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As first reported by Left Foot Forward just hours after George Osborne’s statement, the Guardian‘s front page declares that “Budget will hit poor harder than rich”. A report by the independent Institute for Fiscal Studies yesterday said the Chancellor and Nick Clegg could only assert that the Budget was “tough but fair” or “progressive” by including reforms announced by Labour, such as the changes to pension contributions and the 50p tax rate. Robert Chote, the IFS director, said: “Osborne and Clegg have been keen to describe yesterday’s measures as progressive in the sense that the rich will feel more pain than the poor. That is a debatable claim. The budget looks less progressive – indeed somewhat regressive – when you take out the effect of measures that were inherited from the previous government, when you look further into the future than 2012-13, and when you include some other measures that the Treasury has chosen not to model.”
The poorest 10 per cent were left almost untouched by Labour’s plans but would see their incomes cut by more than 2.5 per cent over the next five years. The Guardian’s editorial calls it, “a direct challenge to the new government’s claims of fairness” while the FT reports that, “Poor to be hit most by service cuts”. And mirroring analysis on Tuesday by this blog, the Telegraph reports that the, “VAT rise was far from ‘unavoidable’.”
The Guardian reports claims by City analysts that the “Cut in corporation tax to 24% from 28% [is] expected to negate the impact of the levy on bank profitability”. John-Paul Crutchley, an analyst at UBS, expected Lloyds and HSBC to benefit by 2012 because the cut in their corporation tax bill was larger than their hit sustained through the bank levy. HSBC’s banking analysts concurred. “We’d expect most domestically-orientated banks, for example Lloyds, to be better off after four years than they were pre-budget,” the HSBC analysts said. Meanwhile, the Independent reports that, “the coalition Government’s proposed levy will fail to reach its target of generating £2bn revenues a year.” UBS analysts said that some banks would be likely to shift business to centres where levies will not be imposed, such as in Asia, if they have significant businesses in the region. Leigh Goodwin, of Citigroup, told the paper: “Based on the full levy rates announced, we estimate that the five major UK-listed banks will contribute around £1.3bn.”
The Financial Times‘ front page reveals that “Fresh welfare cuts are on the way”. The paper reports that amid warnings that Mr Osborne’s Budget implied spending cuts of up to one-third on areas such as transport, energy, universities and business support, the chancellor said that new welfare cuts would take some of the strain. The chancellor told the BBC that he could soften the impact of departmental spending cuts if “over the coming couple of months we can find further savings in the welfare budget.” Mr Osborne’s Budget set out to eliminate the hole in Britain’s public finances by 2015 with a £113 billion fiscal tightening, warning that most departments would have to cut spending by an average 25 per cent. But the Institute for Fiscal Studies said that average cuts could hit 33 per cent, because of the coalition’s promise to protect health and overseas aid spending, and on the assumption that the priority areas of education and defence lost 10 per cent.
The Telegraph‘s front page says, “Carry on working into your seventies” as the paper details how reforms will mean that “by the second half of the century, most people will work into their seventies.” The Government will make it illegal for companies to force staff to give up work at 65 while the age at which employees can claim the state pension will rise to 66 as soon as 2016 for men — 10 years earlier than the last government had decreed. Iain Duncan Smith, the Work and Pensions Secretary, told the paper that the radical pension reform he will oversee was designed to “reinvigorate retirement”. “People are living longer and healthier lives than ever, and the last thing we want is to lose their skills and experience from the workplace due to an arbitrary age limit,” he said.
The Guardian and Times‘ front pages cover President Obama’s decision to replace General Stanley McChrystal, as the top Afghan war commander, with General David Petraeus over comments he made in an interview with Rolling Stone magazine. Mr Obama said: “I don’t make this decision based on any difference of policy with General McChrystal, as we are in full agreement about our strategy … [But] the conduct represented in the recently published article does not meet the standard that should be set by a commanding general. It undermines the civilian control of the military that is at the core of our democratic system and it erodes the trust that is necessary for our team to work together to achieve our objectives in Afghanistan.” The Times reports that David Cameron spoke to Mr Obama afterwards by phone and issued a statement saying that both governments remained “absolutely committed” to the Afghan strategy crafted by General McChrystal. In a profile, the New York Times recalls that in 2008, General Petraeus said, “I’ve always said that Afghanistan would be the tougher fight.”
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20 Responses to “Politics Summary: Thursday, June 24th”
Hitchin England
Politics Summary: Budget unravels – measures are "regressive"; banks will gain http://bit.ly/9iiCOd via @leftfootfwd
Ipso Facto
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Andy Sutherland
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aggy hall
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yorkierosie
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