Wednesday, 12 September 2012

Ditching the debt.. target

While the Treasury is yet to resort to Plan B, it appears to be less and less certain about achieving  Plan A. Forthcoming figures from the Office of Budget Responsibility will show the coalition has little chance of presiding over a fall in debt levels by the 2015 election, leading many papers to speculate that George will abandon that target sooner rather than later.

There is an emerging sense that George is ready to dump the debt target in the autumn statement on December 5th. There seems to be a softening up exercise underway, notably in the leaders of the Times, which usually channel the Chancellor's views.

Many of us have argued for some time that extraordinary circumstances require extraordinary measures, and it now appears that the OBR will give Mr Osborne the excuse he needs to widen his efforts. No doubt he will have mind to the risks of having accusations of u-turns added to the brickbats that will fall on him when he gives up on the debt target.

It is not as though he will have a great deal of choice. The Guardian reports that the situation has deteriorated markedly since the OBR’s last report in March:

“In March, the OBR predicted the government would narrowly meet its debt target, but since then borrowing figures have been substantially higher than forecast. City experts are predicting the Treasury will borrow £48bn more than forecast in 2015-16. The government's debt ratio would rise that year to 90% from 85.2% the previous year.”

Meanwhile, The Times (£) reports that Dave has been distinctly unhelpful when it comes to making cuts which might allow George to meet the target, telling the Treasury to keep its hands off  a large part of the welfare budget:

“David Cameron is resisting pressure from all sides to cut benefits for wealthy pensioners as part of savings of up to £10bn.

“Iain Duncan Smith, the Work and Pensions Secretary, and Nick Clegg are among those pressing the Prime Minister to raid the winter fuel payments, free TV licences and bus passes of richer recipients as a key part of future welfare cuts.”

Nevertheless, the FT (£) has some cheer for the Treasury’s number crunchers -  projections based on last year’s census forecast that the elderly will die younger than previously thought. 

It’s a sign of the times when that’s the good news.


After being announced to a fanfare on yesterday’s Today programme, Vince Cable’s state-backed business bank is already under heavy fire. The Times reports that Vince’s big idea is probably illegal under EU competition rules and under-cooked in several other areas:

“The Government has not even agreed to seek a banking licence from the Financial Services Authority. The Times understands that the FSA has not been approached about the move, which is likely to take months, if not years.”

The impression given of factions in the Treasury briefing against Vince is reinforced by today’s Independent story that the pair are on collision course:

“The Liberal Democrat Business Secretary said yesterday that the scheme "may well" involve state lending. But when the Chancellor announced the "small-business bank" last week, the Treasury made clear it would not have a budget to channel money to firms and would merely make existing government schemes to help business more accessible.”

Reaction to the plan set out yesterday has largely been hostile. The Independent points out that “a bank without funds is no bank at all.” TheFT (£) says that “Cable ties himself in knots to dodge dirigisme charge.”Our leader is also scathing:

“Asking Whitehall to pick winners did not work in the Seventies and it will not work now – as the Regional Growth Fund debacle has demonstrated. The Government already owns a substantial chunk of the banking system. Wouldn’t it make more sense for it to use its heft as shareholder to encourage the banks to make business finance more readily available?”

Pleasing to see joined-up government is alive and well.


It is an important day in Brussels with the German constitutional court delivering its verdict on the bail-out for southern Europe at 10 am British time. In the meantime, the prospect of yet another row between Britain and the EU over the City is brewing.

Our Business splash this morning is Bruno Waterfield’s report that Britain’s banks will be placed under the authority of a panel of European officials under proposals for a European banking union. The panel would be able to force the closure or bail-out of British banks, even against their wishes. Other powers are equally far-reaching, as we report:

“Under the proposals, the newly "independent panel" of officials would have full and binding powers to impose EU law and to arbitrate disagreements between Britain and the eurozone over how the City is regulated. The proposals will "confer full decision-making powers to the independent panel on breaches of EU law and settlement of disagreements", the plans outline.

“Under current rules the EBA panel's decisions are proposed for "final adoption" only after support from a majority of all 27 EU countries. But under the new EC proposal this procedure is reversed. If agreed, the panel's decisions will be implemented automatically unless a specially constructed majority vote against it, which must include three countries that are inside the "banking union" and three that are outside it. It means that in a dispute Britain would have to win over members of the eurozone bloc.”

The FT (£) also lead on the story, quoting a Treasury spokesman offering reassurance that any reforms will include safeguards for the City of London. 

Bankers are still not popular, but then again, nor  is the EU. This  has all the makings of a toxic issue for the Treasury whichever way they turn.


Still, there’s nothing like a bust-up with the EU to bring the Conservative Party together, and Dave might be needing exactly that if today’s ‘Tories at war’ stories continue. Nadine Dorries, no stranger to controversy, announced yesterday that the Conservatives needed a “kill Cameron strategy”. Fortunately a Number 10 source was on hand to tell theGuardian:

“Nadine Dorries has made clear that she does not think the prime minister should be murdered.”

Well that’s alright then. Dorries was speaking at the launch of Conservative Voice. The launch did not quite catch fire. The impression is that the group’s failure to pull their punches about the leadership may have damaged their credibility in the party.

Meanwhile the ghost of Bo-Jo continues to stalk Cam. A poll in today’s Sunshows that the Conservatives would gain an instant six points in the polls were they to swap their leader for London’s mayor. The poll sees Bo-Jo only one point behind Ed Miliband, as opposed to the 11 point gap seen under Dave.

The rebels can dream all they like, it isn’t going to happen, as I write in my column in today’s Telegraph:

“It would take the most mind-boggling set of circumstances for the Conservative Party to mount a challenge against its leader, let alone for it to be successful. Even if 46 anonymous volunteers could be found – and yes, the number of Tories who have it in for Dave is growing – it would require a collective leaving of the senses. 

“I know that in this game we are supposed always to layer in a few caveats to avoid future embarrassment, but in this case we should just say out loud: it ain’t going to happen. Mr Cameron will lead his party into the next election, and we will all get a chance to give him a vote of confidence – or sling him out.”


Nick Clegg is in trouble with traditionalists after a draft copy of a remarks he intended to make  to a gathering of celebrity supporters of gay marriage. We splash on the story this morning:

“Before Mr Clegg could deliver the speech, the word “bigot” prompted an angry response at Westminster and the Deputy Prime Minister’s office made an ill-fated attempt to withdraw the remark. 

“According to the text, Mr Clegg planned to say: ‘Continued trouble in the economy gives the bigots a stick to beat us with, as they demand we 'postpone’ the equalities agenda in order to deal with 'the things people really care about’. As if pursuing greater equality and fixing the economy simply cannot happen at once.’” 

The Mail reports that former Archbishop of Canterbury, Lord Carey, described the Deputy Prime Minister as ‘immature’. That’s one of the nicest things that has been said about him in ages.


The Western Mail reports that Michael Gove will face awkward questions over the decision of the Welsh government to order the WJEC exam board to re-mark English papers.

More pupils in England took the Welsh board's English paper than pupils in Wales,  and they must now watch as Welsh children have their grades fixed. It's academic gerrymandering and parents will be fizzing. Hard for Michael Gove to stand by on this one.


Ed Balls was heckled at yesterday’s TUC conference after supporting the government’s pay freeze on public sector workers. The conference later voted overwhelmingly to start planning the “practicalities” of what would be the first general strike since 1926.

Stirring events on paper. In the flesh, the Daily Mail’s Quentin Letts was less than impressed:

“It was not much of a speech from Balls, being neither effusive nor confrontational. Perhaps five people heckled during the quarter of an hour it took him to unburden himself and during a brief session of questions afterwards. This was nothing compared to the ‘aggro’ of past decades.

“Even Alistair Darling used to get them more excited.”

In fact, Mr Balls’ thunder was stolen by row over T-shirts. The shirts, all of the ‘dancing on her grave’ variety prompted a Labour source to tell theDaily Express:

“Ed Miliband thinks they are totally inappropriate.”

Which is presumably why he is pictured in the Sun beaming whilst embracing a man who is wearing one.


An independent report on the Hillsborough disaster will be published today, and is trailed in today’s papers as being very critical of the response of the authorities. The Independent splashes with allegations that police doctored evidence in a bid to evade blame for the tragedy. 

Dave will make a statement after Prime Minister’s Questions apologising to the families of the 96 victims, according to the Daily Mail


And finally, farewell Tessa Jowell. The former Culture Secretary has stepped down from Ed’s front-bench team. She told the Guardian :

“To have been able to be part of planning and delivering the Olympic and Paralympic Games from start to finish is a rare opportunity in public life and that too has been a privilege. After 10 years with the Olympics and Paralympics, it is job done.”


Labour’s Chris Bryant has some startling news:

@ChrisBryantMP: “Twickenham feels very different for @ladygaga from the usual rugby crowd 

Who would have thought?


Latest YouGov/Sun results: Conservatives 31%, Labour 42%, Liberal Democrats 10%, Other 17%


In The Telegraph 

Benedict Brogan - Dastardly plots and stalking Borises – blame yourself, Dave 

Allister Heath - The UK is already taxed to death - a levy on wealth would be the last straw

Daniel Hannan - Black Wednesday: Britain was free, but we Tories were done for

Rowan Pelling - At least 58 per cent of us don't want slogan T-shirts

Best of the rest

Christina Patterson in The Independent - It will take a lot more effort than this to make work pay 

Alice Thomson in The Times (£) - Why aid is a dream job for Justine Greening 

Martin Wolf in the FT (£) - Draghi alone cannot save the euro 

Andrew Alexander in the Daily Mail - Why Dr Cable’s got the wrong prescription 


Today: Environment Secretary Owen Paterson to set out statement on Government strategy for growth in rural areas.

9:30 am: Barclays chairman Sir David Walker gives evidence to Commons Treasury Committee on banking standards. Grimond Room, Portcullis House.

09:30 am: Education Secretary Michael Gove gives evidence to the Commons Education Committee. Committee Room 15, House of Commons

0930 am: Latest unemployment figures published by Office for National Statistics.

0930 am: The Council of Mortgage Lenders publishes its mortgage breakdown figures for July. 

12:00 pm: Prime Ministers Questions. 

12:30 pm: David Cameron oral statement on Hillsborough tragedy. House of Commons.

12:55 pm New Policing Minister Damian Green to give speech at the Police Superintendents' annual conference. Chesford Grange Hotel, Warwickshire.

2:05 pm: New Transport Secretary Patrick McLoughlin gives evidence to the House of Commons Transport Committee. Committee Room 8, House of Commons.

3:00 pm: Commons Speaker John Bercow unveils plaque to mark renaming of the Commons Clock Tower as the Elizabeth Tower. Speaker's Green, House of Commons.