Monthly Archives: November 2011

Kiran Stacey

Ed Miliband had some good lines ready for today’s prime minister’s questions. He decided to focus on youth unemployment, which recently topped 1 million people for the first time since records began.

Sensibly, he focused on long-term youth unemployment (over 12 months out of work, which is now at 260,000 people): both because Cameron would probably misinterpret the question and try to answer on overall youth unemployment (he did), and because the longer young people stay out of work, the harder it is for them to get back into the jobs market when the economy recovers.

Miliband decided to focus on the effect of scrapping Labour’s Future Jobs Fund, but Cameron was able to bat that away by referring to the Work Programme: Read more

Jim Pickard

Plans to reform the funding of political parties will be unveiled in a few hours’ time but already appear doomed amid continued infighting between Labour and the Tories.

Sir Christopher Kelly’s committee on standards in public life will hold a press conference setting out out proposals including a suggested £10,000 cap on donations, changes to union funding and £20m a year of state funding. It will also suggest that members of the public will be able to give up to £1,000 tax-free to political parties, just as they currently can with charities.

Yet dissent over the issue is reflected within the committee itself, which will produce two separate “notes of dissent” – effectively minority reports – at odds with the main recommendations.

Former minister Margaret Beckett, the Labour member, will argue against a proposal to

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Nicholas Timmins

Buried away in the sweeping proposals from the government commissioned review of how sickness absence from work should be handled is a small bombshell.

Alongside a new independent assessment service to which patients would be sent after 4 weeks on the sick, plus a new brokering service to help people swap a job they can’t do for one they can, is a proposal for tax relief on private medical insurance and private medical treatment aimed at getting people back to work.

This is a highly sensitive issue. In his determination to seal the NHS off as an electoral issue for the Conservatives, David Cameron, in one of his earliest acts as party leader ruled out tax relief for private medical care – declaring that “we should not use taxpayer’s money to encourage the better off to opt out”. Read more

Jim Pickard

If you read Grant Shapps’ statement today the housing minister gives the distinct impression that housebuilding is bouncing back from its recent historic lows.

“Housebuilding in 2010-11 was 29 per cent higher compared to 2008-9, and compared to 2009-10, it was 17 per cent higher,” the minister declared. Read more

Jim Pickard

David Cameron is poised to announce a flagship scheme to underwrite hundreds of millions of pounds of mortgages for new-build homes in an attempt to boost the ailing housebuilding industry, according to numerous sources.

The mortgage indemnity scheme is set to be unveiled by the prime minister on Monday as the centrepiece of a wider housing review. The government will underwrite a small percentage of each new loan on newly built property, leaving taxpayers on the hook if there was to be a severe housing downturn. Read more

Jim Pickard

You have to take your hat off to the government and Virgin Money for their PR operation, which has left the nation believing that Northern Rock is now in the hands of cuddly balloonist Sir Richard Branson.

The numbers tell a different story. Wilbur Ross, who we introduced you to yesterday morning, put in nearly £260m – some five times the £50m investment made by Virgin Group. Stanhope Investments, the Abu Dhabi fund, also put in £50m. Read more

Elizabeth Rigby

Mark Field, the Tory MP for the City and Westminster, and Ed Balls, the shadow chancellor, make an unlikely pairing. But both men yesterday came out and attacked the government’s sale of Northern Rock to Virgin Money, asking whether it was the right time to strike such a deal against the backdrop of choppy markets.

Both wondered whether George Osborne might have extracted more than the £747m on completion of the sale — total proceeds could rise to just over £1bn over five years — had he waited a little longer. Both men also asked whether the government had fully explored the idea of the bank being turned into a mutual.

(Meanwhile Lib Dem peer Lord Oakeshott has put down some parliamentary questions asking if the Treasury have made it a condition of the deal that full British tax must be paid on all profits of Northern Rock and all dividends and capital gains received by the consortium.)

Others were more realistic on Thursday, with Lord Myners, the former Labour City minister, telling the Financial Times that his was a “very good price” to have achieved in Read more

Kiran Stacey

The unemployment stats on Wednesday triggered a new round of speculation about whether George Osborne was likely to meet his two fiscal targets: balancing the structural current deficit and having debt falling as a ratio to GDP by the end of the parliament.

Neither target is quite as tough as you might think, however, as the Guardian has pointed out today. On the debt target, technically, the government could borrow billions more than it is currently planning and still not breach it, as long as it slowed borrowing towards the end of the parliament and showed debt was falling by 2015. This is unlikely to happen (partially because it could breach the other target), but it is possible. Read more

Jim Pickard

Eagle-eyed readers may have noticed a discrepancy in the press releases issued this morning by UKFI and by Virgin on the sale of Northern Rock.

In the UKFI announcement there was no mention of Wilbur Ross, the US billionaire, or his company. By contrast the press release from Virgin Money says explicitly: “The acquisition is funded by an investment consortium led by Virgin Group and WL Ross & Co.”

It seems ministers are keen for Sir Richard Branson to be the smiling face of the deal, rather than the man dubbed by Fortune Magazine the “King of Bankruptcy”.

So who is Ross? He is a very canny financial investor who has made a speciality out of distressed assets. Recently he was part of a consortium which saved Bank of Ireland from full state ownership by taking a combined 35 per cent stake through rights issues: that consortium was made up of Fidelity Investments, Fairfax Financial Holdings and WL Ross & Co. Read more

Jim Pickard

The FT reports this morning that Michel Barnier, Europe’s top financial regulator, has shelved plans to rein in the credit rating agencies. Barnier, who is internal market commissioner, had to bow to objections elsewhere in the EU. We report that Barnier still unveiled proposals to transform the business model of the big agencies but has ordered some last-minute “technical work” that amounts to a ceasefire.

Both Barnier and the rating agencies were discussed in the House of Lords last night, where former City minister Lord Myners was on scathing form. First the Labour peer (a former chairman of Marks & Spencer) criticised the “flawed thinking” from the European Commission on the issue. He then continued:

I worry very much about Mr Barnier. I met Mr Barnier when he was a Minister. He came to see us at the Treasury. He came down the corridor and I was watching him. I am a great fan of art and I was rather impressed that he stopped to look at every painting. I thought this is a man with whom I share a common interest-until I realised he was actually looking at his reflection in the glass on every painting, and adjusting his hair or his toupee. This to me is a man whom we should treat with a very long spoon. I hope the Minister will take due care in working with Mr Barnier because we have been forewarned that this man intends to seek even more powers than those he announced today. He said he wants to return to the issue of censoring

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Jim Pickard

There was a moment earlier today when Nick Clegg appeared to draw the curtains on any imminent deal on party funding.

The deputy prime minister told the Commons: “This is not the right time to ask our hard-pressed taxpayers to pay out more to political parties at a time when they are having to deal with so many cuts and savings elsewhere.”

That is a strong signal given that extra state funding is the key to unlocking a deal between the three parties over the issue – which has foiled the efforts of some very bright people in recent years.

A key report is due next week which will signpost reform of the party political funding system; to be published by the “committee on standards in public life”. Its recommendations would mean the requirement of an extra £100m of state funding for political parties over a five-year term.

Interestingly, there is already disagreement within the committee with questions over whether there will be a unanimous report or a “majority” one, I’m told.

Leaks of the report suggest that there would be a £10,000-a-year cap on donations as well Read more

Elizabeth Rigby

Parliament’s long summer recess should be consigned to history and a November half-term break introduced permanently, as MPs on the procedure committee try to make life as an MP a little more family-friendly.

After months on consultation, the backbench committee which counts Jacob Rees-Mogg as a member has recommended that MPs cut short summer recess and instead add a half-term break to their calenders in  November or go for a more radical shake-up where Read more