Monthly Archives: March 2011

Jim Pickard

The catchphrase “I agree with Nick” became something of a joke after the pre-election TV debates a year ago, as David Cameron and Gordon Brown both vied to sound collegiate.

A close examination of Monday’s Libya debate on Hansard shows how Cameron uses courtesy as a Commons tool to win around MPs to his point of view; impressively in this case. Notice how he uses the phrase “I agree” – or variations thereof – to appear statesmanlike again and again. It is hard to imagine Gordon Brown being quite so smooth. Read more >>

Jim Pickard

The chancellor’s autopilot is locked to Plan A – Philip Stephens, FT

A little light at the end of the tunnel – David Laws, FT Read more >>

Jim Pickard

Today’s Budget did not include many surprises beyond the ones we flagged up in our FT Westminster checklist. They include a plethora of “pro-business measures” which Vince Cable tells us amount to “small changes culminating in big differences“.

On the fiscal front, looking at the crucial “scorecard” in the Red Book (pages 42-46) you can see that many of the changes are relatively small in financial terms.

They are dwarfed by the following changes – for this year alone – which were already in the pipeline from decisions made last year or earlier.

Money already coming into the Exchequer: NICs is going up for employees (£3.5bn) and for employers (£4.6bn), pensions tax relief is being restricted (£1.2bn) and benefits and tax Read more >>

Chancellor’s red boxThe FT’s Westminster blog is running live commentary on the Budget. Join us here from 12.30pm, London time. This post will update every few minutes, although it will take longer on mobile devices.  Read more >>

Jim Pickard

The fog is lifting – and the shape of tomorrow’s Budget is becoming more clear.

My expectation is that this will not be a time for huge giveaways or takeaways given the extraordinary spending review we had last October. (Here is a reminder of the upcoming tax and benefit changes, with 16 alone in April – as illustrated by our Austerity Calendar).

Leaving aside the inevitable surprises, here is what we already know – or expect – in the showpiece event.

UPDATE on Wednesday morning:

i] £250m for housebuilding. The government will replace its old Homebuy Direct (£275m) – which effectively ended last autumn – with a new Firstbuy Direct (£250m) which will help 10,000 first-time-buyers. (The old scheme also helped 10,000 first-time buyers.). The housebuilders are delighted but others may simply see this as filling a vacuum in the shared-equity market.

ii] Rumours on corporation tax. The government is due to cut the rate from 28 per cent to 27 per cent next month (as part of a plan to lower the rate to 24 per cent by the end of Parliament) but could go further – or signal its intention to go faster.

iii] George Osborne will announce a further £600 rise in the tax threshold from April 2012 to £8.045 – on top of the £1,ooo rise taking effect next month. Bear in mind, however, that this threshold should have risen by inflation (4.4 per cent) anyway.

1] George Osborne will signal his medium-term intent to merge National Insurance and income tax. The idea is to convince the British public that they pay too much tax – preparing the way for a more low-tax future.

2] Fuel duty escalator. The chancellor is set to reduce or cancel the 5p a litre rise. But a “fuel duty stabiliser” – being considered by the Treasury – seems unlikely after being criticised by the OBR.

3] Aviation tax:

a] The government has cancelled plans to shift aviation duty from a per passenger to a per plane duty which would have stopped half-empty planes paying less tax.  Officials claimed that the change would have been thwarted by the Chicago Convention from 1944.

b] Air passenger duty will be frozen, according to reports – instead of being raised in line with inflation.

c] Lear Jet levy – passengers in private jets will pay duty for the first time in a small but symbolic hit on the rich.

4] Employment tribunals. Could change rules so that staff at SMEs must work at a company for two years – up from one – to be eligible.There are also plans to charge for visits.

5] More support for apprenticeships, including 100,000 work placements.

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Jim Pickard

Andy Coulson has set himself up as an independent freelance consultant offering communications advice and has just won approval for his first client, a global conference for young future world leaders.

Mr Coulson, former director of communications at 10 Downing Street (pictured back left) resigned in January after the furore caused by allegations of phone hacking at the News of the World, which he previously edited. He has always denied knowledge of hacking under his watch, although he resigned as editor in 2007 when one of his journalists and a private detective were jailed for intercepting voicemails.

His new role was confirmed by Kate Robertson, the co-founder of “One Young World“, who is also UK group chairman of Euro RSCG Worldwide, part of the French marketing group Havas.

Ms Robertson told me she met the former spin-doctor after the Conservatives hired her company in 2007 ahead of the “election that never was”.

She said that Mr Coulson would only be working on a paid ad hoc basis for One Young World and not Read more >>

Jim Pickard

So far there has been a solid display of cross-party unity over the military action in Libya, designed to save the lives of rebels in the east of the north African country. The Labour leadership is firmly behind the coalition on its swift action in maintaining a no-fly zone and protecting Libyan citizens.

But this afternoon’s ongoing debate - it began at 3.30pm and will last six hours - has shown that the consensus is not quite as firm as it might appear at first glance. Instead, having talked to MPs in private, and having watched the first few hours of the debate, I would say the overwhelming feeling is one of pride at the initial intervention but unease about how events will now pan out.

Concerns are shared among MPs of all parties, under these categories:

1] End game. There is concern about the lack of an exit strategy for the Libyan intervention. Does it end with an uprising that extinguishes the Gaddafi regime? Could the country be split into west and east? Could the allies pull out before either side wins? Could this be another Vietnam/Iraq? How does the alliance attack Gaddafi’s troops and tanks – from the air – if they enter suburbs and urban areas. As Dennis Skinner said – in a point accepted by the prime minister – with wars it is “easier to get in than get out“. Or as Emily Thornberry asked: “What would be a successful outcome?” For now the answer of David Cameron – and of a supportive Ed Miliband – it is to uphold the UN resolution which allows the protection of Libyan citizens. That may, in reality, only be phase one.

Rory Stewart, the Tory MP, warned that when you dip your toe into such engagements you can soon become up your neck: ”I think the no-fly zone is the correct thing to do but this is a 20-30 year marathon with a very complicated region,” he said. Read more >>

Jim Pickard

If you are not a regular reader of the paper FT it’s worth buying it today if only for two pieces by our economics editor Chris Giles alone: A feature in which he casts a doubtful eye over the coalition’s “growth claims” and another piece examining the worst losers from the austerity programme.

Perhaps unsurprisingly, it is white-collar public sector workers who are going to be more squeezed than anyone else. Firstly about 320,000 public sector workers are set to lose their jobs over the next four years.

Secondly, those who remain in their jobs will see a real terms fall in gross pay by 6.6 per cent by 2014-15. They also face a 3 per cent rise in pension contributions and tax rises and benefit cuts of around 3 to 4 per centRead more >>

Jim Pickard

Many anti-nuclear Lib Dems have gone quiet on the issue since they entered government; Andrew Stunell springs to mind. He is now a junior minister in DCLG: this is what he said about nuclear power in 2009.

But a Lib Dem backbencher, Martin Horwood, has today put forward an early day motion calling on the coalition to suspend Britain’s new nuclear energy programme in the wake of the Japanese crisis. Read more >>

If this remarkable poll is correct, Nick Clegg should be the one refusing to share a platform with Ed Miliband.

The Ipsos-Mori research turns conventional wisdom on its head and shows that Clegg is actually more liked than Miliband, scoring 40 per cent against the Labour leader’s 36. Read more >>

Jim Pickard

Amid the row about the reorganisation of the NHS – on which many coalition MPs have cold feet – it’s easy to forget one simple fact.

The Tories are committed to ring-fencing health; which means even more brutal decisions elsewhere in government. This was a difficult choice (some would say brave) to make in the spending review.

Labour, by contrast, said last summer they would not ring-fence the health service in quite the same way. In fact former health secretary Andy Burnham made a compelling case nearly a year ago as to why it would be a mistake.Burnham admitted it was “counter-intuitive for a health spokesman to be advocating less spending on the NHS.”

Since then – with John Healey as shadow health secretary – we haven’t heard much on what Labour’s policy would now be on this. Unsurprisingly. Read more >>

Jim Pickard

We raised a key problem with Ed Balls’ plan to seek a cut in VAT on petrol in this blog on Monday.

Now Justine Greening, Treasury minister, has raised five further points about this, which are topical given that Labour are seeking an opposition day motion today on the issue. I’ll update later if the Balls team want to rebut any points:

1. Ed Balls claims the UK could secure a derogation ‘immediately’ from the EU on VAT on fuel as France did for restaurants. But it took France seven years to secure this derogation and the head of the Office for Tax Simplification said the EU would be ‘unlikely’ to grant one on something as ‘fundamental’ as petrol. No EU member has ever secured a VAT derogation on petrol.

2.He admitted today he was wrong to claim on Monday that VAT on road fuel was cut in the mid-1990s. He admitted that in fact it was cut on domestic fuel.

3. He claims the government is seeking an EU derogation on VAT on fuel in rural areas. But this is regarding Fuel Duty not VAT.

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