Economist may quit Treasury in tax-cut row
Saturday 21 October 1995
Alan Budd, chief economic adviser to the Treasury, will consider quitting if he loses a bitter departmental row over tax cuts.
As the Chancellor, Kenneth Clarke, held a crucial Budget meeting yesterday, Mr Budd and Sir Terry Burns, the department's permanent secretary, clashed over the advisability of reducing taxes in the Budget. Close associates say Mr Budd will probably opt for early retirement if the Chancellor goes ahead with a tax giveaway on 28 November.
Mr Clarke has repeatedly said he will not play fast and loose with the public finances. In a speech to businessmen last month, he said: "Nobody should assume that tax cuts are safely in the bag."
However, pressure for lower taxes from the Conservative backbenches has been intense, despite the fact that recent figures have shown that government borrowing so far this year is running above last year's levels. This means tax cuts are likely to be accompanied by lower spending plans, but most economists - including Mr Budd - are sceptical about the Government's chances of meeting even tougher expenditure targets.
Mr Budd does not believe that the state of the economy justifies lower taxes. He argues that it makes no sense to cut taxes straight after increasing them for two years in a row. In addition, he thinks it is essential to keep the government finances on an improving trend.
Sir Terry, on the other hand, accepts the argument that there is a political need for tax reductions this year. In his view, a modest cut would not do any lasting harm to the public finances. The battle between the two camps was still raging yesterday when ministers and officials held the last of the Treasury's series of pre-Budget meetings at Dorneywood, Buckinghamshire.
The broad judgements about taxes and public spending should have been made at the beginning of the summer, at a meeting at Chevening, the Foreign Secretary's country residence. Decisions on more detailed policies are usually then taken at the autumn Dorneywood meeting and the subsequent meeting of the Cabinet's economic policy committee. This year, the row means that the timetable has slipped.
The borrowing requirement set for this financial year in last year's Budget was pounds 21.5bn. The Treasury increased this to pounds 23.6bn in its summer forecast. City economists now expect the figure to be nearer pounds 30bn.
Comment, page 25
- 1 East 17 bandmember Brian Harvey in 'very desperate situation’
- 2 Yorkshire man to win £10,000 off a £1 bet placed six years ago if Dan Jarvis becomes Labour Party leader
- 3 Vladimir Putin says Russia will fight for the right of Palestinians to their own state
- 4 Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
- 5 The West has it totally wrong on Lee Kuan Yew
East 17 bandmember Brian Harvey in 'very desperate situation’
Vladimir Putin says Russia will fight for the right of Palestinians to their own state
Ohio Democrat Teresa Fedor speaks out during abortion debate to reveal she has been raped – and is interrupted by laughter from Republicans
Children take eight Isis captives to be beheaded in latest propaganda video
Jeremy Clarkson 'could be given minder' ahead of a potential Top Gear return
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
JK Rowling responds to fan tweeting she 'can't see' Dumbledore being gay
Jeremy Clarkson sacked live: Alan Yentob 'wouldn't rule out' ex Top Gear host's BBC return
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
The West has it totally wrong on Lee Kuan Yew
Revealed: Putin's army of pro-Kremlin bloggers
iJobs Money & Business
Negotiable: Recruitment Genius: To provide a prompt, friendly and efficient se...
Negotiable: Recruitment Genius: You will be the first point of contact for all...
£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...
£35000 - £38000 per annum + benefits : Ashdown Group: A highly successful, int...