Adam Lent's Archive — Page 2
Adam Lent was Head of the Economic and Social Affairs Department from late 2007 – early 2011 and is now Director of Programmes at the RSA.
Adam Lent
I posted last week on how the OBR’s forecasts for jobs growth in the next five years could be seen as a tad optimistic. Now Brian Green at Brickonomics thinks the OBR might also be looking on the sunny side when it comes to the likely tax revenues that house sales will generate – a full £4 billion too sunny in Brian’s view.
Adam Lent
Reports are emerging of the first Government Department likely to lose jobs in the cuts. Rumours are that some Department for Business operations could lose 25% staff. Although claims that 25% of all staff in the 3,000 strong Department might go have been denied. The redundancy scheme which starts next week will be voluntary.
Adam Lent
There has been a lot of debate this week about the Office for Budget Responsibility’s forecasts for employment over the next five years. The debate has been compounded by the leak of Treasury documents dealing with the same issue.
There is also some confusion about whether the OBR is predicting jobs growth of 2 million or 2.5 million by 2015 and how this fits, if at all, with the HMT’s leaked forecast of 2.5 million new jobs. The key point, however, is that either level of jobs growth could credibly create new work for all those who have lost their jobs since the recession began and those who are likely to lose their jobs as a result of the cuts announced in the Budget. An issue of some economic and political importance to say the least.
One can debate the OBR’s forecasts in a number of ways. One possible method is to compare it to the historical record on jobs growth.
Adam Lent
The Chancellor claimed his Budget was fair and it turns out not to be the case. Now his claim that it will benefit the economy is looking equally ropey. The admission comes not from a think tank but from the Treasury itself. Larry Elliott of The Guardian has seen a leaked presentation by Treasury officials which predicts that between 500,000 and 600,000 jobs will be lost in the public sector over the next five years with a further 600,000 to 700,000 in the private sector. None of this appeared in the Budget of course. Didn’t he say something about transparency and honesty as well?
Adam Lent
Drawing on a wealth of data sources, Landman Economics and the Fabian Society, have been building a statistical model for the TUC and Unison over the last few months which shows how public spending affects different households and income groups. Don’t Forget the Spending Cuts! is the first study based on the model and it reveals just how strikingly regressive the Budget is once you factor in the spending cuts which neither the Treasury nor the IFS’s analysis included.
The model reveals that:
the average annual cut in public spending on the poorest tenth of households is £1,344, equivalent to 20.5% of their household income, whereas the average annual cut in public spending on the richest tenth of households is £1,135, equivalent to just 1.6% of their household income.
The graph based on the data tells its own remarkable story (you can click on it for a bigger version):
The Observer has a report on the study today.
Adam Lent
In an early indication of how the cuts announced in the Budget are going to cause trouble in the private as well as the public sector, a social housing maintenance company, Connaught, has issued a profits warning which led to a severe drop in its share price. A similar company, Mears, also saw its share price hit. As the FT reports, the notion that such outsourcing companies might pick up extra business because they offer cost-savings to local authorities isn’t being bought by the markets.
Adam Lent
Figures out today show that public sector borrowing in May was £2 billion lower than expected because of rising incomes and higher spending which are both generating bigger income tax and VAT revenues.
So why, a casual observer might ask, is George Osborne about to slash spending and raise VAT – measures which will damage confidence, reduce growth and spending and hence drive down those desperately needed tax revenues? I know the Tories have never been too hot on evidence-based policy but this has to be a new low.
Adam Lent
That’s the German one, by the way. But as the Guardian report makes clear, the big issue is the rising unpopularity and perceived unfairness of Merkel’s austerity package. Draw your own conclusions.
Adam Lent
Some good(ish) news at last. The FT reports (registration required) that the Treasury review of private sector contracts will probably let most go ahead. It says that the bulk of loans and guarantees for the car industry and offshore wind will continue. Cameron has already confirmed that a £21 million grant to Nissan to produce the Leaf electric car has been spared the chop. However, the article specifically mentions that the £80 million loan to Sheffield Forgemasters to build components for new nuclear power stations is in the balance.
