meeting the aim because I am balancing the current budget in 2023.’ That is what this says and it is utterly ridiculous. It does not even sign him and his party up to balancing the current budget by the end of the next Parliament.

“The fact is that for all the boasts, the rhetoric and the talk of traps, in this new charter before the House it is not targets but aims; it is not balancing the overall budget but the current budget; it is not an absolute commitment to deliver a surplus in the next Parliament, but an absolute commitment to a three-year rolling five-year target.

“The Chancellor has spent all of the past nine months telling everybody what a clever wheeze this is and, once again, it has totally backfired. It is less of a trap and more of a load of complete pony and trap.”

A “load of complete pony and trap” is exactly what all the talk of Labour supporting £30 billion of cuts is.

So what is Labour’s plan? This blog has already outlined it, but for clarity here’s the relevant information from the Vox Political article:

“The ‘Charter for Budget Responsibility’ is highly elastic: it’s not based on a firm commitment to reach balance in 2017-18,” states the Resolution Foundation… “Instead it represents a rolling ‘aim’ of planning to reach current balance three years down the road.” The article adds: “Most economists are sceptical about how much difference it (the charter) will make.

“So what if Labour targets a current balance in 2019-20 instead? Based on current OBR assumptions this could be achieved with as little as £7 billion of fiscal consolidation in the four years to 2019-20 (including the cost of extra debt interest).”

Labour has made it clear that it plans to make only £7 billion of cuts. As this coincides exactly with the Resolution Foundation’s figures for a 2019-20 budget balance, logic suggests that this is most likely to be what Ed Balls is planning.

So now you know. Anybody suggesting Labour is planning huge, Tory-size, austerity cuts should be sent to this article and told to get a clue.

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Are the Tories lying again about spending cuts?

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Labour has claimed that Conservatives will make £70 billion worth of spending cuts if re-elected in May – more than double the amount that David Cameron and George Osborne have claimed.

It is possible to dismiss this as electioneering hyperbole but, let’s face it, Cameron and Osborne don’t have a good record here; they promised to balance the books by May and instead the deficit is stubbornly sticking to £100 billion a year and they have doubled the national debt.

Labour has published analysis showing that the “unprecedented” and “extreme” scale of these spending cuts would pose a major risk to the National Health Service and/or vital public services such as policing, defence and social care.

The cuts would be so extreme that they would lead to the smallest police force since comparable records began, the smallest army since Cromwell and over a third of those older people who receive social care losing their entitlement to it.

Shadow Chancellor Ed Balls has claimed that George Osborne can only achieve his spending plans by pressing ahead with “unprecedented, extreme and close to impossible cuts”, by raising VAT yet again, or by cutting the National Health Service.

He said that, across the Organisation for Economic Co-operation and Development (OECD), there have been only seven countries since 1945 where reductions on this scale have been attempted and for which we have available health spending data. Across these examples, public spending on health care has been cut – on average by one per cent of GDP.

If the average experience of these past fiscal consolidations were to be replicated in the UK over the coming four years of the next Parliament, then this would imply a real terms cut in NHS spending of over £10 billion by 2019-20.

“This is the implication of the choice that George Osborne made last December – and which he is now trying to brush under the carpet,” said Mr Balls.

“If he is to deliver on his Autumn Statement plans for a £23 billion overall budget surplus, as he says, through a Budget with no fiscal loosening, while promising unfunded tax cuts in the next parliament, then he is going to have to deliver these colossal cuts.

“The evidence is clear – countries which reduce public spending at the pace George Osborne intends have found they have had no alternative but to cut health spending.

“And after their broken pledge not to have a top-down re-organisation of the NHS in this Parliament, the British people know that the Tories have form when it comes to broken promises on the NHS.

“If David Cameron and George Osborne cannot spell out how their sums add up… the British people can only conclude – and would be right to conclude – that alternative plans do exist: to cut NHS spending and introduce charging.

“David Cameron and George Osborne must come clean or the British people will draw their own conclusions. And then, in May, they will make their choice.”

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Osborne rebuked over EU surcharge reduction claim

It’s official – George Osborne lied when he said he had halved the £1.7 billion EU budget surcharge, and his claim that he had achieved a “real result for Britain” was nonsense.

This is how George Osborne probably looked after the fire in his pants caused by his incessant lying about the EU’s £1.7bn bill burned away the rest of his suit. Note that his briefcase is still empty of policies and all he has to offer us is the carrot of false promises [Image: Kaya Mar www.kayamarart.com].

This is how George Osborne probably looked after the fire in his pants caused by his incessant lying about the EU’s £1.7bn bill burned away the rest of his suit. Note that his briefcase is still empty of policies and all he has to offer us is the carrot of false promises [Image: Kaya Mar www.kayamarart.com].

Even more stinging must be the fact that this rebuke comes from a fellow Conservative – Andrew Tyrie, chairman of the House of Commons Treasury Committee.

“The suggestion that the £1.7 billion bill demanded by the European Union was halved is not supported by published information,” he said in a report by the committee.

“The terms of the UK’s rebate calculation are set out in EU law. It should, therefore, have been clear that the rebate would apply.”

The Treasury Committee’s report confirms what Vox Political stated the day after Osborne made his ill-advised claim.

Its report did, however, recognise the government’s “achievement” in extending the payment period and avoiding interest charges – although this was managed in conjunction with every other EU member state that found itself facing the prospect of extra payments, and was not an achievement of the UK government alone.

What does Her Majesty’s Loyal Opposition have to say about this? At the time, Shadow Chancellor Ed Balls told us, “David Cameron and George Osborne are trying to take the British people for fools.”

Has Labour’s attitude softened? No.

“This damning cross-party report exposes George Osborne’s claim to have halved the EU budget surcharge to be totally untrue,” said Chris Leslie, Labour’s Shadow Chief Secretary to the Treasury.

“He must now apologise to taxpayers for making this completely false claim.

“Too many times this Chancellor has desperately tried to use smoke and mirrors to fool the British people. He has been caught out again and his credibility is further undermined.

“People will now treat the false claims he makes in the coming weeks with the contempt they deserve.”

And that is the problem for our part-time Chancellor.

He has undermined his own credibility and that of his party.

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‘Dear George…’ A letter from Ed Balls about tax avoidance

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Labour really isn’t going to let the Tories off the hook about tax avoidance. Ed Balls wrote a letter to George Osborne today, outlining what he considers to be the main issues. Here’s the text of that letter in full. Feel free to compare and contrast with the interpretations in the mass media.

Dear George,

It has now been over a week since the full story about tax evasion and HSBC became public. There are a number of questions which you have failed to answer over the last eight days and which cannot continue to be brushed under the carpet:

1. Why has there only been one prosecution out of 1,100 names? Was the “selective prosecution policy” a decision made by Ministers?

Detailed information was passed to this government in May 2010 about 1,100 HSBC clients allegedly guilty of tax evasion or avoidance and yet since then there has been just one prosecution.

In November 2012 a senior HMRC official told The Times that the government had adopted “a selective prosecution policy” towards cases related to HSBC. Later that month HMRC told the Public Accounts Committee that “another dozen” criminal prosecutions were to follow. However, there have been none since.

Given the scale of the alleged wrongdoing, can you explain why only one prosecution has been made and what role Ministers played in deciding on “a selective prosecution policy” for those accused of tax evasion? People would expect you to have been either involved in, or at least aware of, a decision of this seriousness.

Why did the Financial Secretary to the Treasury claim in the House of Commons last week that the government was provided this data “under very strict conditions”, when the French Finance Minister has since suggested otherwise?

2. When were you first made aware of these files, what action did you take and did you discuss it with the Prime Minister?

While a Downing Street spokesperson claimed last week that “no government minister” had any knowledge of what happened at HSBC, the Chief Executive of HMRC has since revealed that Ministers were in fact informed about these files after they were received:

“We are confident we will have told Ministers that we were about to receive a big tranche of operational information,” she said. “We will have told people, including Ministers, I suspect some time in the next few months [after the data was received].”
Lin Homer, Chief Executive HMRC, Public Accounts Committee, 11 February 2015

When were you and Treasury Ministers first made aware of these files and did you take any action as a result? If not, what were the reasons for this inaction? Did you ever discuss this with the Prime Minister?

3. Why did you and David Cameron appoint Lord Green as a Conservative peer and Minister months after the government received these files?

Lord Stephen Green was Chairman of HSBC 2006-2010 and was appointed a Conservative Peer in September 2010 and then as Trade Minister by David Cameron in January 2011.

This was several months after the government was given information from the French government in May 2010. There had also been extensive public coverage of this investigation since 2010.

For example, on 26 September 2010, the Sunday Telegraph reported that HMRC is investigating more than 200 “extremely wealthy” British taxpayers suspected of tax evasion totalling “many millions of pounds”.  It adds that they are “believed to have failed to declare huge sums of interest from private deposit accounts with HSBC’s bank in Switzerland.” (Sunday Telegraph, 26 September 2010,http://www.telegraph.co.uk/finance/personalfinance/expat-money/8025527/HMRC-launches-tax-evasion-probe-into-Swiss-account-holders.html).

Why was Lord Green appointed months after the government had this information? Can you provide details of the due diligence carried out by the government in advance of Lord Green’s appointment?

4. Did you and David Cameron discuss tax evasion at HSBC with Lord Green, or did you turn a blind eye? Did you discuss allegations of money laundering at HSBC during Lord Green’s time at HSBC which led to the bank being fined $1.9bn?

Did you or Treasury Ministers ever discuss what happened at HSBC with Lord Green in the almost three years in which he was a Conservative Minister? The Prime Minister failed to answer this question four times in the House of Commons last week.

Did you or Treasury Ministers ever discuss allegations of money laundering at HSBC during Lord Green’s time in charge of the bank, which first became public in July 2012 following an investigation by the US Senate Homeland Security Sub Committee and which led to the bank being fined $1.9bn in December 2012? When were you and Treasury Ministers first made aware of the findings of this inquiry?

If you or your Ministers did not ever raise any of these issues with Lord Green while he was a Minister or before his appointment, would this not be remiss given the scale of wrongdoing which you would have been aware of?

5. Why did you sign a deal with the Swiss authorities in 2012 which prevents the UK from actively obtaining similar information in the future?

The Swiss tax deal, which you heralded in the 2012 Autumn Statement, has not only raised a fraction of the sums promised, it also seems to tie the hands of HMRC and the UK government for the future. The following declaration was made by the Treasury:

Declaration of the United Kingdom concerning the acquisition of customer data stolen from Swiss banks:
The Government of the United Kingdom declares on the occasion of the signing of the Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation on cooperation in the area of taxation that it will not actively seek to acquire customer data stolen from Swiss banks.
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/356884/declaration-acquisition.pdf

This deal means that the government may never again be able to get hold of the sort of information it received in 2010 about tax evasion and which is at the centre of this scandal. This deal was also made while Lord Green was a Conservative Minister and years after this government was first given information about tax evasion in May 2010.

Why did you sign this declaration and what advice were you given about how it would impede HMRC and the government’s ability to act in the future?

Did Lord Green have any involvement in the Swiss tax deal while he was a Trade Minister and did he ever give any advice to the Treasury on it?

Given the significant public interest in this matter, I am making this letter public. It is notable that you have not given any live broadcast interviews or given a statement in the House of Commons on this issue. However, these questions cannot continue to be ignored and I look forward to hearing from you.

Yours sincerely,

Ed Balls

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George Osborne’s failure

What an embarrassment: George Osborne's silly ideas about the economy are enough to embarrass anybody.

What an embarrassment: George Osborne’s silly ideas about the economy are enough to make anybody red-faced.

You probably won’t find the failure of the Conservative-led Coalition government laid out any more bluntly than this.

Speaking at Jaguar Land Rover in the West Midlands today (Monday), Ed Balls said George Osborne had failed to reduce the national deficit because of disappointing tax revenues.

“To make up that shortfall, George Osborne has now said he is going to carry on with even bigger spending cuts in the next parliament,” he said, adding that this will result in the biggest cuts in public services over the next five years in any country around the world.

“I don’t think that plan is remotely credible,” said Mr Balls.

He’s right.

Osborne cut public spending hard because he believed the claims of an academic thesis that has long-since been disproved, by Reinhart and Rogoff, that suggested states should not allow their national debt to rise above 90 per cent of GDP.

The result is clear: He stalled the UK economy.

The only way Osborne was able to get the UK moving again was by creating a new housing bubble (which is yet to burst) and by enabling employers to make real-terms cuts in wages, in what amounts to a fiddle of the employment figures.

But tax receipts don’t lie. Despite claims that we have more people in work now than ever before in history, the Treasury is taking less money.

And Osborne’s idea for regeneration is to repeat the strategy that stalled the economy in the first place?

Incredible.

Setting the record straight on Sturgeon’s fiscal policy

The Resolution Foundation's predictions for government spending, based on the different parties' declared plans.

The Resolution Foundation’s predictions for government spending, based on the different parties’ declared plans.

Vox Political’s article on Nicola Sturgeon’s London speech provoked a disgruntled response from Jonathan Portes. The NIESR boss sent a message stating that the article’s fiscal arguments were out of whack.

He didn’t ask for this blog to straighten them out, but the information he sent, coupled with some other pieces he suggested – by Professor Simon Wren-Lewis and the Resolution Foundation – make it inevitable that another stab is required. If you support the SNP, you’re still not going to like it.

The first comment from Mr Portes is as follows: “1. SNP plan is slower deficit reduction than Lab/LDs, which in turn slower than Cons. All consistent with falling debt/GDP ratio. So all are sustainable.  Haven’t looked at detail, but Simon WL & I both think Lab too cautious – so SNP not obviously crazy.”

Simon Wren-Lewis’s article states:  “In reality what Sturgeon was proposing was still deficit and debt reduction, but just not at the pace currently proposed by Labour.”

And the Resolution Foundation adds: “The SNP would commit to delivering existing 2015-16 plans, as each of the Westminster parties have, before changing course.”

There’s a major point to make here, which all three of the sources above have missed. It’s that the SNP and its adherents have been cursing Labour from High Heaven to Low Hell for committing to Tory austerity policies because Ed Balls promised a Labour government would stick to Coalition spending – note that word, spending – limits for the first year after the general election.

Why have SNP adherents been slating Labour when the SNP has committed itself to the exact same Conservative spending limits, for the exact same period of time? Doesn’t this also make the SNP a party of austerity?

This leads us neatly to a point made by the Resolution Foundation. Ms Sturgeon wants to put a lot of space between SNP plans and those of Labour by claiming that Labour is committed to eliminating the UK’s structural deficit by 2017-18. They say Labour signed up to that when it voted to support the Charter for Budget Responsibility. You may recall there was another big fuss about Labour supporting Tory austerity, being just the same as the Tories, and there being only 17 MPs who oppose austerity (the number who voted against the CBR). Bunkum, according to the Resolution Foundation.

“The ‘Charter for Budget Responsibility’ is highly elastic: it’s not based on a firm commitment to reach balance in 2017-18,” states the Resolution Foundation article. “Instead it represents a rolling ‘aim’ of planning to reach current balance three years down the road.” The article adds: “Most economists are sceptical about how much difference it (the charter) will make.

“So what if Labour targets a current balance in 2019-20 instead? Based on current OBR assumptions this could be achieved with as little as £7 billion of fiscal consolidation in the four years to 2019-20 (including the cost of extra debt interest).”

Labour has made it clear that it plans to make only £7 billion of cuts. As this coincides exactly with the Resolution Foundation’s figures for a 2019-20 budget balance, logic suggests that this is most likely to be what Ed Balls is planning.

So SNP (and Green) adherents who crowed about Labour austerity being as bad as that of the Tories need to apologise – sharpish.

Now that these points are cleared up, let’s look at the substantive issue. Here’s the Resolution Foundation again: “The first minister’s headline was that she favours £180 billion of extra spending in the next parliament relative to current coalition plans… an increase in ‘departmental spending’ of 0.5 per cent a year in real terms over four years [we’ve established that the first year’s spending would adhere to Coalition-planned spending levels]. Our estimates suggest that raising departmental spending by 0.5 per cent in each of the four years after 2015-16 would indeed yield a cumulative increase in spending of around £180 billion (in 2019-20 prices, £160bn in today’s) compared to existing coalition plans. So that seems to fit.

“Another, more conventional, way of putting this is that in the final year of the next parliament, departmental spending would be around £60 billion higher in the SNP scenario than it would be under the coalition’s outline plans. This means that departmental spending would end up in roughly the same place in 2019-20 (in real terms) as it is now. We’d see £8 billion or so of departmental cuts in 2015-16 broadly cancelled out by a rise of around £7 billion across the following four years. It also means that, all else equal, there would still be a (small) UK-wide current deficit come the 2020 election.”

As you can see from the graph, the scenario that suggests a Labour balance in 2017-18 would imply a big difference with the SNP, particularly in the first half of the next Parliament – but, come 2019-20, “there would still be a £48 billion gap between Labour and the coalition plans; not that far short of the £60 billion gap that would exist between the SNP and the coalition”.

The scenario in which Labour balances its budget by 2019-20 “would in theory be consistent with spending roughly £140 billion more than coalition plans.

“The SNP proposal implies increases in total departmental spending of £1-2 billion per year over four years whereas Labour’s 2019-20 scenario implies cuts of £1-2 billion per year over the same period. This is against total departmental spending of around £350 billion. By 2019-20 this difference adds up to roughly a £14 billion gap between the two parties. Now, that’s a real difference but given the scale of the numbers involved, (and the fact that some of Labour’s consolidation may come from tax increases rather than spending cuts), it’s also a relatively modest one.”

It’s more or less the same amount the Coalition Government borrows every month, in fact.

Now let’s throw a spanner in the SNP’s works. The Resolution Foundation points out: “Fiscal discussions of this type tend to suffer from a severe case of false precision. None of the party leaders knows any better than you or I what will happen to productivity next year, never mind in 2020… Any difference between, say, the Labour and SNP spending plans would be dwarfed by the fiscal implications of even modest boosts (or dips) in productivity. Indeed, even the very large difference between the SNP (or Labour) and the coalition’s plans could be overshadowed by a significant shift in productivity trends. And, to Sturgeon’s credit, her remarks this week emphasised productivity.”

Yes – productivity. Does anybody remember that, prior to the referendum, the SNP wanted Scottish voters to believe that any borrowing that might be necessary in an independent Scotland would be offset by increased productivity? What did Simon Wren-Lewis have to say about that? Oh yes: “Governments that try to borrow today in the hope of a more optimistic future are not behaving very responsibly.”

But that is exactly what Ms Sturgeon was proposing for the whole of the UK; borrowing on the assumption of increased productivity.

Here’s a chance to put another SNP myth to bed, from the same writer. In his article about Ms Sturgeon’s speech, Professor Wren-Lewis states: “Of course this is the same person who, with Alex Salmond, was only six months ago proposing a policy that would have put the people of Scotland in a far worse fiscal position than they currently are, an argument that has been reinforced so dramatically by the falling oil price. You could say that it is a little hypocritical to argue against UK austerity on the one hand, and be prepared to impose much greater austerity on your own people with the other.”

The argument he mentions ran as follows: “Scotland’s fiscal position would be worse as a result of leaving the UK for two main reasons. First, demographic trends are less favourable. Second, revenues from the North Sea are expected to decline. This tells us that under current policies Scotland would be getting an increasingly good deal out of being part of the UK [and therefore independence would be detrimental].”

He added that the Institute for Fiscal Studies, which had independently analysed the SNP figures, had made a mistake on interest rates. The IFS analysis, he wrote, “assumes that Scotland would have to pay the same rate of interest on its debt as the rUK. This has to be wrong. Even under the most favourable assumption of a new Scottish currency, Scotland could easily have to pay around one per cent more to borrow than rUK. In their original analysis the IFS look at the implications of that (p35), and the numbers are large.”

The Resolution Foundation notes that “the flipside of higher spending, all else equal, would be higher debt and higher debt interest payments”.

So the SNP plan, as this blog pointed out, could create an interest-payment problem for the next government that bites into the extra money said to be for services.

Mr Portes made two other minor points, as follows: “2. Your stuff about Lab could spend more if economy does better wrong way round. If economy worse, we need higher deficit. Over time, as income goes up, so does/should spending. But short-term macro should be countercyclical.”

When I wrote the material about Labour spending more in a better-performing economy, I was thinking of the Labour government immediately after World War II. The current Labour Party has mentioned this period in recent speeches and releases, and it seems clear that Messrs Miliband, Balls et al consider their task, if elected in May, to be similar to that faced by Mr Attlee and his party – the reconstruction of the UK after a long period of destruction.

Are we to believe the economy is likely to worsen, in which case more borrowing will be needed? It’s certainly possible that major shocks are on the horizon. This writer is in no position to speculate.

“3. Finally, stuff about credit rating agencies/bond markets/Greece is absurd propaganda. I’ve written on this many times.” He’s right; it wouldn’t have been included it if Yr Obdt Srvt had stopped to think about it, but the article was up against a deadline and this writer was throwing in all the cautionary words he could find.

So let us forget about them. Here are a few more. Simon Wren-Lewis, at the end of his article, notes: “I read a blog post recently that suggested this was an election Labour would be better off losing… A Labour government dependent on SNP support would be abandoned by the SNP at the moment of greatest political advantage to the SNP and disadvantage to Labour. However if we assume that the oil price stays low there is no way a rational SNP would want to go for independence again within the next five years. It might be much more to its long term advantage to appear to be representing Scotland in a responsible way as part of a pact with Labour.”

Is the SNP rational? All the evidence available so far suggests it isn’t.

It put forward arguments that were deceptive about an independent Scotland’s economic future.

Its representatives and followers spread lies about Labour economic policy.

All indications suggest the SNP will try to create the conditions required for Scottish independence at the earliest opportunity, and then leave the rest of the UK hanging.

The original article on Ms Sturgeon’s speech ended by saying the SNP would be hard to trust.

After the findings of this one, it is nigh-on impossible to do so.

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Labour’s bank reform plans, including bonus clawback and a British Investment Bank

Remember this? Labour wants to claw back unwarranted bonuses.

Remember this? Labour wants to claw back unwarranted bonuses.

Labour is today (Friday) publishing its plans to reform the banking sector so that it better supports growing businesses, economic growth and rising living standards.

Ed Balls MP, Labour’s Shadow Chancellor, and Cathy Jamieson, Labour’s Shadow Financial Secretary to the Treasury, will publish Labour’s banking reform paper after a visit to a business in Bedford.

The banking reform paper is part of Labour’s economic plan and sets out a series of measures the next Labour government will take, including:

· Extending clawback of bank bonuses that have already been paid in cases of inappropriate behaviour to at least 10 years and enacting legislation, passed by the last Labour government, to require banks to publish the number of employees earning more than £1 million.

· Creating a proper British Investment Bank to provide vital funding for small and medium-sized businesses. All funds raised from the planned increase in the licence fees for the mobile phone spectrum – estimated to be up to £1 billion in the next Parliament, subject to Ofcom consultation – will be allocated to the British Investment Bank.

· Introducing a one-off tax on bankers’ bonuses to help pay for Labour’s Compulsory Jobs Guarantee – a paid starter job for all young people out of work for 12 months or more, which people will have to take up or lose their benefits.

· Addressing the lack of competition in the sector. We welcome the Competition and Markets Authority inquiry which we called for and want to see at least two new challenger banks and a market share test to ensure the market stays competitive for the long term.

· Extending the levy on the profits of payday lenders to raise funding for alternative credit providers.

“Too often in recent years our banks have fallen far short of the standards expected of them. After so many scandals we need major reforms and long-term cultural change to restore trust and ensure our banks start working for consumers and businesses again,” said shadow chancellor Ed Balls.

“Banks are essential to our economy, but we need them to work better for the businesses and working people who rely on them.

“We need much more action than this government has been prepared to take. So Labour’s banking reform paper sets out how we will change rules on bonuses, increase competition and get more lending to small and medium-sized businesses.

“We will extend to at least ten years the period bank bonuses can be clawed back in cases of misconduct. As we have seen in recent days, wrong doing can take years to uncover. The current proposals to claw back bonuses are too weak and do not cover a long enough period of time. We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out.

“And we will establish a proper British Investment Bank to help growing businesses get the funding they need to expand and create jobs. Because it’s only when working people and businesses succeed that Britain succeeds too.”

Cathy Jamieson, shadow financial secretary to the Treasury, added: “Bank lending to businesses has fallen year after year under this government. This just isn’t good enough. Without access to finance, SMEs cannot grow and create the high quality, well paid jobs we need to increase living standards. That’s why our plans will deliver more competition in our banking sector and a proper British Investment Bank too.

“We will also change the rules around bonuses and our tax on bankers’ bonuses will help fund a jobs programme for young people in every part of our country.

“We need our banks to better serve the economy and our reforms will ensure that they do.”

This has just been announced; what do readers think?

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Labour soars ahead with plan to tackle tax avoidance

Labour's proposals follow the revelations of tax avoidance on a massive scale at HSBC Bank while it was run by Stephen Green - who later became a Conservative lord and minister.

Labour’s proposals follow the revelations of tax avoidance on a massive scale at HSBC Bank while it was run by Stephen Green – who later became a Conservative lord and minister [Image: Daily Mirror].

In a clear response to the HSBC tax avoidance revelations, Labour is setting out its plans to tackle the issue if elected into office after May’s general election.

With campaigners and non-government organisations calling for a “Tax Dodging Bill”, Labour has announced that its first Finance Bill will act to tackle tax avoidance – and was due to set out the measures in an Opposition Day Debate today (Wednesday, February 11).

Labour’s motion notes that just one out of 1,100 people who have avoided or evaded tax have been prosecuted following the revelations of malpractice at HSBC bank, which were first given to the government in May 2010, after the Conservative and Liberal Democrat government had taken office.

It also calls upon Lord Green and David Cameron to make a full statement about his role at HSBC and his appointment as a minister in 2011.

The proposed Finance Bill includes plans to:

· Introduce penalties for those who are caught by the General Anti-Abuse Rule

· Close loopholes used by hedge funds to avoid stamp duty

· Close loopholes like the Eurobonds loophole which allow some large companies to move profits out of the UK and avoid Corporation Tax

· Stop umbrella companies exploiting tax reliefs

· Scrap the “Shares for Rights” scheme, which the OBR has warned could enable avoidance and cost £1bn and is administered by HMRC, and so ensure HMRC can better focus on tackling tax avoidance

· Tackle disguised self-employment by introducing strict deeming criteria

· Tackle the use of dormant companies to avoid tax by requiring them to report more frequently

Labour’s measures to tackle tax avoidance will also include:

· Ensuring stronger independent scrutiny of the tax system, including reliefs, and the government’s efforts to tackle tax avoidance

· Forcing the UK’s Overseas Territories and Crown Dependencies to produce publicly available registries of beneficial ownership

· Making country-by-country reporting information publicly available

· Ensuring developing countries are properly engaged in the drawing up of global tax rules

Shadow Chancellor Ed Balls said: “David Cameron and George Osborne have totally failed to tackle tax avoidance in the last five years. They have failed to close the loopholes we have highlighted, and the amount of uncollected tax has risen under this government.

“I am determined that the next Labour Government will act where the Tories have failed. We will close loopholes that cost the exchequer billions of pounds a year, increase transparency and toughen up penalties – and we will act in our first Finance Bill.”

Shabana Mahmood MP, Labour’s Shadow Exchequer Secretary, said: “The Tories and Lib Dems should back our motion to show that they are serious about tackling tax avoidance and evasion. We have a clear plan for our first Finance Bill after the election – they need to back that or explain why they don’t.”

This is a terrific move by the Labour Party. It seems clear that Labour was planning to tackle tax avoidance in any case – and should gain recognition for that alone, after the Coalition Government spent the last five years blowing hot air at us and doing nothing.

But it’s not perfect. Richard Murphy, of Tax Research UK, wrote yesterday evening: “There is no commitment to extra funding at HMRC. Nothing will happen without that.

“There is no direct reference to the tax gap and making explicit that these issues are meant to close it. Whilst HMRC works with the current deficient version of the tax gap this problem cannot, again, be resolved.

“I want a general anti-avoidance principle, not a revised General Anti-Abuse Rule, but penalties sure as heck help.

“There is no mention of the extra resources needed to make sure Companies House works properly, which is as important as the changes in dormant company reporting.

“There is no mention of BEPS implementation or action on things like permanent establishment and controlled foreign companies.

“And there’s no Office for Tax Responsibility as yet (although the hint of one has, I note appeared, so I am hopeful).”

All these criticisms are valid and it is to be hoped that Labour will adapt its bill to accommodate them. Even if this does not happen, Mr Murphy himself adds: “Let me stop complaining for a moment because I will probably never be completely satisfied.

“This is a package that indicates commitment to listen and commitment to change. It is a package that looks across the board at the issues of concern. And it addresses a fair range of items into debate. I welcome that, of course. The devil is always in the detail but there is room for manoeuvre in here and many statements are moves in the right direction when those are sorely needed.

“That is what is needed for now, and I’ll take it at that level.”

Do any of the other parties have anything at all to say?

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Torygraph reporting hits a new low point

Mr Barlow was part of the Conservative campaign in 2010 - what a rock'n'roller YOU are, Gary!

Mr Barlow was part of the Conservative campaign in 2010 – what a rock’n’roller YOU are, Gary!

Did anybody bother to read a story in the Daily Telegraph that claimed Ed Balls had accused the Conservatives of wheeling out Gary Barlow to speak against them in an almost-total misrepresentation of the Shadow Chancellor’s words?

Mr Balls referred to the Take That singer in an interview with BBC Radio 4’s Today programme, linking him with Alliance Boots boss Stefano Pessina as people who have spoken out for the Tories.

Here’s what he said: “I would think in the next three months we are going to have a number of people brought forward by the Conservatives – whether it’s Gary Barlow or Mr Pessina – saying don’t vote Labour.”

It’s clear that Gary Barlow is used because of his part in the Conservative campaign of 2010 and, because of that, it’s fair comment to suggest that he might be fielded again.

But there’s a lot of clear blue water between that and “Ed Balls has claimed that the Conservatives are enlisting Gary Barlow, the Take That singer, in a plot to destabilise the Labour Party.”

Is the Torygraph taking on staff from the Mail or Sun, perhaps?

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Labour plans ‘biggest devolution of economic power and funding for generations’

Ed Balls: He wants to put £30 billion worth of infrastructure funding into the hands of local government.

Ed Balls: He wants to put £30 billion worth of infrastructure funding into the hands of local government.

Today’s most interesting election announcement comes from Labour, which is promising to deliver “the biggest devolution of economic power and funding to England’s city and county regions for generations”.

Plans to devolve £30 billion of funding over five years – including funding for housing, transport, business support, employment and adult skills – will be at the heart of the next Labour government’s Spending Review, if elected in May.

A Labour Treasury will allow city and county regions which come together in combined authorities to keep 100 per cent of extra business rates revenue generated by additional growth. They will then be able to invest this to support further business growth in their regions.

All areas will be able to access these freedoms and areas which choose not to have an elected Mayor will not get a second-class deal.

It’s a clear attack on George Osborne’s plan for a “northern powerhouse” – Labour is asking, why just concentrate on ‘The North’ when so many other areas outside London need help due to Tory economic mismanagement?

It is to be hoped that Labour has not forgotten its support base in this business-friendly frenzy. Will this funding be used to promote the Living Wage, for example? Will it be used to create the new work demanded by its jobs guarantee – and will they be permanent, well-paying careers?

“Local areas will be in the driving seat on key decisions affecting their local economies – with new powers over back-to-work schemes, to drive house building, and to integrate, invest in and plan transport infrastructure,” said shadow chancellor Ed Balls, ahead of today’s announcement. It seems Labour has picked up a trick from the Tories – if this scheme fails anywhere, they will be able to blame it on local government. Hmm.

“And we will also let city and county regions keep all the additional business rates revenue generated by growth… We will not only back our great cities, but our towns and county regions too. Not just urban areas, but also rural areas.”

So there is much to recommend this plan – if a Labour government in Westminster can co-ordinate successfully with local authorities, of all colours, in the regions.

Or is this building castles in the air?

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