Treasury – Thirtieth Report Budget 2012
The published report was ordered by the House of Commons to be printed 17 April 2012.
As is usual with this government time is used as a weapon in curtailing scrutiny
2. The timings of the Second Reading of the Finance (No. 4) Bill and the Committee of the Whole House stage are highly unsatisfactory. While we recognise that there are exceptional circumstances this year, the new pattern of Prorogation and State Opening risks making the timing of the stages of future Finance Bills tighter than in the recent past. We therefore recommend that the Treasury and the Business Managers work together to plan the timings of future Budgets and Finance Bills so that the House has longer between publication of the Bill and Second Reading and, particularly, between Second Reading and Committee of the Whole House. This may require the Budget to be somewhat earlier in future.
A request for full transparency from this government is not usually forthcoming:
34. We welcome the Chancellor’s commitment to increase the capacity of the National Loans Guarantee Scheme if it proves to be successful. We note that oversight of the Scheme through monitoring and reporting by participating banks, and also an independent audit, has been put in place to ensure that banks will pass on the full benefit of lower funding costs to SMEs. We expect there to be full transparency about the monitoring of the Scheme and the results of the audit. We will require detailed evidence from the Treasury to show that these guarantees have had the effect intended, and that the scheme is operating in such a way that banks do not retain any benefit, as the Treasury intended.
The government has provided a solution to the wrong problem
36. We remain concerned that while the Scheme should reduce the price of loans to some SMEs, and at the margin may increase the quantity of loans available to them, it was not designed to solve the problem that many SMEs who may be reasonable credit risks are unable to access bank funding at all in the current unusual market conditions. Access to finance for SMEs remains a significant problem. Whilst these exceptional market conditions continue, the Government should regularly publish its own estimate of the degree of dysfunctionality of the market, with proposals for remedy.
How many more times does the following recommendation have to be made?
37. The flow of credit to SMEs would be significantly increased by greater competition in the banking sector. We urge the Government to give greater consideration to the promotion of competition in banking.
The only targets which the coalition haven’t abolished are those which are meaningless
43. While a nominal export target may be of some use in concentrating minds within Government, GDP growth will only benefit if the UK’s net trade position improves as well, and that will require imports to grow less quickly than exports. We are therefore sceptical about the value of an export target without examining the overall current balance and will further examine this issue in our inquiry into global imbalances.
Why would anyone trust the BoE on anything when Mervyn King is one of the biggest failures since the Sinclair C5
51. While the Government maintains the current tight fiscal profile, monetary policy will remain the main tool for stimulating demand in the economy. The Bank of England appears confident of the efficacy of continued quantitative easing, and the Governor urged patience. We note from the OBR forecasts that despite its current extremely accommodative stance, monetary policy alone will be unable to close the output gap over the forecast horizon, with long term consequences for the recovery. Bearing in mind the risks of unwinding, we will continue to monitor the impact of loose monetary policy and the effectiveness of quantitative easing in our hearings with the Monetary Policy Committee and the Financial Policy Committee. We will also continue to explore the effectiveness of loose monetary policy on the economic recovery.
How to promote good behaviour on the part of those who didn’t contribute to the banking collapse – take money off them to subsidise the parasites and fraudsters
54. Loose monetary policy, achieved through quantitative easing and low interest rates, has redistributional effects, particularly penalising savers, those with ‘drawdown pensions’ and those retiring now. The Bank of England has argued that some of those effects may be mitigated by the increase in asset prices stimulated by quantitative easing. While the aggregate of savers and pensioners may have received some benefit from higher asset prices, there will be many individuals who will not have benefited. The Bank of England, after, where appropriate, consultation with the Treasury, should provide its estimate of the overall benefit and loss to pensioners and savers from quantitative easing. It should, in addition, estimate how that balance changes depending on when an annuity was purchased, using the following three dates: immediately before the start of the crisis five years ago; immediately after the introduction of quantitative easing; and now. We further recommend that the Bank of England, and particularly MPC members, improve upon their efforts to explain the benefits of the current position of monetary policy to those affected by the redistributive effects of quantitative easing.
55. We recommend that the Government consider whether there are any measures that should be taken to mitigate the redistributional effects of quantitative easing, and if appropriate consult on them at the time of the Autumn Statement.
How do you ensure your policies are acceptable? – Justify them using unknowable metrics
65. The OBR relies heavily on the output gap in order to assess whether the Government is on course to meet its fiscal mandate. However, as an unobservable measure, the output gap is prone to great uncertainty and frequent revision. There is therefore a risk that there will be unwarranted changes in fiscal policy as a result of reliance on it. We recommend that the Treasury ask the OBR to evaluate other, supplementary, approaches.
How much more can welfare spending be cut?
74. In the next spending review period the Government will need, on current forecasts, to find significant further reductions in expenditure. We look forward to the Chancellor’s update in the Autumn Statement.
The OBR is a government puppet
78. The OBR suggests that the Government is on course to meet its fiscal mandate and supplementary target. There is little margin for error. The achievement of the fiscal mandate is dependent on measurement of the output gap. We have already expressed our concerns about the output gap as a measure (See para 65).
Ben Gummer did not remotely have fairness in mind when making this proposal the right wing idiot wants to turn the HMRC into the Official Wing of the Taxpayers Alliance; maybe his dad should have fed him a few less burgers as he seems to be exhibiting the early symptoms of idiocy.
84. We note the welcome given by the Director of the Office of Tax Simplification. Personal tax statements have the potential to provide some additional transparency for taxpayers. They should explain what they pay in tax and how it is spent. They will need fairly to describe Government spending. We recommend that the Treasury consult the OBR on their design.
When dealing with taxes for the rich don’t worry about evidence just give them the money.
97. The cost and benefits of reducing the additional tax rate to 45p are both highly uncertain, and could be significantly more or less than the cost included in the Budget. We recommend that HMRC publish in due course a comprehensive assessment of the effect on the Exchequer of the new 45p rate.
Incompetence – something at which the coalition excels
115. We recognise that the Government needs to take difficult decisions to tackle the budget deficit. Nonetheless, the Government’s latest proposals for reform of Child Benefit solve only one of the two main problems identified with its original policy. They add further complexity. We will review the effect of the changes on HMRC, where further staff reductions are being implemented, in our regular hearings with it.
Another policy introduced to solve a problem, unfortunately nobody quite knows which problem.
120. We recommend that the Treasury soon ask HMRC to make an assessment and publish the impact of the cap on income tax reliefs, both on business investment and charities. A more detailed explanation of the problem the cap seeks to address is needed, along with consideration of other possible means of dealing with it as the Red Book proposes.
When Tories are even lying to businesses they really must be desperate
124. The reduction in the headline rate of corporation tax is intended to send a positive signal about the United Kingdom as a place to do business and is forecast somewhat to encourage investment. We note, however, that other measures, such as the reduction in the capital allowance rate, may mean that the immediate benefit of the corporation tax cut is only felt by a subset of businesses in the United Kingdom. We recommend that the Government monitor, and report on, the impact of the reduction in corporation tax on businesses of all sizes.
Please let us know what the hell you are doing Gideon
138. The Committee welcomes the Government’s inclusion of supply-side measures in the Budget and recommends a greater focus on supply-side reform. As a priority the Government should set out in the Autumn Statement areas of progress in implementing its agenda and more detailed benchmarks for further reform than we have hitherto seen.
Hoist by your own petard.
151. Coalition government is not a justification for Budget leaks. We recommend that the Government review its practices, based on the experience of this Budget, for preserving Budget confidentiality in a coalition context.
