Posts Tagged “Autumn Statement”

  • Economics

    Fiscal Frameworks & Spending Plans

    19th April 2013 — Filed under: Economics

    Duncan Weldon Duncan Weldon

    Today’s political news is being dominated by a report in the Independent, claiming that Labour will pledge to go into the next election with higher spending plans than the Conservatives.

    The report gives a preview of forthcoming research from the Fabians:

    Arguing the cuts may be unnecessary, the study says that, if the economy is growing by about 2 per cent annually, public spending could rise by 1 per cent a year and Labour could achieve Mr Osborne’s target of seeing debt falling by 2016-17 two years later – or sooner than 2018-19 if taxes were increased.

    Leaving aside today’s likely political brouhaha* over what this analysis means for the politics of 2015, this report is an important contribution to the economics of getting an appropriate fiscal framework in place.

    The political debate on whether or not parties should sign up to the Coalition spending plans beyond 2015 is currently crowding out a much more important fact – the UK no longer has a fiscal framework that is fit for purpose.

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  • International

    Overseas aid: giving with one hand…

    8th December 2012 — Filed under: International

    Owen Tudor Owen Tudor

    Credit where it’s due – in his Autumn Financial Statement, George Osborne resisted the calls from his right wing to abandon the cross-party pledge to reach the UN target of spending 0.7% of UK Gross National Income on overseas aid, making this administration the first Conservative led one for 40 years to increase overseas aid (details below.) The UK will, in the next financial year, join a sadly exclusive club (confined to northern Europe) spending what the international community has agreed developed economies should spend.

    We welcome that, despite the views expressed by some on the left as well as the right that overseas aid targets are not the be all and end all of international development, and that there are better ways to promote development than aid spending (eg promoting trade, promoting good governance, or tackling tax havens). The TUC has always taken the line that the alternative to raising overseas aid spending to the UN target is unlikely to be good news for the poor in developing countries because it means less money being spent in developing countries. Aid spending saves lives, it can help economies to grow, and it can help deliver quality education.

    And here’s the rub: George Osborne will meet the UN target for overseas aid, but the effect of his domestic policies on the UK economy means that the amount of money going overseas will be less than expected.

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  • Society & Welfare

    The different treatment of pensions and other benefits

    5th December 2012 — Filed under: Society & Welfare

    Nigel Stanley Nigel Stanley

    I am not a big fan of the argument that the old are screwing the young. But George Osborne will certainly feed it today.

    His clever political wheeze was to freeze benefits at one per cent. This is going to be written into statute (at present the law requires them to be linked to inflation) and he thinks that challenging Labour to vote against this cut in living standards will expose them as the scrounger’s friend.

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  • Pensions & Investment

    Uprating of the 2013 Basic State Pension not quite as good as it looks?

    5th December 2012 — Filed under: Pensions & Investment

    Helen Nadin Helen Nadin

    In the June 2010 Budget the Chancellor announced that the Basic State Pension (BSP) would be increased by the higher of CPI, earnings or 2.5%, known as the “triple lock”. While the TUC welcomed this announcement, we believe the change was over-stated by the government and would result in lower increases in the BSP than would arise from using RPI as the measure of inflation. Today’s announcement confirms that this has been the case.

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  • Economics

    Postcode pay dropped for NHS and civil service – but unwelcome changes for teachers

    5th December 2012 — Filed under: Economics, Labour market, Public services

    Alice Hood Alice Hood

    Amid the grim news from the Autumn Statement, many public sector workers will have breathed a rare sigh of relief when the Chancellor announced that the government would not be pressing ahead with local or regional pay in the NHS, civil service or prisons. But teachers have been singled out for a divisive and damaging experiment with what effectively amounts to individualised pay.

    The Chancellor said:

    “We are today publishing the reports we commissioned from the pay review bodies on market-facing pay. We commit to implement these reports. This means continuing with national pay arrangements in the NHS and Prison Service, and we will not make changes to the civil service arrangements either.

    But the School Teachers’ Review Body does recommend much greater freedom to individual schools to set pay in line with performance. And the Education Secretary will set out how this will be implemented.”

    The climbdown on regional pay in health, prisons and the civil service is hugely important. A broad alliance including MPs of all parties, councils of all stripes, the public, academics (£) and businesses as well as trade union members from public and private sectors spoke out against the proposals. The economic damage, risks to services and unfairness of the idea were compounded by the lack of evidence to support it from economic theory or private sector practice.

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  • Economics

    The distributional effects of the Autumn Statement

    5th December 2012 — Filed under: Economics

    Nigel Stanley Nigel Stanley

    The Chancellor slipped in the “we are all in it together” mantra right at the end of his speech.

    But the Treasury’s own figures do not exactly bear this out. This chart is taken from the Treasury’s distributional analysis of the Autumn Statement.

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  • Pensions & Investment

    Has the Autumn Statement further scaled back auto-enrolment?

    5th December 2012 — Filed under: Pensions & Investment

    Craig Berry Craig Berry

    In October, I questioned whether the government’s proposal to link the automatic enrolment earnings trigger to the personal income tax allowance meant workplace pensions reform was being ‘scaled back’. The TUC opposed the proposal because it would lead to many thousands of low-earners being excluded from auto-enrolment. The Autumn Statement may just have made the situation even worse.

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  • Economics

    OBR demonstrate huge new tax avoidance loophole opened up by employment rights for shares scheme

    5th December 2012 — Filed under: Economics

    Nicola Smith Nicola Smith

    Today’s budget provides costings for the new employment rights for shares scheme – the costs of which are estimated by the Exchequer to be £80 million by 2017-18. But the OBR also note that:

    There are a number of uncertainties about the costing….the cost is expected to rise towards £1 billion beyond the end of the forecast period….it is hard to predict how quickly the scope for tax planning will be exploited; again this could be quantitatively significant as a quarter of the cost already arises from tax planning.

    If a quarter of the budgeted costs arise from tax planning that means this new measure has already introduced a loophole that will cost the Exchequer £20 million a year by 2017/18. But given the OBR suggest that the costs of the policy will rise to £1 billion shortly after this period (presumably in 2018/19) their analysis suggests that by this point avoidance will be costing the taxpayer £250 million a year – a quarter of a billion. This puts the £10 million that Starbucks have apparently today agreed to pay into sharp relief.

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  • Society & Welfare

    The implications of 1% uprating

    5th December 2012 — Filed under: Society & Welfare

    Richard Exell Richard Exell

    Nicola has explained why getting rid of benefit uprating requires new legislation. As she says, this could easily have a huge impact on living standards, bigger than anything else in the Autumn Statement. I’ve tried to work out what this is likely to mean in practice and it looks as  though, in just three years, single unemployed  people will lose £2.85 a week compared with the uprating policy we have now and £3.85 compared with the policy we had before 2010.

    In the table below we start off with the Jobseeker’s Allowance for a single person aged over 24 in 2012 – 13. The current uprating rule is that benefits rise in April in line with Consumer Price Index inflation the previous September; until the current government took power the increase was in line with the Retail Price Index. The CPI then was 2.2 per cent and the RPI was 2.6 per cent. The practice has been to round the increase up to the nearest 5p.

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  • Pensions & Investment

    Smoothly does it

    5th December 2012 — Filed under: Pensions & Investment

    Craig Berry Craig Berry

    Underneath the headlines of today’s Autumn Statement was a commitment to consult on ‘smoothing’ for pension funds. Funded DB schemes undergo a valuation process every three years, overseen by the Pensions Regulator, whereby scheme assets and liabilities are calculated. Typically valuations are a ‘snapshot’ in time, but smoothing would mean that asset values over a longer period could be taken into account.

    Smoothing would essentially mean that a higher discount rate could be used when valuing scheme liabilities. Liabilities would be reduced, meaning deficits (the gap between assets held and the size of liabilities) would also come down. One of the consequences of this is that employers sponsoring DB schemes would be under less pressure to increase their support for those schemes.

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