Monthly Archives: November 2010

The Queen and Prince Charles have made their debut in the Wikileak files.

A dispatch from a US diplomat notes that the next British monarch will not necessarily be the next head of the Commonwealth. Apparently there are no rules on succession. Should Charles become the next King, he could in theory face a Commonwealth leadership challenge. Read more >>

If you asked a Lib Dem MP whether they would abstain on tuition fees given a free vote, the answer would almost certainly be no. Most of them have very strong views on the matter. Vince Cable just spelled out the obvious: his “personal instinct” is to vote for the policy he developed.

Yet when 57 Lib Dem MPs gather in one room, strange things begin to happen to their judgement.

Even Nick Clegg is now seriously considering the mass abstention option — bravely leading his party to sit on the fence.

To be fair, there are no good options. They will be punished for breaking their pledge to vote against a rise. But it seems that after countless hours of excruciating debate, they’ve decided the best way to minimise the pain is to not vote at all. Read more >>

Here’s another example of the OBR shrugging its shoulders at coalition policy.

The Office of Budget Responsibility reviews the Lib Dem-backed crackdown on tax avoidance and concludes that it will have no impact on compliance ratesRead more >>

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: Read more >>

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. Read more >>

Does the defence review add up? The head of the RAF has today given us an important insight into the maths. He has made public that David Cameron’s vision for the armed forces in 2020 is only affordable if you assume the MoD budget rises every year after 2015 by around 2 per cent above inflation.

For those of you who don’t think it sounds much, a five-year military settlement as generous as that was last granted in the early 1980s.

Is the rise a realistic basis for planning? A prudent approach? Should we really count on a military spending boom after 2015?

This review was, after all, supposed to balance the MoD books. Yet it looks like we’re back to buying kit on the never-never. Officials tell me the cumulative unfunded liability — if you take the usual planning assumption of the budget rising in line with inflation after 2015 — stands at £13bn to £15bn over the coming decade.

Coalition aides say this is completely different from the “black hole” they say they inherited from Labour. It all comes down to this statement given by the prime minister in the Commons:

“My own strong view is that this structure will require year on year real-terms growth in the defence budget in the years beyond 2015.”

On the basis of this “strong view”, Liam Fox’s team think it is realistic and reasonable to at least plan on the basis of real terms increases to cover their spending commitments. Defence chiefs also welcomed Cameron’s “strong view” of the future — but they are still pushing for a more “bankable” pledge. They want George Osborne to guarantee an annual uplift beyond 2015, a request that some Treasury officials will treat as light comedy. I don’t think such a guarantee has ever been given to a department. Read more >>

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. Read more >>

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. Read more >>

Here the FT’s South Asia bureau chief discusses the UK’s aid policy in India. What do you think David Cameron’s government should do? Join the debate in the comments section. Read more >>

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. Read more >>

There have already been some noises off between the UK government and the green energy industry over the green investment bank, the government’s proposed investment vehicle for funding clean energy projects. Apart from anything, many in the sector simply don’t think the £1bn promised by Chris Huhne, the energy secretary, is enough. Read more >>

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: Read more >>