George Osborne has won the endorsement of Jeffrey Sachs, the director of Columbia Universities Earth Institute. The world renowned economist has signed a joint op-ed in tomorrow’s Financial Times with the shadow chancellor.

Here are come of the key excerpts:

“Virtually all policy analysts agree that the path to renewed prosperity in Europe and the US depends on a credible plan to re-establish sound public finances. Without such a plan, the travails which have hit Greece and which are threatening Portugal and Spain will soon enough threaten the UK, US, and other deficit-ridden countries. In the recent duel of macroeconomists, one camp has called for early budget consolidation, followed by further measures over five years. We agree. Others want more fiscal stimulus, delaying deficit reduction. We believe delaying the start of deficit reduction would put long-term recovery at risk. Such an approach misjudges politics, financial markets, and underlying economic realities.”

continue reading

The row about Labour’s plans for taxes on the elderly took a new twist today as it was revealed that a new Government ‘Pay As You Die’ scheme will force the elderly to sign away their homes to pay their soaring council tax bills.

In order to stave off local authority tax collectors and bailiffs, a new Government scheme quietly enacted in November 2009 will permit pensioners to ‘defer’ their council tax bills, and instead pay – with interest – when their property is sold or on death of the surviving resident spouse.

Such a policy though will pressure many pensioners on fixed incomes to sign away their homes if they are struggling with their council tax bills. Council tax will effectively become a form of inheritance tax.

continue reading

As we hurtle towards the general election it appear that a day doesn’t go by now without a key business leader or hugely influential economist coming out and pours scorn of the governments economic policy.

The latest is none other than Sir Richard Branson, who in an interview this morning, saying “I believe the UK’s record budget deficit does pose a serious risk to our recovery. It would be deeply damaging to Britain if we lost the confidence of the global financial markets through delayed action and saw interest rates have to go up steeply.” continue reading

After the last couple of days, in which CCHQ have done their best to to muddy the waters when it comes to Conservative economy policy, George Osborne today got onto the front foot.

The Shadow Chancellor has published eight benchmarks that he want the general public to judge him and his team by, if they win power on May 6.

Describing his benchmarks as the foundation of a ‘new economic model for Britain’ they will create the growth needed. In a nod to the important role the City has in generating growth and keeping the economy moving he said that sustained growth will not be achieved if policy centers around trashing the competitiveness of the City.

Mr Osborne’s the benchmarks are designed so that the British people “can judge the success or failure of their Chancellor and their government over the next Parliament. We will be accountable.” They are:

Ensure macroeconimic stability by protecting Britain’s credit rating.
Create a more balanced economy – ensuring higher exports, business investment and saving as a share of GDP
Get Britain working by reducing youth unemployment
Make Britain open for business by improving our international ranking on tax competitiveness
Ensure the whole country shares in rising prosperity – by raising the private sector’s share of the economy in all regions of the country, especially outside London and the South East.
Reform public services to deliver better value-for-money by improving productivity in the public sector
Create a safer banking system that serves the needs of the economy
Build a greener economy by reducing carbon emissions and improving our share of green technologies

Speaking at the British Museum he also said that preventing credit rating agencies downgrading the UK would be a priority for a Conservative government.

“Protecting the credit rating will not be easy. The largest bond investor in the world thinks there is an 80% chance of a downgrade. The reputational consequence of a downgrade would be pretty considerable. We don’t want to play with fire by getting downgraded.”

For the first time George Osborne has said that Whitehall departments will have to start making cuts almost straight away, should the Conservatives win the coming general election.

David Cameron’s shadow treasury team have already said that an emergency budget will be implemented within the first 50 day’s of a Tory administration taking office, but the shadow chancellor’s intervention is the first public announcement regarding in-year cuts.

Speaking at the London School of Economics on Thursday night he said: “The message could not be clearer – if you find yourself on the wrong road, you take the first available exit instead of carrying on.

“With the date of the general election increasingly likely to be after the beginning of the next financial year, that means we will need to make early in-year reductions in existing plans.”

The Tories plans are is sharp contrast to those of Gordon Brown and Alistair Darling who are refusing look again at their spending commitments in a effort to paying down the record £178 billion deficit.

“Programmes that represent poor value for money, excessive spending on things like advertising and consultants, spending on tax credits for people earning over £50,000, and spending on Child Trust Funds for better off families will all have to be cut during the financial year,” he said.

The Treasury has already set departmental budgets for 2010-2011 which will see spending increase from £676 billion this year to £707 billion next year.

Highlighting the risk arising from the governments continuing refusal to introduce in-year cuts Mr Osborne said: “There is a clear and present danger that the world will lose confidence in Britain’s economic policy. That would push mortgage rates up, more businesses would go bust and the recovery would be undermined.”

Adding: “Total spending is planned to go up by £31 billion in nominal terms, or by more than 2 per cent in real terms. During a period when the Treasury expects the economy to be growing by at least 2 per cent, and with the largest budget deficit of any developed economy, that is simply not credible.

“Everyone knows that the Government’s spending plans for next year are driven by a looming general election and not economic reality.”

Mr Osborne also confirmed the his his policy of introducing a pay freeze for all public sector worker’s who earn more than £18,000 would not take effect until 2011.

Appearing on the Andrew Marr Show this morning David Cameron outlined three measures to help small businesses:

David Cameron has given the clearest signal so far that he will not allow trade unions to derail his plans to get to grips with the public deficit.

Talking to the Daily Telegraph he said that he would be “very happy” to introduce new laws aimed at stopping those trade unions, opposed to his plan to introduce a one year pay freeze, staging walkouts.

When George Osborne outlined Conservative plans to get the countries ballooning deficit under control at Conference in October, union leaders almost instantly came out against the plan with some threatening strike action.

Mark Serwotka, head of the Public and Commercial Services union, said there was a “very strong likelihood” of strikes if the pay freeze went ahead.

Dave Prentis, leader of Unison, said millions of workers would be “left out in the cold? by the freeze. Others will have to pay with job and service cuts, while bankers and tax cheats escape with a slapped wrist”.

These sentiments were echoed by Derek Simpson, joint general secretary of Unite, who said: “This was a speech written on the back of a Bullingdon club membership card. George Osborne has made it clear the Tories are going to hit hard-working public sector workers on low pay while preparing to line the pockets of the wealthy through income tax cuts.”

Mr Cameron said by freezing the pay of those who earn more than £18,000 a year, one million of the lowest paid workers would not be affected.

Using language that highlights his changing attitude towards the unions he warned their leaders that they faced “a very determined, robust, sensible, reasonable group of people,” adding “the trade union laws that were passed in the 1980s have withstood the test of time. If ever they needed to be strengthened I would be very happy to strengthen them. But I think there’s a set of rules that work very well.”

Just like Margaret Thatcher in the 1970s and 80s it could be the trade union’s that make or break David Cameron’s government. It is for this reason that he needs to limit any sign of discontent from within and have both fortitude and commitment to cary through his policies no matter what.

An incoming Tory government would be ready to put up taxes in order to get the UK’s soaring deficit under control, Ken Clarke has said.

The shadow business secretary said it would be “folly” to rule out increases alongside reductions in public spending.

The comments came as David Cameron effectively kicked off the general election campaign, urging voters to make 2010 a “year for change”.

Speaking from his Oxfordshire constituency on Saturday, Mr Cameron said a “a complete overhaul” of the economy would be necessary to reduce the deficit:

“We’ve been clear about our intention to cut public spending, and clear about where some of those cuts will come – from a one-year freeze on public sector pay to bringing forward the planned increase in the state pension age. But it’s not enough just to deal with the deficit. To have a hope of competing in the decades to come, our economy needs a complete overhaul. We need to build an enterprise economy.”

The Conservative leader is expected to make an audacious raid on traditional Labour territory on Monday by pledging to divert more money to healthcare in the UK’s most deprived areas.

In his interview with the Sunday Telegraph, Mr Clarke said: “It’s something that every Conservative tries to avoid but I didn’t avoid it when I was getting us out of recession before.

“Coming out of a recession when you have such a severe deficit, you can’t rule out putting up taxes.

“If you can’t get it down quickly enough, in order to maintain the confidence of the markets and to create conditions for growth and employment, then you may have to look at tax increases.”

Asked specifically about VAT, which some observers expect the Tories to raise to 20% if they win power, the former chancellor said: “When you’re the most indebted country in the Western world… then you cannot start promising you are not ever going to start increasing taxation.

“We will try to avoid it, we’ll minimise it if we have to by having proper control of public spending, which we haven’t had in this country in the last 12 years.”

Public borrowing hit an all-time high of £20.3 billion for a single month in November, official figures have revealed.

The latest confirmation of the recession’s impact on the public finances will put more pressure on Chancellor Alistair Darling.

The figure is not as bad as the £23 billion feared by economists but still takes net borrowing for the eight months of the financial year so far to £106.4 billion.

The £20.3 billion is more than was borrowed by the UK for the whole of 2002 and on a par with International Monetary Fund estimates for the entire 2009 output of economies such as Costa Rica and Uruguay.

Net borrowing is expected to reach £178 billion for the year as a whole.

The gloomy figures also showed net debt reaching a record £844.5 billion in November – or 60.2% of the UK’s annual GDP.

Current tax receipts fell by £1 billion on the same month a year ago while spending jumped by more than £3 billion to £50.3 billion.

Nearly a third of this spending was accounted for by social benefits such as Jobseeker’s Allowance – the so-called “bill for failure” – which hit £16.2 billion. This is the highest for at least eight years, the Office for National Statistics (ONS) said.

Other unwanted records thrown up by the figures include a £16.2 billion current deficit – the gap between spending and receipts.

The deficit for the year so far has reached £83.2 billion, although the Chancellor has pledged to halve the deficit within four years and the Government is passing a Fiscal Responsibility Bill to put the commitment on a legal footing.

Responding to the announcement Shadow Chancellor George Osborne said:

“In the run up to Christmas, Gordon Brown is maxing out on the nation’s credit card – and doesn’t care how we are going to repay these debts in the future. The record public borrowing figures equates to almost £1000 for every family this month alone. Now we’re all paying for Labour’s failure to fix the roof when the sun was shining – and after last week’s PBR, we know they have no credible plan to get this debt under control. So the price of keeping Gordon Brown in office is clear: higher interest rates, higher youth unemployment and families being squeezed. Only a change of Government can now bring the prosperity and lasting recovery Britain yearns. The continuing decline in credit to business also revealed today shows that all those Government recession schemes have failed and the credit crunch continues for many smaller businesses. Our economy needs confidence and credit – and its getting neither under Labour.”

Chancellor Alistair Darling has been accused of covering up the scale of Britain’s mounting debt interest.

Appeared before the Treasury select committee yesterday he refused to give figures estimating how big the countries interest repayments would be on the £178 billion annual deficit.

Michael Fallon, the senior Conservative MP on the committee, grilled Mr Darling over the fact that last week’s Pre-Budget Report had not mentioned that debt interest would hit an estimated £60bn per year by 2013 – roughly double the current amount.

Committee members had been told on Monday by the chief economist at HSBC that annual debt interest would grow to £60bn in four years.

Mr Fallon said to the Chancellor: “Why are you continuing to conceal these numbers?”

Mr Darling replied: “For the last ten years, we have been publishing debt numbers on a three-year programme. What we have not done is to publish estimates and forecasts beyond that.

“Even in the best of times, unlike now when there is a great deal of uncertainty. Nothing has changed from this year to last year. We only publish what has been decided.”

The Chancellor was also quizzed over bankers’ bonuses and admitted that the new 50 per cent levy would “not actually raise that much”.

He acknowledged there was “resistance” to the move, but continued to exert pressure on the banks to change their behaviour.

“I say to the bankers, you’ve got to help yourselves to get through this process, and that means if you want to get off the front pages for goodness’ sake show some of the restraint the public want you to.”

George Osborne challenged Mr Darling to come clean over the size of the interest payments, writing to the chancellor Mr Osborne said:

“Yesterday your officials gave a commitment to the Treasury Select Committee that they would publish the Treasury’s projections for overall Departmental Expenditure Limits that lay behind your assertion that spending would be “broadly flat”. I asked you three times in Treasury Questions to publish the same projections. Today, in front of the same committee, you acknowledged that the Treasury had made those projections but repeatedly refused to publish them.

“The only logical conclusion is that the projections contain information about Government forecasts for departmental spending that you do not wish to be made available to the public. After the Budget we published internal Treasury projections which revealed that departmental spending would be cut by 9.3% in real terms. Following the Pre-Budget Report, the Institute for Fiscal Studies have estimated that your announcements on NHS and schools spending imply average cuts in other departments of up to 19% over three years.

“You have said that you want to make public spending plans more transparent, and today you said that you were “reflecting” on what additional information could be published. The lack of detail that you provided in the PBR has resulted in an overwhelmingly negative reaction from international investors that puts Britain’s economic stability at risk and threatens the recovery. So I am writing to ask you to publish immediately the projections for overall departmental spending that your officials agreed to provide to Parliament. What are you trying to hide?“