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TheLow-income families will be hard hit in April by government spending cuts and tax hikes. Philip Hammond might have considered the double setback that awaits them when he woke up last week to make his spring statement. Certain expectations, particularly among some anti-poverty charities, were waiting for the Chancellor to open his portfolio to alleviate their financial difficulties following the promise he made the year before. last to end the austerity.
Families in the bottom fifth of the income bracket will lose an average of £ 400 a year from the benefit freeze. Universal credit will be reduced for all households, with the exception of the lowest-income households, and municipal taxes, which affect the poor much more than those in the highest income groups, are expected to increase on average 4.5%.
The Treasury's independent Fiscal Responsibility Bureau (OBR) told the Chancellor that it had exceptional tax revenues and that interest payments on the government's approximately $ 2 trillion of debt were being reduced.
In addition, the OBR stated that it expects these trends to continue for several years, strengthening the spending power of governments at the end of the decade.
Unfortunately, there was no talk of improving social benefits in the spring declaration. In fact, the Chancellor spent very little of the $ 30 billion in windfall gains provided by surprisingly generous forecasts. And when he briefly outlined his priorities for the future – priorities that he will consider this summer as part of a comprehensive review of spending – he said he would only spend additional money on public services, infrastructure projects, tax cuts or cost reduction. national debt.
In the words of the Institute for Fiscal Studies (IFS), the think tank on taxes and expenses, he placed the bulk of the money for the purposes of the spring declaration. Before discussing his options, he told OBR that he would use the bulk of the annual deficit.
In the treasury, senior officials had to breathe a sigh of relief. Not because they are not aware of the pressures on the state, but because they know how the forecasts produced by the OBR are built on sand. The numbers badume a good Brexit, among other things, which could happen on March 29 as planned, but seems to be happening more and more at a later date, if at all.
It's the same thing for two years. Everyone must accept the game of forecasts, even if they know that there is an even greater probability than usual that the forecasts for GDP growth, tax revenues and public spending are false.
In this case, the OBR has been closer to the mark in the last two years than in previous periods, mainly because it had abandoned overly optimistic expectations of productivity growth. Nevertheless, in the future, the forecasts will almost certainly be in contradiction with the actual results. Robert Chote, president of the OBR, said at the press conference following the spring declaration.
IFS chief, Paul Johnson, took the same position as Treasury officials when he said it was best that Hammond keep his powder dry until the Brexit dust has dissipated: this is only while the Chancellor will have a more accurate idea of the amount of money available. spend. But the problem with this argument is that Brexit is proving to be an increasingly long and winding road.
Meanwhile, Hammond knows that he has the 1.8 billion pounds he needs to end his four-year freeze on social badistance benefits. He could also begin to rebuild the budgets of local authorities and unprotected Whitehall departments, which are about to undergo a new round of debilitating cuts.
Thameslink fine is near, we will get a real punishment
Few people applauded the railway regulator last week when it fined the Govia Thameslink Railway a £ 5 million fine for failing to inform pbadengers of what was happening – or more generally during the fiasco last May. This amount of 5 million pounds is roughly equivalent to the revenues of the company's tickets for a good weekday.
Beyond the major GTR fiasco of not operating thousands of promised services, the Office of Rail and Road was particularly irritated by the fact that the operator failed to provide accurate information on canceled services. . He even sometimes forgot to tell pbadengers when a Thameslink train arrived, which led to these being called "ghost trains" – but not fun.
Given that GTR is clinging to a huge commuter franchise – including Southern, Great Northern and Thameslink – whose relatively short history has been marked by gloomy failures, it is understandable that some have denounced the fine. like a pat on the fingers.
However, the RWG can count on an additional GBP 15 million in compensation agreed with the Ministry of Transport, which would have already eliminated profits for this year. Margins are thin in the rail: GTR profits in a full year were similar to those of the fine. On this measure, the sentence is not trivial. With another redesign of the calendar in two months, commuters hope that the fine will at least help to focus minds.
Ultimately, however, accountability is not the hallmark of rail, whether it is the huge overruns that have left Network Rail's infrastructure renewal plans in tatters or simple everyday issues such as reason why a crowded train and too expensive is delayed or canceled. Even when US Secretary of Transportation Chris Grayling can blame the industry for millions of people suffering haemorrhage from failed contracts, GTR's fine may be as close than that of an honest policeman.
An accounting oversight body will need sharp teeth
It was Carillion first – it's now Interserve. The collapse of two government subcontractors at just over a year apart has put the debate on corporate governance in Britain back on the agenda – with the reform of the audit industry at the center of the news.
The auditing services of large accounting firms are supposed to be the modern equivalent of the city's canary of the mine: they badess the resilience of companies, check the accuracy of their accounts and provide quick alerts.
The problem is that long before Carillion failed, the system was not working. Repeated scandals, particularly in the banking sector, have shown that the problems are not isolated cases of mismanagement.
The regulator – the Financial Reporting Council (FRC) – appeared to be either undernourished or asleep while driving.
In an apparent happy coincidence for the government, the ministers announced last week, just days before Interserve filed its application for administration, that the FRC be abolished. It will be replaced by the Authority for Auditing, Reporting and Governance (Arga), a statutory body with new powers. FRC President Win Bischoff will resign as soon as a replacement has been found. Its former chief executive, Stephen Haddrill, resigned last November.
However, none of these changes goes as far as the cabinet workers had the idea of having the four large accounting firms separate their auditing services from their accounting practices. Audit work is often used as a loss manager to gain profitable consulting and accounting activities. The idea is that separating these elements increases quality while eliminating potential conflicts of interest.
We will let Arga have the time to show that he has changed more than his name, but that he does not have much leeway. Repeated failures mean that there will be intense pressure on the watchdog to show him the teeth. If this does not work in the next failure, support for the more radical option of Labor will inevitably increase.
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