Is PFI dead? Don’t be so sure
The private finance initiative – or at least the PFI as we know it – is dead. That’s what the fiercest critics will hope given the Treasury’s announcement of a “fundamental reassessment” of the model.
But don’t be too sure.
George Osborne, the chancellor, is looking for a model that “is cheaper, accesses a wider range of private sector financing sources, and strikes a better balance of risk between the private and public sectors.”
How to tackle youth unemployment
This Wednesday, unemployment among 16-24 year-olds is expected to top 1m people, its highest since records began in 1992. This has triggered a lot of anxiety and head scratching in government circles, prompting a whole week of events this week focusing on young people. That began today with David Cameron’s article about schools that are not failing but neverthless are “coasting” and need to be improved.
Why is youth unemployment so high? The first thing to say is obvious: there is a recession. It is true that youth unemployment has risen faster than overall unemployment, but this always happens in a recession, for two reasons: 1) employers are reluctant to lay off older workers, because of higher redundancy payments and “last-in-first-out” policies; 2) the first thing many organisations in difficult times do is stop recruiting, especially younger people.
It’s hard to draw up a growth review with no money
We reported last week that George Osborne and Vince Cable were pushing for a new toll road scheme on the heavily congested A14 near Cambridge. Today, the Sunday Times suggests that road tolling will play a central role in the government’s growth review on November 29.
The paper says Osborne and Cable want £50bn from the private sector, mainly pension funds and insurance companies, to fund new infrastructure, including roads, homes and power stations. In return they will get a share of tolls, rents and energy bills.
The problem is that ministers can’t force private companies to spend their money on such schemes: all they can do is put the incentives in place for them to do so. But these carry their own risks.
How much does each benefit cost?
UPDATE: I have now added in housing benefit – apologies for the omission, and thanks to Paul Treloar for pointing it out.
The brains over at the Treasury are currently trying to work out if there is a way to cut billions of pounds of public spending by freezing benefits in a way that would also be palatable to most voters. As we reported last week, it looks like pensions will be exempted from any freeze to avoid accusations of punishing older people. But what else is up for grabs, and how much could be saved?
Here is a table of each of the most significant benefits paid out by DWP and how much each one costs. I’ve done one column for how much was spent last year, one for how much is forecast to be spent next year, factoring in various policy changes, and one for how much they would cost next year if there were no spending cuts and they were allowed to rise with 5.2 per cent inflation.
Labour attacks Osborne for hurting pensioners
Labour is in a slightly difficult position about how to respond to the news in the FT today that the Treasury is looking to slash benefits by linking them to earnings or even freezing them temporarily.
Although Cameron said he wouldn’t “balance the books on the back of the poor”, Labour knows that attacking the government for hypocrisy on this point could make it look like they are standing up for benefits’ claimants – or “scroungers” as they are thought of by many people.
Instead, the opposition will want to pick its battles. At the moment, the Treasury is still actively considering applying this change to all benefits and pensions, which would affect a lot of people who don’t fall into the “scrounger”.
Is there any evidence for Cameron idea that more women execs would curb high pay?
David Cameron made his claim again yesterday during PMQs that having more women on the boardroom would lead to more restraint.
He made a similar comment on Friday while in Australia, saying more female directors would have a “beneficial effect” on boards and lead to less disproportionate remuneration.
(Income Data Services found a 49 per cent jump in the total earnings of all FTSE 100 directors, taking their average package to just under £2.7m. This followed an increase of 55 per cent in the previous year.)
But the idea that a heavier female presence in the boardroom would act as a curb on lavish pay has been met with some scepticism from experts.
Deborah Hargreaves, chair of the independent High Pay Commission, told me
PMQs: Cameron forced to the left
It was an intriguing PMQs today. As I have previously noted, Ed Miliband has begun to find his feet on the economy, and once again used this as his main attack line.
As he has done at previous sessions he chose an obscure policy that has achieved little so far (this time the “business growth fund”, which was set up using money from the Merlin agreement), and used it to embarrass the PM.
As has happened before, Cameron didn’t know what the policy was (in fact at the end, he started talking about the Regional Growth Fund – a different fund altogether). So when asked how many businesses the fund had invested in, he was unable to answer.
Lord Young was never properly sacked
Remember Lord Young? He is the former trade and industry secretary who was given the task of reviewing health and safety regulation for Number 10 last year. He was forced to resign last November, however, after telling a Telegraph journalist that many Britons had “never had it so good”, despite the economy being gripped by recession.
At the time, David Cameron said:
Obviously he is extremely embarrassed. He was very quick to retract completely what he said. It was unacceptable.
Will Liam Fox return?
Just over a week after leaving office, Liam Fox has returned to the spotlight, giving an interview to BBC Bristol defending himself and attacking the media.
Talking about his meeting in Dubai, attended by Adam Werritty but no civil servant, Fox said:
I think it was really just a mistake not to have somebody there but… we were sitting in a coffee lounge in a hotel, it was hardly a high security meeting.
But nonetheless, given this was a potential defence supplier – not as it turns out an actual defence supplier – it still should have had somebody there. It’s very easy to be careless but you pay a price for it.
Cameron: reduce executive pay by appointing more women
I revealed this morning that despite David Cameron’s promises to cut down on civil service pay, the total Whitehall bonus pot went up last year from £136m to over £140m. Much more shocking than that, however, is the news that in the same financial year, directors of FTSE 100 companies have seen their pay rise by nearly 50 per cent. That follows a 50 per cent rise the year before.
David Cameron was asked about this issue at his press conference in Perth on Friday morning. What can we do to stop directors paying themselves so much money?
Although his answer included the usual messages on the importance of transparency and accountability, he also had a more intriguing suggestion:
We have to make sure there are more women executives on boards. Increasing the number of women in boardrooms – that will have a beneficial effect.
I can understand why having more women on boards is a good idea, but is there any evidence that it would result in less inflationary pay?
Miliband allows Tories to unite on Europe – but not for long
Ed Miliband’s interventions on Europe have a habit of serving only to bring David Cameron closer to his own backbenchers on the issue. On Monday, as Tory rebels lined up in their dozens to defy Cameron on an EU referendum, Miliband was the only one who managed to restore harmony on the Tory benches, uniting them in laughter when he said:
Apparently president Sarkozy – until recently his new best friend – had had enough of the posturing, lecturing and know-it-all ways. Let me say, Mr President, you spoke not just for France but for Britain as well.
At PMQs on Wednesday, a similar thing happened. Miliband had some good lines, including telling saying Cameron “was pleading with his backbenchers instead of leading for Britain in Europe”.
Number 10 hints at repatriating powers from the EU
David Cameron appears to be trying to dangle some red meat in front of his restive backbenchers by holding out the prospect of using any imminent EU treaty change to try and repatriate powers back from Brussels to London.
Speaking after meeting fellow European leaders over the weekend, the PM said:
This is the right time to sort out the eurozone’s problems, defend your national interest and look to the opportunities there may be in the future to repatriate powers back to Britain. Obviously the idea of some limited treaty change in the future might give us that opportunity.
| About this blog | Blog guide |
Jim Pickard joined the lobby team in January 2008. He has been at the Financial Times since 1999 as a regional correspondent, assistant UK news editor and property correspondent.
Kiran Stacey is an FT political correspondent, having joined the lobby in 2011. He started at the FT as a graduate trainee in 2008, working on desks including UK companies and US equity markets before taking over the FT's Energy Source blog.
Elizabeth Rigby, the FT's chief political correspondent, joined the lobby team in September 2010. Elizabeth has worked at the FT for more than a decade and was most recently its consumer industries editor.
Helen Warrell is the FT's UK reporter, covering home affairs, crime and policing. She joined the FT in 2008 and has spent time as a reporter in the Brussels bureau and more recently, editing the paper's Asia coverage on the world news desk.
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