Alistair Darling tries to talk tough against bankers who need to be brought “back to earth”

Robert Peston makes the case against high pay for bankers

George Osborne is being probed over his expenses

Are Tories homophobic, as Ben Bradshaw suggests? Iain Dale has hit the roof.

Even Gordon Brown’s enemies admire his intellect, says Arianna Huffington - who has spent the week with London’s very important people

From my Notebook column in today’s FT:

Shaun Woodward: Our new secret formula is a great success. The public love it.

Gordon Brown: Higher spending and investment until the end of time.

Ed Balls: Unlike the Tories’ 10 per cent spending cuts.

Alistair Darling: Aren’t they Labour cuts?

Gordon Brown: Not since our rebranding exercise. Now it is the Conservatives who will wrest vital funding from the hands of policemen and lollipop ladies.

Alistair Darling: Surely if we win the general election this will come back to haunt us?

Cabinet ( together ): We won’t.

Shaun Woodward: I still think we need something stronger.

Peter Hain: The Tories will institute compulsory Morris dancing?

Andy Burnham: They will murder the first-born of every household?

Peter Hain: They’ll ban Britain’s got Talent .

Gordon Brown: That’s more like it.

One of the riddles of Gordon Brown’s regime is the exact role played by Shaun Woodward, Northern Ireland secretary. Some sense Woodward’s hand in the crude claim that Labour will increase investment while the Tories will cut spending. After all, he was John Major’s head of press during the - successful - “Labour Tax Bombshell” campaign in 1992.

Is Woodward now a crucial adviser to Brown? Lord Mandelson waspishly told the FT on Monday: “I don’t know. What is the advice being dispensed by Mr Woodward?” The former Tory MP has been regularly tipped in the media for promotion to higher office - wrongly.

Yet Woodward is not short of ambition. Alastair Campbell wrote in his diaries of Woodward’s defection in 1999: “He made clear again, less subtly than before, that he felt he was seen by some in the Tory party as a possible future leader.”

Incidentally, Woodward used to work on That’s Life with Esther Rantzen, who sang a song at his stag party, having gate-crashed it. “Do not in any circumstances ask what I was wearing,” she says. “Although a close friend was a gorilla.”

I ask Rantzen if her old friend was annoyed with her proposal to stand in Labour-held Luton. “It’s really unfortunate because the sleaze is evenly distributed,” she admits.

Labour last year begged a dozen private backers - who lent the party £14m in 2005 - to delay repayments until 2015.

Most agreed; including Chai Patel, Richard Caring, Rod Aldridge and Barry Townsley. Two others wrote off their loans altogether (Sir Gulam Noon and Lord Sainsbury).

Two refused to play ball: Andrew Rosenfeld (who was owed £1m) and Gordon Crawford (£500,000).

But I’m told that Rosenfeld has now got most of his money back. And so has Crawford. This is a sliver of good news for Labour - although the party now has a new problem; the drying up of donations or loans from private individuals.

Sam Coates pointed out a while back that some of Labour’s biggest private donors are dead people.

Gordon Brown’s sums are skewered by Chris Giles, FT economics editor

The organogram of (imminent) power: a map of David Cameron’s inner circle

Tom Harris, former transport minister, defends the nationalisation of the East Coast mainline

The new Parliamentary Standards Bill is further undermined

Barack Obama faces his big test: healthcare reforms

Your guide to the Norwich North by-election

You would have thought that the prime minister would now have his public sector spending numbers at his fingertips - given that David Cameron has made the issue his focal point for three sessions of Prime Minister’s Questions in succession.

Apparently not. “Capital spending…will fall after 2011″ he said. Then, later: “Capital spending will rise to 2011 and then fall.”

This is less wrong than his previous PMQ claim that capital spending would keep rising until the Olympics (2012).

But it’s still wrong.

There was a clarification towards the end of the half-hour session when Brown said that in fact the figure would fall in 2010. His admission came after prompting by a Tory MP who reminded him that the Treasury’s own capital spending figures show £44bn this year and £36bn next year.

Some pundits are wondering whether Cameron should start following a different strategy and stop using up all his questions on the same theme. They ask whether the impact is blunted by repetition. I’m not sure. After all, Brown’s reputation was built on his solid grasp of numbers.

UPDATE

I forgot to mention Brown’s preposterous claim that the Tories were expecting unemployment to rise in the coming years - as if he was not.

Surely the Treasury’s own economic forecasts are based on unemployment rising substantially from today’s levels? Given that this is the consensus of almost all independent forecasters.

Bang: Is that the sound of the wheels coming off a transport company?

There has been growing frustration within the Department for Transport for weeks. The issue: the demand by National Express to renegotiate its £1.4bn, seven-year contract to run the East Coast rail franchise.

This request always had an element of chutzpah - given that the company had freely entered the contract of its own volition. The price was based on unrealistic forecasts of passenger growth by National Express.

No wonder that the DfT has always played hardball, warning that it could not renegotiate. If it did, there would be umpteen other transport companies beating a path to its door and demanding the same thing.

Not that today’s announcement is great news. It’s unclear whether - by pulling the plug on the National Express franchise - the taxpayer will ultimately end up with a better or worse deal. There may not be much appetite from other companies to take on the line during a recession. And will the year of “temporary” public ownership mean running losses for the department? (Answer: No; the route would be profit-making if it wasn’t for the cost of the franchise).

It seems clear though that Lord Adonis, the new transport secretary, has played the best of a difficult hand. The move was welcomed this morning by Norman Baker, the Lib Dem transport secretary, although Baker also raised the thorny question of National Express’s other two franchises. It would send out a clear signal to the rest of the industry if Adonis removes the profitable East Anglia and c2c franchises from the company’s hands. This morning the transport secretary said this was “possible” and options would be discussed. But no firm decision has been made.

At the back of Adonis’s mind may be the concern that even these two successful routes could struggle to attract more generous bidders at this time. Also - according to Peston’s blog - the government may not be able to remove the other two contracts (as punishment for the East Coast fiasco) because the East Coast franchise is controlled by a special purpose vehicle. Or so NE’s lawyers believe.

The DfT has been unhappy for weeks at the idea that it was “renegotiating” the contract. Of course it had received this request from the company - but that’s not quite the same thing.

The nationalisation of the East Coast line won’t happen until the end of the year, when National Express’s funding for the line runs out. Or so the company says in today’s statement.

That was seemingly contradicted by Ray O’Toole, chief operating officer, on this morning’s Today programme. He claimed the company would only lose the franchise “if the existing economic conditions continue”, and “if this economic cycle continues in the vein it is at the moment”.

I’m told that senior people in the DfT listened to this in disbelief.

We are about to see the full details of Labour’s new policy of giving priority on council housing waiting lists to local residents.

This is an obvious dog whistle to working class voters who might otherwise vote BNP.

Here is a reminder of what happened to Margaret Hodge when she suggested something very similar two years ago. She was attacked by senior Labour figures including Alan Johnson, Peter Hain, Jon Cruddas and Ken Livingstone.

Here’s a recap of what she suggested. A need for social housing policy to take account of length of residence, citizenship and national insurance contributions.

This was Livingstone’s riposte: “Margaret Hodge’s suggestion that housing allocation should be based not on need but factors like length of residence would be catastrophic for community relations.”

Johnson accused Hodge of “using the language of the BNP.”

And now it’s going to be government policy.

UPDATE

Here is the page in the BNP’s manifesto which includes: “Make length of residency in an area the key criterion for council house allocation.”

You might have missed an excellent article this morning by my colleague Michael Peel.

He says lawyers are warning that the new threat of up to a year in jail for errant MPs guilty of expense scams is actually less severe than the existing penalty.

Transparency International points out that the current maximum jail time for fraud is 10 years - against the “up to a year” for MPs.

A former SFP prosecutor, Claire Shaw, who is a lawyer at Pinsent Masons, said: “They shouldn’t be passing a special act for MPs which has a tenth of the penalty the wider public face.”