Hard going for the government

A tough morning for the government at the hands of Tyrie, Fallon and rest of the Treasury Select Committee. Sir Alan Budd apologised for his naivety, Robert Chote described the Budget as ‘regressive’ in the main and the banking levy has been criticised on the grounds that is de-stabilising banks’ capital bases, which will affect lending.

The government would prefer silence on these issues but the damage was far from total. Budd was an interim figure and the spat that has developed around him is largely political – there is no question that Budd was ‘nobbled’. Robert Chote deserves his reputation but he is not infallible. And Treasury Chief Economic Advisor, Dave Ramsden, put paid to the criticism of the banking levy. He argued that £2.5bn across the sector will not bring insolvency of financial institutions, which something of an understatement. He also pointed out that the levy is brought on short-term investments, which is designed to moderate risk as well as make banks pay for the insurance that the taxpayer gave them.