Monthly Archives: August 2008

Jim Pickard

David Cameron must be spitting tacks. The Tories’ favourite think tank, Policy Exchange, has put out a report urging the government to – in effect – abandon the north.

Why bother using money to prop up dying conurbations on the fringes, the report asked this morning? Wouldn’t we be better off concentrating on London, Oxford and Cambridge? The latter two university towns could expand in the way that Manchester and Liverpool (pictured below) did in the 19th century, it argues.  

But people in the north have votes. And they don’t like being told that their communities are doomed and therefore should be abandoned. As far as Labour is concerned, this is an open goal.

Peter Kilfoyle, Labour MP for Liverpool Walton, said the report was “utter nonsense”. “It doesn’t ring true economically, socially or politically,” he said.  

The timing is dreadful for Mr Cameron, who has just embarked on a two-day tour of marginals beyond the Watford Gap, where the party’s support is still patchy. He has wasted no time distancing himself from the independent report, which he today described as “insane”.

“Regeneration of our northern cities has been a key Conservative theme over the past three years, and one of the first things I did as leader was to set up the Cities Taskforce to look in to how we can further renew and regenerate our great cities,” he said. “The authors of this report have themselves admitted it is barmy, it isn’t, it is insane.”

 The report has also gone down badly in the South-east, where the idea of accepting another million incomers would put further pressure on transport, housing and green spaces.

Ideologically, however, the debate is not unique to the UK. In Brussels, a team of academics led by Belgian economist Andre Sapir – from the think tank Bruegel- recently put forward a similar argument re European funding. Sapir argued that the money should be used to target areas, industries and projects which are already successful. This would better improve the EU’s overall competitiveness, he argues, citing projects such as Airbus and Galileo.

Perhaps unsurprisingly, the idea hasn’t gained much traction in the EU either. 

Jim Pickard

The parallels are uncanny.

A party, in crisis after years in power, deposes the politician who has dominated domestic policy for the last decade.

Riven by internal rivalries, it plumps for the compromise successor who represents consensus and no change.

Who cares that he is low-profile, not desperately charismatic, has no obvious policy ideas and does not seem to be made of leadership material?

For John Major, read Alan Johnson.

A fortnight ago the mood music from within the unions, the Parliamentary Labour Party and the constituencies was that Mr Johnson would be the key man if Gordon Brown was deposed. He could forge a “dream ticket” with David Miliband to run the party/country.

Now, more and more are pondering if he should stand in his own right as the stability candidate if there is a leadership election (not yet a given).

He’s not from the right (unlike Miliband), nor the left (John McDonnell) nor the unions (Jon Cruddas).

He came second in last year’s deputy leadership election. The man himself has been saying nothing. Presumably he is on holiday; but who knows? His silence – and generally low profile as health secretary - has allowed him to become a blank canvas on to which Labour people can project anything they like.

He has a good life story. Left as an orphan at 12, brought up by his older sister in a London estate, he stacked shelves at Tesco before becoming a postman. He is less disliked in his party than Miliband.

Major, you may remember, was also from humble London origins. He left school at 16 and was so bad at maths that he was rejected for the job of bus conductor. He was less disliked in his party than Michael Heseltine.

 Unfortunately Major, ejected in 1997 by a landslide, did not go down in history as a triumph.

Jim Pickard

About four years ago the Conservatives hired Rothschilds, the blue-chip City bankers, to examine options for tolls on Britain’s motorway network. It would have been an enormous privatisation, bringing in something not far off £100bn, according to someone involved with the project at the time.

In a real piece of blue-sky thinking, the tolls would have allowed a Tory government to cut road tax across the board. As a result, the fiscal system would no longer penalise old dears who only use their cars to drive to the supermarket once a week – but hit those who drive thousands of miles every month.

What happened to this report of 100-odd pages? It was killed off on the orders of a nervous Michael Howard, then party leader.

-

Jim Pickard

I’ve never quite seen the Heathcliff analogy myself.

Much more accurate would be to compare the British prime minister to curmudgeonly Inspector Rebus, the hard-boiled cop from the Ian Rankin mystery novels.

It’s all there. A principled but dour Scot, born in Fife, raging against the world around him.

Skimming through a Wikepedia profile of Rebus comes up with some incredible similarities.

1] “He has to deal with his own personal issues”

2] He is surrounded by “internal politics” in his workplace

3] “His clothes are often less than immaculate”

4] “His advancing years and approaching retirement means he is unlikely to receive another chance”

5] “(His) gruff exterior and fierce will to succeed in his field belies a benevolent nature.”

 6] “An intimidating personal manner” 

7] “Rebus is ‘married’ to his job”

Incidentally, the PM has read most of the Rebus books. Another website offers the following from the official Ian Rankin website:

“He’s approaching 60, but with a bit more flesh on the bones – both literally and metaphorically – and he’s also a little more disillusioned, fighting a few more demons”….

Jim Pickard

I believe it was Viz’s Profanisaurus which coined the term “the fecal touch” as the opposite of the Midas touch. The expression comes to mind as the Treasury lurches through yet another crisis, this time over whether or not it’s going to change stamp duty to give the gift of negative equity to naive youngsters  bring much-needed solace to the housing market.

It’s getting easy to lose track of the litany of screw-ups and volte-faces – from losing discs to U-turning on capital gains tax and non-doms….not forgetting the mother of them all, the £2.7bn compo package for the abolition of the 10p tax rate.

It’s hard not to sympathise with Alistair Darling over the stamp duty issue. After all, chances are that the original leak didn’t come from the Chancellor or his officials in the first place. But he’s now under increasing pressure to explain what he’s going to do.

Last night the head of the National Association of Estate Agents told me the situation was like the 1988 abolition of shared Miras relief, widely regarded as a monumental disaster. Nigel Lawson, then chancellor, made the mistake of saying in his April budget that the tax would be abolished in August. The result: a stampede of people buying homes with siblings, friends and acquaintances to beat the deadline. It stoked up a housing market which was already in bubble territory – prices in London rose 13 per cent in just four months. 

Today we have the same thing in reverse; thousands of people who would have bought a home (and already had misgivings about losing money) will now sit on their hands to find out if they’ll get a tax break.  

Jim Pickard

The talking point this morning in Westminster – for those who haven’t escaped to a beach – will be this fascinating article in the Daily Telegraph.

David Miliband’s spokeswoman told me last night, definitely, that the story (“Miliband lines up Milburn for the Treasury) was “complete nonsense” and that there was no leadership plot. Alan Milburn said today: “I told the paper yesterday it was complete bollocks and I am amazed that they have run with it.”

The tale does have an air of plausibility, however, at least in terms of Miliband (or his people) discussing with Alan Milburn the possible configurations of a future cabinet which would include him.

But has Miliband actually offered the job of Chancellor – second most important political post in the UK – to the former health secretary?

To quote the Telegraph: “Mr Milburn…is understood to have told Mr Miliband he would be happy to accept the Treasury”.

That is not the same thing.

In strategic terms, meanwhile, would Miliband (seen as a Blairite) lose support within the Parliamentary Labour party from having such a prominent uber-Blairite as his Chancellor? (See my blog from Monday). His power base is already weak among the unions and the leftwing grassroots, where there is no love lost for Milburn either.

I bet the Brownite coterie are kicking themselves for not starting the Milburn rumour themselves………

Jim Pickard

The facts first. Reports of a stamp duty holiday for all home buyers appear to be wrong.

Instead, the Treasury is considering the “deferral” of stamp duty; just for first-time buyers. They would have to pay the money back in the future, a bit like a student loan.

So not necessarily a big vote-winner then.

More importantly, would a stamp duty freeze kickstart the property market? I doubt it. Sales have frozen because banks will no longer lend as much as a year ago; as simple as that.

So, a typical first time buyer purchasing an average home (£180,000) has a dilemma. Last year he could borrow, say, £150,000. Now he can only borrow, say, £110,000. Unless prices drop further, he has a £40,000 hole in his finances.

Not paying stamp duty on this purchase would save him - falling in the 1 per cent bracket – a mere £1,800.

It’s a token gesture; no more.  

PS

As an afterthought – if anyone doubts me – take a look at almost any newbuild scheme in the UK. A year ago you could get a discount of 5 per cent. Now you can haggle 20 per cent off a new flat.

And still no one is buying.

PPS

We pointed out weeks ago that the stamp duty take is already set to plunge this year. Which is a separate headache for the Treasury. (The £10bn figure includes commercial property)

Jim Pickard

This should be THE crucial question for Labour as the party faces the possible prospect of civil war over leadership, direction and policy.

The left, and the unions, want to reach out to core Labour voters with policies such as more affordable housing and a windfall tax on energy companies.

The right wing of the party wants to continue on the Blairite path; pro-business, pro-choice, pro-reform, etc.

They are lampooned by Alan Simpson, the leftwing MP for Nottingham South, as: “A group of ex-ministers cruising the corridors and cafeteria of Parliament in search of stray MPs….a group of 20 or so ex-ministers (mostly junior ones) meeting to discuss how they could maintain the flame of the Blairite revolution.”

The dilemma for the leadership – and the grass roots – is trying to deconstruct how much of Tony Blair’s popularity was down to his policies (Iraq war, foundation hospitals, academies, PFI, etc) and how much was down to his personality (persuasive, charismatic, telegenic etc) – at least in the early years.

I suspect the latter has played more of a role than anyone – including Blair’s closest acolytes – would ever admit. Would the Blairite agenda really be a vote-winner in the hands of less persuasive politicians such as Stephen Byers (pictured below) or John Reid? Not necessarily. 

Jim Pickard

The next cabinet meeting will be in the West Midlands on September 8.

This is a break from the usual tradition of holding it at No 10 – and will be the first of more cabinet gatherings in other parts of the country. The idea is to listen (and be seen to be listening) to the concerns of punters out there in the real world.

I believe the idea was mooted in a paper from Hazel Blears a few months ago. Cabinet ministers will spend the rest of their day out in Birmingham (or wherever it is) holding meetings and sessions with locals.

No doubt the idea will be derided in some quarters. At least they’re making an effort to prove they’re making an effort though.

Jim Pickard

For a level-headed news story on Gordon Brown’s position on windfall taxes see this morning’s FT.

The government is considering upping the proportion of carbon permits which energy companies will have to buy in the latest phase of the EU’s emissions trading scheme.  (Until now they have been given the permits for free).

Instead of the proposed 7 per cent a year the figure could be raised to 10 per cent.

By my maths, this is 3 per cent of the estimated £1.5bn annual value of the permits (of which 90 per cent would still be given for free until 2012, when all will have to be bought).

In other words, £50m a year; contrary to most reports.  Even if this is frontloaded it still comes to just £200m over the four years to 2012.

It’s rather a far cry from the “billions” being demanded by the unions and the Labour left.

Sure, there may be other measures: eg making energy companies pay more to help low-income families insulate their homes.   

And there’s an interesting line in this morning’s Guardian suggesting that the government could weight the winter fuel allowance further towards the poor; and not just pensioners of all backgrounds. At the moment this is still at the “option” stage, however.

Jim Pickard

Chutzpah today from the Tories after the breakdown of talks between EDF and British Energy.

Charles Hendry, shadow energy minister, has put out a statement declaring that: “Time is not on our side, as the government has left it very late to give a firm direction for nuclear.”

This seems a bit rich when – until the back end of last year – the Tory policy was nuclear as a last resort.

It wasn’t until early January that the party made its more positive position clear via Alan Duncan.

Jim Pickard

One year after the arrival of Hips and the public aren’t impressed.

A new YouGov poll has found that only 5 per cent of people think the new, compulsory sales packs have delivered benefits. Another 68 per cent said they had failed to make a positive difference.

Plus they increase the cost of moving home – although, to be fair, sellers have other things to worry about right now, ie the crash.

But the most interesting point here is that the government always claimed Hips were necessary to meet the EU directive demanding that home sellers must produce energy performance certificates (EPCs) – which form part of the new packs.

In northern Ireland, as of the start of this month, EPCs have been introduced; without Hips.

As Grant Shapps, shadow housing minister says: “The example of Northern Ireland shows that Hips simply aren’t needed.”

Westminster blog

on the UK political scene

About this blog Blog guide
Jim Pickard and Kiran Stacey, FT Westminster correspondents, share the latest news and analysis on the UK's political scene.

Follow the latest news on the UK coalition government.

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All posts are published in UK time.

Contact the Westminster blog team: Jim Pickard, Kiran Stacey, Nicholas Timmins, Elizabeth Rigby and Helen Warrell.

The illustrations of Jim and Kiran are by Nick Hardcastle.

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The authors

Jim Pickard joined the lobby team in January 2008. He has been at the Financial Times since 1999 as a regional correspondent, assistant UK news editor and property correspondent.

Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.

Contributors

Elizabeth Rigby, the FT's chief political correspondent, joined the lobby team in September 2010. Elizabeth has worked at the FT for more than a decade and was most recently its consumer industries editor.

Helen Warrell is the FT's UK reporter, covering home affairs, crime and policing. She joined the FT in 2008 and has spent time as a reporter in the Brussels bureau and more recently, editing the paper's Asia coverage on the world news desk.

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