Economy

Tuesday

Peter Hoskin

Why Labour’s 50p tax wobble is dangerous for Ed Miliband

Why did Gordon Brown wait until the last few weeks of Labour’s thirteen-year reign to implement a 50p tax rate? Easy. Because it wasn’t so much a fiscal policy as a fiendish trap, designed to cut into a Tory government’s flesh. But now, it seems, the trap has snared another victim: Labour itself. The Telegraph’s Daniel Knowles has already neatly summarised the politics arising from Sam Coates’ report (£) that Labour will neither back the scrapping of the 50p rate nor promise to reinstate it either. But the basic point is worth repeating: if that’s the approach that Labour chooses, then they’ll be left in a complete mess. They can

Eamonn Butler

Has Osborne learnt the right lessons from Adam Smith?

According to Rachel Sylvester in The Times (£) today, George Osborne’s love of soaking the rich — from the non-dom levy to the tycoon tax – stems from the importance he puts on the ‘empathy’ described in Adam Smith’s Theory of Moral Sentiments. If so, he’d better start re-reading his Adam Smith. Certainly, the Chancellor is familiar with Smith’s other great book, The Wealth of Nations (1776). He wrote an introduction to a recent edition of it. That book is a passionate call for free trade and for open and competitive markets, and a stinging critique of the mutual back-scratching between businesspeople and politicians — what today we would call

Monday

Melanie McDonagh

Sundays should be about more than just economics

The Chancellor didn’t even bother to hide the thick end of the wedge as he inserted the thin end into the Sunday trading laws. He declared yesterday that restrictions on Sunday trading would be lifted for the duration of the Olympics and Paralympics on the basis that ‘It would be a great shame if the country had a “closed for business” sign on it.’ And he went on to remark, ‘maybe we will learn some lessons from it’. What might those be, do you suppose? That people, left to themselves, will shop all day, every day and should therefore be able to? Certainly that was the conclusion of The Times,

Fraser Nelson Fraser Nelson

Yes to new roads, no to a pensions raid

New roads in Britain are badly-needed, but who should bear the costs? Motorists, says David Cameron — and his speech today is a move in the right direction. No tolls would be slapped on existing roads, so motorists are free to drive as freely as they do now. But if they want a shortcut, they’ll have to pay for it. What I’m uneasy about is Cameron trying to raid our pension funds to help subsidise this. There are many ways to raid pension funds — QE is one. The National Association of Pension Funds estimates that a scandalous £130 billion has been wiped from the value of our collective pensions

Jonathan Jones

Support for scrapping the 50p rate grows, but why?

Will Wednesday’s Budget herald the end of the 50p tax rate? It’s looking increasingly likely, with today’s Telegraph claiming that Osborne will replace it with a top rate of 45 per cent. Leaving the economic arguments aside, the consensus is that this will prove an unpopular move that could damage the Tories. Tim Montogmerie tweets that ‘if the post-Budget headlines are about 50p then Tories have a political problem’. The New Statesman’s George Eaton writes that it ‘would do more to retoxify the Tory brand than any other measure’. But how dangerous a move is it? Certainly, scrapping the 50p rate doesn’t poll well. Yesterday’s YouGov poll found 60 per

James Forsyth James Forsyth

The coalition needs to get a move on

David Cameron’s speech today says all the right things about infrastructure. But the test will be whether Cameron forces these changes through the system.   Already, the planning reforms have been held up by a lengthy consultation. The government will respond to this consultation this week. But that won’t be the end of the matter. For even after the government has set its plans before parliament, there’ll be a ‘transition’ period between the old rules and the new ones.   All of which is a reminder that if Britain, and especially the capital, is going to get the extra airport capacity it so desperately needs, then decisions will have to

Peter Hoskin

A significant moment for the minimum wage

Here are some numbers for you: the adult rate of the national minimum wage will be raised, this October, by 11p to £6.19 an hour, but the separate rates for 16-17 and 18-20 year-olds will be frozen, at £3.68 and £4.98 respectively. I mention this not just because these figures were announced today, but also because it’s the first cash freeze in any of the rates that we’ve seen since 2005 (and even that was when the 16-17 year-old rate was kept at the same level after its very first year of existence): The question is, what now? The government is defending the freeze by saying that, ‘Raising the youth

Peter Hoskin

Where will Cameron’s road proposal take us?

Are we facing ‘toll road UK’, as the Mirror suggests this morning? That is certainly a possibility arising from David Cameron’s plan to allow private firms to bid for chunks of Britain’s motorway system — but I wouldn’t get too excited just yet. It’s a very distant possibility at the moment. After all, just note the details of the story. The routes that the coalition has in mind are very significant ones, but they still add up to only 3 per cent of the national network — ‘toll road UK’ may be pushing it. And then there’s the fact that nothing has been entirely decided yet. We’re told that, ‘The

Sunday

Fraser Nelson

Taleb in 30 minutes

Nassim Taleb, the Lebanese-American academic whom we interviewed in The Spectator last month, is the subject of a Radio Four profile by The Economist’s Janan Ganesh that was first aired last Monday but will also be on Radio 4 at 21:30 this evening. David Willetts is interviewed, saying that Taleb’s work underlines the folly of long-term forecasts because ‘the big events that shape the world today are those which no one predicted four or five years ago’. The discovery of Shale gas, for example, could utterly change Britain’s energy requirements. Taleb’s heroes are Burke and Popper: his emphasis is on the need for humility, on how hard it is for

James Forsyth James Forsyth

Downing St plans to boost construction

In the last few months, there’s been a distinct change in the attitude of the Tories at the heart of government. They are now far more cognisant of just how difficult it is to drive change through the government machine. It is no longer just Steve Hilton and Michael Gove complaining about this, but Osborne and Cameron too. The Chancellor’s particular frustration at the moment is over the pace of planning reform. Osborne and his brains trust believe that simplifying the planning rules is one of the things that they could do to both give the economy a short term stimulus, by encouraging more construction, and improve its long term

Peter Hoskin

Osborne makes his appeal to Britain’s grafters

‘A Budget for Working People’. That’s the headline theme of this year’s Budget, says our former editor Matt d’Ancona in the Sunday Telegraph today. And his words are borne out by George Osborne’s interview with the Sun on Sunday. ‘We’ve got to help people into work, particularly young people,’ says the Chancellor, ‘We have to make this a competitive place in the world to set up in business and employ people.’ The measures being broadcast around this morning include a trial suspension of Sunday trading regulations, timed for during the Olypmic Games. At once, this is both an unsurprising and genuinely risky venture from Osborne. Unsurprising, because the votes of

Saturday

Fraser Nelson

The man behind the Budget

In today’s Telegraph, I profile Rupert Harrison, chief economic adviser to George Osborne and the man who’ll do more than anything else (including his boss) to shape next week’s Budget. In the British political system, special advisers are given very little attention — even though the best of them are more influential than the average Cabinet member. The Treasury’s vast power, assembled by Brown, is still there. That can’t be said for Osborne: he spends half his time in Downing St, and is sufficiently detached from the Budget process that he felt able to take a couple of days’ holiday in America last week to jump in the motorcade and

James Forsyth James Forsyth

Osborne’s economic and political reasons for local pay rates

George Osborne has just fired the first shot in the fight over the 2012 Budget. His decision to introduce local pay for the 160,000 civil servants coming off the public sector pay freeze is, as is often the case with Chancellor Osborne, both an economic and a political move. The economic case for local pay is straightforward. National pay rates mean that public sector workers are relatively underpaid in prosperous areas of the country and relatively overpaid in deprived areas. Pay that reflected local conditions would make for a more balanced economy, helping the private sector in those parts of the country where the public sector is currently dominant. But

Friday

The Spectator

From the archives: Rowan Williams on capitalism and idolatry

To mark today’s news that Rowan Williams will be stepping down as Archbishop of Canterbury, here’s a piece he wrote for The Spectator during the financial crash of 2008: Rowan Williams, Face it: Marx was partly right about capitalism, 24 September 2008 Readers of Anthony Trollope will remember how thoughtless and greedy young men in the Victorian professions can be lured into ruin by accepting ‘accommodation bills’ from their shifty acquaintances. They make themselves liable for the debts of others; and only too late do they discover that they are trapped in a web of financial mechanics that forces them to pay hugely inflated sums for obligations or services they

James Forsyth James Forsyth

Labour miss out the details

Labour’s launch of its new youth jobs policy has been rather overshadowed by Harriet Harman’s inability to explain the costing behind the policy on the Daily Politics earlier: not a good look for a party trying to show that it is fiscally credible. But more interesting than the number behind the policy is how it marks an attempt by Labour to toughen up its position on welfare. Those young workers who have been out of work for a year will have to take one of these minimum wage jobs or have their benefits docked.



 On the Labour front, the interview with Ed Miliband in the Times today is also worthy

Thursday

Tim Leunig

Right to reply: Why QE isn’t a disaster for pensioners

The best of all possible worlds for the pension industry is a buoyant economy. Workers have enough money to save, share prices rise and dividend growth is robust. Interest rates are positive in real terms so annuities are good value. The economy ground to a halt in 2008. The overwhelming priority for everyone is to get growth going again. Without growth the services that pensioners depend on — such as the NHS — will struggle. Traditionally, governments cut interest rates and raise spending to get the economy moving. The Bank of England has cut interest rates as much as possible and the government deficit remains very high. We have exhausted

Fraser Nelson Fraser Nelson

The questions Alex Salmond can’t answer

Should Scotland be independent? I’d have thought that only a few people — most of them Scottish — would care enough about the question to come to a debate hosted by a think tank, but the Policy Exchange fight club was packed last night. The sole nationalist was the SNP’s Pete Wishart, allied with Sir Simon Jenkins making his English Nationalist points. Sir Malcolm Rifkind spoke against the motion, with yours truly his support act. As you might expect from a London audience, those opposed won easily. But two things struck me. The first is Sir Malcolm’s eloquence. He was brilliant, better than Salmond, a reminder of what was cut dead in the

Wednesday

Jonathan Jones

Unemployment’s high, but at least it’s stopped rising

So, new jobs figures out today. Which do you want first: the bad news, or the kind-of-alright news? The bad news is that employment’s showing no signs of growth: the total number in work has been stuck at 29.1 million since it fell there in the summer. It’s a touch better than the trough of 28.8 million we hit at the end of 2009, but still half a million below where we were when the recession hit. And we’re showing no signs of getting there any time soon: And the not-so-bad news? Unemployment’s slightly down on last month, which was slightly down on the month before. It’s not a big

Fraser Nelson Fraser Nelson

The Bond Bubble’s getting bigger

George Osborne is planning to launch a 100-year bond, says the FT — a sure sign that the Bond Bubble is getting even bigger. These devices are usually used by American universities: the California Institute of Technology issued one at 4.7 per cent, MIT did one at 5.6 per cent, and a few American companies have tried at 6 per cent. The Mexcians sold a billion bucks’ worth of century bonds a while ago at 6.1 per cent, so it would only be a matter of time before HM Treasury — a world leader in, ahem, novel debt vehicles — was going to do the same. The US Treasury Borrowing

Monday

Fraser Nelson

Cameron’s sub-prime thinking

You’d think the American sub-prime crisis would have taught politicians the world over not to try to rig the housing market. But no, David Cameron is back on it today — about how to ‘unblock’ the system so the debt geyser starts to gush again. ‘The problem today is that you have lenders who aren’t lending, so builders can’t build and buyers can’t buy,’ says the Prime Minister. ‘It needs the government to step in, and help unblock the market.’ The idea that lenders may not lend because they feel the housing market may fall, and people may be unable to repay, is instantly dismissed. He speaks as if debt