Inflation and Public Borrowing Add to Budget 2011 Headaches
THE GUARDIAN: • Consumer price index hits 4.4% for February 
• Public sector net borrowing for February at £10.3bn
 • Hopes dashed of big cut in deficit
 • News increases chance of cautious budget package

George Osborne was handed a double dose of unwelcome pre-budget news on Tuesday when official figures showed inflation leaping to 4.4% and public borrowing hit its highest February level since modern records began in 1993.

With the chancellor putting the finishing touches to his second package of fiscal measures, the rise in inflation put additional pressure on the Bank of England to raise interest rates while the deterioration in the public finances put paid to City hopes that borrowing in 2010-11 would significantly undershoot the government's £148bn target.

The disappointing economic news increases the chances of a cautious package from Osborne on Wednesday. The setback to the public finances gives the chancellor even less scope for budget giveaways and he will see a tough fiscal stance as necessary to prevent the Bank from raising interest rates.

Higher heating costs, the soaring price of oil and mark-ups from clothing and footwear retailers were mainly responsible for the increase in the consumer prices index measure of inflation from 4% to a 28-month high of 4.4%, according to the Office for National Statistics. » | Larry Elliott, economics editor | Tuesday, March 22, 2011

THE GUARDIAN: Inflation hits 4.4% in February: Retail prices index, which includes housing costs, hit 5.5% - its highest level since July 1991 » | Graeme Wearden | Tuesday, March 22, 2011

Senior Lib Dem Sacked for Criticising Controversial Deal for Bankers
THE DAILY TELEGRAPH: Coalition tensions over bankers’ bonuses have been laid bare with the sacking of a senior Liberal Democrat who criticised a controversial deal announced by George Osborne.

Lord Oakeshott, a close ally of Vince Cable, the Business Secretary, was last night removed from his post as the Lib Dem spokesman on Treasury issues.

His departure from the post came after he condemned the Coalition’s agreement with the banking industry as inadequate and accused Mr Osborne’s team of “arrogance and incompetence”.

Under the deal with the industry, the heads of the taxpayer-backed high-street banks will receive multi-million pound pay and bonus packages for last year.

The Chancellor said it was time to move from “retribution to recovery” and agreed to water down laws which would have identified multi-million pound bank traders.

However, under the terms of the “Project Merlin” deal, the country’s main high-street banks have agreed to increase lending and provide funding for community projects – in return for the Government not vetoing their bonus payments. >>> James Kirkup, and Robert Winnett | Wednesday, February 09, 2011

MAIL ONLINE: Clegg forced to sack Treasury spokesman after he pours scorn on 'weasel' Osborne's deal with banks: The coalition was in disarray over a lending and bonuses deal with Britain's biggest banks as Nick Clegg was forced to sack a member of his frontbench team for an extraordinary public attack on the Treasury. >>> James Chapman and Becky Barrow | Wednesday, February 09, 2011

THE DAILY TELEGRAPH: RBS's Stephen Hester and Lloyds' Eric Daniels accept multi-million pound bonuses: The chief executives of state-owned Royal Bank of Scotland and Lloyds Banking Group have accepted multi-million pound bonuses on the same day George Osborne unveiled details of a deal with UK banks that should cut pay-outs. >>> Harry Wilson and Andrew Trotman | Wednesday, February 09, 2011

Millionaire Bankers' Message to Britain: We're All Right, Jack
THE INDEPENDENT ON SUNDAY: Britain’s bankers are celebrating bumper bonuses. Whatever happened to the Government’s pledge to tackle them?

After umpteen calls for restraint by ministers, weighing the public relations impact, and consulting colleagues and advisers, Barclays chief executive Bob Diamond has made his most difficult decision. The multi-millionaire is set to accept a £9m bonus, one of the largest in the world, and will be followed by the bosses of the other major banks. This shows that they are all in something together, even if it's not what the rest of us are in.

Mr Diamond canvassed close City friends before deciding to take the bumper bonus which he fears will reignite the row over bankers pay. Sources close to him said: "Bob's been in a real dilemma as he can't stand this country's culture of banker-bashing and finds our attitude to bonuses extraordinary. But he is also aware of public opinion, so sounded out people about whether he should turn down his bonus again for the third year, take less or give some to charity."

Despite rising public anger about the scale of City payouts, David Cameron insisted last night that he was not interested in "headlines satisfying people today and tomorrow that I've given the banks a good kick in the pants. Can we do more on bonuses, particularly on those banks we own? Yes we can, and yes we will," he told The Sunday Telegraph. "But look, we've just been talking about growth. I don't believe actually in the long run, you can deliver the enterprise-growth agenda while having a running war with the British banking industry at the same time."

Some of those whom Mr Diamond – or his advisers – have consulted counselled him to show restraint. But the American decided that when he is offered the pay package – somewhere between £7m and £10m – he is minded to take it. >>> Margareta Pagano, Business Editor | Sunday, February 06, 2011

Why don’t they jail these SOBs? Then they would show some restraint! – © Mark

THE SUNDAY TIMES: Dominic Lawson: The Rich List can’t touch these guys: As Hosni Mubarak and Zine Ben Ali — and a host of other despots — have proved, there’s no business like kleptocracy >>> Dominic Lawson | Sunday, February 06, 2011 [£}

THE SUNDAY TIMES: Banks to hand out £6bn bonuses: A bonanza for British lenders will embarrass the chancellor as he tries to agree pay curbs and lending targets >>> Iain Dey | Sunday, February 06, 2011 [£]

Davos 2011 - David Cameron

THE DAILY TELEGRAPH: Davos WEF 2011: Osborne calls time on banker bashing – George Osborne has given a clear signal the Government wants to halt the long period of “banker bashing” by admitting “we need to move on”. >>> Kamal Ahmed, in Davos | Friday, January 28, 2011

What the hell is this chancellor is talking about? Who the hell is he to tell us what we are supposed to think? If this chancellor wants people to stop banker-bashing, then he needs to take action to halt the despicable bonuses which these people are stealing from the system. This is the disgusting face of ‘unbridled’ capitalism. – © Mark

George Osborne: Budget Cuts Keep Down Interest Rates
George Osborne has said the Government's austerity package will keep down interest rates for borrowers after economists questioned his strategy following a sharp contraction in the economy

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Terry Murden: Bank Bonuses Are Back as Politicians Roll Over
THE SCOTSMAN: NO-ONE should be surprised that the banks are expected to defy public opinion and once again pay multi-million pound bonuses.

Difficulties in controlling the bonus culture have been made plain by the frustrations felt by politicians across the spectrum and were highlighted here as far back as August 2009 after the then shadow chancellor George Osborne demanded that bonuses should be banned altogether in banks that had been bailed out by the taxpayer.

Well, he's moved a long way from that particular argument and now doesn't even see eye-to-eye with the bite-your-legs business secretary Vince Cable, who has found himself muzzled over the issue.

The bankers believe the Lib Dems who have been making most of the noise on this issue are now a bit of a spent force in the debate and that the slightly more banker-friendly tone emanating from Osborne and Prime Minister David Cameron will leave them free to award themselves the sums they see as their right.

The banks argue that they contributed towards the £53.4 billion paid in taxes last year by the financial services industry, equal to 11.2 per cent of Britain's total tax receipts. No wonder the Treasury should consider it inappropriate to bite the hand that feeds it.

Before Christmas there were more threats of a new bonus tax, an idea revisited by Deputy Prime Minister Nick Clegg, and warnings from Cable that the banks would be punished if they didn't change their ways. But opinion in the City is that there is not much substance behind them.

The bankers are now said to feel so confident of getting away with paying large bonuses that they see no further need for Project Merlin, the initiative led by Barclays former chief executive John Varley to repair relations with the government. Expect the next round of bonuses to be trimmed, but only marginally, and as an acknowledgement of, rather than a concession to, public outrage. >>> Terry Murden | Sunday, January 09, 2011

THE SUNDAY TIMES: Lib Dems tear into Tories 
on bonuses: Ministers are furious at George Osborne’s apparent cave-in over unacceptable bank bonuses in a time of austerity >>> Marie Woolf, Whitehall Editor | Sunday, January 09, 2011 (£)

THE OBSERVER: Britain's best-paid bank boss set for showdown with MPs over huge bonus: Barclays chief Bob Diamond is under intense pressure to lead by example and give up payout >>> The Observer | Sunday, January 09, 2011

Mervyn King Told US Cameron and Osborne Were 'Out of Their Depth’
THE GUARDIAN: Diplomatic memos reveal Bank governor thought top Conservatives lacked experience to deal with deficit

WikiLeaks cables reveal that Mervyn King was worried about David Cameron and George Osborne's lack of economic depth. Photograph: The Guardian
The head of the Bank of England privately criticised David Cameron and George Osborne for their lack of experience, the lack of depth in their inner circle and their tendency to think about issues only in terms of their electoral impact, according to leaked US embassy cables.

Mervyn King told the US ambassador, Louis Susman, he had held private meetings with the two Conservative politicians before the election to urge them to draw up a detailed plan to reduce the deficit.

He said the pair operated too much within a narrow circle and "had a tendency to think about issues only in terms of politics, and how they might affect Tory electorability". He also predicted that economic recovery would be "a long drawn-out process", since Britain had not been through an economic restructuring.

His apparent pressure on the Tories, a few months before the election, gives further credence to the claim that King was central in persuading leading coalition figures to back a far more dramatic deficit-reduction programme than any politician advocated during the election campaign. He has recently been criticised by members of the Bank's monetary policy committee for straying into politics. Read on and comment >>> David Leigh and Patrick Wintour | Tuesday, November 30, 2010

WikiLeaks: Mervyn King Should Quit Over 'Political Bias', Says Blanchflower
THE GUARDIAN: Leaked US cables show governor of Bank of England's 'thirst for power has clouded his judgment', former colleague says

David Blanchflower, a leading economist and former member of the Bank of England's monetary policy committee, has called on Mervyn King to quit as governor of the Bank of England following leaked US cables that he claims show King's "thirst for power and influence ... has clouded his judgment one too many times".

In his toughest attack on his former colleague to date, Blanchflower seized on revelations that suggest King may have been central in persuading leading coalition figures to back a far more dramatic deficit-reduction programme than any politician advocated during the election campaign.

Blanchflower, who stepped down from the policy committee last year and who has warned the coalition government's deficit reduction programme could lead to a recession, seized on the information revealed in the latest tranche of leaked US embassy cables released by WikiLeaks to say King's position was now untenable. >>> Hélène Mulholland, political reporter | Wednesday, November 01, 2010

David Blanchflower: Mervyn King Must Go
THE GUARDIAN: In showing his true party political colours, Mervyn King has compromised the Bank of England's independence

Mervyn King is one smart guy and that has always been abundantly clear. Unfortunately, it is his thirst for power and influence that has clouded his judgment one too many times. He has now committed the unforgivable sin of compromising the independence of the Bank of England by involving himself in the economic policy of the coalition. He is expected to be politically neutral but has shown himself to be politically biased and as a result is now in an untenable position. King must go. >>> David Blanchflower | Wednesday, November 01, 2010

Bank Chief Attacks PM's 'Lack Of Experience'
The head of the Bank of England criticised David Cameron and George Osborne for their lack of experience ahead of the General Election, according to the latest leak of US diplomatic cables

Are Cameron and Osborne Too Rich to Know How the Middle Classes Feel About Child Benefit?
David Cameron and George Osborne too rich to understand? Photo: The Telegraph
THE TELEGRAPH – BLOG – DAVID HUGHES: Out of the smouldering wreckage of the child benefit announcement is emerging a view of the Tory leadership that will, if it takes hold, be immensely damaging. It is that they are so well-heeled that they simply do not have a clue about how most people live their lives. David Cameron and George Osborne have never had to worry about money, ever. It has never impinged on their charmed existences. Read on and comment >>> David Hughes | Tuesday, October 05, 2010

Now That’s Really Dumb, George!
THE TELEGRAPH: Middle class parents who take time out from work to look after their children will lose out on thousands of pounds of Government handouts under a reform of child benefit announced by George Osborne.

In a move designed to save a billion pounds a year, the Chancellor annouced that higher-rate taxpayers will no longer be eligible for the benefits.

However the way the system is calculated threatens to put families with just one breadwinner at a disadvantage relative to households where both parents work.

This is because families with a combined income of £87,000 where both parents earn just under the higher-rate tax threshold of £44,000 are still entitled to the benefit while those with just one breadwinner earning £45,000 are not.

If the withdrawal of the benefit is not tapered, it could also mean that parents earning just below the threshold could be penalised if they get a pay rise.

The system relies on higher rate taxpayers declaring whether anyone in their household is claiming the benefit which can then be deducted from their earnings.

Mr Osborne defended the plan by pointing out that the costs of conducting a means test on every family would eat up much of the savings from cutting the benefit payouts. He claimed that the average income for households with one higher rate taxpayer is £75,000.

Speaking in an interview on ITV's Daybreak this morning he described the move as "a tough but fair decision."

He added: "It's just not fair to ask someone who's on £15 or £20,000 a year to be paying for the child benefit of someone who's on £50,000 or even more."

"At any other time, I wouldn't do this. But Labour left us with a heck of a mess." Stay-at-home parents to lose out in child benefit reform >>> James Kirkup, Political Correspondent | Monday, October 04, 2010

BENEDICT BROGAN: Child Benefit: What's fair about taxing stay-at-home mums? >>> | Monday, October 04, 2010

The Nation Is in Deep Debt and Stiglitz Calls for Profligacy! Osborne's First Budget? It's Wrong, Wrong, Wrong!
THE INDEPENDENT ON SUNDAY: Joseph Stiglitz, the Nobel prizewinner who predicted the global crisis, delivers his verdict on the Chancellor's first Budget and tells Paul Vallely it will take the UK deeper into recession and hit millions – the poorest – badly

George Osborne will probably not be very bothered that there is a man who thinks he got last week's emergency Budget almost entirely wrong. But he should be. Because that man is a former chief economist at the World Bank who won the Nobel Prize for Economics for his work on why markets do not produce the outcomes which, in theory, they ought to.

Professor Joseph Stiglitz, who has been described as the biggest brain in economics, is distinctly unimpressed by George Osborne's strategy. This, he predicts, will make Britain's recovery from recession longer, slower and harder than it needs to be. The rise in VAT could even tip us into a double-dip recession.

Stiglitz, who was once Bill Clinton's senior economic adviser, is now professor of economics and finance at Columbia Business School. He was in the UK this week at the University of Manchester, where he chairs the Brooks World Poverty Institute, but he lifted his head from the detail of international development to scrutinise the economic strategy of the Conservative Chancellor whose Liberal Democrat partners recently reversed their judgement that massive public spending cuts now would endanger the economy and joined in the Tory slash-and-burn strategy. They were deeply wrong to do so, he believes. Continue reading and comment >>> | Sunday, June 27, 2010

Budget 2010: VAT Rise and Benefits Cuts to Tackle Britain's Deficit
THE TELEGRAPH: VAT will rise and benefits will be cut to wipe out Britain’s budget deficit within five years, George Osborne has announced.



The Chancellor used his emergency Budget to announce that VAT will rise from 17.5 per cent to 20 per cent from January 4.

He will also cut £11 billion a year from benefits and welfare payments.

High-earners will be hard hit by the measures. Anyone earning more than £49,700 a year will be almost £1,600 a year worse off, Treasury figures indicated.

The average earner will be £400 a year worse off.

Mr Osborne said the wide range of cuts and tax rises were needed to pay off the deficits Labour ran up.

“This is the unavoidable Budget,” he said.

“It is tough but it is fair. I am not going to hide hard choices from the British people.

He added: “Today, we take decisive action to deal with the debts we have inherited.”

He insisted that all income groups will share in the pain to come. “When we say we are all in this together, we mean it,” he said. >>> James Kirkup, Political Correspondent | Tuesday, June 22, 2010

Emergency Budget 2010: Osborne Promises to Balance Books in Five Years
George Osborne holds Gladstone's original budget box as he leaves 11 Downing Street for Parliament today. Photo: The Independent
THE INDEPENDENT: A stern-faced Chancellor George Osborne delivered his "tough but fair" emergency Budget plans to Parliament, promising to balance Britain's books within five years.

In a statement issued after briefing Cabinet colleagues, Mr Osborne said the Budget aimed to protect children and pensioners and ensure the richest bear the largest share of the burden.

He then posed briefly on the steps of 11 Downing Street, flanked by his equally grim-faced Treasury team, before heading to the House of Commons to unveil his plans.

In his statement, Mr Osborne said: "My Budget is tough but it is fair. This is an unavoidable Budget because of the mess we have to clear up. So the coalition Government will take responsibility for balancing Britain's books within five years.

"We are going to do this fairly, protecting children and pensioners and ensuring the richest contribute the most. And it means getting enterprise going, because it is business, not Government, that will create the jobs of the future." >>> Press Association | Tuesday, June 22, 2010

Coalition Warns of ‘Hardest’ Budget
George Osborne will try to distinguish his measures from anything that Labour could portray as a Thatcherite attack on the poor. Photo: The Times
THE TIMES: George Osborne will claim today that the harshest Budget for 30 years will squeeze the rich more than it hits the poor. The Chancellor will seek to sell his package of record spending cuts and tax rises as being stamped by fairness as he tries to win public support for a four-year austerity drive.

Nick Clegg moved to pre-empt any revolt by Liberal Democrats last night by insisting that his party’s values were at the heart of Mr Osborne’s assault on the deficit. “This is one of the hardest things we will ever have to do,” he wrote in an e-mail to party members, an acknowledgement that the pain to come will put the coalition under immense strain.

Mr Osborne’s Budget statement is a watershed moment, when households learn how much they will have to suffer to help to pay off the country’s debts. Read on and comment >>> Roland Watson, Political Editor | Tuesday, June 22, 2010

Vision Offered by the Coalition Government in the Queen's Speech Will Offer Little to Help Victims of the Cuts
THE TELEGRAPH: It's a new nation under the coaltion government – but be warned: the newly poor will need a voice, says Mary Riddell.

Tomorrow, with all due pomp and pageantry, the Queen will tell Parliament that her Government will exercise "freedom, fairness and responsibility". Her speech, rooted in 500 years of tradition, will herald the birth of a modern nation.

The legislative programme outlined by Her Majesty is the gateway to a Britain in which children play in streets uncluttered by CCTV cameras and superfluous immigrants. These pupils, heading to sumptuous schools set up by (non-working?) parents, may walk past JobCentre Plus branches packed with benefit scroungers being shoehorned into gainful employment. Any anti-social elements disturbing the civic calm will be swiftly dealt with by our newly-politicised police. What happy days.

I do not mean to parody the Con-Lib agenda. Scrapping ID cards, curbing the excesses of the surveillance state and electoral reform are welcome and overdue. Even so, the upbeat pitch of today's proceedings stands in stark contrast to yesterday's.

The £6.25 billion cuts outlined by George Osborne sounded modest and, in some cases, positive. We can all sign up to a bit of quangocide and an end to first-class travel by civil servants. But these are the surface grazes before tax cuts kick in and the axe falls on the 300,000 public sector jobs threatened by efforts to cut the £157 billion budget deficit.

As the age of austerity dawns, the government is unfurling two contradictory visions of Britain. One is of a settled country reclaiming equality and freedom. The other shows a future so divisive that its strictures may rupture our tacit social contract and threaten civic peace. Obviously, cuts are essential, and Labour profligacy has made them more so. But the Coalition, still in its honeymoon, is being allowed to draw a veil over the pain to come. >>> Mary Riddell | Monday, May 24, 2010

New Sharia Row Over Chancellor’s Plans for ‘Islamic Bonds’
THE MAIL ON SUNDAY: A new sharia law controversy erupted last night over Government plans to issue special "Islamic bonds" to pay for Gordon Brown's public-spending programme by raising money from the Middle East.

Britain is to become the first Western nation to issue bonds approved by Muslim clerics in line with sharia law, which bans conventional loans involving interest payments as "sinful".

The scheme would mark one of the most significant economic advances of sharia law in the non-Muslim world.

It will lead to the ownership of Government buildings and other assets currently belonging to British taxpayers being switched wholesale to wealthy Middle-Eastern businessmen and banks.

The Government sees sharia-compliant bonds as a way of tapping Middle-East money and building bridges with the Muslim community.

But critics say the scheme would waste money and could undermine Britain's financial and legal systems.

Senior Conservative MP Edward Leigh, chairman of the Commons Public Accounts Committee, said: "I am concerned about the signal this would send – it could be the thin end of the wedge.

"British Common Law must be supreme and should apply to everyone." New sharia row over Chancellor's plans for 'Islamic bonds' >>> By Simon Walters

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