Monthly Archives: June 2010

Former Tory leader Michael Howard has been on the PM programme criticising Ken Clarke’s new, more liberal stance on prison populations (which is, of course, driven in part by cost-cutting concerns). His concerns are shared by many Conservative MPs. Read more

This announcement has been in the pipeline (ahem) for over a month, I’m told. Could it have anything to do with the fact that hiring the former chief executive of BP as a government adviser could be unpopular – given the environmental disaster befalling the Gulf of Mexico?

Lord Browne was a somewhat controversial figure even before BP’s current nightmares.

The Minister for the Cabinet Office, Francis Maude, has announced that Lord Browne of Madingley will become the Government’s lead Non-Executive Director. In this important new role, one of his first tasks will be to work with Secretaries of State to appoint Non-Executive Directors to the board of each government department. He will also work closely with the Minister for the Cabinet Office, Francis Maude, on overhauling how departmental boards are run and improving governance across Whitehall.

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The Guardian had an eye-catching splash this morning warning that the Budget would “cost 1.3m jobs”. Particularly striking was the premise that more would be lost in the private sector than the public sector over the next five years as a result of cutting the deficit.

Read the story in detail, however, and it also emerges that 2.5m jobs will be created in the private sector in the next five years. The result (even presuming no new public sector jobs): a net increase of 1.2m jobs. This explains how the Office for Budget Responsibility can still predict unemployment to peak this year at 8.1 per cent and then fall to 6.1 per cent in 2015. (You may or may not find this all a little optimistic). Read more

We never resisted the chance to laugh at Gordon Brown for conjuring up schemes which always promised round-number cash figures, usually of £1bn or £10bn or £100bn. It gave him a certain Dr Evil from Austin Powers quality, as we frequently pointed out.

Therefore it would be unfair not to point out that David Cameron appears to be going down the same path; yesterday the coalition promised a £1bn growth fund for regions hit by public spending cuts.  Read more

1. The claimant count has more than trebled from 700,000 in the late 1970s, costing the Treasury about £12.5bn a year.

2. About 40 per cent suffer from a mental illness or bad nerves. They are half as likely to find work as someone with a physical disability. Read more

You may have noted the mock horror from Labour about IDS’s comments to the Sunday Telegraph yesterday that those on benefits may need to travel to work. It’s described by the Labour-supporting Mirror as an “extreme Norman Tebbit-style ‘on yer bike’ policy“.

Here is a link to the interview when Caroline Flint two years ago suggested that unemployed people getting housing benefit should, in effect, be turfed out. She was, of course, the Labour housing minister. It appears to be exactly the same policy. What goes around comes around. Read more

When the coalition on May 12 pushed out its announcement for which MPs would take up ministerial roles there was a noticable delay when it came to Defra posts. I can reveal that David Cameron did intend a significant reshuffling between that department and DECC.

The idea was to add “environment” to DECC (creating DEECC, perhaps), beefing up the department controlled by Chris Huhne. I’m told that the documentation was all written and ready to send out. Several responsibilities would have been shorn from Defra, including the entire Environment Agency. Something that day made the new prime minister change his mind. Read more

The Observer has carried out an excellent survey of the five Labour leadership candidates today. The highlights:

1] Highest opinion of self: Diane Abbott: Asked what the wisest thing a fellow candidate has said, she replies: “The most stupid thing that fellow candidates have said is that immigration cost us the election. The wisest thing they have said is ‘I agree with Diane.’” Read more

Westcountry Lib Dem MP Andrew George has tabled an amendment to the Finance Bill* and has attracted the signatures of three colleagues, the Independent on Sunday has revealed. (Bob Russell, Mark Williams, Roger Williams). The amendment demands an assessment of the impact of the VAT rise on various social groups.

There is no doubt that some Lib Dem figures are hugely uncomfortable with the Budget – especially the VAT move. But how far would potential rebels go over the issue? It feels increasingly likely that the four may vote against the Budget; or at least the VAT element of it. The IoS story goes even further by suggesting they are already talking to Labour figures about covert co-operation. Read more

An orgy of internal elections to select committees reached its climax this afternoon with a stunning outcome for members of the new intake. I haven’t yet had time to go through the Labour results but, on the Conservative side, the class of 2010 dominates the membership of even the most prestigious select committees, such as foreign affairs, treasury and public accounts. Whereas almost all candidates from the 2010 intake won a place for their first choice, many older MPs will be disappointed: several committees – including business, innovation and skills – had attracted over 25 candidates for 4 places. Read more

Analysts are starting to work through the implications of the looming squeeze on departmental spending. Whitehall is bracing for job cuts, but the raw numbers are still quite stark.

Take defence. George Osborne promised to spare the MoD from part of the 25 per cent cuts. But even a flat cash settlement — of 10 to 15 per cent cuts — would place heavy strain on the budget.

Malcolm Chalmers at RUSI has calculated what a 15 per cent cut would mean for personnel.

If, as our central scenario suggests, total real spending on personnel falls by around 13%, total personnel numbers would therefore have to fall by around 15% by 2014. Total personnel numbers would then be reduced from 283,000 to 240,000. If spread proportionately, this would lead to a 30,000 cut in military personnel numbers, together with a reduction in civilian personnel numbers of around 13,000.

At a time of war, announcing 43,000 job cuts is politically toxic. The MoD is no stranger to shedding staff — the size of the Defence Equipment and Support group in Bristol has fallen by more than 10,000 over the last few years. But the squeeze on numbers this time will be of a different order. Given around 40 per cent of the budget is staff costs, there is little alternative. Read more

Vince Cable valiantly continues to argue that the £1,000 increase in the income tax threshold is part of the Lib Dem “progressive” strand of this week’s Budget – evidence that George Osborne listened closely to the Lib Dems’ determination to protect the poor when framing his austerity package.

Before he pushes the case too far, Cable would do well to have a quiet word with his departmental (Tory) colleague David Willetts.

Politicians (and the media) have short memories. Increases in the income tax threshold used to be a favourite policy of the Conservative right: people would keep more of their own money and would be less dependent on state benefits, the argument ran. And, the poor would benefit. Read more

A slim but distinguished figure was yesterday waiting in the foyer of Deutsche Bank yesterday; none other than Lord Mandelson, former business secretary. Apparently he was kept waiting for at least a quarter of an hour.

This morning I called the peer to make sure there isn’t a Mandy doppelganger wandering around the streets of the City of London. Read more

The departure of General McChrystal from the top military job in Afghanistan will undoubtedly strengthen the arguments of those in Whitehall who have concluded that Britain is fighting alongside the US in an unwinnable war.

It will also likely stir further doubts in David Cameron’s mind about the conflict. The prime minister is said to believe that British troops should not stay a moment longer than is necessary to avoid a open rupture with the US; that means that as soon as the Americans start coming out – and Mr Cameron hopes that will be in mid-2011 – so too will be the British. Read more

This is the hair shirt parliament and MPs will need to lead from the front. Ministers have started the process by axing the limos, one of the toughest cuts so far negotiated. Now, as trailed in the last parliament, it is time for rank-and-file backbenchers to do their bit to fill in the £156bn deficit. The House of Commons Commission, a body run by John Bercow, the speaker, has agreed to cut £12m from the budget for the House in the current year.

This marks the start of what the body claims will be a fundamental review of expenditure, which will deliver further savings over the next three years. The savings to be made this year are 5 per cent more than the Commission had originally planned, and will reduce estimated spending for 2010/11 to £219m.
This action follows the Commission’s decision in December 2009 to cut House expenditure by 9 per cent by the end of 2012/13. Read more

The new chair of the backbench business committee – a small news story slightly lost amid yesterday’s Budget – is to be Natascha Engel, the Labour MP, who beat Tory Sir Alan Haselhurst by 202 votes to 173.

She was a member of the Wright committee, whose report led to the setting up of this new body; designed to transfer powers from the whips to backbench MPs. Read more

Alex and Ian Mulheirn calculated this morning that some core departments including the Home Office could face cuts of a third in real terms over the Parliament.

In case you had any doubts about their maths, I’ve just had a look at the post-Budget conclusions from the Institute for Fiscal Studies. Here is their key line which backs up this morning’s blog: Read more

On the basis of Osborne’s spending plans, it looks like the coalition is either:

Before you accuse me of exaggerating, take a look at the rough maths. (This is courtesy of the ever-sharp Ian Mulheirn at the Social Market Foundation.Read more

There are some real little horrors buried in the fine print of this Budget.

Just take the measure to cut housing benefit by 10 per cent for anyone on the dole for more than a year. Read more

Check out these video interviews with FT experts on key areas of the Budget. Read more