News round-up 26/6: Public finances sink deeper into red

Public finances

Britain’s public finances sank deeper into the red last month as weaker tax receipts from the recession-hit economy depleted the Treasury’s coffers, the Guardian reports. Figures from the Office for National Statistics showed that net borrowing excluding financial help to Britain’s banks stood at almost £18bn in May – up from just over £15bn in the same month in 2011. City analysts had been expecting net borrowing to come in at around £14.5bn in May but the ONS said income tax receipts were down more than 7% on May 2011 while government spending was up by 8%.

Elderly benefits

British pensioners are getting a better deal from the state than at any time in the last 15 years, while the young bear the brunt of the recession, the Independent reports. Research published by the Institute of Fiscal Studies (IFS) shows that the wealth of the elderly has grown faster than any other age group, while the amount they pay in tax has fallen. A separate study released today suggests that the young have lost out compared with older generations since the 2008 financial crisis. 

Welfare

Fresh questions over the cost, timetable and viability of universal credit emerged yesterday, according to the Guardian, as prime minister David Cameron unveiled 17 further reforms aimed at cutting £10bn off the welfare budget. The paper writes that reforms go wider than expected and are designed to give political momentum to the government. It states that senior sources in the government, as well as the Labour opposition, are claiming that universal credit is now over budget and running late, although work and pensions secretary Iain Duncan Smith denied this.

Hospitals

One of Britain’s biggest hospital trusts is “on the brink of bankruptcy” and will be taken over by ministers in the coming weeks due to large debts from PFI deals, the Financial Times writes. South London Healthcare Trust is losing more than £1m a week and will be run by a troubleshooter and new management team. The paper writes that more than 20 other hospitals in financial difficulty also face being taken over unless they take urgent steps to turns around their fortunes.

EU budgets

The EU would gain far-reaching powers to rewrite budgets for Eurozone countries that breach debt and deficit rules, according to a draft report seen by the Financial Times. The proposals are likely to be discussed at a summit this week. The proposals are part of what the paper calls an “ambitious plan” to turn the Eurozone into a closer fiscal union that would see Brussels given powers to serve like a finance ministry for member countries. Plans for a banking and political union are also in the report that will be presented at the summit.

Strikes

Unite has set aside a £25m “fighting fund” to back strikes around the country in the coming months as its general secretary Len McCluskey warned of “trouble ahead”. Speaking to the Times, Mr McCluskey said that the fund “sends a signal to members and to employers”.

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