Monthly Archives: October 2010

Sir John Sawers, the head of the Secret Intelligence Service, has never been one for the shadows.

While he served as political director at the Foreign Office, his influence was unmistakable on almost all areas of policy — indeed he even earned the nickname “Jonny Blue Eyes” for his dashing diplomacy.

Those who have worked with him are unsurprised that his views on Afghanistan are heavily influencing the prime minister, convincing him to set clear limits on a mission that is hogging resources better deployed elsewhere.

My colleague James Blitz, in an insightful piece, describes Sawers as “privately spelling out the limited threat Afghanistan poses to UK national security”. He goes on to quote a Whitehall official who has seen him in operation:

“John’s view is that we’re overly focused on the static threat we have in Afghanistan, with 10,000 troops costing £6bn a year….He is worried that we have our largest intelligence effort focused on one corner of Afghanistan – but that is not where the threats to our country are currently coming from.”

Fascinating stuff. This only highlights the importance of the National Security Council approach to Afghanistan in the years ahead.

David Cameron’s closest allies think setting a clear deadline for leaving Helmand has been one of his top two achievements in office. But the debate is far from over.

Senior military figures will strongly resist leaving an unfinished job. A stand-off between Barack Obama and General David Petraeus in Washington could well be mirrored in London between Cameron and General Sir David Richards. The advice of Sawers at that point will be more important than ever.

Jim Pickard

News this morning that directors of FTSE 100 companies gave themselves a 55 per cent rise in total remuneration in the last year would be astonishing at the best of times. At a time of job cuts, austerity and recent recession, it is even more surprising.

My colleague Jonathan Guthrie suggests in today’s Lombard column:

Short of throwing a champagne celebration for themselves outside a Merthyr Tydfil jobcentre, FTSE 100 bosses could not have shown less tact.

This is why I was frantically seeking political reaction yesterday to the report by Incomes Data Services, which is on our front page today. Criticism came obligingly from Vince Cable, union leaders and from Labour figures including John Denham (Kelvin Hopkins said it was a “moral outrage”.) Although it’s not quite clear that any of them have a magic bullet to solve the issue.

Ed Miliband’s reaction? No comment whatsoever.

It’s not as if this isn’t a subject close to his heart, supposedly. During the summer he said salary differentials were far too wide – and called for Will Hutton’s official review should be extended to the private sector. (Hutton, curiously, is only tasked with examining state-sponsored salaries).

Miliband’s caution reminds me of Tuesday last week when Labour’s new leader didn’t attend the TUC rally (which he had promised to go on), with aides saying it wasn’t a rally.

You can understand his determination to shed the Red Ed tag and try to position Labour as close to the centre ground as possible. But those who heard him during scores of summer hustings may now be confused about what he does stand for.

Jim Pickard

10 Downing Street has opened up its doors to transparency with a list of visits to the building, hospitality received and gifts to the prime minister – as well as foreign trips.

The list of visitors seems rather brief (see below). Interesting to see Ratan Tata, the billionaire Indian businessman, dropping in twice. And Bob Geldof (pictured) among the first to arrive.

If you want to know why the list is so thin, it is because the prime minister has excluded any private visits to his flat, as I revealed last Saturday. Instead there are only the formal engagements downstairs. Not quite as transparent as it could have been.

Meetings with external Organisations:

May 2010: Meeting with 16 different charity organisation (To discuss big Society)
May 2010: Meeting with Rupert Murdoch (General Meeting)
June 2010: World Bank (to discuss Business Issues)
June 2010: Bod Geldof (to discuss Development Issues)
June 2010: Ratan Tata (to disuss Business Issues)
June 2010: Facebook (to discuss New Media Issues)
June2010: FIFA (to discuss Sporting and World Cup Issues)
July 2010: Aiden Barclay (General Meeting)

Jim Pickard

An interesting exchange at Treasury select committee this morning, where Lord Turnbull – former head of the civil service – seemed to question George Osborne’s claim that Britain was on the brink of bankruptcy until now.

Chuka Umunna: “You said that you didn’t think the issues that had been raised in relation to sovereign debt and the UK were relevant. What did you mean by that?”

Lord Turnbull: “Well I always thought that we were capable of producing a financial settlement that wouldn’t take us into Irish and Greek problems. Secondly, a very large part of our debt was domestically held. If people are going to sell gilts they’ve got to buy something else. Who are these great shining examples of people who are issuing rock solid debt you want to buy?”

Chuka Umunna: Do you think it is accurate to describe the UK as being on the brink of bankruptcy?

Lord Turnbull: No, I don’t.”

Jim Pickard

We wrote on the front page of the FT this morning about widespread scepticism about the new Local Enterprise Partnerships (LEPs) which will be announced today. Business groups need persuading* that the new bodies are not just a feeble attempt to paper over the gap left by the dismantling of the old regional development agencies (RDAs).

The financing of LEPS, seemingly random hybrids of councils and companies, is likely to be hand-to-mouth, with a Darwinian contest for the money in the new regional growth fund which is offering about £500m a year for three years. (They will be competing not only with each other but with hundreds of private sector bidders for this cash). The RDAs, by contrast, received £1.5bn every year.

I’m told there may be another rabbit in the hat today which councils have been calling for for ages. The policy – in the regional white paper – would mean that local authorities which encourage economic growth get to keep a greater share of their business rates. (At present the levy goes to central government and is then redistributed through a complicated grant formula).

There are strong rumours that this new flexibility will be in today’s announcement, according to council sources. It would certainly be welcomed by the Local Government Association. (UPDATE: VInce Cable has confirmed this – or at least that it is under consideration).

One of the last places in Britain you’d think of hosting next week’s Anglo-French summit is aboard the HMS Ark Royal, the Royal Navy flagship that was abruptly decommissioned in the defence review.

But, incredible as it sounds, someone in Downing Street thought this idea was worth investigating.

For a couple of weeks, officials in Paris and London were busily working on a plan to bring Nicolas Sarkozy and David Cameron together on the deck of a carrier.

Team Cameron thought it would provide a splendid backdrop that emphasised the strengthened Anglo-French military ties.

But finding the right spot proved tricky.

The most practical option was Ark Royal, which is based in Portsmouth. With impeccable timing, I’m told the Downing Street location scouts paid a visit within days of the Ark Royal crew being told the ship was to be scrapped. Cameron’s emissaries were, understandably, not given the warmest reception.

If this mini-blunder does highlight anything, it is the weakness of Cameron’s position.

Jim Pickard

I brought you news on Monday about the Charles Walker proposal to slash the number of ministers in line with MPs. It turns out that his amendment did get called and there was a vote on Monday night – which he lost by only 293 votes to 252.

No fewer than 22 Tory MPs defied the whips and backed Walker, although this is fewer than the Tory backbencher had anticipated. “You wouldn’t believe how many of them told me they agreed and would give me their vote – and then changed their minds,” he tells me. “It’s taught me rather a lot.”

Looking through the order papers there are some interesting names among the rebels: Andrew Tyrie, Bernard Jenkin, Graham Brady (chair of the 22 Committee) and Mark Field amongst them.

Jim Pickard

This news is conveniently timed given that the coalition are cracking down on the bulging budget for housing benefit. How ironic then that it is being delivered by the doomed Audit Commission, which is being axed by Eric Pickles within months.

According to the commission, councils detected £135m worth of fraud last year involving 119,000 individual cases. The bulk – almost £100m – involved housing benefit fraud. Another £15m of council tax fraud was found along with people fraudulently claiming personal budgets for social care. (This is where people are given money directly to buy the care they need, rather than social services directly providing it.)

Housing tenancy fraud has emerged as one of the biggest issues, the commission said, with almost 1,600 social housing properties recovered that have been illegally sublet. That is only a fraction of the estimated 50,000 houses and flats that may be illegally occupied.

The commission also said there had been a big rise in the number of people claiming a single person’s discount on the council tax. Typically one in 20 such claims are false, according to councils.

This annual survey will end next year when the Audit Commission is abolished.

Jim Pickard

The prize for most curious story of the day has to go to the news that a North Sea gas field could be closed – because of EU sanctions on Iran.

The gas field of Rhum, 200 miles off the coast of Scotland, is jointly owned by BP and an Iranian state-owned oil company. (This was news to FT Westminster). It could be the casualty of new sanctions by EU foreign ministers against Iran’s energy sector imposed in an attempt to bring the republic back to the negotiating table over its uranium enrichment activities.

A spokeswoman for the EU told Dow jones that it was “possible” the field could be shut down although it was not a “foregone conclusion”.

I was told by a Foreign Office official earlier today that the British government was – in effect – staying out of the row: “It’s for BP to decide how to adapt its activities to ensure compliance with the regulation,” she said.

BP is meanwhile “studying the impact of the new legislation”. It has a 50 per cent stake in the field, as does Iranian Oil Company, which is indirectly owned by National Iranian Oil co.

Jim Pickard

When Francis Maude said a few weeks ago that he was culling 192 quangos he couldn’t put a number on how much money the coalition would save. And no wonder. The cost of any government reorganisation can quickly mount in terms of redundancy payments, closing down offices and so on – before you get any net benefits.

Regional Development Agencies will require a further £1.4bn-plus of state funding over the next four years despite their abolition in the spending review, officials have just confirmed.

The nine regional quangos, which are to be replaced with a patchwork of “local enterprise partnerships” – loose networks of councils and companies – cannot be axed immediately and instead will be wound down gradually with heavy redundancy costs for staff.

Jim Pickard

It would be a volte-face to prompt an angry backlash from the right. But there are a few smoke signals emerging from above 10 Downing Street that a rethink of the immigration cap could be underway.

David Cameron’s spokesman insisted this morning that no decision had been made over the cap, which applies to the number of visitors from outside the EU. (The vast majority come from inside the free market and thus cannot be halted).

But the prime minister’s speech to the CBI gave a strong hint of compromise:

‘As we control our borders and bring immigration to a manageable level, we will not impede you from attracting the best talent from around the world.”

At present there is a temporary cap of 24,100 which applies until April. After that the government has pledged a new annual limit. Not only are many large companies angry about the lack of flexibility but Vince Cable, business secretary, has also loudly championed their cause.

No 10 said that Mr Cameron’s remarks did not signify there was a “rethink” on the policy. But a spokesman said:

“We will be looking obviously at the level of that cap and at the way in which it operates and making sure that works in a way that allows business to bring the people that they need into the UK.”

The problem for Cameron is that the cap was a manifesto promise, one which is popular with many Tory MPs and much of the press. Squeezing out of it entirely would be rather tricky – and would look like another concession to the Lib Dem junior coalition partners.

Having said that, there are some areas in which compromise could be found; restrictions on moving staff from country to country within the same company (intra-company transfers) are a very obvious area for retreat.

Anyone walking past the main Treasury entrance today now will see a white sheet of paper stuck to the wall, which is supposed to cover up some graffiti.

A rather big and burly security guard has been given the job of fending off photographers and making sure no one sees what is behind it.

But one hard working official went in early enough this morning to snap the Banksy-style attack before the white paper was put up. He kindly shared the picture with us.

It definitely bears a likeness to George Osborne, albeit with a serious black eye. What I’m completely thrown by are the words. I just don’t get the joke.

“A Conservative Treasury will drive green growth….by financing a green recovery?” Perhaps this is a Tory Banksy?

My suspicion is that this is a Greenpeace stunt — after all they are running a campaign for the Green Investment Bank using the very same quote.

UPDATE: It’s a group called Climate Rush.

Westminster blog

on the UK political scene

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

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

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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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