Monthly Archives: November 2011

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

 Read more

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

Jim Pickard

Ministers have proposed increasing the threshold by which e-petitions have a chance of generating a Commons debate amid a flurry of high-profile campaigns.

The e-petition system was created last year by David Cameron to make politics more accessible to the public. There is now a common public assumption that any e-petition with over 100,000 signatures will generate a Parliamentary debate – like the one taking place right now over fuel duty.

In reality, however, a petition that receives more that 100,000 signatures is sent to the Commons’ backbench committee of MPs, which then decides whether or not to hold a debate on the issue.  But the committee can also schedule debates on any issue proposed by other MPs – with or without petitions.

Its two most high-profile debates so far have prompted big rebellions for Mr Cameron; one Read more

Jim Pickard

Ministers in the Home Office are under new pressure – this time over allegations that they published “highly selective” statistics on drug seizures.

The chair of the UK Statistics Authority, Sir Michael Scholar, has written to Damian Green, the immigration minister. Sir Michael asked for reassurance that the Home Office did not deliberately publish a press release suggesting a rise in seizures of Class A drugs to enhance the reputation of the UK Border Agency.

The letter says: “It was, I understand, produced without any involvement by, and without the knowledge of, the Department’s statisticians; and it is highly selective in its choice of statistics, in order, it seems, to show the UK Border Agency in a good light.”

Sir Michael suggests that if this was the case it would be “highly corrosive and damaging to public confidence in national statistics”.

This is the latest headache for Theresa May, home secretary, given the recent furore over immigration checks. Right now Brodie Clark, former head of the UK Border Force (part of the agency) – who resigned over the controversy – is facing the Home Affairs Select Committe.

Here is the letter to Damian Green:

Dear Mr Green

I am writing to express concern about the Home Office press release issued on 4 November 2011, copy enclosed, which contained statistical information on the volume of seizures of Class A drugs by the UK Border Agency. This press release was embargoed until 7 November, three days

 Read more

Nicholas Timmins

The private finance initiative – or at least the PFI as we know it – is dead. That’s what the fiercest critics will hope given the Treasury’s announcement of a “fundamental reassessment” of the model.

But don’t be too sure.

George Osborne, the chancellor, is looking for a model that “is cheaper, accesses a wider range of private sector financing sources, and strikes a better balance of risk between the private and public sectors.” Read more

Jim Pickard

Chuka Umunna made his first flagship speech as shadow business secretary this morning at Bloomberg HQ in the City.

He was asked again about the “predator-producer” distinction made by Ed Miliband in his conference speech in late September. (You may remember that the Labour leader was criticised for the simplicity of his argument.) Read more

Nicholas Timmins

Andrew Lansley is to prevent primary care trusts from arbitrarily setting minimum waiting times and caps on the number of NHS treatments. In principle quite right too.

But the NHS also still has maximum waiting times – despite the health secretary’s initial attempt to scrap them as a Labour “top down” target.

So cash pressured primary care trusts, and their successors the clinical commissioning groups, will not be allowed to set minimum waits but will still have to attempt to honour maximum ones when longer waits have always been the way the service copes when spending is tight.

Over the next four years it is set to get very tight indeed as demand rises but the money remains flat in real terms.

So how can it cope? The good ways include redesigning service to deliver high quality at lower cost – in effect increasing efficiency – although the service’s ability to do that on the scale needed is in question. The bad ones are likely to include raising the threshold for Read more

Kiran Stacey

This Wednesday, unemployment among 16-24 year-olds is expected to top 1m people, its highest since records began in 1992. This has triggered a lot of anxiety and head scratching in government circles, prompting a whole week of events this week focusing on young people. That began today with David Cameron’s article about schools that are not failing but neverthless are “coasting” and need to be improved.

Why is youth unemployment so high? The first thing to say is obvious: there is a recession. It is true that youth unemployment has risen faster than overall unemployment, but this always happens in a recession, for two reasons: 1) employers are reluctant to lay off older workers, because of higher redundancy payments and “last-in-first-out” policies; 2) the first thing many organisations in difficult times do is stop recruiting, especially younger people. Read more

Jim Pickard

David Cameron is poised to announce a sharp rise in the number of brownfield sites owned by Whitehall departments which will be made available for developers to build new homes.

During the Tory party conference five weeks ago the prime minister said that sites for 50,000 homes had been identified after departments had come forward with unused land.

Now that figure has risen to 83,500, according to coalition insiders, making it likely that there will be a surge in homebuilding on government land in the coming years.

That announcement is set to form a key part in a housing strategy announcement by the prime minister later this month ahead of the wider growth review.

Five departments have so far come forward with brownfield sites under pressure from Read more

Kiran Stacey

We revealed earlier this month that George Osborne was considering slashing the benefits bill by linking them to earnings (which are stagnant), rather than inflation (which is rising fast).

Since then, the chancellor has been locked in a battle, not only with Nick Clegg, but also Iain Duncan Smith, the Tory work and pensions secretary, about whether the government should do this, having previously said benefits would rise in line with CPI.

If Vince Cable is to be believed, it looks like IDS and his Lib Dem allies have won this one. The business secretary told the BBC’s Politics Show: Read more

Kiran Stacey

We reported last week that George Osborne and Vince Cable were pushing for a new toll road scheme on the heavily congested A14 near Cambridge. Today, the Sunday Times suggests that road tolling will play a central role in the government’s growth review on November 29.

The paper says Osborne and Cable want £50bn from the private sector, mainly pension funds and insurance companies, to fund new infrastructure, including roads, homes and power stations. In return they will get a share of tolls, rents and energy bills.

The problem is that ministers can’t force private companies to spend their money on such schemes: all they can do is put the incentives in place for them to do so. But these carry their own risks. Read more

Kiran Stacey

Word reaches us that David Miliband is getting ready to dip his toe back into domestic politics with an appearance on Newsnight next week. Although dates have not yet been finalised, David is keen to go on the programme to talk about his work on the youth unemployment task force, which was set up by the Association of Chief Executives of Voluntary Organisations, and which he chairs.

Since the Labour leadership election, Miliband Senior has kept his public interventions in politics mainly to large-scale foreign policy questions. This is in part because of his previous job as foreign secretary, but also it has helped his younger brother find his feet on the bread-and-butter issues of British politics without interference. Read more

Kiran Stacey

Last month I revealed that Paul Burstow, the social care minister, refused to meet Jamie Buchan, the Southern Cross CEO, on several occasions before the UK’s biggest care home operator went bust. This was despite the fact that Buchan warned that his company was in financial difficulty.

Today the letters that I quoted from have been laid in the Commons library, along with a couple of other previously unseen messages, which show Buchan tried more often than we previously realised to secure such a meeting. Read more

Jim Pickard

If you are not familiar with Adrian Beecroft, the former venture capitalist, here is the upsum: the Tory donor was commissioned not long ago to compile a report into how employment law could be shaken up. He was called in by Steve Hilton (pictured), the head of policy in No 10, who wants to slash red tape as part of the autumn growth review.

As yet the report has not been published but its main proposal has been leaked to the sympathetic Daily Telegraph: that companies should be allowed to fire at will. Instead of going through complex unfair dismissal procedures they could simply get rid of staff and offer a pay-off. He admits that this would lead to some managers sacking people simply because they did not like them: “While this is sad I believe it is a price worth paying for all the benefits that would result from the change“, he says in the report.

The proposal has the backing of many business groups including the British Chambers of Commerce and the Institute of Directors.

But opposition within Whitehall has been led by Vince Cable and Nick Clegg, who believe the report’s recommendations go far too far. Their most convincing argument is that there would be an immediate impact on consumer spending if people suddenly lost their job security and feared they could be sacked at any time.

Critics of Beecroft believe he has a knee-jerk right-wing attitude. Apparently the first draft included a recommendation that women on maternity leave should give six weeks’ notice Read more

Kiran Stacey

Theresa May authorised a pilot scheme to relax border controls on certain people temporarily to allow more time to be spent checking people border staff thought were higher risk.

This has blown up into a big story for two reasons: 1) she didn’t tell parliament; 2) she claims that border staff were relaxing checks further than she had authorised.

But an email I have seen, apparently from someone at the UK Border Agency, suggests May should have known if border controls were being relaxed beyond her instructions. Read more

Jim Pickard

Among the many tributes to Philip Gould, former New Labour pollster, is that from David Miliband, who writes on his blog that he:

brought a dose of focus group reality to Labour’s other-worldly musings about the state and future of the country

Gould, despite his popularity, was divisive within the Labour party: the left resented the reliance placed on opinion polls by its leadership. But he also had an independent strategic mind which was admired by senior colleagues: “He was our own Karl Rove, no one else really came close,” one senior Labour MP told us today. Read more

Kiran Stacey

UPDATE: I have now added in housing benefit – apologies for the omission, and thanks to Paul Treloar for pointing it out.

The brains over at the Treasury are currently trying to work out if there is a way to cut billions of pounds of public spending by freezing benefits in a way that would also be palatable to most voters. As we reported last week, it looks like pensions will be exempted from any freeze to avoid accusations of punishing older people. But what else is up for grabs, and how much could be saved?

Here is a table of each of the most significant benefits paid out by DWP and how much each one costs. I’ve done one column for how much was spent last year, one for how much is forecast to be spent next year, factoring in various policy changes, and one for how much they would cost next year if there were no spending cuts and they were allowed to rise with 5.2 per cent inflation. Read more

Jim Pickard

First we had Oliver Letwin dumping government documents in a bin in the park. And now it is Vince Cable’s turn to have his careless document-disposal habits exposed in the press.

The full inside story on the “whistleblower” who found bags of confidential and personal letters discarded in the street is told in today’s Richmond and Twickenham Times. I’ll let them tell the full story.