Newsflash: I’ve just been told that Tesco is withdrawing plans for an ecotown at Hanley Grange, near Cambridge.

We ran the story last week that the wheels were falling off the ecotown project, with three having withdrawn, one having been cut from 15,000 homes to 5,000 and another three - including Hanley Grange - running into difficulties.

After that article, a DCLG official called me to say that Hanley Grange was going fine, despite the fact that one major member of the consortium, Wellcome Trust, had dropped out of the scheme.

Now it seems that Tesco, the remaining landlowner, has some reservations about the way in which the government is bulldozing local authorities to get its new conurbations built. It still wants to do the project, but in a more conciliatory way.

TESCO STATEMENT ON HANLEY GRANGE ECO TOWN PROPOSAL:

“Tesco put forward a strong proposal for an environmentally-leading mixed-use development at Hanley Grange through the Government’s Eco Town initiative – combining housing, employment and cutting-edge environmental technology.

The site was shortlisted as one of 15 out of an original list of 57 sites, and we think the proposal had very good prospects of succeeding under the Government’s Eco Town initiative. 

However, we recognise that a proposal of this type has implications not only for the local area, but for the region.  We also believe that a genuinely sustainable community stands

the best chance of being delivered successfully if a broad range of stakeholders in the region feel that they have been fully engaged in the process leading up to a decision. 

We believe this is most likely to be achieved through a review of the Regional Spatial Strategy (RSS), which involves a wide range of organisations and interest groups in the region.

We look forward to setting out our plans for a sustainable community at Hanley Grange through the RSS process, and to engaging on the broad range of views that will be expressed through that process.”    

There’s more on this website.

Leave aside the question of whether energy companies are charging too much for power. There is the separate question of the European emissions trading scheme (ETS) windfall, addressed elsewhere on this blog.

Earlier this year, Ofgem said power companies had ended up with a £9bn windfall because of a quirk in the scheme. In its second phase polluting companies must buy on average 7 per cent of the permits they need to pollute. For power companies it’s about 30 per cent.

Yet the price of electricity has risen as if companies had to pay for 100 per cent of their permits. Thus the Ofgem figure.

But the £9bn was based on carbon permits at £20 each, whereas the market price is now £25 to £30. That means MPs, unions and others who complain about the ETS windfall can now use a new figure……well north of £11bn.

Vince Cable held a press conference this morning to outline various ways to ease the pain in the housing market. I’m not sure any of his suggestions will make a massive difference (they include letting housing associations borrow more to buy up empty homes***).

But credit to the Lib Dem Treasury spokesman, who has long been alert on this issue. As he reminds us, Labour MPs were literally laughing at the idea of an imminent housing crash - as recently as the spring.

Here, as a sorry reminder of government complacency, are extracts from the Hansard account of a debate in April on a Lib Dem-led motion on the housing bubble:

Angela Eagle, exchequer secretary to the Treasury: “The Liberal Democrat motion has been much commented on, possibly because it reads like the storyboard for “Apocalypse Now”, or perhaps even “Bleak House”. According to the motion, we are facing an “extreme bubble in the housing market” and the “risk of recession”, and we must “act to prevent mass home repossessions”.

Presumably that is why the hon. Member for Taunton (Mr. Browne) got through his entire speech without mentioning any of those things until the last minute—they obviously keep him up late at night.

Fortunately for all of us, however, that colourful and lurid fiction has no real bearing on the macro-economic reality. In difficult economic times—here I find myself in agreement with the hon. Member for Fareham (Mr. Hoban)— [ Interruption. ] —at least in part; I do not want to get him into trouble. In difficult economic times, it generally pays to remain calm and to apply a cool, analytical mind to the situation. Hysterical over-reaction, as this motion demonstrates, might attract a few cheap headlines and some doom-laden Lib Dem press releases, and it might even frighten a few voters ahead of local elections, but it is not mature or responsible, as my hon. Friend the Member for Leeds, East (Mr. Mudie) took some time to point out.

Now that we have had “Apocalypse Now” and “Bleak House”, I am going to talk about “An Inconvenient Truth”, which is that the economy is strong and stable.”

later….

Siôn Simon (Birmingham, Erdington) (Lab): ”It is alarming me to discover that people as esteemed as the Liberals think that we are in the grip of an “extreme bubble”. If we are in an “extreme bubble” now, could she tell us what sort of bubble we were in during the early 1990s when people’s homes really were being repossessed by the hundreds of thousands?”

Angela Eagle: ”…Because our economic fundamentals are right, we can look forward with reasonable expectation to getting out of this situation. The housing situation will be unwound in a relatively calm and orderly way, which is what people need to know.”

Calm and orderly, you say?

*** This now seems to be the government’s big idea, according to The Times on Friday morning. Questions for the government: where will the money come for councils to buy up unwanted homes (occupied or otherwise)? Will central government give billions of pounds to local authorities (if so from where?). Or will it let them borrow more (if so from whom? Most banks are in retreat from anything property-related). This sounds more like a useful mopping-up exercise rather than a measure which will make much difference to the crash.

Expect an official announcement on Tuesday. It will also be interesting to see what’s changed since Caroline Flint spoke to the FT in June:

The housing minister is pressing ahead in the area where she believes she can make a difference - using the clout of public sector bodies to help housebuilders, not only by buying thousands of new-build homes from them, but perhaps by changing payment terms so registered social landlords pay more upfront.

You may or may not have noticed the Conservative silence during the ongoing debate about a windfall tax on energy companies. It’s not hard to imagine the internal debate at the top of the party on this one.

Attacking the idea would be sensible and confirm the party’s pro-business credentials. But supporting it could play well in Lower Middle England.  Saying nothing would give the Tories the benefit of the doubt either way.

Alan Duncan, shadow business secretary (pictured with David Cameron) broke ranks last night in a phone interview with the FT.

He told me that Labour backbenchers hadn’t stopped to think about how to impose such a levy, since many suppliers are not UK-based companies. Nor had they considered the implications for energy supply and pricing, given that companies’ long-term investment could be restrained by such a tax.

“Whipping up hatred is not a good basis for fair taxation. What matters more than retrospective taxation is properly working competitive markets, which is what [the energy regulator] Ofgem is there to bring about,” said Mr Duncan. “We are seeing old-fashioned socialist hatred converting once again into high taxation.”

I also had a word with Patricia Hewitt, business secretary from 2001 to 2005, who said a levy would be a “very bad idea” because it would be “arbitrary, unpredictable and it would undermine confidence and the climate for future investment”.

Any decision on whether pricing was unfair should be left to Ofgem, said the Labour MP for Leicester West.

Ms Hewitt said: “As a general principle i’m against windfall profit taxes”. She conceded that the first New Labour government had imposed a windfall tax: “We did, and I do think that’s the exception that was acceptable because it was made clear in that situation that privatised utilities had been under-valued at sale. We always made it clear that we were going to impose a windfall tax…to finance the New Deal for young people, there was no surprise about it.

“It was justified in my view and other people’s…but there is no equivalent situation today, and as a general rule I think windfall profit taxes are a very bad idea…In so far as there are concerns about the level of price rises , that is a matter that Ofgem should be asked to investigate to see if there are excessive price rises and whether competition is working.”

Actually, Ofgem is already investigating the energy market and will report next month.  I’m told that its staff have the powers to enter the premises of all the power companies to go through their paperwork and this has already taken place. You can presume that the recent rises will form part of the published report. There will also be an emphasis on the “vulnerable” and whether they are being helped or harmed by competition.  

In theory Ofgem can impose fines of up to 10 per cent of global turnover if it finds evidence of anti-competitive practices. Recently it hit National Grid with a £42m fine in February.

Rob Marris MP* has just denied that he will quit if the government doesn’t bring in a windfall tax.  

Here are his comments to me over the phone just now:

“It is not correct, I never said that…at least not in terms of resigning over a windfall tax. I wasn’t talking about resigning over anything. I didn’t make myself clear. I never said or indicated that I would resign over a lack of a windfall tax. My position is, a backbencher or junior MP supports his or her government depending on the policies put forward by that party. An extreme example is, if a government announced that they were going to introduce a flat rate of income tax at 20 per cent my enthusiasm for supporting a Labour government would be markedly decreased for obvious reasons.”

“My enthusiasm for remaining a pps depends on the policy. What we need, and I did make this clear, the difficulty facing the Labour government. It’s not the effect of the leadership, but of policy. We need new policies in the autumn, and I’m presuming we’re going to get these. One of these under consideration, and which I’m on record supporting, is a windfall tax, but it is not a deal breaker for me. It is not like 28 days (pre-trial detention of terror suspects), on that I supported 90 days, that is the sort of issue which raises strong views on both sides, a big issue of principle, that is the kind of resigning issue. A windfall tax is not a resigning issue and I never indicated that it was.”

* Rob Marris is MP for Wolverhampton South West and parliamentary private secretary to Shaun Woodward, secretary of state for Northern Ireland

Incidentally, the nearly-80 names of Labour MPs on the Compass petition, calling for a windfall tax….how many have already signed early day motions saying the same thing?

For starters, there are 47 Labour MPs on Fabian Hamilton’s EDM, put forward in January.  There are 35 on Lindsay Hoyle’s EDM, written in July. (He did a previous EDM on this in February, which has 30 Labour signatures). There are 48 on Desmond Turner’s EDM from June. Some MPs will have signed all of these motions.

So the question for Compass is this: How many of your names are new?

UPDATE

Okay, I’ve done the maths. About half the names - 35 by my calculation - have not already signed an EDM on this. There are also dozens of names who HAVE signed EDMs but aren’t on the Compass petition….suggesting that it has the scope to grow, maybe past 100.

So far the group tells me it has 75 on the record, plus 7 “sympathisers”, mostly pps’s, who don’t want to go public.

The scene: A newsroom. The date: September 2008

Reporter (on the phone to Treasury).

“So this windfall tax…”

Official

“It’s not a windfall tax”

Reporter

“OK well it certainly sounds like one. Aren’t you raising billions from the energy companies?”

Official

“Um”

Reporter

“Something to do with ETS?”

Official

“Under the EU’s emissions trading scheme (ETS) companies get permits which allow them to pollute. They can trade these amongst themselves. In the first round they got the permits for free. In the third round, which begins in 2012, they will have to pay for all of them.

In the second round, which has just started, they will have to buy just 7 per cent of the permits on average. That mean figure ranges from electricity companies having to buy over 30 per cent of their permits to steel and cement companies being exempt for now.

The process has already started and will raise £1.7bn-£1.9bn over four years. The money will be frontloaded, with greater cashflow this year and next. So I would imagine you’re looking at well over half a billion before Christmas.”

Reporter

“So it’s not a windfall tax?”

Official

“You can call it whatever you like. Ministers are also thinking about shifting the 7 per cent figure to 10 per cent - the maximum allowed under EU rules at present. That would bring in another £700m or so. And you could frontload the process further to get even more of the money now.”

Reporter

“But there won’t be any clawing back of the estimated £9bn which energy companies have got from their free permits?”

Official

“Well, maybe a smidgeon. If they raise it from 7 to 10 per cent. ”

Reporter

“I’ve just thought of something. I heard that Gordon Brown wants a big giveaway for 7 million families this winter. Up to £150 each to help with bills. That would cost just over £1bn. Maybe this ETS thing could cover that?”

Official

“You might think that. I couldn’t possibly comment.”

10 minutes later

Reporter

“I’ve got this great story. It’s a bit complicated though - have you got five minutes?”

News Editor

“What’s the top line?”

Reporter

“Well, energy companies are paying up a billion, well, much more than that actually, and Gordon will probably use it to help the poor.”

News Editor

“£1bn Windfall Tax on Energy Companies Revealed!”

Reporter

“It’s not really a windfall tax. And we knew it was coming, well, the industry did, apparently.”

News Editor.

“Explain it. But I haven’t got much time.”

Reporter

“Under the EU’s emissions trading scheme (ETS) companies get permits which allow them to….”

News Editor

“Boring”

Headline the next day: “£1bn Windfall Tax on Energy Companies Revealed!”

One week later…

Gordon Brown: “We are raising ONE BILLION POUNDS from the energy companies to help the most vulnerable people in our society with their fuel bills….” cheers from Labour backbenches etc etc

The typical household in the UK has seen disposable income drop by 15 per cent in the last year as food prices and utility bills soar.

Disposable income now represents 28 per cent of average household income, down from 35 per cent a year ago, according to a survey published on Monday by uSwitch.com, the price comparison website. This is the equivalent of £14,520, down from £17,102.

On one level the figures are unsurprising given the well-publicised double-digit rises in the prices of many staples ranging from petrol to a loaf of bread.

But the survey quantifies the pressure on household finances which has helped to erode Labour’s popularity at the ballot box. Prices have risen by 28 per cent for gas, 20 per cent for electricity, 28 per cent for petrol and 25 per cent for food and drink.

The average family is also spending 6 per cent more on mortgage repayments as a result of higher interest rates.

People living in Newcastle are now spending 77 per cent of their net income on bills – far more than the 35 per cent spent by those in Surrey or Buckinghamshire.

It’s not hard to see why the Scottish National party will be campaigning at the next Scottish by-election, Glenrothes, on the cost of living. This was the clinching factor in Glasgow East.  

You could almost feel sorry for Labour…if they hadn’t taken the entire credit when times were good.

PA Consulting’s website boasts about its appearances in the business and national media. Strange then that it makes no mention of the latest flurry of publicity, such as here, here and there. Should we expect an update?

Here’s another one from this morning for the company to add to their files.

Back in February the prime minister said in his monthly press conference that it was “entirely possible” the government could sell Northern Rock at a profit. Eventually.

But now we know that Goldman Sachs was - in the same month - advising the Treasury in private that taxpayers would lose at least £450m from the nationalisation, even under a best-case scenario.

The US investment bank believed that a £1.28bn subsidy was the “base case scenario”. It’s not yet clear what the worst-case scenario would look like.

In one sense this is now historic. Earlier this month we saw the Treasury potentially write off up to £3bn of loans to Northern Rock by swapping them for equity. (Bad for taxpayers because creditors come ahead of shareholders in the queue if the business is wound up or sold at a loss).

The question is: Did Brown make his comments about a possible profit before or after he received the Goldman advice?

UPDATE

The Treasury have just come back to me. The Goldman advice was made between February 4 and February 17 (the day of nationalisation).

Therefore Mr Brown already knew that a profit was phenomenally unlikely.

That will be the inevitable response within most of the Labour party to the imminent departure of Lord Jones of Birmingham, former head of the CBI.

One of the “goats” (non-partisan ministers in the, ahem, ‘government of all the talents’) hired last summer by Gordon Brown, he was hardly an outright success.

Seen as a natural Tory, he wouldn’t join Labour or even pretend to back many of its policies. Most strikingly, he carried on opposing the minimum wage - years after most business leaders had given up this fight. (Bear in mind that the CBI predicted 100s of 1000s of job losses from the original measure, which turned out to be nonsense).

Jones carried on driving a Jaguar - while the cabinet debated driving green vehicles and Mr Brown persistently talked the talk about electric cars.

And he refused to tone down the outspoken, bluff persona. At a gathering of Arab businessmen, he said: “We don’t care what colour you are, we don’t care if we can’t pronounce your names . . . we just want you to invest in our country.”

And then there was the FT interview where he single-handedly undermined the new tax on non-doms, prompting the first of several damaging fiscal U-turns by Alistair Darling. 

We already knew Lord Jones was stepping down before the next general election; now he says he will quit later this year. He is no doubt a “character” and admirable in many respects. But did he ever belong in a Labour government?