Westminster blog

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.

Clegg is determined to remove from Ed Miliband the mantle of “champion of the squeezed middle“, although he uses slightly different rhetoric like “alarm clock Britain”. It’s an easier marketing sell in opposition than in the cabinet, however.

And how will he pay for the increased personal allowance? For now that is the big question. It’s easy to talk about tax avoidance – and measures are being taken to crack down on this – but less obvious that it will reap the desired windfalls. Meanwhile the economic slowdown does not point to higher tax receipts in the coming months. Inflation automatically lifts the allowance by a certain amount, but not as far as Clegg would like.

It’s easy to forget but back in November Clegg said some similar things about how the rich would be the ones mainly paying for measures in the growth review such as a £1bn fund for getting people back to work:

Over the last year and a half we’ve increased capital gains tax, we’ve slapped on a big bank levy, we’ve made sure that the loopholes that the wealthy enjoy are closed and we will have more of this kind of thing to make sure that the people with the broadest shoulders pay their fair share.

Perhaps unsurprisingly this was seen as a signal that the growth review would be progressive in terms of who had to pay the most. The end result, however, was that changes to tax credits (which support those in the “squeezed middle”) cost around £1bn while a small change to the bank tax is set to raise only a few hundred million pounds.

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

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”.

Lord Mandelson will be among scores of peers forced to disclose their business clients for the first time under this quiet rules change.

The Lords authorities have written to about 90 peers, including the former Labour business secretary, asking them to identify the clients of their consultancies.

Brendan Keith, registrar of Lords’ interests, told the FT that the current “loophole” would be closed under which peers only had to name the advisory companies they owned or worked for – and not their clients.

Some members had been “mystified” by the new disclosure rules, which have to be obeyed by January 27, said Mr Keith.

The changes are part of a broader amendment of the code to oblige greater transparency from peers: “The philosophy is one of disclosure and openness,” he said.

Lord Mandelson, who was European trade commissioner before returning to a senior role in Gordon Brown’s government, has set up a ”strategic advice consultancy“ called Global Counsel. WPP, the marketing group, is an investor in the company.

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.

The report by the Committee on Standards and Privileges acknowledges the MPs’ co-operation and repeated apology. But it goes on to say that it might have ordered him to apologise to the Commons – in a personal statement – if he was not an inexperienced MP.

The committee accepts his written apology but add:

“We restrict ourselves to accepting Mr Dromey’s offer to apologise by way of a point of order on the floor of the House for his failure to declare interests…”

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

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.

There are also enormous difficulties in how you implement this idea; people in Downing Street and the Treasury fear a backlash if they immediately cut pay. There are also concerns about freezing pay in poor areas while lifting it in affluent areas. That may leave the much smaller option of only introducing the system for new hires; but even that would result in a two-tier labour market, which would also be controversial.

Here’s a link to our full story this morning.

I’m not entirely sure that the potential merger between PCS and Unite has been confirmed before by any senior figure from either union: until today. Mark Serwotka, head of the PCS, told us in an interview today that he wanted to deepen the “ever closer developing relationship” the pair had formed since signing a co-operation deal a year ago. He also pointed out that his union had a similar deal with Unison which had not gone so well.

There are wider political consequences. While both unions are not in formal merger talks, as Serwotka made clear, any future deal would be of great concern to the Labour party. Why? Because Unite, with about 1.5m members, is the party’s biggest donor. The PCS, with nearly 300,000 members, is a vocal critic of the party for its relatively centrist approach.

Some Labour MPs have already woken up to the possibility that Serwotka could be deputy general secretary of a merged union – and therefore a potential successor to current leader Len McCluskey. That would not necessarily mean an end to Unite’s donations to Labour (there are precedents for having separate political funds in merged unions). But it could make the uneasy relationship between the afiliated unions and Labour much more tense.

Meanwhile the PCS is mulling the idea of fielding election candidates in by-elections and general elections, although this would be limited to just a handful of people. Serwotka wants PCS people to be put up in instances where there are no other candidates from the left.

It’s a common assumption that without Scotland the Labour party would be eternally doomed, unable to ever get another majority in a Disunited Kingdom.

As Peter Oborne wrote yesterday in an otherwise excellent Telegraph column about the union:

This discrepancy has become so marked and so permanent that most political scientists calculate that Labour could not form a government without Scotland, meaning that independence would open the way to Tory control at Westminster into the foreseeable future.

The reality is in fact rather different, according to psephologists I talked to earlier in the week. There is no doubt that the Tories would benefit, given that they have one solitary MP north of the border (David Mundell) – while Labour has 41 out of 59. You don’t have to be a maths genius to work out that it would be bad for Ed Miliband’s party.

The reshifting of the political techtonic plates is accentuated by boundary changes which will remove an estimated 28 Labour MPs and only 7 Tory MPs, according to Anthony Wells at YouGov.

And yet.

John Curtice, professor of politics at Strathclyde University, tells me that while it would be harder for Labour to win it would not be impossible. According to Professor Curtice, Labour would still have won in 1945, 1950, 1997, 2001 and 2005.

In February 1974 there would still have been no majority but the Tories would have nudged ahead of Labour. Eight months later, Harold Wilson’s majority of three would have been obliterated.

In 2005 Labour’s majority of 66, already down steeply from 167 at the previous election, would have been halved – but Tony Blair would have still edged it.

I’ll gloss over his cruel treatment by John Humphrys on Today, his 35-minute-late arrival at his own press conference and the hostile questioning by some journalists today.

On matters of substance, did Ed Miliband offer up any new policy?

There was a new idea; forcing energy companies to put elderly customers on their cheapest tariffs. This would apply to all over-75s, many of whom fail to shop around or don’t have internet access.

It’s quite a smart policy and wouldn’t cost the government anything. (Although energy companies are likely to complain that it could impact on their investment plans.) In practice it could also mean other people’s energy bills rising, but for now Miliband was able to deny that potential consequence.

The move follows on from plans, announced at conference, to limit the power of Britain’s “big six” energy companies by stopping them from producing gas and electricity and selling it themselves. (Instead, all their energy would go into a central pool, allowing supermarkets and others to enter the supply market.)

For those who thought that the keynote conference speech about “predators v producers” was too vague, this kind of detail should be welcomed. (We’ll ignore the point that Miliband did little to address these issues as energy secretary.)

There will be more “fleshing out” of the concept of responsible capitalism in the coming

This may sound counter-intuitive given the Tory focus on the “Big Society”. But charities are shedding jobs much faster than the public sector, according to a survey published today.

Analysis of the Labour Force Survey, collated from ONS data, suggest that the voluntary sector now* employs 723,000 people – a fall of 70,000 over the previous 12 months.

That drop equates to 8.7 per cent. In comparison public sector employment fell by 4.3 per cent while private sector employment rose by 1.5 per cent in the same period.

Most of the drop is among female employees, although my guess is this may reflect a large proportion of women in the sector. The figures also suggest a drop of 3 per cent in pay against small increases in the public and private sectors.

The findings were produced by the National Council for Voluntary Organisations, the Third Sector Research Centre and Skills – Third Sector.

They don’t entirely negate the idea of the Big Society, which was always more about people volunteering than being paid salaries by charities. But the survey offers a clear insight into the heavy impact on government cuts on charitable organisations, many of which have seen the financial rug pulled from beneath them in the last 18 months.

Gareth Thomas, the shadow minister for civil society, says the research as “underlines the gap between his (David Cameron’s) rhetoric and the reality for charities and community groups of funding cuts, job losses and reduced services.”

* Figures for the third quarter of 2011.

The FT splashes this morning with news that Cameron may be expected to increase Britain’s contributions to the International Monetary Fund – if other countries such as Japan and Brazil decide to increase their support for it to deal the eurozone crisis.

That would place the prime minister on another collision course with some of his most unruly backbenchers. Some 31 Tories rebelled by voting with Labour last July against plans to raise Britain’s potential contribution by £9bn from £10.7bn to £20bn. The country is now under pressure to increase this £9bn “headroom” to E30bn.

The vote in the House of Commons was close last time: 274 against 246. If the coalition is constrained from increasing its lending to the IMF there are implications for the UK’s international reputation.

Equally there are issues for Labour, given that Ed Balls has long been an advocate of IMF-style internationalism – as was his mentor Gordon Brown. The shadow chancellor wrote in the FT in November that he did not oppose higher IMF contributions per se but “there should be no IMF funding to plug the gap in the eurozone’s bail-out fund and do the job the ECB should be doing.” The coming weeks may see Balls having to make a tough decision on the issue.