July 3 is the day when MPs will (perhaps reluctantly) back the new expenses regime (see my last blog).

They also get a choice on pay. Do they accept or reject the recent recommendations by Sir John Baker which amount to an inflation-busting 4.5 per cent pay rise?

Sir John has suggested £650 a year for three years to catch up with past pay-lag. He also wants MPs’ pay to be based on the public sector average earnings index. (Bear with me here).

But the government wants pay to be set at a lower index based on civil service median pay, something like 2.5 per cent.

Sir John suggested his index, which is higher (currently 3.5 per cent) to take into account the lack of any career path or promotion for most MPs. Which seems fair.

The only problem is, with hairshirt public sector pay restraint the order of the day, who will agree with him?

Possibly quite a few MPs, one tells me. He has been waiting to see the orders, which have not been forthcoming. For now no one knows what they will be voting on.

Until the government comes up with a new formula (it’s not good enough to talk vaguely about some new one based on civil service pay) this could be a tricky issue.

“MPs are very much in mind to vote against the government given that the Baker proposal is the only one that works,” he says. 

Shock, horror.

Michael Martin’s committee of MPs has done the unexpected and come up with a new system of expenses for the Commons.

It is a genuine overhaul.  The sums in question remain the same; up to £24,000.

But:

1] The John Lewis list is dead (MPs will no longer be able to claim for furniture and repairs).

2] MPS in outer London will see their expense allowances halved.

3] There will be more forensic oversight of expenses, all of which - not just from £25 upwards (or £250 until recently) - will have to be declared.

There will still be criticisms.

Here they are: Ministers with grace and favour homes can still claim the allowance for a second home. Central London MPs have had a pay rise of £7,000 recommended. There will be no clocking in and out for MPs. The rules governing husband and wife MPs - both claiming on the same second home - remain up in the air. MPs can still use the allowance to pay mortgage interest instead of rent. Employment of relatives will not change.

Even so: It’s a big change, and should be applauded as - at the very least - a step in the right direction. MPs will vote on the package on July 3.

 ps: The committee did look at combining salaries with expenses (which would look like a pay rise of up to £40,000) but rejected it; contrary to the splash in one Sunday newspaper at the weekend.

Officials are a bit slow to wake up to the world of the $130 barrel.

The government has revised its estimates for oil prices upwards in the wake of the recent spike, but still believe it will halve in the next 18 months.

The government’s “central scenario” for the oil price suggests a real terms fall in the price of a barrel to $65 per barrel by 2010 and $68 by 2015.

Thanks to Norman Baker, Lib Dem transport spokesman, for digging this out.

The forecast, made by DBERR, has been revised upwards from an earlier estimate of $57 in February. But it is still far below the actual price - which has soared because of a cocktail of concerns (demand spike in India/China, supply constraints).

DBERR predicts a drop to $70 a barrel by 2020. Even its “high scenario” suggests a rise in real terms to just $105 a barrel by 2030.

Baker argues that this risks skewing policies on issues including energy, transport and the environment.

“I think it is cynical and deliberate, if they had to admit where prices were going it would change a lot of government policy,” Mr Baker said. “Raising its forecasts would require ministers to re-examine “every aspect of life.”

For example, ministers might consider the need for more renewable energy even more pressing than at present. They might also take greater risks with - dare I say it - road pricing.

Vince Cable, Lib Dem Treasury spokesman and a former economist at Shell, said that it would be a mistake for anyone to predict the future price of oil with confidence. But under two “oil shock” scenarios - war in the Middle East or a peak in oil production - there would be a damaging impact on the economy, he warned.

Few forecasters can say with certainty how consumer behaviour would

DBERR admits its estimates are not rock-solid and have come from industry analysts. It’s impossible to forecast the price of a barrel of oil “next week, let alone in 2020”, moans Malcolm Wicks.

I’ve been wondering for a while now how much the shortfall in stamp duty will be this year, given that house sales could be down 40 per cent and prices 10 per cent.  

Lord Oakeshott, the Lib Dem Treasury spokesman for the Lords, has an estimate of £5bn, down from £10.1bn in 2007/8:

To put this in perspective, it’s almost DOUBLE the £2.7bn cost of compensating the abolition of the 10p tax band.

True, the Treasury did forecast in the Budget that stamp duty receipts would fall…..by about 5 per cent, not 50 per cent. Soon we’ll see who is right.  

Oakeshott makes the astute point that as property prices fall, buildings enter lower stamp duty bands, accentuating the effect.

You might argue that the Treasury will be compensated by rising oil prices, which result in higher VAT at petrol pumps and more North Sea Oil tax. Unfortunately, officials were knocking down this theory a few weeks ago (see Blogs passim).

Still laughing here at our colleague Robert Shrimsley’s astute take on the Irish no vote and the aftermath: Here it is in full…

“The great figures of Europe met in the wake of the Irish No vote to agree on a way forward.
About one thing they were absolutely clear. “We must respect the Irish vote,” they agreed. “It would be a terrible sign of European arrogance to suggest we could just sweep aside a democratic vote of a member state.”
So they all agreed to go out and tell the Irish how much they respected their vote. And they agreed there must be no bullying; no warning the Irish to get their ungrateful Fenian butts into line or go it alone in miserable and obscure isolation.
In fact, they were so clear on this point that they at once agreed to go out and start emphasising it in public. Several gave statements noting that there was pressure from some quarters for Ireland to be left behind but adding that the people of Ireland should not be frightened or feel disrespected because they were sure it would not come to this. And so, just to offer further reassurance, they would put up posters in Ireland making clear that the Irish had better vote Yes PDQ or get their miserable Fenian butts out of the EU.
But maybe even this is not enough, said one. Perhaps we ought to get over to Ireland and give TV interviews stressing that under no circumstances will there be any miserable Fenian butt-kicking.
While they were there, they would take the chance to add that so deep was their respect for the Irish No that Ireland could have as long as it liked to change its mind. Across the continent European leaders insisted there would be no pressure. “If the deadline slips by a few months, so be it,” said one, adding that to take any other view would be to “disrespect the Irish No”.
But surely, they argued, the best way to demonstrate our respect to the Irish people is to show how we can move Europe forward. We need to change the agenda, said another.
“The people have spoken,” they said. And the message was that they wanted to get away from all this talk of treaties and constitutions and referendums that had caused the Irish reaction that had to be respected.
“We have to move the agenda on,” they said. We need to stop bothering the people of the EU with these referendums they do not understand.
When you analyse this, they said, what the Irish - who had to be respected - were telling them was that this was far too complex a matter and they want us to drive this through without bothering them. Once you put it that way it was clear their views had to be respected.
More importantly they had to heed the message that they were being told - to stop fussing about internal stuff and start talking about things that really mattered to the people, like jobs and the economy. That meant they needed to drive through those changes as fast as possible so they could get on to the important matters.
So they got to work at once, working out how to secure most of the rejected changes without bothering the Irish again - out of respect for their democratically expressed wishes. After all, they noted, deep down the Irish are good Europeans. They know a convoy cannot move at the pace of its slowest member - unless, of course, that slowest member is France.”

Some more spying tales.

Britain’s first national security strategy document has largely been forgotten in Whitehall. Officials are carrying on in much the same way as they did before Britain’s security priorities were set out on paper. One explanation is given in an endnote to the document:

“The wider scope of issues to be addressed within this strategy is not to be taken as affecting the legally understood meaning of national security.”

This disclaimer was requested by the Secret Intelligence Service and Security Service, I’m told. Britain’s spies refused to have the legal basis by which they operate watered down by adding threats like flooding to the “legal definition” of national security.

Cynics among you may wonder why the government spent months on a national security strategy that was never permitted to officially redefine national security. But very little surprises when it comes to the NSS, which has always had the smack of a Whitehall farce. We are looking forward to the second instalment, which is supposed to be published in nine months time.

Global Dashboard have spotted an incredible interview in the LA Times with “Curveball”, one of the most important “disinformation” agents in the run up to the invasion of Iraq.

Rather depressingly, it shows that a good deal of Colin Powell’s UN presentation on WMD was based on the word of a jobbing burger flipper who failed to even win the trust of his colleagues at Burger King.

This passage is unforgettable:

In early 2002, a year before the war, he told co-workers at the Burger King that he spied for Iraqi intelligence and would report any fellow Iraqi worker who criticized Hussein’s regime.

They couldn’t decide if he was dangerous or crazy.

“During breaks, he told stories about what a big man he was in Baghdad,” said Hamza Hamad Rashid, who remembered an odd scene with the pudgy Alwan in his too-tight Burger King uniform praising Hussein in the home of der Whopper. “But he always lied. We never believed anything he said.”

Another Iraqi friend, Ghazwan Adnan, remembers laughing when he applied for a job at a local Princess Garden Chinese Restaurant and discovered Alwan washing dishes in the back while claiming to be “a big deal” in Iraq. “How could America believe such a person?”

A tennis match with Tony Blair, the former prime minister, is among the auction lots to be sold at a Labour fund-raising dinner next month.The event, which is hoping to raise £500,000 from table places alone - with 500 tickets at £1,000 apiece - as well as more money through the auction.

Among the prizes are lunch with Sir Alex Ferguson, manager of Manchester United, and a day out at a racing circuit with Lord Paul Drayson, the pharmaceuticals millionaire.

The event comes as Labour struggles to reschedule some of its £18m of outstanding debts, prompting fears over its financial stability.

The auctioneers will be Alastair Campbell, Mr Blair’s former press chief, and Richard Caborn, former sports minister.

But what will it do for the party’s reputation if the event is not full?

It was striking that the event has been press-released and publicised. In the old days, there was no need.

A Labour bod has been in touch to say the event has been publicised to enable people - such as City folk - to bid in advance for the prizes. FT readers, that includes you.

My favourite line from today’s report - “Conduct of Sir Nicholas and Lady Winterton” - lies in the appendices. It is a letter to the standards commissioner from Lady W on April 28, 2008:

….”My husband and I have already commenced looking for an alternative property with similar facilities in the Westminster area. As I am currently chairing the Local Transport Bill Public Bill Committee and Nicholas is the lead Chairman on the Finance Bill Public Bill Committee and, in addition, we shall be attending the inauguration of the new Taiwanese President in Taipei in May, I am sure you can appreciate the limits on our time….”

( Sir Nicholas and Ann Winterton were found to have broken expenses rules by claiming rent on a flat they already owned. The Commons Committee on Standards and Privileges accepted that the breach regarding the £700,000 London property was accidental. But they ordered the couple to cease their unusual arrangement from September onwards. The Wintertons claimed more than £120,000 in Commons expenses for their second home, six years after they paid off their mortgage. They did this by moving the building into a family trust, set up for their two children. This allowed them to claim more than £21,600 a year in “rent” on the building and also avoid inheritance tax in the event of their death. )

British diplomats in South Africa have had a busy few months, but this afternoon their problems were less to do with Robert Mugabe and more to do with Gordon Brown.

Mr Brown’s comments in parliament on Zimbabwe today included not one, but two embarrassing blunders, according to a foreign office source. Here are his words in full:

The Prime Minister: I have not only kept in touch with the President, Thabo Mbeki. I was also in touch on Sunday with the president-elect—that is, the president of the African National Congress, Jacob Zuma. I made it clear to him, and he supported the idea, that there would be 1,000 monitors from the ANC party offered to Zimbabwe, so that they, too, can play their part in the election. So it is not strictly the case that South Africa is not making available election observers or monitors; that is exactly what they are doing.

The first error is that Mr Zuma is not the president elect of South Africa; the election has yet to take place.

The second, much more serious error, is that Mr Brown incorrectly stated that the ANC would send 1,000 election monitors. Indeed, the ANC have already released a statement denying what Mr Brown claimed:

MEDIA RELEASE
ANC MEMBERS TO FORM PART OF SADC OBSERVER MISSION

The African National Congress has noted a report on Reuters suggesting that
the organisation will send a contingent of 1,000 people to observe the
Zimbabwean run-off elections.

The ANC wishes to correct this report.

The ANC will be sending observers as part of the 400-strong SADC observer
mission. The ANC’s contribution to this mission includes 14 Members of
Parliament and 15 others.

The ANC remains committed to contributing in whatever way it can, within the
ambit of multilateral institutions like SADC, towards a sucessful and
credible run-off election.

This appears to be a serious mistake at sensitive moment in the Zimbabwe crisis. Mr Brown must know that revealing the details of conversations with world leaders — elected or not — is a big blunder. Spreading misinformation about private conversations with world leaders is an absolute howler. I’m told that Mr Zuma is not happy, with some justification.

This error comes days after Mr Brown upset relations with the EU, Iran and the US by announcing sanctions that do not exist.

Some diplomats are beginning to see a pattern of unhelpful and distinctly undiplomatic interventions by the prime minister. It is not making their job any easier.