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Poor families 'still losing out' despite tax credit U-turn - live updates Poor families 'still losing out' despite tax credit U-turn - live updates
(35 minutes later)
11.23am GMT11:23
We may need George Osborne’s brick-laying skills -- his plan to build 400,000 new homes could founder if enough trained builders can’t be found.
It may also bring little short-term help to renters. Frank Nash, partner at chartered accountants Blick Rothenberg, explains:
“The chancellor has openly admitted that more affordable housing, including the private sector, needs to come forward to allow people to become owner occupiers and achieve their aspirations. However, it will take at least five years and, until those homes are built, young families have no choice but to rent.
“The problem is that until these new homes are built, private rented property is price inelastic. Landlords need to protect their investment and are expected to pass the cost on in the form of higher rent. This reduces a tenant’s ability to save a deposit for a home of their own, and in turn their ability to make best use of the range of the Help-to-Buy initiatives.”
Nash also fears that the new 3% stamp duty levy on second-home and Buy-to-Let landlords could rebound, and be passed onto renters.
Buy-to-let surcharge will "hurt tenants, not landlords" https://t.co/fsxKm9MiOw via @CityAM
Updated at 11.25am GMT
11.04am GMT11:04
There’s something slightly clichéd and unconvincing about politicians tromping around building sites....
..but at least George Osborne has been learning some new skills.
10.58am GMT10:58
George Osborne has already warned that he won’t shy away from “difficult decisions”.
The chancellor has spent this morning defending criticism of his autumn statement -- and claims that he’s abandoned austerity by committing to spend his £27bn fiscal windfall.
He also declined to apologise or to admit a blunged over the tax credits u-turn, as we report here:
Related: Osborne: I will continue to take 'difficult decisions' after tax credits U-turn
Asked by the Today presenter Nick Robinson whether he was admitting he had made a mistake and was apologising or whether he had simply been forced to change tack by critics, the chancellor said that his “central judgment” to move to a lower welfare and higher wage economy was the right one.
10.48am GMT10:4810.48am GMT10:48
Resolution: Poor risk being trapped in low-paid, part-time jobsResolution: Poor risk being trapped in low-paid, part-time jobs
Torsten Bell, the Resolution Foundation’s director, is adamant that George Osborne’s spending review decisions hit the poor but spare the rich.Torsten Bell, the Resolution Foundation’s director, is adamant that George Osborne’s spending review decisions hit the poor but spare the rich.
That’s because long-term welfare changes are still in force -- so as Universal Credit is rolled out, millions more people will be hit.That’s because long-term welfare changes are still in force -- so as Universal Credit is rolled out, millions more people will be hit.
Bell says:Bell says:
The most damaging changes are to universal credit, the government’s flagship welfare programme which is at serious risk of being undermined. For working households with children on universal credit the average loss with be £1,300 in 2020.The most damaging changes are to universal credit, the government’s flagship welfare programme which is at serious risk of being undermined. For working households with children on universal credit the average loss with be £1,300 in 2020.
These changes will also increase the risk of people being trapped in low-paid short-hours work.These changes will also increase the risk of people being trapped in low-paid short-hours work.
Universal credit replaces a set of other benefits, and is already being piloted - as Ashwin Kumar, director of Liverpool Economics, explains:Universal credit replaces a set of other benefits, and is already being piloted - as Ashwin Kumar, director of Liverpool Economics, explains:
Those hit hardest by the new universal credit rules will be lone parents, disabled people and couples with children who rent their home rather than have a mortgage.Those hit hardest by the new universal credit rules will be lone parents, disabled people and couples with children who rent their home rather than have a mortgage.
Currently, the rules allow lone parents £8,800 a year in earnings before their universal credit starts to get reduced. From April that figure will drop to £4,800.Currently, the rules allow lone parents £8,800 a year in earnings before their universal credit starts to get reduced. From April that figure will drop to £4,800.
Related: So, Osborne scrapped tax credit cuts – but what of universal credit?Related: So, Osborne scrapped tax credit cuts – but what of universal credit?
10.28am GMT10:2810.28am GMT10:28
Resolution Foundation: Osborne still hitting poor familiesResolution Foundation: Osborne still hitting poor families
The Resolution Foundation are continuing to kick the tires of the autumn statements.The Resolution Foundation are continuing to kick the tires of the autumn statements.
The think tank is warning that George Osborne has slipped out significant tax rises, on top of the surprise £27bn pick-up in the public finances from the independent Office for Budget Responsibility.The think tank is warning that George Osborne has slipped out significant tax rises, on top of the surprise £27bn pick-up in the public finances from the independent Office for Budget Responsibility.
It is also reiterating its concerns that poor families will still be hit, as the universal credit is implemented in five years (meaning the tax-credit u-turn is only temporary)It is also reiterating its concerns that poor families will still be hit, as the universal credit is implemented in five years (meaning the tax-credit u-turn is only temporary)
Matthew Whittaker @resfoundation: Osborne's tax rises amount to £27bn, on top of the £27bn windfall from @OBR_UK forecasts.Matthew Whittaker @resfoundation: Osborne's tax rises amount to £27bn, on top of the £27bn windfall from @OBR_UK forecasts.
Matthew Whittaker @resfoundation: no change in loss for working families by 2020 as UC kicks in: £650 average for poorest 50% of households.Matthew Whittaker @resfoundation: no change in loss for working families by 2020 as UC kicks in: £650 average for poorest 50% of households.
The chart we ran earlier in the blog shows how the poorest are worst hit by tax and benefit changes this parliament.The chart we ran earlier in the blog shows how the poorest are worst hit by tax and benefit changes this parliament.
According to the Resolution Foundation, the move to universal credit will cost working households £1,000 on average in 2020.According to the Resolution Foundation, the move to universal credit will cost working households £1,000 on average in 2020.
Executive chair David Willetts (a former Tory minister), is also struck by how Osborne’s austerity drive has softened, compared to the pre-election budget in March:Executive chair David Willetts (a former Tory minister), is also struck by how Osborne’s austerity drive has softened, compared to the pre-election budget in March:
Willetts @resfoundation: In old days, politicians promised milk + honey before election and you'd get bad news after; Osborne did opposite.Willetts @resfoundation: In old days, politicians promised milk + honey before election and you'd get bad news after; Osborne did opposite.
Former Liberal Democrat MP David Laws is also unimpressed:Former Liberal Democrat MP David Laws is also unimpressed:
David Laws @resfoundation: Osborne has fudged how much he's U-turned by focusing on 2019-20 instead of near-term.David Laws @resfoundation: Osborne has fudged how much he's U-turned by focusing on 2019-20 instead of near-term.
'He's spending a lot of time + money + capital shooting other people's foxes, rather than developing a strategy': David Laws @resfoundation'He's spending a lot of time + money + capital shooting other people's foxes, rather than developing a strategy': David Laws @resfoundation
Updated at 10.29am GMTUpdated at 10.29am GMT
9.55am GMT09:559.55am GMT09:55
Barclays £72m fine - the "Elephant deal" ...Barclays £72m fine - the "Elephant deal" ...
Katie Martin of the Financial Times has a good take on this morning’s Barclays fine.Katie Martin of the Financial Times has a good take on this morning’s Barclays fine.
Here’s a flavour:Here’s a flavour:
Barclays and the troublesome ‘elephant deal’Barclays and the troublesome ‘elephant deal’
The £72m fine just meted out to Barclays over poor checks on certain very wealthy clients refers to a £1.88bn transaction that the bank described as an “elephant deal” for which one senior manager wanted to “race through” the due diligence process. Here’s what we know from the Financial Conduct Authority’s report.The £72m fine just meted out to Barclays over poor checks on certain very wealthy clients refers to a £1.88bn transaction that the bank described as an “elephant deal” for which one senior manager wanted to “race through” the due diligence process. Here’s what we know from the Financial Conduct Authority’s report.
The 37-page report published by the UK watchdog says:The 37-page report published by the UK watchdog says:
Deals over £20 million were commonly referred to within Barclays as “elephant deals” because of their size and the Transaction, which was for an amount of £1.88 billion, was also referred to as an “elephant deal”.Deals over £20 million were commonly referred to within Barclays as “elephant deals” because of their size and the Transaction, which was for an amount of £1.88 billion, was also referred to as an “elephant deal”.
The FCA is not suggesting that the deal “involved financial crime”, writes Katie Martin. But it says the bank cut corners on checks to avoid irritating important but risky clients. It also went to considerable lengths to keep the transactions confidential, the FCA says..The FCA is not suggesting that the deal “involved financial crime”, writes Katie Martin. But it says the bank cut corners on checks to avoid irritating important but risky clients. It also went to considerable lengths to keep the transactions confidential, the FCA says..
Barclays and the troublesome 'elephant deal' https://t.co/fUwBNT2rpyBarclays and the troublesome 'elephant deal' https://t.co/fUwBNT2rpy
Updated at 10.47am GMTUpdated at 10.47am GMT
9.45am GMT09:459.45am GMT09:45
French bank BNP Paribas also expects the ECB to cut its deposit rate (paid by banks on their ECB deposits) deeper into negative territory.French bank BNP Paribas also expects the ECB to cut its deposit rate (paid by banks on their ECB deposits) deeper into negative territory.
Currently, it is minus 0.2% - and BNPP thinks it will be slashed to -0.4% next Thursday.Currently, it is minus 0.2% - and BNPP thinks it will be slashed to -0.4% next Thursday.
BNP Paribas now expects a 20bps cut to ECB deposit rate in Dec Vs prev forecast of 10bps pic.twitter.com/NdzhpcpplVBNP Paribas now expects a 20bps cut to ECB deposit rate in Dec Vs prev forecast of 10bps pic.twitter.com/NdzhpcpplV
Other banks expect a 10 basis point cut, to -0.3%.Other banks expect a 10 basis point cut, to -0.3%.
9.35am GMT09:359.35am GMT09:35
Barclays’ shares are actually up this morning, gaining 3p to 224p, despite the bank being shamed for cutting corners on financial crime checks.Barclays’ shares are actually up this morning, gaining 3p to 224p, despite the bank being shamed for cutting corners on financial crime checks.
Barclays shareholders clearly spooked by these fines. Shares up only 1.3%. $BARCBarclays shareholders clearly spooked by these fines. Shares up only 1.3%. $BARC
Barclays didn't want to "irritate" big-spending clients by asking too much about where their billions were coming from, FCA says. CrackingBarclays didn't want to "irritate" big-spending clients by asking too much about where their billions were coming from, FCA says. Cracking
Barclays' management have agreed to settle the fine from their bonuses, right?... https://t.co/v6XIm8Z0DUBarclays' management have agreed to settle the fine from their bonuses, right?... https://t.co/v6XIm8Z0DU
Updated at 10.10am GMTUpdated at 10.10am GMT
9.22am GMT09:229.22am GMT09:22
Barclays fined £72m over financial crime risk failingsBarclays fined £72m over financial crime risk failings
Is there no end to the misdeeds of Britain’s banks?Is there no end to the misdeeds of Britain’s banks?
Apparently not. Barclays has just been fined £72m by the City watchdog, the FCA. It’s offence? Failing to minimise the risk that it may be used to facilitate financial crime.Apparently not. Barclays has just been fined £72m by the City watchdog, the FCA. It’s offence? Failing to minimise the risk that it may be used to facilitate financial crime.
The FCA says Barclays failed to take proper checks when transferring £1.88bn of funds from “ultra-high-net-worth clients”.The FCA says Barclays failed to take proper checks when transferring £1.88bn of funds from “ultra-high-net-worth clients”.
Banks are supposed to be extra careful when shifting such funds around, in case the money comes from illegal activities and is being laundered through the system.Banks are supposed to be extra careful when shifting such funds around, in case the money comes from illegal activities and is being laundered through the system.
Barclays, though, appears to have bent over backwards to avoid putting out its richest customers.Barclays, though, appears to have bent over backwards to avoid putting out its richest customers.
The FCA says:The FCA says:
Barclays went to unacceptable lengths to accommodate the clients.Barclays went to unacceptable lengths to accommodate the clients.
Hopefully new CEO Jes Stanley can avoid a repeat....Hopefully new CEO Jes Stanley can avoid a repeat....
FCA fines #Barclays £72m for failing to make proper checks on mega-rich clients because 'it did not wish to inconvenience' themFCA fines #Barclays £72m for failing to make proper checks on mega-rich clients because 'it did not wish to inconvenience' them
Updated at 9.24am GMTUpdated at 9.24am GMT
9.13am GMT09:139.13am GMT09:13
Kit Juckes, top currency strategist at Societe Generale, says we should expect something pretty serious from the ECB at next Thursday’s meeting.Kit Juckes, top currency strategist at Societe Generale, says we should expect something pretty serious from the ECB at next Thursday’s meeting.
Dipping into classical texts, Kit writes:Dipping into classical texts, Kit writes:
“He who exercises no forethought but makes light of his opponents is sure to be captured by them”.“He who exercises no forethought but makes light of his opponents is sure to be captured by them”.
The quote’s from Sun Tzu’s The Art of War and while I don’t think for a second that Mario Draghi is anyone’s opponent, he is regularly under-estimated.The quote’s from Sun Tzu’s The Art of War and while I don’t think for a second that Mario Draghi is anyone’s opponent, he is regularly under-estimated.
It’s a step up from quoting Chairman Mao, anyway....It’s a step up from quoting Chairman Mao, anyway....
So what devilish plan might general Draghi unleash? One option is a “split-level” negative rate, meaning more punishing negative rates for banks who leave lots of money at the ECB.So what devilish plan might general Draghi unleash? One option is a “split-level” negative rate, meaning more punishing negative rates for banks who leave lots of money at the ECB.
Kit says:Kit says:
It’s not really obvious that such a policy would drive rates (and in particular, longer-dated rates) any lower, but it reinforces the sense that Mr Draghi is committed to further easing next month.It’s not really obvious that such a policy would drive rates (and in particular, longer-dated rates) any lower, but it reinforces the sense that Mr Draghi is committed to further easing next month.
9.05am GMT09:059.05am GMT09:05
Mario Draghi hinted strongly in October that he could take more action if needed, to get the eurozone away from deflation.Mario Draghi hinted strongly in October that he could take more action if needed, to get the eurozone away from deflation.
So, he risks a backlash if the ECB isn’t decisive next week.So, he risks a backlash if the ECB isn’t decisive next week.
As Ken Wattret at BNP Paribas put it to Reuters:As Ken Wattret at BNP Paribas put it to Reuters:
“It cannot run the risk of disappointing markets, having raised expectations of action.”“It cannot run the risk of disappointing markets, having raised expectations of action.”
8.48am GMT08:488.48am GMT08:48
Euro hit by ECB stimulus talkEuro hit by ECB stimulus talk
The euro is weakening this morning, as speculation grows that the European Central Bank will announce significant stimulus measures next week.The euro is weakening this morning, as speculation grows that the European Central Bank will announce significant stimulus measures next week.
The single currency has slipped to just $1.06 this morning, near a seven-month low.The single currency has slipped to just $1.06 this morning, near a seven-month low.
And investors are betting that the euro will keep falling, as Mario Draghi unleashes new measures to drive growth and inflation.And investors are betting that the euro will keep falling, as Mario Draghi unleashes new measures to drive growth and inflation.
Bloomberg explains:Bloomberg explains:
Forecasters are cutting their year-end and first-quarter euro estimates at the fastest pace since March, when the start of the central bank’s bond-buying program sent the currency tumbling to a 12-year low. Options signal there’s a 70 percent chance the euro will match that low this year, up from 18 percent when the ECB last met in October.Forecasters are cutting their year-end and first-quarter euro estimates at the fastest pace since March, when the start of the central bank’s bond-buying program sent the currency tumbling to a 12-year low. Options signal there’s a 70 percent chance the euro will match that low this year, up from 18 percent when the ECB last met in October.
But it’s not clear what Draghi will do. He could boost the ECB’s QE programme, promising to print even more money to spend on government and corporate bonds.But it’s not clear what Draghi will do. He could boost the ECB’s QE programme, promising to print even more money to spend on government and corporate bonds.
Or he could impose even steeper negative interest rates on banks, to force them to lend rather than leave cash gathering dust at the ECB.Or he could impose even steeper negative interest rates on banks, to force them to lend rather than leave cash gathering dust at the ECB.
Steven Bell, London-based chief economist and director of macro strategies at BMO Global Asset Management, says:Steven Bell, London-based chief economist and director of macro strategies at BMO Global Asset Management, says:
“He’s going to pull a rabbit out of the hat -- we’re just not sure what that rabbit will be.“He’s going to pull a rabbit out of the hat -- we’re just not sure what that rabbit will be.
“The euro is going down heavily.”“The euro is going down heavily.”
Cute rabbit, though:Cute rabbit, though:
#Draghi will pull a rabbit of the hat, say euro watchers, but none knows what it'll be https://t.co/vaS9197ys2 #ecb pic.twitter.com/YD12xBYOzH#Draghi will pull a rabbit of the hat, say euro watchers, but none knows what it'll be https://t.co/vaS9197ys2 #ecb pic.twitter.com/YD12xBYOzH
8.37am GMT08:378.37am GMT08:37
The Resolution Foundation, a UK think tank, has warned that poor British families are still losing out, despite the tax credit reprieve announced in yesterday’s sutumn statement.The Resolution Foundation, a UK think tank, has warned that poor British families are still losing out, despite the tax credit reprieve announced in yesterday’s sutumn statement.
And that’s because of longer-term changes to the UK welfare system, which will bring in the universal credit.And that’s because of longer-term changes to the UK welfare system, which will bring in the universal credit.
Torsten Bell, Director of the Resolution Foundation, explains:Torsten Bell, Director of the Resolution Foundation, explains:
The attention now turns to the longer term changes to the welfare system the Government has put in train. All the post-2020 welfare cuts announced in the Summer Budget remain in place and will eventually affect millions of families as Universal Credit is rolled out nationally.The attention now turns to the longer term changes to the welfare system the Government has put in train. All the post-2020 welfare cuts announced in the Summer Budget remain in place and will eventually affect millions of families as Universal Credit is rolled out nationally.
“New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.“New Resolution Foundation analysis shows that these cuts fall overwhelmingly on poor working families.
And this chart shows how low-earners are still set to lose out over this parliament:And this chart shows how low-earners are still set to lose out over this parliament:
Low-income working families on Universal Credit set to lose £1,300 https://t.co/n6igG9roK3 pic.twitter.com/2PqxDcv2tlLow-income working families on Universal Credit set to lose £1,300 https://t.co/n6igG9roK3 pic.twitter.com/2PqxDcv2tl
RF's distributional analysis just out suggests average loss for bottom half is £650 from all changes from Budget + SR, no loss in top halfRF's distributional analysis just out suggests average loss for bottom half is £650 from all changes from Budget + SR, no loss in top half
Updated at 8.49am GMTUpdated at 8.49am GMT
8.34am GMT08:348.34am GMT08:34
Osborne denies weakness over tax creditsOsborne denies weakness over tax credits
George Osborne has been conducting a whistle-stop media tour this morning - and sporting a distractingly high-vis jacket - to discuss yesterday’s spending review.George Osborne has been conducting a whistle-stop media tour this morning - and sporting a distractingly high-vis jacket - to discuss yesterday’s spending review.
There’s a lot of attention on his surprise tax credit u-turn - a sign of weakness, chancellor?There’s a lot of attention on his surprise tax credit u-turn - a sign of weakness, chancellor?
Apparently not. Osborne told ITV1’s Good Morning Britain from a building site that:Apparently not. Osborne told ITV1’s Good Morning Britain from a building site that:
“I don’t think it’s a weakness, if you are doing this job, to listen to people and listen to the concerns that are made.”“I don’t think it’s a weakness, if you are doing this job, to listen to people and listen to the concerns that are made.”
Spending Review Reaction, @George_Osborne talks to @GMB, #GMB pic.twitter.com/v67Eg2itteSpending Review Reaction, @George_Osborne talks to @GMB, #GMB pic.twitter.com/v67Eg2itte
8.27am GMT08:278.27am GMT08:27
The Agenda: ECB meeting looms; Autumn Statement falloutThe Agenda: ECB meeting looms; Autumn Statement fallout
Good morning, and welcome to our rolling coverage of the financial markets, the economy, the eurozone and business.Good morning, and welcome to our rolling coverage of the financial markets, the economy, the eurozone and business.
Coming up today, we’ll be mopping up economic reaction to Wednesday’s Autumn Statement and Spending Review.Coming up today, we’ll be mopping up economic reaction to Wednesday’s Autumn Statement and Spending Review.
The Institute for Fiscal Studies will give its verdict at lunchtime, and will show who really won and lost yesterday.The Institute for Fiscal Studies will give its verdict at lunchtime, and will show who really won and lost yesterday.
Already, some of the gloss is coming off George Osborne’s big day, with his own independent advisors admitting that the surprise windfall might not actually happen (awkward, as the chancellor has promised to spend it)Already, some of the gloss is coming off George Osborne’s big day, with his own independent advisors admitting that the surprise windfall might not actually happen (awkward, as the chancellor has promised to spend it)
Related: OBR admits uncertainty over £27bn windfall behind tax credit U-turnRelated: OBR admits uncertainty over £27bn windfall behind tax credit U-turn
It's a #spendingreview #tomorrowspaperstoday montage: https://t.co/eMlZoF01X9 pic.twitter.com/fehi2OKqpUIt's a #spendingreview #tomorrowspaperstoday montage: https://t.co/eMlZoF01X9 pic.twitter.com/fehi2OKqpU
In the markets, attention is turning to next week’s European Central Bank meeting when new stimulus measures could be laid out.In the markets, attention is turning to next week’s European Central Bank meeting when new stimulus measures could be laid out.
It’s Thanksgiving in America, so our US friends will be busy swapping bon mots over the turkey and preparing for theIt’s Thanksgiving in America, so our US friends will be busy swapping bon mots over the turkey and preparing for the
hellhell
joy of Black Friday. So it could be a quieter day....joy of Black Friday. So it could be a quieter day....