Tuesday 29 January 2013

Osborne under fire..



Good morning. George Osborne has woken to a slew of unhelpful headlines. The catalyst is a report from the Treasury Select Committee which casts doubt on the Chancellor's plan to raise £8.5bn in the next two years from a Swiss tax agreement and the sale of the 4G mobile spectrum. It adds that the decision to drop the "golden rule" in the last Autumn Statement - the pledge to have debt falling as a percentage of GDP by 2015 - hurt Mr Osborne's credibility, while the practice of using the Autumn Statement as a micro budget introduces additional uncertainty over public finances, as we report.
Then there is the fall-out from last week's poor GDP number. The Chancellor's decision to front the unveiling of the second stage of HS2 planning seems to have focused minds on more direct stimulus measures he isn't taking (particularly much of the HS2 construction fund will be headed abroad, as the Mail's leader notes). Talk of unfunded tax cuts is rife on the Conservative benches, talk which won't be helped by yesterday's TaxPayers' Alliance claim that 254 tax increases have been introduced while George has been at the helm, with a further 45 to come. Market sentiment is gloomy despite the charging FTSE, Sterling has fallen alarmingly swiftly against the supposedly stricken Euro, and most voters believe that the EU referendum will further damped the economic outlook, as the Independent reports. The Guardian's story that Qatar has suspended its £3bn investment in redeveloping the Chelsea Barracks adds to the cloudy outlook.
If that wasn't enough, the FT (£) adds that the Chancellor is about to find himself embroiled in another no-win row over bonuses at state banks, with RBS intending to pay £250m in bonuses to an investment banking division implicated in Libor rigging which could cost the taxpayer £400m in fines to US regulators. At the moment, though, George appears trapped by a schedule which sees most of the real fiscal reform slated for 2015 onwards. Unless he is careful, he could find a golden economic legacy going Labour's way. Between now and then, he needs a rabbit from the hat, as I argue in my Telegraph column:
"Downing Street has long made every effort to avoid anything that looks like tension between No 10 and No 11 [but] the door-plate on No 10 does say "First Lord of the Treasury". It’s only a murmur at the moment, but Mr Osborne might anticipate what happens when the Prime Minister decides someone has to save the Tory legacy, and it might as well be him."
HS2: DELAYED THANKS TO LAWYERS ON THE LINE
Legal challenges and endless judicial reviews could push the completion date of HS2 back by a decade, the Independent reports, suggesting work may not now begin until 2022. The £33bn scheme can ill afford the delays - the FT (£) adds that it managed to add £2bn to its projected cost from 12 months ago while sat idle on a planner's board. The completion date of 2032/33 (as well as the decision on the Heathrow link, due 2015) has struck a number of commentators as unnecessarily conservative.Michael Deacon argues it wouldn't happen in China, while over at the Mail, Correlli Barnett says it wouldn't have happened under the Victorians, either. In fact, the whole HS2 project has found the Mail at its grumpiest. Although our leader praises a "bold vision [which] will keep Britain on track", the Mail laments the "high-speed trail of blight" before suggesting in its leader that the whole scheme is simply "another job-creation scheme for German engineering firms and Eastern European labourers." Poor Dave, that cut-out-and-keep front page must seem a long time ago.
LAST ROLL OF THE DICE ON BOUNDARY REFORM
The Boundary Reform Bill is in the Commons today, and the chamber will witness the Lib Dems voting against the government line for the first time under the Coalition. With the Bill unlikely to be passed (Scottish nationalists and Ulster unionists are also against), Nick's refusal to honour his side of the Coalition agreement will probably prove fatal. Liam Fox pops up in the Sun to castigate Mr Clegg for his "deeply dishonourable" showing, but this is a move which has been well telegraphed and reluctantly accepted in Number 10. However much it irks the backbenches, it will be business as usual this time tomorrow.
TORIES MULL FORCING FIRMS TO PUBLISH ETHNIC MAKE-UP
Rachel Sylvester uses her Times (£) column to lay out one of the biggest strategic challenges the Conservatives will face in coming elections - the party's support base is still overwhelmingly white, but the country is becoming much less so. What was a country which was 91pc white a decade ago is now 86pc white, with the figure dropping to 73pc for under-fives. The latest Tory plan to counter the "ethnicity effect" is an idea being pushed by party vice-chairman Alok Sharma which would see listed firms forced to publish an ethnic breakdown of their workforce. Presumably the workforce won't also be polled on who they'll be cheering for in that summer's test series...
BERCOW WARNS ON BACKBENCH PAY
David Cameron has been warned by the Speaker that he "would not be terribly clever or brave" if he attempted to "appease" public opinion by blocking a large rise in the salaries of backbenchers when IPSA makes its pay recommendations, we report. Ever the crowd pleaser, Mr Bercow.
APPOINTMENT WAR ROLLS ON
Caroline Spelman's advocacy of politically appointed permanent secretaries at the Institute of Government's debate yesterday won her a telling-off, the FT (£) reports. Sir David Normington, the civil servicecommissioner, warned that this is "the wrong debate at the wrong time" and added that an image of a civil service at war with ministers put-off potential recruits. Meanwhile in the Guardian, the head of the FDA union has warned that morale in the service is so low that two thrids of senior mandarins are prepared to quit their jobs.
BRITAIN IS RUBBISH AND THERE ISN'T EVEN A HEALTH SERVICE (FOR YOU)
On the off chance that the Government's "Britain: not very good" advertising campaign in Romania and Bulgaria fails to pay off, immigration minister Mark Harper has another plan. As the Mail reports, migrants without a job will be told that they must buy private medical insurance to prevent the NHS becoming over-loaded. Of course, there is nothing contradictory here with the advice issued to GPs in October that the NHS must treat anyone, irrespective of nationality, lest it risk discrimination. Nothing at all.
BRITISH TROOPS LIKELY TO JOIN EU TRAINING MISSION TO MALI
At least 200 British troops are ready for deployment in Mali should the French request them, the Guardian reports. Although troops could be used for "force protection" for troop trainers sent as part of a potential EU mission, theirs would not be a combat role.
GREAT POLITICAL INSULTS (CONT...)
It is often said that standards of vituperation have fallen in Parliament in the modern era, so it was refreshing to see ITV report that Iain Duncan Smith put some effort into his attack on Labour during a debate on his welfare reforms. The benches opposite were packed with a "bunch of discombobulated monkeys", IDS fumed.
RSPCA TOLD TO REVIEW PRIVATE PROSECUTIONS
The Charity Commission has written to the RSPCA to ask it to review its prosecution policy after it spent £326,000 prosecuting members of David Cameron's local hunt, we report. Simon Hart writes in our comment section that today's debate in Parliament on the work of the charity will debate potential conflicts of interest, its relationship with the police and whether to ask the Attorney General to undertake a review of the prosecutions.
HUHNE TRIAL
Chris Huhne will stand trial on Monday over allegations that he forced his ex-wife Vicky Pryce to take speeding points for him, we report. Appearing in court yesterday, Mr Huhne entered a plea of not guilty to a charge of perverting the course of justice.
TWEETS AND TWITS

Who says there are no new ideas in politics? Well, Michael Fabricant, for one:

@Mike_Fabricant: "Irony: Labour has now adopted Conservatives' pre 2010 route for HS2, while the Conservatives have accepted Labour's route (Birm to London)."

TOP COMMENT 

In the Telegraph

Benedict Brogan - A big play from Osborne could stop Labour hijacking his legacy
Janan Ganesh in the FT (£) - Britain's rising populism is worthy of Nixonland
Rachel Sylvester in The Times (£) - Why the "ethnicity effect" terrifies Tories
Steve Richards in The Independent - Investment? Not such a dirty word after all

THE AGENDA

TODAY: MPs vote on boundary changes for Commons constituencies. Business minister Jo Swinson makes announcement on measures to tackle anti-competitiveness.
09:30 am: Commons Public Administration Committee takes evidence on the future of the civil service. Witnesses: Lord Wilson of Dinton, GCB, former Cabinet Secretary and Rt Hon Dame Janet Paraskeva DBE, former First Civil Service Commissioner; Sir Nick Harvey MP, Rt Hon Nick Herbert MP, Rt Hon Caroline Spelman MP and Rt Hon Lord Adonis. Committee Room 16, House of Commons.
09:30 am: National Association of Pension Funds give evidence to Commons Treasury Committee on impact of quantitative easing. Thatcher Room, Portcullis House.
11:00 am: Education minister Liz Truss speech on childcare. Policy Exchange.
11:15 am: Justine Greening gives evidence to Commons International Development Committee on Pakistan. Committee Room 5, House of Commons.
01:30 pm: Business Secretary Vince Cable and Wales Secretary David Jones give evidence to Commons Welsh Affairs Committee on steel industry in Wales. House of Commons.
02:45 pm: Commons Home Affairs Committee. Hearing to take evidence on: At 02:45, anti-social behaviour, with ministers Jeremy Browne and Don Foster. At 03:30, child sex grooming, with former MP for Keighley Ann Cryer. At 04:00, e-crime, with the British Retail Consortium and National Trading Standards eCrime Centre. At 04:30, Capita's work for UKBA, with Capita executives. Grimond Room, Portcullis House.
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