Monthly Archives: December 2010

Jim Pickard

My favourite episode in the satirical TV programme The Day Today was when the Chris Morris presenter – styled loosely on Jeremy Paxman – goads various politicians into declaring a world war.

I was reminded of the clip this morning when I saw the Times’ splash predicting a campaign of strikes for the Easter: “Unions plot campaign of strikes for Easter.”

Are parts of the media itching for a confrontation between Britain’s unions and government a la 1970s? (Kevin Maguire at the Mirror suggests the Times is obsessed with strike stories as a legacy of the 1980s Wapping dispute.)

This isn’t the first time that mass strikes have been predicted since the general election. Last summer the Times reported that:

“A campaign of national strikes over cuts to spending, pay and pensions involving millions of public sector workers is being drawn up by trade union leaders for the autumn.”

This blog was sceptical, noting that a meeting of union leaders only the previous week had agreed to delay any action until the spring. As it transpired, no major strikes came to pass outside of specific confrontations at BA and the London Underground.

The brothers are as much to blame for the strident headlines as the press given their love of loose language. At the TUC conference in September it was hard to work out whether their vivid threats were genuine or merely rhetoric, as I wrote here.

Moderates in the movement know they need to have public support for any such action, which is not yet strongly evident. Union leaders also need to have an achievable aim; stopping the coalition from cutting the deficit does not seem to fall into that category at present. Plus any action means a loss of income to those workers – already suffering pay freezes and other cuts - who do not turn up to work.

I’m now told that at the last meeting of the TUC executive – made up of general secretaries from the big unions – the language was indeed much more strident, with several figures pushing for big strikes. They were unnerved by their lack of a major role in the headline-grabbing tuition fees protests of November and December and want to make sure they are at the helm of any new anti-cuts groundswell.

A general strike is illegal but synchronised action over various issues on the same day is not. It’s “a possibility” this could take place, as Brendan Barber – pictured, head of the TUC – said on BBC Radio 5 this morning.

Then again, Mark Serwotka of the Public and Commercial Services Union may have made a slip of the tongue when he told the Times that: “Unless you look like you want a fight they won’t negotiate. The government has to see we are serious.”

It is still not clear whether this spring will just see a few walk-outs from the radical PCS, a few localised transport disputes and a huge one-off TUC rally – or something much more widespread and damaging.

If it’s the former the public may come to the conclusion that the unions these days – with far fewer members than 30 years ago – are more bark than bite, akin to the boy who cried wolf.

Jim Pickard

You can find many of the more serious moments of 2010 elsewhere on YouTube, for example this clip of Gordon Brown leaving Downing Street for the last time.

But here is our compilation of 10 other clips from the political year which are distinguished only by their cringeworthiness. Enjoy.

1] David Cameron’s less than great performance in the TV leaders’ debates; here he suggests that a “black man” he met in Plymouth had joined the Navy aged 10.

2] Lib Dem leader Nick Clegg makes a promise he can’t keep on tuition fees; one that will come back to haunt him during the autumn’s student riots.

3] Bigot-gate: the prime minister implodes

4] Bigot-gate the sequel: the prime minister is forced to listen to a recording of himself insulting a Labour-supporting pensioner

5] Labour’s own candidate for north-west Norfolk, Manish Sood, claims Gordon Brown is the worst prime minister ever. He later threatens legal action against his party.

6] Clegg and Cameron hold their first joint press conference, an event described by many onlookers as akin to a “civil ceremony” as scripted by Richard Curtis. Listen to the summer birdsong in the background.

7] “David I love you so much”: Ed Miliband seizes the Labour leadership from stony-faced elder brother.

8] The Miliband cracks begin to show: David Miliband asks Harriet Harman – “You voted for it (the Iraq war). Why are you clapping him?” Her reply: “I’m clapping because I’m supporting him.”

9] The Daily Telegraph ruins Vince Cable’s Christmas by sending two young female reporters posing as constituents to talk to him. Alas he claims he has “declared war” on Rupert Murdoch.

10] Ed Miliband’s Christmas message. Critics were quick to mock the stilted vocals and bulging eyeballs.

Jim Pickard

Plenty of coverage around today of the Independent’s story about Miliband’s plans to “sever big money ties with unions”. I predicted a week ago that the Labour leader was planning a symbolic gesture to show that he was not in hoc to the union barons; perhaps this is it?

Yet the reaction to the Indie story has got ahead of itself in terms of what it all means.

Firstly, Labour has today denied point blank the claim that Miliband wants to give 25 per cent of votes in future leadership elections to members of the public – thus reducing the union vote from 33 per cent to 25 per cent. I’m told this is just an idea in the ether and not one that Ed M backs.

Secondly, reducing a donation cap to £500 sounds radical. It sould stop unions making big one-off donations to fund election campaigns. But under Miliband’s suggestion – put forward to the committee on standards in public life – unions would still every year give millions of pounds in aggregate from millions of members each paying £500. Labour would not bow to Tory demands for an “opt in” rather than an “opt out” clause on the unions’ political funds.

Meanwhile under a £500 cap the Tories would see a massive slump in funding given that currently their donations tend to be in the thousands, tens of thousands or hundreds of thousands from individual backers. For that reason they are likely to argue for a higher cap – which Miliband may then reject.

While taking the credit for the seemingly ultra-democratic £500 cap idea.  

Party funding talks under Sir Hayden Phillips foundered in 2007 for precisely these reasons; don’t expect an imminent solution. (The obvious one, greater party funding – which Sir Hayden himself backs – remains unpalatable to the public).

The Westminster blog is briefly interrupting its holiday break so readers can listen to the Vince Cable audio clip, courtesy of the BBC website.

Read our story: Cable says he ‘declared war’ on Murdoch 

Jim Pickard

Alex and I are both off this week but the blog will be up and running again soon after Boxing Day. Many thanks to all our readers who have helped support us through the last year.

Jim Pickard

I revealed back in August that David Cameron wanted to invite Britain’s union leaders for a meeting, a surprising overture given the hostility between the two sides. The process has been complicated by the fact that the prime minister – unsurprisingly – did not want to give the brothers an excuse to publically snub him.

Yet the meeting has been scheduled for tomorrow. Patrick Hennessy at the Sunday Telegraph revealed this morning that a delegation of unnamed TUC officials is poised to go into Downing Street to meet Mr Cameron.

The TUC won’t confirm who is attending but my understanding is that the visitors include up to 10 of the general secretaries of the big unions, including Len McCluskey of Unite (pictured), Paul Kenny of the GMB and Billy Hayes of the CWU. (Although Dave Prentis of Unison has rejected the invite).

The story in tomorrow’s FT is here. Cameron’s aides won’t tell me whether the menu is beer and sandwiches or Pimms and scones.

It’s hard to gauge whether the meeting will help to calm tensions between the two sides or whether it will inflame them; the union movement is furious about the scale of the public sector cuts initiated by the coalition. A big rally is to be held in March in London. And although widespread strikes have not yet happened – contrary to press predictions of a ‘winter of discontent’ – they may take place next year. I’m told that at recent meetings of union leaders there has been a hardening of tone; not least because the brothers want to retain ownership of the anti-cuts agenda. (Which was not the case during the tuition fees demonstrations.)

It may seem curious that Cameron would even hope to achieve anything from the meeting, given that his party has spent months being rude about unions whose leaders have traded insults with equal enthusiasm. But his aides say that he kept channels of communication open in opposition and intends to do so in government.

As an aside, I’m also picking up the rumour that Ed Miliband intends to attempt some sort of symbolic rupture with the unions in the New Year in a latterday Clause 4 moment. It’s hard to imagine this could be more than totemic, however, given how deeply Labour now depends on the unions’ deep pockets.

Jim Pickard

Alan Johnson heavily criticised the New Year rise in VAT from 17.5 per cent to 20 per cent this morning, warning it would cost jobs and could jeopardise the economic recovery.

Is this responsible opposition? A Tory source points out that Labour would have almost certainly have done the same thing – or at least considered it very strongly.

It is true that an initial plan by Alistair Darling to lift VAT was over-ruled by Gordon Brown in favour of increasing national insurance. But quotes from the election campaign make clear that the option was kept open.

*         Darling was quoted saying that ruling out a VAT rise would have been ‘absolutely daft‘ (The Daily Telegraph, 13 April 2010).

*         Gordon Brown refused to rule out a VAT rise during the election. ‘We’ve never actually made any promise about the VAT rate. But I can give you an absolute assurance that we have not raised VAT since 1997‘ (The Daily Telegraph, 13 April 2010).

*         During the election campaign Alistair Darling said ruling out VAT rise would be ‘ludicrous’ and ‘daft’. When asked about it during the chancellors’ TV debate he said: ‘no Chancellor or would-be Chancellor is ever going to say they’re not ever going to change tax rates over the next five, ten years. That would be a ludicrous position to get in to‘ (Chancellor’s Debate, Channel 4, 29 March 2010).

Jim Pickard

Alan Johnson was guilty of modest political opportunism this morning when seemingly questioning Philip Hammond’s position in the light of the extreme weather conditions. The shadow chancellor hinted that the transport secretary should resign.

It reminded me of the occasion that Boris Johnson appeared in front of the transport select committee (in May 2009) to defend charges that he had failed to protect London from the wintry elements.

It seems to testify to the theory that Boris is at his most witty when under pressure:

Q197 Graham Stringer: You are telling me what gritting went on, but that was not the question I asked. The question I asked was what action you took, with your overall responsibility for transport in Greater London, over the five days when we knew, the whole country knew, there was going to be a heavy downfall of snow which was likely to cause disruption. I would like to know what actions you took.

Mr Johnson: As Chair of Transport for London, I am happy to say that I had general oversight and I presided over, with my Commissioner for Transport, a massive programme of gritting. If you ask me whether I personally went around trying to repel each snowflake as it tried to settle over London, then obviously I would have to give you a negative answer. You do ascribe phenomenal powers to me – quite rightly, I think, as I think it is high time that we thought about a revision of the powers-to have authority over basic meteorology, but it is not within my competence to get up into a helicopter and encourage the snow to stay away. What I think you need to focus on, if I may be so bold, Chairman -

Jim Pickard

We reported yesterday that David Cameron had joined Nick Clegg in warning of new action against banks which did not show bonus restraint.

David Cameron warned banks on Friday that they faced higher taxes if they continued to pay “unjustified” bonuses, adding to a growing political and regulatory pressure on the City before the industry’s bonus season early next year.The prime minister, speaking after a European Union summit in Brussels, said that the public found such payments “galling”, adding: “Every decision the banks make like that makes it more difficult to keep a tax regime that they might favour.”

Vince Cable’s comments on today’s Andrew Marr show this morning continued in the same vein. But if you listened carefully the words indicated a threat rather than an imminent crackdown.

“If they don’t behave, if they don’t take account of their wider responsibilities the government has as a possibility some form of taxation,” said Cable.

Understanding the government’s stance would be a lot easier – as I pointed out on Friday – if they could indicate what they want from the banks, which are already heading for a lower bonus payout than last year. A bit less than last year? Half that figure? Ten per cent? For now it is not clear.

As for the opposition, what should we make of Alan Johnson’s suggestion that last year’s one-off bank levy could be made permanent? Is it credible? Is it official Labour policy?

Johnson told Sky:

Last year we introduced a tax on bankers’ bonuses; it pulled in about £3.5bn. Nobody fell over, nobody went abroad, all the kinds of things that we heard that would happen. So you know there is more money to be taken from banks. Particularly when you look as a fair share not as retribution; as a fair share to getting the fiscal deficit down.”

The counter-argument is that the banks only stayed onshore was because they knew it was a one-off; to regularise the levy could change their calculations.

Meanwhile Cable is still keen for banks to enforce new disclosure rules put on the statute book by Labour – requiring them them to list how many staff (albeit unnamed) received £1m-plus bonuses.

In this respect he is at odds with George Osborne, the chancellor, who last month watered down the rules – as revealed in the FT by George Parker. Which makes this a genuine spat at the top of government.

A cloud is hanging over one of the government’s biggest privatisations.

The £6bn proposed PFI deal for the search and rescue helicopter service has taken a highly unusual turn. It could have big implications for not only the service, but how such negotiations are handled in future.

Philip Hammond told the Commons yesterday that talks have been abruptly halted — hours before a planned announcement to proceed — after the private Soteria consortium disclosed a “possible issue” to the Ministry of Defence.

Whitehall figures told us that the “issue” is a possible breach of propriety on bidding rules. In other words, this is about standards of conduct, rather than problems with fundamentals of the deal (price, debt etc).

Most of the details remain secret — indeed some ministers and senior people involved with the negotiations are still in the dark. This is certainly a story to watch carefully over the coming weeks.

Jim Pickard

This may come as a surprise to those who read Nick Clegg’s comments today about the need to crack down on bankers’ bonuses. (And David Cameron’s veiled threats today of a higher tax on banks that don’t comply).

Yet last week coalition MEPs were sent a document on how Britain has been seeking to water down a EU rule intended to restrict bonuses in the future.

The EU last Friday laid out its new rules meaning that no senior banker should get more than 20 per cent of their bonus in cash upfront.

The EU wants bankers to defer half of their bonus, of which at least 60 per cent will have to be paid in shares or other financial instruments.

The British (via FSA policy set out in the summer) had argued that banks should be allowed to give all of the cash element upfront while mostly deferring the shares element. That would have meant bankers getting 40 per cent of their bonus in cash upfront – double what the EU wanted.

The document argued that Britain “led the way” in implementing G20 principles and that the EU should not go any further.

It was an entirely valid point of view to take; but there is a distinct irony in the idea of the British government proposing weaker restrictions than the rest of the EU while posing as banker-bashers.

The document is a bit long but here you go:

CRD3 Briefing

CEBS Guidance on Remuneration Provisions in the Capital Requirements Directive

Summary

  • There are two issues at play in the various press reports covering the CEBS guidance on the CRD3 remuneration provisions: (i) the current interpretation of the upfront cash limit provisions and the tax implications of retention conditions; and (ii) the exaggeration of provisions that relate to state assisted banks and fixed/variable pay ratios.

Upfront Cash and Retention Conditions

  • The provisions in CRD3 imply a cap on the maximum proportion of a bonus that can be paid in cash upfront.
  • These provisions are open to interpretation and throughout the negotiation and implementation of the Directive, we have supported an interpretation that limits upfront cash to 40% of a total bonus. This interpretation is consistent with the G20 agreed FSB Standards.
  • The European Parliament has taken a different view and interpret the provisions as imposing a 20% cap. This will go beyond the globally agreed position and will have a significant impact on the European financial services sector’s international competitiveness.

Jim Pickard

If all low-carbon energy is given a public subsidy then has nuclear power been subsidised? You might have thought so.

But Chris Huhne insisted yesterday that this was not the case.

“There is no subsidy, there is a contract for difference to support low-carbon generation; nuclear is getting no special treatment,” the energy secretary told the House of Commons.

Except that surely it is – at least when compared to gas and oil power plants. Renewables and nuclear look likely to benefit from new feed-in tariffs and from a carbon price floor, both announced in yesterday’s consultation.

The issue has put some Lib Dems in a spin, unsure whether to believe their cabinet colleague or not over an issue which has traditionally been very contentious for the third party. You may remember that the coalition agreement stipulated that Lib Dem MPs are allowed to vote against new nuclear power stations – and that the government will not subsidise the industry.

Last night I spoke to Andrew George, Lib Dem MP for St Ives, who said: “It is an issue that will exercise a lot of us, there is a broad concern.” Andrew Stunell, a junior minister, is among those who have spoken out strongly against nuclear power in the past.

Martin Horwood, MP for Cheltenham, told the Commons yesterday that he was concerned about nuclear’s “inflexibility and intermittency and the toxic legacy”. Should Mr Huhne not explore a levy on nuclear to balance any “hidden even if unspecific windfall subsidy” which might come about?

Mr Huhne’s reply was clear: “My hon. Friend knows very well that our policy is no subsidy to nuclear.”

Will these Derren Brown-style mind tricks convince the LIb Dem backbenches? We will soon find out.

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.

The illustrations of Jim and Kiran are by Nick Hardcastle.

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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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