Monthly Archives: August 2012

David Cameron insisted at the start of August that he would press ahead with a vote next year on constituency boundary changes – despite Nick Clegg’s vow to block the measure.

It is a very sensible proposal and it will be put forward,” he declared, to widespread scepticism.

That firm line belies the belief in Tory circles that the boundary reforms – which would have helped the party’s chances at the next election – are now dead in the water. The plans were doomed the moment that the party abandoned Lords reform.

One rumour circulating right now is that Tory high command is already preparing to pick candidates for the next general election, as early as November, and that they will be on the old boundaries.

That would be interpreted widely as a signal of Cameron throwing in the towel.

I put the question to CCHQ which at first denied the theory and then refused to comment.

There is one argument as to why this would not necessarily mean Read more

David Cameron faces a backlash from 2m voters living under the Heathrow flight path if he “betrays” them by authorising the expansion of the airport, Zac Goldsmith has warned.

The Richmond MP, widely seen as the green conscience of the Tory party, told the Financial Times that voters in west London would punish the coalition at the ballot box if ministers reneged on their promise not to allow a third runway.

Goldsmith said that the renewed pressure on the government to change its course was “scaremongering” given that Heathrow already had more flights to business destinations than any other European airport.

“Simply calling on government to double the size of Heathrow is lazy half-thinking by people who ought to know better, but who have been captured by

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Nick Clegg yesterday came to the defence of embattled transport secretary Justine Greening, insisting that there would be no change to Heathrow policy before 2015. Here is our story in today’s FT.

We wrote that Maria Eagle, shadow transport secretary, has invited the government to open cross-party talks to try to thrash out an alternative to Heathrow. Philip Hammond, the previous transport secretary, was poised to agree to such talks just before he was moved to the MoD nearly a year ago.

Labour is opposed to the third runway at Heathrow (Ed Miliband nearly resigned over the issue when he was energy secretary) although some senior figures such as Ed Balls and Lord Adonis are in favour.

Here is the letter:

Rt Hon Justine Greening MP
Secretary of State for Transport
Department for Transport

28th August 2012


I am writing following your interview on Radio 4’s Today programme this morning and, in particular, your comments on a cross-party consensus on

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Nick CleggNick Clegg took many by surprise this morning by appearing in the Guardian calling for an emergency, temporary tax on wealth to help pay down the deficit. Why make the call publicly, when he’s a senior member of the government that decides whether this happens or not? And why now, so far away from Budget time?

The obvious answer is that this is not a thought-through policy proposal, but merely a bit of positioning to cheer the troops ahead of next month’s party conference. It will not happen, say many (including the BBC’s Nick Robinson), so there is no need to worry about what Clegg actually means.

But, that analysis ignores a couple of things. Read more

Breaking news: Statement by Virgin Trains Limited re West Coast Main Line franchise

“Virgin Trains Limited (VTL) has today commenced Court proceedings in respect of the
decision to award the West Coast Main Line franchise to FirstGroup.

We have tried for three weeks to get clarity over the Department for Transport’s decision
and to have a number of key questions answered. On each occasion we have been refused

We are left with no choice but to commence Court proceedings as we believe the
procurement process has ignored the substantial risks to taxpayers and customers of
delivering FirstGroup’s bid over the course of the franchise.”

In addition it has ignored the DfT’s own assessment that VTL’s bid was more deliverable and
a lower risk. We question whether FirstGroup’s bid has been correctly risk adjusted by the
Department given all of its supposed incremental value is delivered after 2022.

The current process is geared to selecting the highest risk bid and needs to be
independently audited to prevent a repeat of former franchise f

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Would Ed Balls as chancellor have a more functional relationship with prime minister Ed Miliband than Gordon Brown, his mentor, did with Tony Blair?

It is something that people are starting to ask, however prematurely: there are still three years to go before the general election. But the question is not without good reason.

I revealed back in June that Miliband rejected Balls not once but twice to be shadow chancellor. On both occasions he tried to get his brother David to fill the role, unsuccessfully. When Alan Johnson quit after just a few months in the post Miliband was left with no option other than hiring his onetime Treasury rival. Read more

Sir Richard Branson showed his genius for fuelling a story today when he offered to run the West Coast line for several months without making a profit to let ministers have more time to review their decision to strip the franchise from his company Virgin Trains.



Sir Richard Branson

Sir Richard Branson

Writing the the Sunday Telegraph, Sir Richard said:

It is far better for MPs to have the chance to debate the issues, and question ministers on the detail before the decision is finalised. To assist in this process, there should be an independent audit of the department for transport decision to ensure it has been based on correct criteria and reliable forecasting of customer numbers, revenue and payments to government.

If this process means extending the current franchise beyond December for a few months, I and my partners at Stagecoach would happily run the extended franchise on a not-for-profit basis, or donate profits to charity. We must ensure that this crucial decision is taken with all the facts correctly assessed and understood.

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Asil Nadir

Asil Nadir

The row about what should happen to the money given to the Tories in the 1980s by the convicted fraudster Asil Nadir rumbles on. In this morning’s Mail, Lord McAlpine, the former Tory treasurer, said keeping the money would “taint” the party. He said:

It shames the Conservatives if they hang on to it. They have a moral duty to give it back.

He turned the screw on David Cameron himself:

The Tory Party has a duty to return it. It will speak volumes about the character of the modern Tory Party if they don’t do the right thing. I trust that David Cameron is an honourable man.

The former tycoon boasted in the 1990s of having given over £1m to the Tories,  but the party says the money came from his company Polly Peck, and had not been stolen. They say this despite reports of a 1993 document from the accountants Touche Ross to Tory HQ which said £365,000 had been stolen.

I have been talking to several Tory MPs today and it seems all this wrangling over the cash is starting to make them uneasy. Two of them said they wanted the party simply to bite the bullet and hand the money back before the row got worse. One told me: Read more

The issue of whether to grant permission for a third runway at Heathrow is starting to become a festering sore for the Tories. Although coalition policy is not to allow it, pressure has been building for a while on the party to commit to reversing that decision if they win a majority in 2015.

David Cameron and George Osborne have been quietly persuaded that a u-turn in party policy is needed, but are unwilling to make that their public stance until 2015.

Willie Walsh

Willie Walsh

In the meantime the aviation industry is getting impatient. Willie Walsh made his frustrations clear in an unusually outspoken and personal attack on the PM in the FT this morning. The chief executive of International Airlines Group, which controls BA, called the lack of progress a “disgrace”. He added:

I don’t believe this government has the political will to address the issues. David Cameron seems a lot happier clapping and cheering for gold medals than dealing with tough, long-term economic challenges.

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Nick Clegg on the campaign trailLib Dem strategists are fond of telling reporters their assumptions about a Lib Dem collapse at the 2015 election are wrong. The theory goes that there are many more LD-Tory marginals than there are LD-Labour ones, and in those seats, Tory voters will be happy to back a Lib Dem to keep out Labour.

Lib Dem HQ hopes that by going into coalition and signing up to the stringent departmental spending cuts they will combine their traditional strength in local campaigning with a new level of trust to be a party of national government.

The argument is questionable: will Tory voters really back then Lib Dems, especially as the two parties go into the election playing up their differences to appeal to their core voters? And won’t lots of left-wing voters cross over to Labour, even if they know it means letting in the Tories, since many view the Lib Dem as just as bad as their Tory counterparts? Read more

BonfireWe learned this morning of the latest progress in the so-called “bonfire of the quangos”, the sharp cuts to semi-governmental bodies being carried out by Francis Maude, the cabinet office minister.

As the BBC reported:

More than 100 quangos have been axed and a further 90 merged into other bodies since the coalition came to power, ministers have said.

Cabinet Office minister Francis Maude said the cull of publicly funded agencies was on track to save £2.6bn by the end of this Parliament.

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There have been moments in Oliver Letwin’s political career when it did not look as if he would ever emerge as the intellectual powerhouse of a national government.

There was his time at the Downing Street policy unit in the 1980s, when he helped devise the disastrous poll tax. There was the time, more recently, when he shed official documents in a bin in St James’s Park. In 2001 he had to go into hiding ahead of the general election after admitting he wanted to cut £20bn of taxes, far more than his party’s official position.

In fact Letwin has so many verbal slips to his name that George Eaton at the New Statesman has a handy guide to his top 10 gaffesRead more

Danny Boyle's tribute to the NHS at the Olympics opening ceremony

Danny Boyle's opening ceremony tribute to the NHS

The Times and the Independent both broke an interesting story this morning about government plans to set up a body to promote NHS expertise across the world as a way of making money for the domestic health service.

The Independent reports:

Some of Britain’s best-known hospitals are being lined up by the Government to export the “NHS brand” around the world and set up profit-making branches overseas to boost their incomes.

Under a radical plan to be launched this autumn, officials from the Department of Health and UK Trade and Investment will come together to act as a “dating agency” between hospitals that wish to expand overseas and foreign governments with a demand for British health services.

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As I reported today, the Treasury is looking seriously into the idea of adopting German-style “mini jobs”, a scheme long championed by free market Conservative MPs. The model is that workers can earn up to €400, or £314, tax free each month, while their employers benefit from flexible labour with minimal bureaucracy: they pay a flat rate of wage taxes, insurance and pension contributions.

It is easy to see why companies and jobseekers might be clamouring for the government to pick this up, but there is actually a serious political case as well. Tories who were frustrated by the Liberal Democrats’ opposition to radical labour market reforms put forward by Adrian Beecroft have been calling for ministers to come forward with some new deregulation measures for some time.

The Lib Dems themselves are keen not to be seen as too obstructionist on this issue given the drive for growth, and party officials have assured me that they are not pushing back against the mini jobs idea. Could this be the middle way? Read more

Alex Salmond with David CameronIt has been assumed in Westminster for several months now that the Scots will get an independence referendum, and it will happen in 2014. But mutterings are beginning to emerge that this may not happen at all - and here is why.

After David Cameron signalled he was willing to give way on his preferred date of 2013, the only things left to work out were supposed to be who got to vote and what the question would be.

The first of those points of tension looks close to being settled. Number 10 this morning all but admitted it was willing to let 16- and 17-year-olds to vote in the referendum if the SNP insisted on it. When asked if allowing this to happen would set a precedent for general elections, a Downing Street spokesman said:

These are two different things. One is a referendum on the independence of a nation which is an irreversible decision. The other is an election for the government, which can be reversed after five years.

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George Osborne

George Osborne

This morning’s papers are not going to make comfortable reading for George Osborne (not the first time we’ve said that recently…).

The Guardian has splashed on a story in the New Statesman that several of the 20 economists who signed a letter in 2010 backing the Osborne deficit reduction strategy had now changed their minds. The story was picked up in other papers too.

But of greater political significance is the piece I wrote in this morning’s FT about how the first fissures are starting to show in the joint coalition commitment to Plan A. Three Lib Dem MPs went on the record to say they wanted the chancellor to be more flexible with his   spending plans, and allow the deficit reduction targets to slide in order to pay for a short-term stimulus. Read more

Boris Johnson has threatened a rift with senior Tory colleagues by condemning the government’s aviation policy as “totally mad” and urging ministers to proceed faster with new economic growth measures.

The mayor of London, buoyed by strong poll ratings and a successful Olympic games, made the forthright comments in a newspaper interview on Wednesday. His observations left colleagues visibly irritated, with Iain Duncan Smith, welfare secretary, saying it was nonsense to suggest that the prime minister was simply sat “twiddling his thumbs” in Downing Street.

Despite hugging one another at an event during last week’s Olympics, relations between David Cameron and Mr Johnson are uncomfortable, not least because the latter is now the grassroots favourite to become the next leader of the Conservative party.

In his latest outspoken interview – in the Evening Standard – the mayor urged the government to “stop pussyfooting around” and get started on a clutch of new Read more


Sir John Vickers

Sir John Vickers

I revealed in this morning’s FT that Nick Clegg and Vince Cable want to reopen talks on how to put the Vickers recommendations on banking reform into law.

When the commission led by Sir John Vickers first set out its proposals, the government accepted most of them – most significantly that banks’ retail operations should be ringfenced from their investment banking side.

But the banks won two crucial victories in their attempts to water down these proposals. The first was that the government scrapped the Vickers recommendation that ringfenced banks should have stricter standards on how much equity they had to issue compared with their assets. The second was that ministers allowed for interest-rate and currency swaps to be sold from within the ringfenced arms of banks, putting them in the same category as ordinary loans and making them cheaper and easier to sell. Read more

Last Saturday I revealed that Danny Alexander will use the Lib Dem conference to articulate his differences with Tory partners over green energy and employmeng legislation.

The event is likely to see many more moments of differentation, and not only from the usual suspects such as Tim Farron or Vince Cable.

On transport, too – and in particular aviation – the Lib Dem motion at conference is a reminder of the gulf between the two parties on issues of policy.

While the Tory leadership (if not transport secretary Justine Greening) has swung behind a third runway at Heathrow, the Lib Dems are determined in their opposition to the scheme.

The motion says that Heathrow is “extremely badly located” and repeats that the Lib Dems remain “strongly opposed to the third runway“.

It repeats the coalition rejection of new runways at Heathrow, Stansted or Gatwick. It then goes further and voices opposition to mixed-mode at Heathrow, which the Tories are keen to push as an interim measure for the next three years.

(I revealed on July 1 that the coalition has put any aviation decision into the long grass until 2015 and that the Tories will not mention Heathrow in their manifesto to enable a U-turn in the next Parliament.)

The Lib Dem motion, from backbencher Julian Huppert (who has a Read more

Last week, Sir Merrick Cockell, the head of the Local Government Association, made some interesting comments about how the government provides public services. In an interview with the FT, he warned ministers not to assume that the private sector was necessarily best.

He said there had been a period when “public bad, private good” had “almost been a mantra”, accompanied by a belief that “the right way for local authorities to do things was to outsource everything”.

He added:

I hope we’ve moved beyond that, because there are very good cases for outsourcing. There are even stronger cases for testing a service properly to see whether it’s the right service to outsource, to see whether there’s a mature market out there that may be suitable to tender against it and then properly to reach a conclusion that there is, or there isn’t.

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