Some weeks ago, we ran a story on how David Cameron’s immigration cap would stunt economic growth and cost the exchequer around £9bn a year, at least according to the Office of Budget Responsibility economic model.

At that point the OBR had yet to take account of the new coalition policies. So for our piece, we had assumed Cameron would actually achieve his aim of bringing net immigration down to the level of the 1990s, when the average was close to 60,000.

Well, the OBR has now officially taken account of the coalition’s immigration policies. Their verdict makes surprising reading.

Their considered view is that Cameron will have no impact on net immigration. All the announcements since June have not made a jot of difference.

This is the key passage explaining the old assumption and the new policies:

Ed Milband flailed around this morning while defining his “squeezed middle”. By the end of the Today interview, it basically counted as any household earning under £100,000 that is not reliant on benefits.

All wonderfully inclusive (see this chart). But including most of the nation in your analysis hardly helps in identifying policies to help these squeezed people.

Gavin Kelly at the Resolution Foundation has done a much better job. His broad definition is anyone who is “too poor to be able to benefit from the full range of opportunities provided by private markets, but too rich to qualify for substantial state support.” Even something this vague would have helped Miliband.

But Kelly does go further. His squeezed middle consists of:

…those on below-average incomes who remain largely independent of state support. While median income is relatively straightforward to establish as an upperthreshold, defining when people become independent of state supportis more difficult, particularly as all income groups are entitled to some welfarepayments.

This table shows the final definition, according to household type:

Kelly’s analysis shows what a genuinely important political problem the squeezed middle will be in the years ahead. He calculates that stagnating pay and the rising cost of living will leave these households losing an average of £720 in 2012. That is even before the impact of cuts to tax credits are taken into account. No politician can ignore that.

Miliband’s mistake wasn’t the choice of issue. It was the rubbish way he explained it.

UPDATE: If you want to read more on this, Gavin gives a compelling explanation of The Big Squeeze over at the Spectator Coffee House.

An old parlour game in Westminster has been guessing the political motives (if there are any) behind Mervyn King’s various interventions in public life.

What has become all too clear today is the serious concerns they have generated in the Bank of England.

At an extraordinary hearing of the Treasury select committee today, an external member of the monetary policy committee spoke out over Mervyn’s “excessively political” statements on the pace of deficit reduction. In genteel Bank terms, this is an uprising.

Howard Flight is the latest politician to make a bid for the “most inappropriate remark of the year” award. He’s up against some tough competition but this quote is quite something.

We’re going to have a system where the middle classes are discouraged from breeding because it’s jolly expensive. But for those on benefits, there is every incentive. Well, that’s not very sensible.

Although I’m loathe to say it, he’s kind of right about one thing. There is apparently a link between benefits and birth rates. What is inexcusable is the suggestion that those incentives should be rigged against the poor.

What is the evidence of a link? We’ve written on this blog before about the 45,000 extra children born as a result of Gordon Brown’s largesse with benefits. This is the cohort of “Brown babies” identified by the Institute of Fiscal Studies.

The changes to tax credits and benefits basically lowered the financial risk of having a kid, helping to push the birth rate to its highest level since 1974. The “price” of an extra child fell for many low income families along with the financial penalty of staying at home as a mother. Working class families had more confidence to have children – or at least have them earlier.

That’s the theory at least. It admittedly does sound a bit crude to make such a link. But the IFS research seems reasonably rigorous. None of that, though, excuses Flight’s breeding blunder.

Bankers can breathe easy. This year’s bonus season will roll on unhindered by any new disclosure rules.

George Osborne will take credit in the City for the U-turn. But the bankers also have to thank Sir David Walker, the City grandee who originally proposed the measures, for concluding it would be “mistaken” for Britain to go it alone.

Walker’s revised view is largely consistent with his report, which did acknowledge the dangers of unilateral action. But Walker also made one conflicting point. This is the key passage:

The priority of persistence with efforts to achieve such [international] convergence needs no further underlining, but a situation may develop in which the adoption of an exemplary leadership stance by the UK in this respect is the most effective way of achieving progress.

Exemplary leadership? The virtues of going it alone? This bold manoeuvre is not something  Walker cared to mention in his recent op-ed for the Financial Times.

It is probably not an idea that will capture Osborne’s imagination.

Michael Gove interviews can, in patches, be almost as fun as reading his newspaper op-eds.

One particularly highlight of our interview with him yesterday was the section on grammar schools. Gove, remember, had told pro-grammar school Tories that his “foot was hovering over the pedal” of allowing an expansion of selective education.

His foot, it seems, is still hovering. Here’s an extract from the transcript: