This week’s meeting of the cabinet was a robust occasion, with heated argument across the long lozenge-shaped table in Downing Street. Eric Pickles was criticised for failing to transform the planning system quickly enough; Caroline Spelman was taken to task for failing to push back on an EU habitats directive; there was a lengthy debate about whether Vince Cable’s department has done enough to get help to small businesses. We described the occasion as a kind of “star chamber” in our FT coverage. I’m also told there was a discussion over whether the coalition should abandon its pledge to be the “greenest government ever“, although the details on who said what are a bit sketchy.
One issue which came up was infrastructure, and whether the coalition is inching towards Osborne’s grand plan to get £20bn of pension fund money into public and private schemes in transport, energy, communications and so on. Apparently the chancellor asked why progress is not faster on the A14 upgrade – a key arterial route connecting the port of Felixstowe with the rest of the country. The process of getting in private funding to build a new toll is moving slowly, with publication of options not until this summer.
I’m not sure whether a rather bigger macro-issue was discussed; new EU rules which could effectively force insurers and pension funds (ie the entire institutional universe) to reduce their allocations to alternative asset classes – including infrastructure. I’ve explained it in today’s FT on page 3. It’s a bit technical but the overarching consequences should be of serious concern to Osborne. Don’t forget; infrastructure was a major plank in his autumn growth plan. Watch this space.
John Cridland, head of the CBI, sums it up thus: “The ability of pension funds and insurance companies more generally to play a role in infrastructure could be really screwed up,” he warns.
Meanwhile Osborne is almost certain to ignore calls to drop the 50p rate, a move which would be politically suicidal for the coalition. Instead he will target the rich with action against tax-avoiding purchasers of expensive central London residences, as I explain today.
Any idea that the Tories and Lib Dems are on the same page re how to achieve economic growth is undermined by today’s revelation by Beth Rigby that the Lib Dems have forced a delay in a a review into scraping employment rights for workers until after their spring conference.
Will Labour take advantage of any confusion over economic policy within the coalition? Not necessarily when Ed and Ed are in disharmony over both banker-bashing and deficit reduction. We brought you the scoop a few days ago; in case you missed it here’s the link.
Jim Pickard
Kiran Stacey