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. Read more

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: Read more

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) Read more

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?” Read more

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). Read more

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. Read more

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. Read more

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.) Read more

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. Read more

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. Read more

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). Read more

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. Read more

Jim Pickard

Charles Walker, a Tory MP, is hoping to table an amendment today to the Alternative Vote bill which would limit the number of ministers in the next Parliament.

His argument is that ministers are the “only cadre” of public life which is not seeing swingeing cuts. And he proposes that there should be an 8 per cent reduction in line with the proposed shrinkage of the House of Commons. Read more

Jim Pickard

My colleague Fiona Harvey has dug out the fact that an array of flood prevention schemes could soon be culled – despite claims by ministers pre-CSR that flood funding would be protected.

There could be “dozens” of flood measures among the casualties of the spending round including a £100m flood prevention scheme in Leeds.

Caroline Spelman, secretary of state for the environment, said on Wednesday that although the floods budget would be cut by 20 per cent much of this would be found through efficiencies. But Defra has since admitted that proposed flood defence projects would be cancelled, although it has not yet offered any details.

The budget for building new flood defences and upgrading existing defences has been reduced from an average of £335m a year to £261m a year for the next four years.

You could say this is unsurprising in the context of wider cuts to almost all parts of government. But it flies in the face of comments by ministers: such as Ms Spelman’s insistence during the summer that she would ensure the protection of vital spending on the key areas of animal health and flood prevention.

 Read more

Jim Pickard

(I first published this last October but thought it could be of renewed interest).

The following documents, obtained by my freedom of information request, refer to a contract signed in early 2008 between General Dynamics UK (the British arm of the US company) and the Libyan government to supply a communication system for its military.

The $165m deal was the first major defence deal between a British company and the north African state since an embargo was lifted in 2004.

The letters provide an interesting insight into the way that the Foreign Office provides help in assisting British business overseas – which is one of William Hague’s top priorities.

The redactions are by the FCO, which did not provide the dates of the letter. General Dynamics confirmed that the correspondence refers to the communciations deal.

Letter from General Dynamics United Kingdom Ltd to His Excellency, Sir Vincent Fean KCVO, Her Britannic Majesty’s Ambassador to Libya

Dear Vincent

As I sit on the aeroplane back to London after my first visit to Libya, I wanted immediately to write to thank you, not only for your extremely generous hospitality, but also for your personal interest and support on the rocky road towards success in the […] programme.

I am convinced that we would not be in the optimistic position in which we find ourselves without […] that your involvement […] and neither would we be able to make suggestions to the Libyans authorities on […] without your advice. So – my warmest thanks. We are genuinely indebted to you. Read more

Jim Pickard

There is something curious in the way that several key transport decisions were left out of the CSR on Wednesday. The four missing announcements were: the big order for Intercity Express trains from the Hitachi-led Agility consortium, the electrification of the Great Western line, another order for about a thousand train carriages and the Thameslink upgrade.

Sources in the Department for Transport insist that these interconnected upgrades are genuinely going to the wire. They depend, for example, on Agility’s ability to reduce its original £7.5bn cost by a significant margin. Read more

Jim Pickard

The chancellor said on Wednesday:

“We will fund a major improvement in our flood defences and coastal erosion management, that will provide better protection for 145,000 homes.” Read more

Jim Pickard

The most striking finding from today’s IFS research (aside from the poorest half getting hit harder) is that young families get punished while pensioners escape relatively lightly.

Anyone wondering why this is the case should read this research from De Montfort University and Age UK showing that 4 in 10 votes cast are by the over-55s. Read more

The spending review did not end in the way most people expected. When Cameron’s top team gathered around the Chequers table on Sunday to tuck in to roast lamb and Yorkshire puddings, there was virtually no talk of squeezing out extra savings to balance the books. They had money to spare.

This was not the impression given to the rest of the cabinet, or indeed the BBC. But the truth was that the Treasury was sitting on a small cash-pile. After agreeing all the big budgets, there was £1bn or more left in the emergency fund for the quad — Cameron, Clegg, Osborne and Alexander — to distribute.

“They went from the horsemen of the apocalypse to Father Christmas overnight,” said one official close to the final days of the spending negotiation.

This back of the sofa discovery is a feature of spending rounds. The Treasury always set cautious targets so there is some flexibility at the end. But how Cameron handled the mini windfall is revealing. It gives us an insight into both his priorities and the methods he used to bluff the BBC into paying for the World Service. Read more

Jim Pickard

Bad news for the government – and terrible timing given the massive cuts to housing budgets in yesterday’s CSR. Figures released today reveal that the net number of homes added to the housing stock in England fell to a record low in 2009-10, down 23 per cent on 2008/9.

Just 128,680 net additional dwellings were provided compared with around 167,000 in the previous year. This figure is even lower than the previous record low of 130,510. Read more