Monthly Archives: December 2011

Jim Pickard

Three decades before the MPs expenses scandal hit the House of Commons, Margaret Thatcher was acutely aware of the need to avoid any impression of lavish spending. The then prime minister insisted on using her own crockery at 10 Downing St as well as her own ironing board: truly the “Iron Lady”. She sent back unwanted bed linen saying “we only use one bedroom“, according to official papers kept at the National Archives in Kew.

According to the papers, released today for the first time, Thatcher wrote the memos on blue felt-tip pen after maintenance costs at Downing Street were published in response to a question by a Labour MP. The total cost of refurbishments had come to £1,836 and the prime minister’s aides were worried that this might prompt public disapproval. (Some would say the spending, even with inflation, was relatively modest compared to David Cameron’s recent £64,000 upgrade). Read more

Jim Pickard

It’s a striking headline on the front of today’s Daily Telegraph: “Greener energy will cost £4,600 each a year.” And no doubt it will fuel any incipient hositility to renewables among the broadsheet’s large readership. But is it accurate?

Technically, yes. Professor David MacKay, a government adviser on climate change, has done the calculations on how much it will cost on sustaining and replacing the nation’s entire energy system. The resulting figure – which is not synonymous with energy bills – is the total investment in energy needed (£2.4 trillion) over the next four decades. That is then divided by population to come up with the figure.

But as the article makes clear a few paragraphs further down, it could cost even more to rely on traditional sources of power such as fossil fuels and nuclear. (It also suggests we are already spending £3,700 a year already).

MacKay, who is a professor of physics at Cambridge – and has written a highly regarded book on the future of energy – has (with DECC officials) produced a “cost of energy calculator” setting out what Britain will need to spend in the coming years.

Key to this is his assumption that energy already costs us an average of £3,700 a year per person in Britain.

There are several future options including:

* “Do nothing” to develop low-carbon energy systems: this would cost £4,682 a year, Read more

Jim Pickard

The news from the High Court in the last few minutes is bad for ministers in the energy department, with a ruling against the way in which cuts to solar subsidies were imposed. It is a victory for Friends of the Earth and two solar companies which launched the action – which are now likely to see a delay in the cuts.

Last month the government announced a halving of the feed-in tariff – which allows people to sell power back to the grid – after overwhelming demand from the public.

The move prompted a backlash from the industry because the speed with which it was imposed from the point of December 12. Solar companies also pointed out that the move was retrospective as the date was more than week before the supposed end of a consultation on the issue. These were the issues on which the court case was launched.

We may not get the full details of the High Court ruling until tomorrow but it is likely to provide relief for those companies which had millions of pounds of stock in Read more

Kiran Stacey

House of LordsMany commentators have been asking why the Liberal Democrats are still in the coalition, given they have now lost major battles on tuition fees, electoral reform and Europe.

Philip Stephens, writing in today’s FT, suggests:

With trust gone, the coalition is now much more a transactional affair. Anything beyond the shared goal of reducing the deficit is the subject of intense negotiation.

Clegg, when asked today in the Commons, said that the main reason to form the coalition, and to stay in it now, was to bring down the deficit. But if there is one issue that might seem distinctively Lib Dem, and on which Clegg might be able to score a victory, not least to placate his own backbenches, it is on reforming the House of Lords. Read more

Jim Pickard

There was a point when it looked as if the “winter of discontent” – long predicted by all and sundry – could happen; the one-day strike three weeks ago seemed to augur months of misery as umpteen unions embarked on a season of ill-will towards the government.

Today, however, has seen the big thaw – at least for many of the unions in their negotiations with ministers over public sector pension reform: not for all.

Four different sets of talks have been ongoing.

1] Three unions have been negotiating with the Local Government Association over local government workers’ pensions. An agreement has been reached and will (I’m told) be approved tomorrow by Eric Pickles, communities secretary. It isn’t a full detailed deal, but more a “roadmap” of principles under which talks will continue. Council pension funds are seen as a special case as they are fully funded, unlike central government pension funds.

2] Health. As my colleague Brian Groom reports, some 15 health unions have signed an agreement with the Department of Health. It is a big deal that Unison, the largest, has agreed to take the outline proposals back to its health executive for consideration. One Read more

Kiran Stacey

I wrote a few weeks ago that the number one priority of those at the heart of the coalition, and especially those close to Nick Clegg, was not to have a referendum on Europe. But there are people on his side who think the Lib Dem leader should effectively call the Eurosceptics’ bluff and back a referendum, not just on any new European treaty, but on the UK’s very membership of the union. It is an argument even Clegg used to advance.

Philip Stephens, the FT’s chief political commentator, made this call a few weeks ago in a provocative column (at least for a europhile) entitled Britain’s eurosceptics are right to call for a referendum. In it he argued:

Barring a euro break-up, Britain and its partners are now set on different courses. At some point the divergence will become unsustainable. The Tory sceptics may be right after all. There is a case for an in-or-out referendum. My guess is the sceptics would be sorely disappointed by the outcome. The voters are realists. Much as Brussels may irritate them, they know there is nothing splendid about isolation.

Now YouGov have done some polling that seems to back up Stephens’ conclusions, especially about the outcome of such a referendum. Read more

Kiran Stacey

Council and privately owned housesThe Commons is dead at the moment: with little legislation to debate and no mandatory votes left, many MPs have drifted away to their constituencies (or further afield) for Christmas. But the Lords has plenty to do, and peers are making their presence felt.

Last week, ministers were given a bloody nose when peers voted to nullify plans to cut housing benefit by up to 25 per cent for people who live in council houses with spare rooms. The department for work and pensions says the policy is designed to free up housing stock. A spokesman says:

It’s not fair that people to continue to live in homes that are too large for their needs when in England alone there are around five million people on the social housing waiting list and over a quarter of a million tenants are living in overcrowded conditions.

 Read more

Jim Pickard

My understanding is that “half a dozen” companies will be quizzed next week into their tax deals with HM Revenue and Customs.

Sir Andrew Park, a former judge, has been approached (but not quite appointed) to investigate the agreements that might have benefited companies including Vodafone and Goldman Sachs.

The news comes ahead of a report next Tuesday by the Public Accounts Committee of MPs which will raise serious concerns about the so-called “sweetheart deals”.

Margaret Hodge, chair of the PAC, said she couldn’t comment on the report yet but said:

“We have serious, serious concerns about this whole issue because there is a lot of taxpayers’ money at stake.”

Dave Hartnett, the most senior tax official, earlier this year admitted mistakes in Read more

Uwe Corsepius, EU Council’s secretary general

UPDATE: According to a British official, the UK has today been invited to participate in the treaty negotiations, a significant shift that will allow London to weigh in on some of the most sensitive issues to be discussed, including whether EU institutions will enforce the new pact.

Senior officials from European national finance ministries chatted last night in the first informal negotiations on the highly-touted new intergovernmental treaty to govern the region’s economic policy, though diplomats say little substance was discussed.

Ahead of the talks, however, Uwe Corsepius, the new secretary general of the European Council, sent out a four-page letter to negotiators in an attempt to set a roadmap for how the talks will proceed – and we at Brussels Blog got our mitts on it.

 Read more

Elizabeth Rigby

Nick Clegg yesterday made a very public display of engagement with business over Europe as the deputy prime minister convened a business breakfast with Business For New Europe, a pro-single market group. Mr Clegg, flanked by Vince Cable, Danny Alexander, Chris Huhne David Laws, wanted to get the message across that he had dusted himself down and was ready to begin work on rebuilding relations on the continent after a bruising week for Britain.

But beyond the photo shoot and crafted media message lines, was a second, more exclusive meeting between Mr Clegg and the director-generals of key lobby groups. This meeting wasn’t briefed out but was apparently a quite detailed debate about tactics going forward.

“We pooled intelligence and talked about how big inward investors want

 Read more

Jim Pickard

One could be forgiven for wondering if the “entente cordiale” has become the “entente vitriole” in the last few days.

Earlier today the governor of the Bank of France suggested that France did not deserve a downgrade by ratings agencies; at least not before the UK. Read more

Kiran Stacey

Ed Miliband started well at today’s PMQs, using David Cameron’s words from his 2011 New Year message to highlight the government’s failure to stop the rise in unemployment, which has hit a new 17-year high.

Miliband quotes the PM as saying: “What is uppermost in my mind is jobs,” before asking, “What went wrong?”

There then followed such a well-worn debate (“Unemployment is rising,” says Labour; “Here’s what we’re doing to tackle it,” say the Tories) that half the press gallery fell asleep during it. Read more

Jim Pickard

There are two rules for politicians during a period of economic uncertainty. One is not to claim to have seen “green shoots” too early; the mistake made by Norman Lamont (and arguably by Shriti Vadera). The other is not to talk the economy down even further.

Ken Clarke, the justice secretary, today referred to the strong possibility of “a prolonged recession, with a long period of youth unemployment.” He may be correct, of course, but the comment did not show the most deft of political touches. Read more

Kiran Stacey

Nick Clegg with Herman Van Rompuy

Nick Clegg with Herman Van Rompuy

Nick Clegg’s advisers like to call him the “Heineken” of British politics, because he reaches the parts of Europe that other British politicians can’t reach. Clegg, who trained at the College of Europe, learned at the feet of Leon Brittan, the famously pro-European Tory, became an MEP and speaks to leaders across Europe in their own languages, is ideally placed to try and win back some goodwill for the UK among European leaders.

And that is what he will try and do over the next few weeks and months. He told cabinet this morning that he now wants to focus on how to re-engage with Europe after David Cameron’s treaty veto, which has clearly angered many on the continent. Vince Cable specifically raised the issue of business fears about being cut adrift.

Tomorrow, the Lib Dem leader will host a series of meetings with business leaders  to try to soothe any worries they have on the UK becoming isolated from the rest of Europe, and to ask their views on Europe more generally. He will also attend a business breakfast arranged by Business for New Europe, a pro-EU group of corporate representatives. Read more

Kiran Stacey

One of the key achievements of Britain’s veto in Brussels on Thursday night was supposed to have been that not allowing the full 27 members of the EU to sign a treaty would have stopped the 26 countries willing to go ahead using the EU’s institutions to do so.

The main effect of that would be to stop the European Commission scrutinising other countries’ budgets, and the Euroopean Court of Justice implementing the Commission’s decisions. This would make it much harder for Brussels to interfere in the fiscal plans of member states. Read more

Kiran Stacey

Douglas Alexander has written a piece for the New Statesman trying to prise open the cracks in the coalition over Europe.

In the run up to this afternoon’s debate on the EU, during which Ed Miliband is expected to paint Cameron as isolated both at home and abroad, the shadow foreign secretary has invited the Lib Dems to work with Labour to get the UK back into the heart of Europe.

He writes:

The roots of what happened on the night of Thursday 8 December lie deep in Cameron’s failure to modernise the Tory party. Just because he puts party interest before the national interest, there is no reason others should do the same. That is why I make a genuine offer to Liberal Democrats to work with us to try to get a better outcome for Britain, between now and when this agreement is likely to be finally tied down in March. Work can and should start immediately both to win back friends and allies and to consider what rules and procedures can avoid Britain’s further marginalisation.

 Read more

Jim Pickard

One of the most interesting lines to come out from Vince Cable’s statement today on the Green Investment Bank is the sheer number of cities vying to host the new entity, which will have £3bn of capital to invest in renewables.

We already knew about Edinburgh, Leeds and Bristol. The business department has now put out a much longer list today, made up of: Read more

Jim Pickard

Ed Balls has given an interview this morning to the FT where he accuses European leaders of “catastrophic failure of leadership“, warning that the debate over Britain’s isolation should not obscure the wider danger to the eurozone.

This is politically significant as it implies that the shadow chancellor is aware of the fact that the British public rather enjoys the sight of the prime minister “standing up” to Brussels. A poll by Populus for the Times this morning suggested that 14 per cent of the public disagree with Cameron’s stance while 57 per cent agree.

Thus Balls’ focus more on the fact that the eurozone crisis has not been tackled; for example the summit has not yet addressed the role of the EC in heading off the Read more

Kiran Stacey

Nicolas Sarkozy avoids shaking David Cameron's hand

Nicolas Sarkozy avoids shaking David Cameron's hand

So Britain has isolated itself in Europe by refusing to sign up to a deal to save the eurozone because other countries refused to give the UK specific safeguards to protect the single market and the City of London. Tory backbenchers are delighted, but what does the pro-European Lib Dem half of the coalition make of it?

Anyone expecting a massive bust up at the heart of the coalition will have been dismayed to read Nick Clegg’s statement this morning. The deputy prime minister said:

The demands Britain made for safeguards, on which the Coalition Government was united, were modest and reasonable. They were safeguards for the single market, not just the UK.

What we sought to ensure was to maintain a level playing field in financial services and the single market as a whole. This would have retained the UK’s ability to take tougher, not looser, regulatory action to sort out our banking system.

 Read more

Kiran Stacey

Sitting in the Commons chamber for business questions today, I was startled to hear an apparently frank admission from Vince Cable to a question from Gordon Banks, the shadow business minister.

Other ministers (including the chancellor) have insisted that Project Merlin, the deal between the government and the banks to increase gross lending to businesses, has been a success. But Cable apparently disagreed.

Here is the full exchange: Read more