Matter-Eater Lad Posted May 17, 2010 Share Posted May 17, 2010 Liam Byrne, the former Chief Secretary to the Treasury, last week wrote a letter for his successor - the Liberal Democrat David Laws - stating: "I’m afraid to tell you there’s no money left.” Speaking at a press conference yesterday, Mr Laws said: "When I arrived at my desk on the very first day as Chief Secretary, I found a letter from the previous chief secretary to give me some advice, I assumed, on how I conduct myself over the months ahead. "Unfortunately, when I opened it, it was a one-sentence letter which simply said ’Dear Chief Secretary, I’m afraid to tell you there’s no money left’, which was honest but slightly less helpful advice than I had been expecting." The letter - which Mr Byrne claims was meant to be humorous - represents a sign of the stark challenges facing the new Coalition Government to reduce Britain's record £163 billion budget deficit.Speaking at his first press conference as Chancellor of the Exchequer today, George Osborne expressed his eagerness to start earmarking expenditure cuts immediately. He announced that his first budget will be on June 22, a week earlier than the promised 50 day deadline. Mr Osborne indicated that Government departments will be told this week how much of the £6 billion in cost savings they will each have to bear, and that the allocations will be announced on Monday. He made it clear that those departments will have to make the cuts within the current financial year. Of that £6 billion, the majority of it will be used to pay down the deficit with some deployed for targeted job creation schemes and scrapping back-dated business rates demands for firms. Prior to the election, Mr Osborne had said that all of the £6 billion would have been used to pay down the deficit, but the Liberal Democrats managed to extract a jobs pledge from the Tories during coalition negotiations. The Chancellor gave details of the establishment of the Office for Budget Responsibility (OBR) which is to be chaired by Sir Alan Budd, a former member of the Bank of England's interest rate-setting committee. Sir Alan has recommended that the Treasury appoint Geoffrey Dicks and Graham Parker to complete the three-member Budget Responsibility Committee. They will lead the work of the OBR on an interim basis.The Queen’s Speech next Tuesday will provide for legislation to establish the OBR on permanent, statutory terms. The committee has been created to draw up independent economic forecasts and will produce its first set of figures on projected growth rates and the size of Britain's borrowings before Mr Osborne's first Budget next month. While Mr Osborne declined to be drawn on whether the Government will announce an increase in VAT in the Budget, he hinted that he will stand by a pre-election pledge to cut corporation tax from 28 per cent to 25 per cent and also introduce a cut in the tax rate for smaller firms. Mr Osborne believes he can fund the tax cuts by simplifying the existing revenue system and cutting capital allowances. The Chancellor said: "If we don’t get on top of our debt, every family in Britain will be poorer and the dreams of millions of young people will be dashed. Mortgages will be higher, businesses will go bust and debt interest will become one of the largest items of government spending. "We urgently need to restore confidence in our economy. And we need the determination to act quickly in the short-term in order to establish credibility for the longer term. So, in the space of less than a week this new coalition government has already changed the way that Budgets are made, forever." Mr Osborne warned that the Revenue had witnessed a "substantial" shift where high earners have been trying to effectively reclassify their income to reduce the effect of the planned increase in the top rate of income tax from 40 to 50 per cent next April. Those high earners, he said, have sought to move their income so that it would instead attract capital gains tax - currently at 18 per cent. However, under the terms of the coalition agreement signed at the beginning of last week, the Liberal Democrats managed to extract a pledge to align capital gains tax at the same rate at which an individual pays income tax, capped at 40 per cent. Mr Byrne insisted that his parting message was meant as a private joke. “My letter was a joke, from one Chief Secretary to another,” he said today. “I do hope David Laws’ sense of humour wasn’t another casualty of the coalition deal.” The ill-judged private comment marks the second time in a month that the Labour MP for Birmingham Hodge Hill has made a gaffe. During the election campaign, Mr Byrne was caught swapping notes with Yvette Copper, the former Secretary of State for Work & Pensions, complaining that an event which they were attending was "second tier". http://business.timesonline.co.uk/tol/business/economics/article7128665.ece Link to comment Share on other sites More sharing options...
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