Richard Exell

The headline on the press release for yesterday’s Markit/Ipsos MORI Household Finance Index figures says it all:

Widespread gloom among UK households as fiscal cuts take shape

There was a small deterioration in the overall Index, a larger fall in the index of how respondents expected to change over the next 12 months and a particularly large fall in the index of expected movements in house prices. The households in the survey reported an increase in debt and a “moderate decline” in income levels. 27% said that their finances had deteriorated since the previous month, compared with 7% who reported an improvement.

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Richard Exell

Iain Hasdell, UK Head of Local and Regional Government at accountants KPMG has warned that the local government settlement announced in the spending review “will severely test the financial viability of some councils.”

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• Gingerbread: lone parents being set up to fail
  A briefing from Gingerbread about the new rules that require lone parents whose youngest child is over 7 to look for paid work. Making this move at a time when childcare can be difficult to obtain and jobs are hard to find (especially those that are flexible enough to combine with having a child at primary school.)
• The only way to enjoy life is to spend, spend, spend
  Michael Winner's answer to the recession: “Here’s the best way to bring a smile to your face: spend, spend and spend again. You can’t afford it? You probably can. You’re just too mean or cautious to give it a go.”
• Police budget cuts to hit poorest areas hardest – Guardian
  The poorest areas that suffer the highest crime rates will be struck hardest by the government's cuts to police budgets, according to senior police figures.
• Nine jobseekers for every job in Duncan Smith’s Cardiff – News centre
  Iain Duncan Smith says unemployed people in the valleys should get on the bus to Cardiff to look for work. PCS looked at just what jobs are actually available there: jobs that finish after the last bus back home, temporary work (much of it for very short periods), part-time work that would hardly cover travelling costs.
• Stumbling and Mumbling: The Dorries paradox
  Mathematical proof that George Osborne is not doing a great job!

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Richard Exell

In an interview on the Politics Show yesterday Dame Suzi Leather (chair of the Charity Commission) warned the Prime Minister that the cuts could “pull the rug” from under his own ambitions to create a Big Society. She pointed out that charities run important services for local authorities and rely on them for funding; with councils facing a 26 per cent reduction in central government funding over the next four years, there is a risk that cutting their funding will be seen as an easier option.

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Nicola Smith

I have a post up at Left Foot Forward setting out my analysis of the impact that the Coaltion’s Tax Credit policy will have for low-income working families. It shows that working families stand to lose significant amounts as a result of the Budget and the Spending Review. For example, a dual earner household (with one part-time and one full-time earner on minimum wage) with two children will be over £700 a year worse off a year by 2012/13 than they would be if existing Tax Credit policy remained in place.

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Richard Exell

One of the casualties of last week’s Spending Review was the Warm Front scheme, which provides a grant (usually of up to £3,500) to people on low incomes to pay for insulation and heating measures, such as loft insulation, draught proofing, cavity-wall insulation, hot-water-tank insulation and installing central heating.

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Richard Exell

Today’s figures for mortgage approvals and business borrowing do not show any sign of increased demand. The monthly figures from the British Bankers’ Association show the level of lending by the main high street banks; the mortgage figures show that the value of loans approved (seasonally adjusted) as it its lowest level since May 2009, while the number of loans is at its lowest since March of that year.

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Richard Exell

Writing in today’s Sunday Mirror Christopher Pissarides accuses the Chancellor of exaggerating the risk of a government bond crisis like Greece’s. If Britain did face a bond crisis it would be very serious -

But in my view Britain is a long way from such a threat, and the Chancellor has exaggerated the sovereign risks that are threatening the country.

He also makes an important point about the way the government is ”taking risks with the economic recovery.” This point is being rather over-simplified in most of the coverage of this article and which follows on from a rather too simple version of the economic debate.

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Richard Exell

Three Conservative-controlled London councils – Westminster, Hammersmith and Fulham and Kensington and Chelsea – have announced plans to merge their most important services. In a joint statement, the leaders of the three Boroughs declared that their initial focus would be on children’s services, to be followed by environmental services, family services and corporate services; they would, they promised, preserve “the democratic sovereignty of local authorities.”

The goal, the three leaders insisted, was “to deliver more for less” and they have suggested that the move could save £100 million.

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• Archbishop attacks Coalition’s spending plans
  Dr John Sentamu, Archbishop of York, says “You do not escape an economic downturn by cutting investment and by squashing aspirations.”
• Exclusive: leaked email shows company supporting Cuts saying different internally
  Sunny Hundal shows that while the CEO of Arup was happy to publicly claim that the private sector is driving jobs growth, he has made the opposite case in an internal email to staff. Specifically he states that “…with the anticipated improvement in our sector of the UK economy failing to materialise, further redundancies have become inevitable.”
• Concerns raised of raid on council funds
  Local Government Chronicle reveals that the grant to local authorities will be less than the amount that business rates (collected centrally) are expected to raise. They report fears that the Treasury plans a ‘raid’ on this revenue which is supposed to be passed on to Councils entirely.
• British Fashion Victims
  Paul Krugman criticises the spending review and in passing points what’s obvious to most unbiased observers about how we got here: “Over-reliance on the financial industry largely explains why Britain, which came into the crisis with relatively low public debt, has seen its budget deficit soar to 11 percent of G.D.P.”
• The British Conservatives Have No Theory
  US economist Brad DeLong’s trenchant response to the Spending Review: “Their shame would not be quite so great if they had a theory about what elements of spending will grow to offset their 9% of GDP planned fiscal contraction.” A short item but really worth reading.

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