Downing Street Says

On whether the Prime Minister spoke about the Budget to the President, the PMS said that he had done. The Prime Minister had explained the measures that we had taken yesterday.

Asked if the Prime Minister had explained why he was going further and faster than the US, the PMS replied that there was agreement on this issue; different countries would implement policies that were appropriate to them. There was agreement on fiscal consolidation and there was agreement on the need to have policies that supported growth and in particular for surplus countries to do more to promote domestic demand.

Put that in his letter last weekend, the President had said that a credible medium-term fiscal path was to halve the current deficit by 2013, the PMS said that the President had set out that plan for the US. Different countries implemented different fiscal policies. The PMS added that Secretary Geithner had said three weeks ago that he thought that the UK was doing the right thing.

Put that those comments were not relevant as they came before the Budget, the PMS said that the comments were relevant as they reflected the US position. The letter from President Obama also spoke about the need for flexibility and recognised the fact that different countries would implement fiscal policies that were appropriate to them.

On whether the Prime Minister would still think the Budget was fair when cuts in tax credits kicked in, in subsequent years, the PMS said that the Prime Minister thought the Budget was tough but fair. We had a significant fiscal deficit that needed to be addressed and the measures announced yesterday were designed to do that in a way that shared the burden and made sure people at the higher end of the income scale contributed more.

The PMS said that we had been clear that tax credits were one of the areas that needed to be looked at and we had made some changes so that they were paid less far up the income scale.

Put that housing benefit cuts were very tough, the PMS replied that the housing benefit bill had increased rapidly in recent years and it was a benefit the Government had to get to grips with.

Asked if the Prime Minister accepted that this Budget was a gamble, the PMS replied that there were clear risks in not tackling the deficit. We had seen what had happened in Greece and other areas of Europe and there were significant risks if we did not deal with the deficit effectively.

Put that the Bank of England did not have room to slash rates like the Canadian Central Bank did in the mid 1990’s, the PMS said he would not get into commenting on monetary policy.

Asked what the position was on employees National Insurance Contributions (NICs), the Treasury Spokesman replied that there had been no change on that. They would go up by 1%.

On whether he thought the highest burden would still fall on the richest 10% after 2013 as some of the measures announced would not come into affect until 2013/14, the Treasury Spokesman replied that between now and then, the Government would be overhauling welfare policy. What happened in future years would be informed by that work.

Asked if the Prime Minister thought that Gordon Brown should have been in the House yesterday, the PMS said that whether or not Gordon Brown attended Parliament was a matter for him.

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» Wednesday, June 23, 2010

Budget

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