The Big Bang that happened today

By Peter Hoskin
_{Follow Peter on Twitter}

Even though the Guardian and Mirror are overstating their collective case, today is still a day of momentous policy changes. You can see our quick checklist of the biggest – which includes a couple that didn’t make it into the Guardian’s main round-up – below. Although, before you do, it’s worth noting that there’s more to come later this month, from another increase in the personal allowance to the first trial of the Universal Credit. Here are today’s measures:

• Introduction of a carbon price floor. This is, in HMRC’s own words, a “tax on fossil fuels used in the generation of electricity” – pour encourager energy companies to use less coal, oil and gas. The Government’s early analysis of the policy suggested that its financial implications would be minimal, for the Exchequer, businesses and individuals. Yet the Institute for Public Policy Research reckons that it could drive wholesale electricity prices up by 17 per cent  across the next few years, driving thousands into fuel poverty.

• Changes to housing benefit. Whether you call it the “spare room subsidy” or the “bedroom tax”, the simple fact is this: housing benefit claimants who have one spare bedroom will have 14 per cent of their benefit removed, rising to 25 per cent for two or more spare bedrooms. It’s expected to save the Exchequer around half-a-£billion each year – from a total housing benefit bill of £17 billion – provided it can be administered successfully.

• A new system of financial regulation. The Financial Services Authority has been whacked, and two new regulatory bodies birthed in its place. The Prudential Regulation Authority is there to “promote the safety and security” of financial institutions. The Financial Conduct Authority will keep an eye on the City’s behaviour, trying to spot – and stop – the sort of dodginess that led to, say, the Libor scandal. The whole shebang will be overseen by the Bank of England’s Financial Policy Committee, another example of the power accumulating on Threadneedle Street.

• The main rate of corporation tax falls to 23 per cent. From 24 per cent, of course. The Coalition plans to reduce it further still, to 20 per cent, by the next election.

• Cuts to legal aid. The Government hopes to save £350 million from the £2.2 billion legal aid bill. That will be achieved, in main part, by lowering the cut-off point for aid to a household income of £32,000 a year. There will also be more detailed means tests for those earning between £14,000 and £32,000. Here’s an article written in 2010, by ConHome’s own Harry Phibbs, on the cuts and their scale.

• NHS commissioning reforms. Hmm, you may just have heard about these NHS reforms before. They’re the ones by which clinical commissions groups – made up mainly of GPs – steer the work of the health service. As Max Pemberton puts it in a useful article in today’s Telegraph, “They will be responsible for organising and paying for care, and deciding who will provide it”. This was controversial enough when the idea was conceived, but now it seems to have attracted another swarm of opposition. Today’s Mail highlights and attacks the possibility of GPs “awarding themselves” lucrative contracts.

• Changes to council tax benefit. Council tax benefit reduces any claimant’s council tax bill. The DWP has traditionally administered it, but now it’s asking councils to sort it out themselves – along with a 10 per cent reduction in funding. What this means for current claimants mostly depends on what their local authorities decide. The Scottish Government along with Scottish councils is, for instance, stumping up £40 million to bridge the “funding gap”.