AFTER the fiasco of last year’s pasty tax Budget, George Osborne can ill-afford a repeat performance when he steps up to the despatch box on 20 March.
So the chancellor will be hoping that his words last July, as he unveiled his flagship Funding for Lending Scheme (FLS), do not return to haunt him.
The initiative would provide, he said, “welcome support to businesses that want to expand and families aspiring to own their own home... The Treasury and the Bank of England are taking coordinated action to...support the flow of credit to where it is needed in the real economy”.
For “flow”, read “fast-drying trickle”. It must have been with a shudder that Osborne got his advance sighting of figures released this week showing a £2.4bn dip in net lending during the fourth quarter of 2012. Twisting the knife further, it will not have escaped the chancellor’s attention that the Newbury Building Society lent more on a net basis to small and medium-sized companies than either Lloyds Banking Group or Royal Bank of Scotland, the two taxpayer-backed lenders. It won’t be the central plank of the Budget Day debate, but it is crucial to perceptions of Osborne’s competence as an architect of programmes that stimulate economic growth through improved credit supply.
Ed Balls, his Labour shadow, knows that only too well.
In recent days, I understand that Balls’ office has reached out to the major UK banks asking them for ideas about potential improvements to the FLS. Balls knows that the scheme already has his opposite number hemmed in. Vince Cable, the business secretary, has called publicly for an overhaul.
A flat-footed response to a new stream of ideas from Balls would not quite equal the pasty tax debacle for the chancellor, but it would not be far short.
THE NAME IS NOT GOING TO BE BOND
Further delays to the $73bn (£48.6bn) merger of commodities trader Glencore and miner Xstrata have not prevented investors turning up the heat over the identity of the combined group’s chairman. This week’s slump in profits from both companies has fanned those flames. Discredited by a row over executive bonuses, Sir John Bond, the Xstrata chairman, will exit shortly after the merger completes.
Priority number one for shareholders appears to be to find a chairman robust enough to exercise genuine influence over Ivan Glasenberg, the Glencore boss who will run the combined group.
One name now being mooted is that of Dick Olver, chairman of BAE Systems, who is expected to step down from that role this year.
Olver has been less tainted by the failure of last year’s merger between BAE and EADS than those who opposed the deal suggest. He has the right credentials to represent investors in the Glenstrata boardroom.
THE CLAWBACK CRAZE
Like neckscarves and Andy Murray, bonus clawbacks in banks have suddenly become all the rage.
Analysis of the major UK lenders’ annual results shows that the best part of £1bn has been reclaimed this year through the cancellation of unvested stock awards.
More is about to follow. I understand that Royal Bank of Scotland (RBS) is to consider clawing back parts of the bonuses awarded to Ron Teerlink, the chief administration officer who steps down this year, over the IT failure that left millions of customers without access to their accounts last summer.
RBS is awaiting the results of a probe into the meltdown by the City regulator before it decides what action to take, but some form of financial penalty looks inevitable.
Mark Kleinman is the City editor of Sky News @MarkKleinmanSky