The Treasury is blocking the army’s attempts to replace its lightly armoured Snatch Land Rovers with safer vehicles, senior defence sources said last week.

No extra funding for the vehicles will be provided by the Treasury, leaving the Ministry of Defence (MoD) struggling to fund the vehicles from its overstretched budget.

The attempts to buy a better protected vehicle that matches the Snatch Land Rover’s mobility come as relatives of some of the 30 soldiers killed in Land Rovers in Iraq and Afghanistan take the MoD to court for allegedly failing to protect them.

MoD surveys have found that half the armed forces believe the government is not equipping them adequately. Many are leaving as a result. ...

The Times 20 July 2008

The Chancellor is facing a £7.5bn black hole in his Budget for next year as a result of the economic downturn, an analysis of Treasury figures for The Independent has found.

The black hole means that Alistair Darling will either have to raise tax, cut spending or borrow more. Borrowing such sums risks stoking inflation and a further rise in interest rates.

The black hole is the equivalent of cutting 57,000 teaching jobs, cancelling the two giant aircraft carriers ordered by the MoD, and closing five hospitals. It is also the equivalent of adding 2p to the basic tax rate.

The figures, given exclusively to The Independent by the National Institute of Economic and Social Research (NIESR), will increase the fears of Labour MPs that they are heading for a general election with the public finances in chaos.

The NIESR predicts that the slowdown in the economy will cut at least £8bn from the tax revenues that Mr Darling predicted in his March Budget while the slump in house sales will halve the Chancellor's stamp duty receipts to £3bn ...

Independent 08 July 2008

The Treasury's accounts are in such chaos that they can not be signed off by the National Audit Office, it has emerged.

Alistair Darling, the Chancellor, is said to have clashed with the spending watchdog after officials objected to his handling of the nationalisation of the troubled Northern Rock bank.

In a highly unusual move, the Treasury's annual report has been published with the financial accounts removed. ...

The NAO is reported to be concerned about the way that the bank is being treated on the Treasury's books ...

Telegraph 04 July 2008

The Office for National Statistics (ONS) reported public sector net borrowing of £11bn last month, £2.4bn worse than in the same month last year. It was the lowest May figure since monthly records began in 1993 and was the second-worst monthly figure on record.

For the first two months of the 2008/09 financial year, the shortfall was £12.7bn, up from £8.4bn last year. The public finances have moved deeply into the red in recent years, as the government has increased spending faster than tax receipts. Many economists warn the situation is going to get a lot worse as the economy slows.

The breakdown of the data showed that tax receipts in the first two months of the fiscal year were up only 3.6% year on year, a lot worse than the 4.8% pencilled in by Alistair Darling in his March budget. Spending was up 5.4%, broadly in line with the budget forecasts.

The ONS also said that the current budget deficit, which excludes investment spending, slumped to £9.1bn last month, the worst monthly figure since April 1998, from £7.6bn in May last year. ...

Guardian 20 June 2008

The European Commission is to start disciplinary proceedings against the UK for breaching its economic rules.

It says Britain's budget deficit, the gap between its spending and its revenues, is growing too large.

The disciplinary proceedings are in effect a formal warning to curb borrowing, cut spending or both. ...

It says it foresees a situation when Britain's deficit is over 3% of its GDP, breaching the rules on economic management set down in Europe's Growth and Stability pact. ...

BBC NEWS 11 June 2008

Growth in the UK will slow sharply to 1.6% in both 2008 and 2009.

It said that the UK economy would be affected by a weakening housing market, the contraction of the financial sector, and the impact on UK exports of weaker growth in the US and Europe.

Its UK forecast is substantially below the Treasury forecast of around 2% growth this year and 2.5% next year made at the time of the March Budget.

The IMF admits that the global downturn might be still more severe than it is currently predicting, and says that there is a one in four chance of a "global recession" when world growth falls below 3%.

"The financial market crisis that erupted in August 2007 has developed into the largest financial shock since the Great Depression," the report says. ...

BBC NEWS 09 April 2008

It's one minute to midnight for HM Treasury - and Gordon Brown - if business commentators are to be believed.

On 17 December 2007 The Telegraph reported that a record number of families now spend more than one-fifth of their salaries on debt, and on the same day The Guardian reported that government's total exposure to Northern Rock had reached £50bn. [More than the Defence budget.]

The Office for National Statistics reported that the public finances suffered a shortfall of spending over receipts of £9.1bn last month on the current budget measure, which excludes investment spending.

That was nearly £2bn worse than last November's figure in spite of strong economic growth over the past 12 months and means that for the first eight months of the year, the government suffered a deficit of £23.1bn.

Both the monthly and cumulative figures were the worst since monthly records began in 1993.

A crack team of supervisors who would be based in the Bank of England holds the key to preventing another Northern Rock-style banking collapse, according to a hard-hitting report by a powerful committee of MPs.

The new grouping, under the control of a central bank deputy governor, should take charge when any bank or building society is found to be in financial difficulties, the MPs said.

In contrast to the government, which has recommended the Financial Services Authority be handed extra powers when banks get into trouble, the committee believes the Bank emerges from the debacle with a less sullied reputation and would prove a safer pair of hands.

The Guardian 26 January 2008

... the rescue plan, which will be put before MPs later today, is facing intense opposition from the Conservatives and Liberal Democrats.

George Osborne, the Shadow Chancellor said: "Gordon Brown is mortgaging the taxpayer to try to get out of the political hole he's dug for himself.

"The British people could be billions of pounds in the red for years to come thanks to his economic incompetence. How does this square with the Government guarantee to get all the taxpayers' money back? Add in the fact the whole deal's been leaked in advance and Alistair Darling's been completely sidelined, this has all the hallmarks of the Brown style of government: never face the music, pay anything to get out of trouble, don't let anyone else including your Chancellor take any decisions."

Mr Osborne's comments were echoed by Vincent Cable, the Liberal Democrat shadow Chancellor. He said: "This is not a private sector solution. The private sector isn't taking any risks. It is the taxpayer that is taking all of the risks."

He added: "The Government seems to have mishandled this dreadfully. We have a combination now of being taken in for what's little better than a confidence trick, primarily in order to help the Government to save face and I think they will be found out." ...

Telegraph.co.uk 21 January 2008

The public finances are in a mess

With the prospect of slower growth this year and hence slower tax revenues, ITEM forecasts a grim outlook for the public finances. The current deficit over the first eight months of the financial year came in at £23.1 billion - £8.6 billion worse than last year. Net borrowing was £36.2 billion, £10.2 billion worse.

Spencer said, "Now that the economy is slowing sharply, the public finances will deteriorate equally rapidly. We have revised our forecast of this year's current deficit up to £14 billion, compared with the Treasury PBR forecast of £8 billion. This assumes that public expenditure is in line with the Treasury's very tight plans, which is likely to prove optimistic in current circumstances.

Spencer continued, "The Treasury failed to take advantage of years of good growth to put our public finances on a sounder basis, so our ability to respond by easing fiscal policy has been compromised. The Government should have begun to sort out the national finances three or four years ago. Brown’s famous self-imposed 'golden rule' was meant to stop us getting into this kind of bind but I’m afraid it will now make matters worse.”

Enrst & Young 21 January 2008

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