Govt will accelerate deficit reduction
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The Conservatives and Liberal Democrats have agreed a plan to “significantly accelerate” the reduction of the deficit over the next five years, starting with £6bn worth of cuts to non-front line services in 2010/11.
An agreement released by the coalition today says that the parties will cut spending rather than increase taxes to cope with the main burden of the deficit.
The parties agree that a plan for deficit reduction should be set out in an emergency budget within 50 days of the signing of any agreement and new forecasts of growth and borrowing should be made by an independent Office for Budget Responsibility for this emergency budget.
The Con/Lib coalition says it will reverse Labour’s proposed NI tax rise, for the “protection of jobs” and will reduce the Child Trust Fund and tax credits for higher earners.
The agreement states: “The parties agree that modest cuts of £6bn to non-front line services can be made within the financial year 2010-11, subject to advice from the Treasury and the Bank of England on their feasibility and advisability.
“Some proportion of these savings can be used to support jobs, for example through the canceling of some backdated demands for business rates.”
The parties agree that reform to the banking system is essential to promote a competitive economy, to sustain the recovery and to protect and sustain jobs.
The coalition says it will bring forward proposals to give the Bank of England control of macro-prudential regulation and oversight of micro-prudential regulation, but does not mention plans to scrap the FSA in favour of a Consumer Protection Agency.
It will also introduce a banking levy, bring forward proposals to tackle “unacceptable bonuses” in the financial services sector and bring forward proposals to foster diversity, promote mutuals and create a more competitive banking industry.
The parties agree to rule out joining the European Single Currency for the duration of the agreement.
The agreement also pledges the establishment of an independent commission to investigate separating retail and investment banking.
It says: “While recognising that this would take time to get right, the commission will be given an initial time frame of one year to report.”
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Readers' comments (1)
lol | 17 May 2010 5:52 pm
Whilst they are bringing forward prposals to tackle unacceptable bonuses at the banks they should do the same for the unacceptable bonuses at canary wharf, not to mention the unacceptable pay and conditions for certain members of staff together with the golden handshake severence payouts and pensions, unacceptable expenses claims, expensive consulting agency fees, fancy christmas and leaving parties, works of art etc etc etc The banks are angels compared to the regulators.
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