It emerged the other day that Labour set up a secret Treasury team to examine the issue of hard-pressed low-income workers as early as 2005: only to then do nothing with its findings.
Ed Miliband has taken credit for coining the phrase “squeezed middle”, even though it was actually former shadow health secretary John Healey who first started using it in this country.
While the expression was mocked at first – what demographic was Miliband talking about precisely? – it is now seen as a cunning piece of political positioning. The next Read more
Some of you may have already followed the 161 hours of evidence during the Parliamentary Commission on Banking Standards. Others will have read the 571 pages of the report, published overnight.
For those who have neither the time or inclination, here is a summary of the main points – with analysis of whether Osborne is likely to take heed or not. (The chancellor has indicated his full response will be ‘within a month’.)
1] Weighing up an RBS split. The report says the government should carry out “detailed analysis” of splitting RBS into a good bank and state-owned toxic bank. (This was encouraged by Sir Mervyn King and Lord Lawson.) Alistair Darling, the former chancellor, told me last night that splitting up RBS was “just wrong” and not backed by anyone outside the commission. The idea was a “red herring” that would involve a messy, expensive, time-consuming process, he said.
Consequences: Osborne may go through the motions but is unlikely to re-invent the wheel, instead preferring a less seismic restructuring
2] End government interference. Treasury should wind up the ineffectual arms-length UKFI. Interference at RBS has been particularly damaging, the report says.
Consequences: Osborne is likely to ignore this recommendation.
3] Bonus delays. The commission wants banks to overhaul their pay structures to align rewards and risks. Bonuses could be delayed for up to 10 years.
Consequences: Osborne is likely to implement elements of this but may consider the Read more
George Osborne this morning raised hopes of an imminent G8 deal on a new tax “register” showing the ownership structure of companies, as I report on ft.com this morning.
The UK hopes to “lead the way” on transparency by creating a central register of company ownership – although it may only be available to the tax authorities rather than the general public.
By getting a deal on “beneficial ownership”, the chancellor – and prime minister David Cameron – hope to emerge from the G8 gathering in Northern Ireland with a tangible result on tax avoidance.
The Treasury is acutely aware that large numbers of the tax havens which have attracted global opprobrium are, ahem, governed from London. (The first minister of Anguilla, a tiny Caribbean haven, told me last week that he viewed the City of London as the biggest money-laundering centre in the world.)
The issue of tax is never straightforward. And the focus on offshore jurisdictions is Read more
To read the headlines last week would suggest that the Labour leadership has had a Damascene conversion to the fiscal realities faced by any serious political party planning to run the UK.
Certainly, there is some reason to take that view.
In his Canary Wharf speech on Monday, Ed Balls was surprisingly frank on several issues. One was that growth couldn’t not “magic away” the deficit. The other was that cracking down on tax avoidance could not somehow raise billions of pounds overnight. And overall, he said, a Labour government would have to govern with “iron discipline”. That, according to aides, means accepting the coalition’s fiscal inheritance at least for a year or so.
Chris Giles, our economics editor, is among those impressed by the new stance.
“The good economic news is that the 2015 battle is unlikely now to be fought on a phoney argument pitting austerity against growth. Instead the electoral choice will hinge on the spending priorities of the next government amid tight constraints and the economic credibility of politicians.”
The most obvious political consequence is that Labour will no longer be able to oppose Read more
By Jim Pickard and Elizabeth Rigby
John Mills, the Labour donor whose “tax-efficient” gift threatened to overshadow the party’s relaunch, has had brushes with the authorities in the past for trading offences.
The offences involved the sale of brass trinkets as gold-plated jewellery and a “Lucky Panda” toy whose eyes and ears fell off.
Mr Mills was sacked in 1986 as deputy chairman of the London Docklands Development Corporation for failing to disclose these misdemeanours.
The tycoon, who made his fortune through JML, the shopping company channel, is the brother of David Mills, the husband of Tessa Jowell, the former Labour cabinet minister.
On Thursday, it emerged that he had given a £1.65m donation to Labour in shares because Read more
As the battle for a share of the spending round spoils escalates, other departments are pressing ahead with attempts to seize a slice of the protected health budget.
The FT understands that Eric Pickles, local government secretary, is seeking to redefine some housing programmes as health spending. (Just as Philip Hammond and others have sought to squeeze under the “electrified” ringfence.)
These are the Decent Homes fund, which is focused on improving the condition of homes for social housing tenants and vulnerable households in the private sector in England, and the Disabled Facilities Grant which pays for changes to housing to meet the needs of disabled people.
He is also seeking a greater contribution from the health and education departments to Read more
Not so long ago key members of Ed Miliband’s team told me their electoral strategy, boiled down to the substance.
According to opinion polls, the public still trust Labour more than the Tories on the National Health Service – despite the party’s refusal to ring-fence it at the 2010 general election.
By contrast the opposition party is on much less safe ground on welfare, immigration and Europe. (Thus the recent rise of Ukip.)
This week is supposed to be Labour’s relaunch on the economy (Balls’ speech on Monday) and on welfare (Miliband’s speech tomorrow) but you would never have guessed it from today’s session of prime minister’s questions.
Instead Labour’s desire to keep the focus on health was in evidence, with every single Read more
Lord Mandelson, who was de facto deputy prime minister in the last Labour government, is set to add a lucrative directorship with a Russian conglomerate to his portfolio of business interests.
Now a peer in the House of Lords, the former business secretary is set to take up the position of director at Sistema, a Moscow-based group with stakes in oil, energy, aerospace, banking, retail, tourism and telecommunications.
Lord Mandelson has set up a consultancy firm called Global Counsel which is run by Benjamin Wegg-Prosser, another former New Labour figure. The peer has fiercely Read more
Philip Hammond appeared on the Today programme this morning defending his position after being accused of dragging his heels on the spending review.
The defence secretary has not yet submitted his draft plans for how he could cut 5 per cent of his budget in 2015-16 (half of that asked of other departments), but he told the BBC he was not a “hold out” adding that he hopes to have an “adult conversation” about where the axe should fall.
But in case anyone was in any doubt of how willing he is to stand up to the Treasury, he added this:
We should be very clear that there is a difference between efficiency savings, which may be difficult to achieve but are painless in terms of the impact on the front line, and output cuts, which are of a very different order and require proper and mature consideration across government about the impact that they will have on our military capabilities.
Ministers’ flagship “Help to Buy” housing support scheme is set to be undermined by banks refusing to take part, the former head of the Council of Mortgage Lenders has warned.
The scheme, which has been compared to the US’s Fannie Mae and Freddie Mac, was the centrepiece of the March budget and could see government guarantees on some £130bn of home loans over three years.
But after two months the banking industry is still unclear on the precise mechanics of the scheme, not least how much money banks will Read more
George Osborne has been touring the TV and radio studios this morning talking about the deals he has managed to strike with some of the smaller government departments for how they are going to cut their budgets in 2015/16. Talking about the settlements made with departments including Justice, Energy and Communities, the chancellor told the BBC:
We are now about 20 per cent of the way there with a month to go. I don’t think any chancellor in history has made this much progress with a month to go.
Osborne still has a huge amount to achieve in the next month, particularly in the face of intransigence from big departments such as the MoD and the Home Office. But in the middle of the spending round process, another decision on a massive item of government spending will also come a step closer. Read more