Monthly Archives: January 2012

Jim Pickard

You can read our full story here on ft.com about Fred Goodwin losing his knighthood. Here is my backgrounder on other well-known names who lost their honours.

Meanwhile here is the Cabinet Office statement:

It will soon be announced in the London Gazette that the Knighthood conferred upon Fred Goodwin as a Knight Bachelor has been cancelled and annulled.

This decision, not normally publicised in advance, was taken on the advice of the Forfeiture Committee, which advised that Fred Goodwin had brought the honours system in to disrepute.

The scale and severity of the impact of his actions as

 Read more

Jim Pickard

I wrote in this morning’s FT about how Lord Mandelson has sidestepped a new requirement for peers to disclose certain business clients after exploiting a loophole in the system. As I wrote:

He had been expected to be among a wave of peers to publish a full list of their clients under new rules voted through the House of Lords last November.

But the former Labour business secretary has avoided any need to do so after simply moving his advisory firm, Global Counsel, from one category to another on the Lords register.

The company was previously registered under Mandelson’s name under “category one”, indicating a directorship.

But by shifting Global Counsel to “category 2”, which covers “remunerated employment”, Lord Mandelson no longer strictly has to provide this information.

 Read more

Kiran Stacey

Government ministers have had to get used to an unusually truculent House of Lords in the last few weeks, as I wrote about last week.

Both the health and welfare bills might have to undergo serious change if they are to pass the upper house in time for the Queen’s speech.

But peers are also debating another important bill at the moment: the legal aid bill. And that could end up being yet another source of tension. Read more

Jim Pickard

We wrote this morning about the Tory backlash to Nick Clegg’s speech in which he called for an acceleration of the personal tax allowance – which is currently pencilled in for 2015.

One way to interpret his words was a further attempt by the Lib Dem leader to stamp his brand over the tax giveaway, one of the few pleasant fiscal moves of recent years. (Although how progressive the change is has been the subject of debate.) The Lib Dems have been tacitly authorised to “own” the personal allowance issue – just as the Tories have ownership of scrapping the 50p rate. The difference is that raising the allowance is part of the coalition programme and scrapping the highest income tax rate is not.

But is Clegg being realistic by suggesting that the move could be hastened even further? Nowhere did we hear any mention of the potential extra cost yesterday of accelerating an already expensive (£4bn) plan.

Today there are two figures knocking around – £1.5bn in the FT and £9.5bn in the Times.

Neither is wrong; they are just based on different calculations as to what might happen. (The Treasury estimates that each increase of £100 in the allowances costs just under half a billion pounds).

The Times calculation is based on the tax change happening in full Read more

Jim Pickard

Ed Miliband has done an interview with Paul Waugh in the House magazine: there are a few interesting nuggets.

The Labour leader has dismissed the idea of a new Royal yacht, at least with any public money. He says that the “welfare state is too inadequate in some parts” – such as child care, elderly care and social care. Read more

Kiran Stacey

Harrier jump jetsAn additional 3,000 civilians will be axed from the Ministry of Defence after ministers realised the department’s “black hole” – the gap between revenue expectations and spending commitments – was bigger than previously thought.

This “black hole” has become one of the government’s most effective examples of Labour profligacy versus coalition (especially Conservative) fiscal discipline. But in truth, we’ve never really known how big it is or how close it is to being eliminated.

It is generally reckoned that when the coalition came in, there was a £10bn gap that needed closing over the course of the parliament, but the total overspend on existing projects could eventually be as high as £38bn. Read more

Jim Pickard

Nick Clegg is making a speech today where he will call for the £10,000 personal tax allowance to be accelerated faster than its 2015 target – indicating that the wealthy will be squeezed in the Budget to pay for this.

This threshold policy is clearly branded as a Lib Dem policy; the 2011 Budget saw a significant lift of the figure by some £630 or so. Party strategists believe that it is an easy concept for the public to understand and casts them in a positive light. Read more

Kiran Stacey

David Cameron was asked in today’s prime minister’s questions about the critical report from the government’s auditors on the government’s flagship back to work scheme.

The National Audit Office warned that providers of the £5bn Work Programme are working to overly-ambitious targets which they might not meet. They believe that out of the group of people who are easiest to get into work, only just over a quarter will be successfully placed. That compares to government estimates of 40 per cent.

The prime minister tried to brush off the problem during PMQs, sayign the risk was not to the taxpayer, but to the providers themselves:

The basic point is the Work Programme is not putting the taxpayers at risk, it is putting providers at risk. It is about payment by results, it is about getting things the previous government never did.

 Read more

Kiran Stacey

It was no surprise that Ed Miliband led on the economy today, on the day that GDP figures showed a drop in output in the last quarter of last year.

The Labour leader’s questioning was more effective than usual. He has a new line that looks like it could pay off:

He and his chancellor are the byword for smug, self-satisfied complacency.

It certainly gives us all some relief from the previous ubiquitous epithet Labour applied to the prime minister and his party of “out of touch”. Read more

Jim Pickard

This morning’s legal decision against Chris Huhne’s department, DECC, may serve as a welcome distraction for the energy secretary given his other thorny issue.

(He is of course awaiting a decision by the Crown Prosecution Service as to whether to prosecute him over allegations that he asked his former wife to take speeding points on his behalf.)

Then again it may just add to the pressure on the beleagured Lib Dem cabinet minister.

Solar companies are today celebrating victory over the government after the Court of Appeal upheld an earlier legal decision that recent cuts to household solar subsidies were illegal.

Three Court of Appeal judges ruled that parliament did not have the power to make such a modification “with such a retrospective effect.”

The government must now pay costs for the solar industry and has been refused permission to appeal.

It will also have to pay its original higher subsidy for customers who installed panels between early December and the start of March – a cost which could run into tens of millions of pounds in the long term.

The verdict is in some ways a Pyrrhic victory for the industry as solar subsidies will still be halved as of March 3. But companies which would have seen their subsidies Read more

Kiran Stacey

When countering claims from charities and campaigners that the government’s proposed benefits cap would push people into homelessness, Iain Duncan Smith, the work and pensions secretary, made a fairly eye-catching claim. He told the Today programme:

The [definition of homelessness] that’s used by the pressure groups is that certain children would have to share rooms.

Well, most of your listeners would find that astonishing. For them homelessness is not having any kind of accommodation, reasonable accommodation, to go to and being on the street. I can guarantee that is not going to happen.

This was surprising: did charities such as Shelter really think homelessness means children sharing bedrooms? The answer to that is no – as Shelter’s strongly-worded riposte makes clear. Campbell Robb, their chief executive, said this afternoon: Read more

Jim Pickard

Journalism is the first draft of history, not the last. For a good example it’s worth turning to the first few months of Gordon Brown’s regime, which were described almost universally as a brilliant example of political leadership – as the new PM tackled floods and whatever else. In retrospect this was a rather generous verdict.

And according to the journalistic narrative, Ed Miliband has had a catastrophic start to 2012. Just awful. The Labour leader is up to his armpits and flailing, such is his predicament. Such is the verdict from many of our most learned commentators of late. Read more

Kiran Stacey

I wrote in today’s FT about how Labour’s Lords operation has helped delay or even stall several significant government bill in the upper chamber, including the health, welfare and legal aid bills.

Today, it is the welfare bill that is in question, with Labour, the Lib Dems and crossbenchers lining up to vote for a range of amendments that would change plans to impose a £26,000 cap on overall benefit payments for any one family.

As I mention in my piece, part of the reason the government has already suffered four defeats on this bill is that the opposition whipping operation, led by Lord Bassam, has been particularly effective. Labour has drummed up a core of Lib Dems and crossbenchers willing to oppose the coalition on a whole raft of measures, and is inflicting some real damage.

Now minsters will either have to make significant changes to the bill in the Commons or hope they can simply face down peers if it is going to pass in time for the Queen’s speech, which will probably be in May. Read more

Jim Pickard

Friday will see Mark Harper, Cabinet Office minister, unveil a consultation on a statutory register of lobbyists – with the potential for many other groups (unions, law firms etc) required to sign up. I’ve written the news story here.

More quietly, however, a major change is taking place at the House of Lords where officials are tightening up their disclosure criteria on the “register of interests”. Read more

Kiran Stacey

George Osborne with Jun Azumi, the Japanese finance minister

Osborne with Jun Azumi, Japanese finance minister

George Osborne has been in the far east this week – probably the best place to be when the IMF announced it would ask member countries for an extra $500bn in funding. This would probably involve another €30bn from the UK – a request that would have to be approved by parliament.

This request is tricky for the chancellor. He wants to play his role as a responsible world leader and help the Fund fight the various economic crises gripping global markets – after all, a collapse of the eurozone (for instance) would have serious implications for the UK too.

The problem is, his own MPs see this as a backdoor bailout for the eurozone. They say that as the UK is not a part of the currency bloc, it shouldn’t be forced into rescuing it when it fails. And Cameron and Osborne have both made much political capital out of not signing up to the expanded European rescue fund, the EFSF. Many Tories therefore see this as both a cop-out and hypocrisy. Read more

Jim Pickard

There is a Parliamentary report out today into Jack Dromey, Labour MP for Birmingham Erdington, over his failure to register payments from Unite. Dromey is of course Mr Harriet Harman.

Dromey, former deputy general secretary of Unite, was paid by the union from May 2010 to October 2010 (while an MP) and failed to register the payments or on several times declare his interest in debates. Read more

Kiran Stacey

Ed MilibandIt was sensible of Ed Miliband to tackle the prime minister over unemployment at prime minister’s questions today. No matter what the coalition says about falling interest rates, if people keep losing their jobs, the government’s robust position in the polls (if not quite a lead) is not going to last very long.

Miliband has tried to recreate a narrative from the 1980s: that the callous Tories don’t care about people losing their jobs. It’s not quite working yet, partially because voters still believe the government is clearing up Labour’s economic mess and partially because the 1980s are a fading memory. At one point, the Labour leader even had to explain who he meant by one reference to Lord Young, the former Tory employment minister, who is back working at Number 10. Read more

Jim Pickard

The FT splashed back on November 18 about the government’s new enthusiasm for a Thames estuary airport with ministers such as George Osborne taking the plans seriously for the first time.

We revealed that the proposal would be part of an interim report on aviation published this March*:

Submissions have already been made to the transport department for an aviation review, which should produce an interim report in March next year and a final report in the spring of 2013. “The concept of a Thames estuary airport forms a useful contribution to the debate and will be considered alongside all other responses,” the Department for Transport said.

The BBC is now all over the story, which has resurfaced on the front of the Daily Telegraph.

Key to the project is Steve Hilton, who shares Boris Johnson’s enthusiasm for the visionary plan to build a new airport hub in the estuary; it could either be at”Boris Island” or on the nearby Isle of Grain as suggested by Lord Foster, the architect.

We also wrote this analysis, which laid out some of the technical issues surrounding the plan. In theory the new hub would be applauded by business leaders, who are worried that Britain will run out of aviation capacity within the next two decades; Heathrow is almost full already. The coalition’s promise not to build a third runway at Heathrow is the reason why ministers are now casting around for more radical ideas.

The potential obstacles to an estuary airport include:

1] The cost: At around £50bn this is an awesome sum to be considering at a time of fiscal austerity – although it would be spread over many years.

2] Environmental issues. Would the new airport breach Britain’s future carbon pledges? Would geese pose a danger to jets by flying into engines?

3] What do you do with Heathrow? If it’s closed down BAA would require compensation estimated at £12bn. If it’s kept open then traffic to the new estuary hub could be slow at first. (This is what happened when a new Malpensa airport was built at Milan).

4] There are suggestions that Dutch or Belgian air authorities would not accept planes flying through their airspace en route to the hub.

One entirely separate obstacle which has emerged in today’s Telegraph is the hostility of the Lib Dems towards the estuary project.  It’s easy to forget but the party entered the general election with a commitment to no airport expansion at all in the south-east. And that remains their point of view. The Libs hope that HS2 could reduce future aviation demand – a theory which doesn’t really fit with the DfT’s predictions for where high-speed passengers will come from.

The environmental and cost implications mean we don’t the estuary project is viable even in the long-term,” a senior Clegg aide tells me today. That sets up the coalition for a battle when this comes to a head; not necessarily this March but definitely in March 2013 when the final aviation report is published.

* If you’re interested in the technicalities: There was a scoping document last Read more

Kiran Stacey

Last week, we were told that the UK government believes the Scottish parliament does not have the legal right to hold its own referendum on independence.

Since then, debate has focused on what the legal consequences would be if Alex Salmond pushed on and held one anyway: would it be regarded as “consultative”? Would the UK government challenge it in the courts? If so, would that look like London bullying Edinburgh?

Today, Jim Wallace, the former deputy first minister and Lib Dem leader in Scotland, has intervened in that debate, using some pretty strong language to try and head off the possibility of Salmond simply going ahead and holding his own referendum. In the most striking passage, Wallace says that to do so would be not just illegal, but undemocratic: Read more

Jim Pickard

This won’t come to a head until the summer; but rebellion is already in the air among Lib Dem MPs over coalition plans to regionalise public sector pay. Several have told us they believe the idea is “stupid” or “unsound” and “should be resisted” because it could accentuate the north-south divide.

George Osborne has written to six pay bodies to report back by July on how the idea might work; the Tory chancellor believes it could help the economy. (The theory is that if the state offers higher wages in poorer areas then companies have a smaller pool of available talent). Tory MPs – even in the north and south-west – seem to think it’s a great idea. But the Lib Dems fear it could have the reverse effect, causing a “race to the bottom” as companies follow suit and cut their pay to match the public sector. Read more