A squirm, an over-ruling and a new number

Treasury officials have just finished giving evidence at the Treasury Select Committee on last week’s fiscal plans announced by the UK government. Three things materialised:

Treasury officials appear to have been told they are not allowed to reveal the government’s plans for cutting departmental spending from 2011 to 2014. Instead, they evaded the issue, obfuscated and squirmed. It was a terrible spectacle. Worse, it is absurd that ministers are too scared to tell the public what is projected for the details of government spending before next year’s election. So much for telling it how it is, fiscal transparency and rebuilding trust in politicians. And when officials seem to be banned from revealing the important details of fiscal policy, so much for a coordinated monetary and fiscal strategy, which the same officials said was vital.In further and more justifiable secrecy news, Nick Macpherson, the Treasury permanent secretary, revealed he was overruled by chancellor Alistair Darling over disclosing to the Committee chairman the secret lending as a last resort to HBOS and RBS last year. He advised the disclosure should happen, but he understood the chancellor’s insistence on secrecy. “Everything during this period ran at an extraordinary pace; this ran over the course of 45 minutes,” McPherson said. “The decision was taken within an hour of the advice being drafted. His reasons were about the absolute need for secrecy.”The new number relates to bankers’ bonuses. One official said the £550m revenue forecast was net of projected lost income tax and national insurance, not gross. He revealed the gross figure was £1bn. So the Treasury’s figures are that it expects £2bn of bonuses to be paid, netting £1bn in new revenues, but without the tax it would have expected about £3bn of bonuses to be paid, implying a loss of roughly £450m in income tax and national insurance contributions.
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