Friday, 29 June 2012
The “firestorm” of the Barclay’s scandal, as the FT splash phrases it, covers the front pages since - as we’ve put it - “More banks are drawn in”. RBS and Lloyds are now in the frame. The Prime Minister and the Chancellor have already waded in, giving the Indy its headline “You’ll pay for this, PM tells Barclays” . The fury palpable, the Sun’s “Sign on you crazy Diamond” - one for the Pink Floyd fans, that - adds some light relief. This morning’s breaking news on how small firms have been crippled by bank hedges add to the gloom.
Mark Hoban has been on Radio 5 to say laws will be put in place to make sure the setting of Libor is regulated and that criminal sanctions can be imposed in future. He said:
“What we’ve done is look at the regulation of Libor. The regulatory regime we inherited from the previous government doesn’t cover Libor and nor are there any criminal sanctions in place for the manipulation of Libor.”
The Mail’s leader column calls for an inquiry into banks, while the FT says it may “be necessary to retire this generation of flawed leaders.” The Indy says it’s “A sick banking culture that cannot be tolerated”.
Our leader column urges caution in the face of this anger, saying: “there is a danger that in our haste to shove Bob Diamond and others into the tumbril, we will not only fail to remedy the situation, but will create more problems than we solve.”
In his column, Jeremy Warner reinforces that view: “Finance’s golden age may be drawing to a close; with no new industry or manufacturing renaissance coming up in the wings, it is not entirely clear what’s going to take its place as a source of British wealth, jobs and tax revenues. It is not just finance for which hard times lie ahead.”
Unbelievably, Bob Diamond has no intention of quitting - or saying sorry. In a letter to Andrew Tyrie, the Chairman of the Treasury Select Committee - published in full here - falls short of an apology. The closest he gets is: “As well as accepting the authorities’ penalties and apologising, it is important that Barclays takes further action.” Read the last three paragraphs to appreciate the miss.
David Cameron will consider a number of variables. In political terms, he will be relieved to see the media spotlight focusing elsewhere - at a fractious time for the Coalition, he will benefit from being out of the firing line for a period. But he will be anxious about any evidence that connects the Tories to bankers (there are hints of it today, with claims that Conservative donors are implicated in the scandal).
No wonder George Osborne is keen to make sure that the role of Labour and Ed Balls in regulating (or not regulating) the banks is appreciated by everyone. Ed Balls was City minister when it happened, which the Treasury says raised questions about his credibility as shadow Chancellor. But in economic terms, Mr Cameron will worry that the scandal will do yet more damage to the international reputation of the City and the economy. This will be his greater preoccupation: how a scandal of greed will prove to be a major setback to the prospects for growth.
Italian victories over Germany is not limited to the football today. Italy, with backing from the Spain, refused to back the EU summit’s growth and jobs package yesterday, unless Germany supported short-term debt crisis measures.
In the early hours this morning, Angela Merkel caved in. The Spanish banks will be recapitalised directly by allowing a €100 billion EU bailout to transferred off Spain’s balance sheet at the end of the year. The move is based on putting the ECB at the centre of a “effective single supervisory mechanism” for banks after an EU summit in December.
Mario Monti could not resist mentioning the football, saying “It is a double satisfaction for Italy.” Ouch. You can read more in our report here.
There’s also another Coalition to dig out amidst all this chaos. In a letter to the Telegraph , Michelle Mitchell, director general of Age UK, and Dr Peter Carter, chief executive of the RCN, accuse the Government of failing to “measure up” on pledges in the Coalition Agreement to find a sustainable solution to elderly care.
They claim that months of delays in announcing a white paper to overhaul the care system threaten to land the NHS with a “colossal” and unnecessary bill.
The Coalition agreement recognised the “urgency” of reforming the care system. How will they respond?
TORY HEART AND SOUL
Fraser Nelson has a revealing column in today’s Telegraph. He says there’s a brain drain going on in Downing Street, because the recent U-turns have led to the sense of mission drift. At least half a dozen people have left and have not been replaced. He says this has emboldened the Tory backbenchers, and that the rebels are growing in number. He claims the Treasury dropped the fuel tax because they thought they’d the lose the vote.
He is on to something. Today we read that 100 Tory backbenchers have signed a letter to the Prime Minister telling him he must put a EU referendum on the statute book before the next election, making a commitment to hold a referendum during the next Parliament.
The letter, organised by Tory backbencher John Baron, says “The heart and soul of the Conservative Party believes it is now time to consult the British people about this.”
Dave tried to shore things up in Brussels yesterday, underlining his eurosceptic credentials by reminding other leaders of his promise to defend Britain’s £3 billion annual rebate from the EU budget. He also said he “understood and shared” his MPs’ concerns, but offered no public support for the prospect of a popular vote on the EU relationship. You can read more in our report here.
The numbers will worry Mr Cameron: 100 MPs - the same amount willing to rebel on the Lords Bill - is almost a third of his parliamentary party. He’ll be hoping this third doesn’t start to see themselves as an alliance and coordinate their attack against No 10 - it could be the makings of a threat to his leadership.
Ian Birrell in the Guardian is slightly more optimistic for Dave, saying that the “naked politics” at work in his welfare cuts speech on Monday, could help him accidentally rediscover “his narrative of compassionate conservatism”.
And finally, the Sun reports that Grant Shapps has announced that families of fallen soldiers will be rushed to the front of the social housing queue. Dave will be pleased. It might help relieve some of the problems Rachel Sylvester revealed he’s got with the MoD.
TWEETS AND TWITS
Good to see Labour MP Jamie Reed is keeping things decent online:
“@jreedmp: Germany v. Italy. Can we leave our WW2 jokes outside please? You know the ones. Thank you.”
Latest YouGov/The Sun results: Conservatives 32%, Labour 43%, Lib Dems 10%, UKIP 7%
Overall government approval rating: -38
In The Telegraph
Fraser Nelson: U-turns make even David Cameron wonder what this Government is for
Sue Cameron: PFI is the boondoggle to end them all
Jeremy Warner: After Barclays, the golden age of finance is dead
Leader: Crippling the banks will only make things worse
Best of the rest
Owen Jones in the Independent: If rigging rates isn't anti-social behaviour, what is, dude?
Ian Birrell in the Guardian: David Cameron's inner Maoist
Gillian Tett in the Financial Times: Libor affair shows banking’s big conceit
Nigel Lawson in the Times: After this scam, banks must be split apart
Today: David Cameron attends the European Council
10.30am: The Bank of England publishes its Financial Stability Report. Followed by a televised press conference with governor Sir Mervyn King. The report is expected to relax rules requiring banks to hold large amounts of cash as a buffer.
Thursday, 28 June 2012
Barclays’ £290m fine for distorting the cost of borrowing covers the broadsheet front pages this morning. The Independent say the firm is “shamed”, while the Times homes in on the guys at the top with “Barclay’s chiefs’ jobs on line”
Andrew Tyrie of the Treasury Select Committee plans to summon Bob Diamond to give evidence, though to judge by the calls for his head that's the least of his troubles. The potential scale of this scandal is so huge that it is likely to have consequences for politics, as voters realise that the banks were rigging the price of money.
Politicians will want to distance themselves from bankers, and may choose to exploit the situation: when in trouble, find a bad guy. Labour will want to tread carefully given its record of bank deregulation. Let's see how No 10 and the Treasury play it.
And the fallout has already begun. In the Telegraph, Damian Reece says this is “just the beginning of the Libor scandal” while the Mail’s Alex Brummer says “The real scandal at RBS is how it sacked thousands of British workers - and sent their jobs abroad”.
This - and the Queen shaking hands with Martin McGuinness - has pushed the Lords controversy back a few pages. But it’s still as potent: the Mail says “Lords reform rebels threaten the biggest revolt in Tory history” while the Guardian says there’s “no issue as lethal - or as likely to fade away”, and that the “bill exposes deep rifts within parties”. The Independent has taken a slightly different angle, saying the Tories are “shocked as Cameron stands by Clegg”.
We’ve concentrated on Ken Clarke’s message to the Tories. They should “ stop larking about' and back Lords reform”, he says.
Northern Ireland PPS Conor Burns is the first senior figure to say he’s willing to lose his job over the issue, saying: “If I lose my job for something that was a mainstream view within the Conservative Party within the last Parliament, which serving Cabinet ministers held as their view, so be it.” Dave will be in trouble if many others may think the same.
Patrick Wintour says there are even doubts among the Lib Dems, but thinks that Nick Clegg has no choice: “After the rebuff over the alternative vote, he cannot afford to abandon all constitutional reform.”
Our leader column calls it a “wretched Bill” and says: “Any Tory or Labour MP who can help kill it off, by whatever means available, will be doing the nation a service.” It also supports the view of Lord Kakkar who has a column in today’s Telegraph. He argues that the democratic legitimacy of Parliament is vested in the House of Commons. The purpose of the Upper House is not to make law, but to ensure that the power of the elected chamber is kept in check and its legislation properly scrutinised.
While this is happening, Dave is off to another EU summit - and he’s going with a cash offer. The Times reports that he will inject £1.3 billion from Britain into an EU-wide growth plan. The Mail’s calling it Dave’s “Backdoor bailout”. (I can practically hear Douglas Carswell’s head exploding.)
But there is some good EU news for the Tories. The FT reports that William Hague wants to conduct an audit of EU powers, which sounds a little like what Tory backbencher Andrea Leadsom was calling for. Mr Hague best be careful, though, as he doesn’t want to get the backbenchers excited if he’s going to let them down.
James Kirkup, however, says the audit is already underway, and that the row is whether it should be published. Is this going to be Beecroft mark two?
Poor Chloe Smith. Not only has the Mail called her Newsnight performance “the most humiliating interview ever ”, the affair also seems to have sparked a mini Tory row. Nadine Dorries tweeted that George was a coward for throwing her to the wolves rather than standing up for the U-turn himself (see tweet below).
The Guardian has latched on to this, saying that it’s “Fanning the flames of the fuel duty freeze” and the FT reports on the grumblings in the ranks over the way he sprung his fuel U-turn on the party. Oh dear.
Damian McBride has written a blog to commemorate the fifth anniversary of Gordon Brown becoming PM. It’s definitely worth a read - it gives a fascinating insight into the workings of that government, and the power of the Treasury.
CURSE OF CAMERON
Treat of the day for Downing Street: the Mail carries a feature on The Curse of Cameron - the interweb suggestion that he jinxes everything he comes into contact with. Dave will particularly like the mock of him as a vampire with bloodied fangs.
In the Telegraph, Peter Oborne argues Lord Ashcroft’s ownership of Conservative Home is responsible for the Tories swing to the Right. The website, under his ownership, has “transformed from a relatively loyal voice of the Conservative Party as a whole into the Prime Minister’s most damaging critic.”
The government appears to be coming good on part of its “era of transparency”. The Guardian reports that hundreds of pieces of government data– ranging from the success of different GPs treating patients with cancer to where British aid money is spent – about public services will be published over the next year alongside an open data white paper. A brave move. Newspapers across the country will be looking to recruit a few more data journalists.
It seems that Tony’s comeback is underway. Yesterday he guest edited the Evening Standard and submitted to a revealing interview by Blair’s standards. He said he didn’t want to leave office in 2007, but it would have provoked “a bloody battle” in the party if he hadn’t. He said he still wants a public role and claimed that he pays 50 per cent tax in Britain on all his earnings.
He also had praise for Ed Miliband. He said: “Ed Miliband has made a conscious decision that he is going to keep the Labour Party in the centre, and that is sensible.”
Now that’s out of the way, the stage they’ll share at a sports’ charity event in August will more interesting. Not least because, I’m told, that they’ll be surrounded by celebs including “Alex Ferguson and other more surprising names”.
He definitely gets quote of the day though. In the FT, Tony says: "This notion that I want to be a billionaire with a yacht: I don't!"
TWEETS AND TWITS
Nadine Dorries went out to bat for Treasury Minister Chloe Smith yesterday:
“@NadineDorriesMP: I was at a dinner last night so didn't see Newsnight, however, if Osborne sent Chloe on re scrapping 3p he is a coward as well as arrogant.”
No 10 responds: “Nadine is Nadine, isn't she? What can you do?”
Latest YouGov/The Sun results 27th June CON 31%, LAB 45%, LD 9%, UKIP 7%; APP -31
In The Telegraph
Peter Oborne: Lord Ashcroft’s Tory Right is stopping the Coalition working
Lord Kakkar: Why Nick Clegg’s Senate is seriously flawed
Leader: The Lords may need reform, but not like this
Leader: Varsity blues
Best of the rest
Camilla Cavendish in the Times: Look away now: a tale of British immigration
Steve Richards in the Independent: At a time of crisis, we need more experience at the top than this
Chris Giles in the Financial Times: The good, the bad and the ugly of Cameron’s welfare plan
Zoe Williams in the Guardian: A future without growth need not be dismal if we use Plan C
Today: Theresa Villiers to launch red tape challenge for aviation.
Today: Treasury Minister Mark Hoban will launch a consultation on the future of building societies.
9.30am: The Bank of England will release its credit conditions survey for the second quarter of this year.
9.30am: Rachel Reeves will give a speech to the Resolution Foundation on raising living standards. 23 Savile Row, London
9.30am: Third estimate of Q1 GDP is published by the Office for National Statistics.
10.30am: Transport Questions
10.45am: Ed Balls gives a speech to the Local Government Association.
1pm: David Cameron attends a European Council summit in Brussels. Justus Lipsius Building, Rue de la Loi 175, Brussels
3.30pm: Defence minister Peter Luff addresses the Rusi conference. Royal United Services Institute, Whitehall, London
3pm: Vince Cable gives evidence on executive pay to the Commons Business Committee.Room 8, Palace of Westminster, London
3.30pm: Eric Pickles gives a speech to the Local Government Association
6.30pm: Martin McGuinness will make a keynote address on future Irish/British relations. Attlee Suite, Portcullis House, House of Commons
Wednesday, 27 June 2012
The Treasury denies it panicked, but no one can quite understand the logic of announcing a U-turn on the day your enemy suggested it. That the Cabinet weren't consulted and Justine Greening was in the dark about it suggests undue haste.
Sadly for Ed Balls, the sketch writers seem to think Mr Osborne had the better of him in the Commons. But in Labour HQ there was bafflement at the Tory tactics. A few months ago Ed Miliband and his aides would have scratched their heads and tried to work out what cunning plan George was up to. Now, I'm told, they just laugh.
U-turn features prominently in the headlines, as do embarrassment and reversal. We give Mr Osborne the benefit of the doubt in our leader, unlike the Sun which is grudging in its acknowledgment: Mr Osborne has written a fawning piece for them but that hasn't stopped the Sun from duffing up the Chancellor and the Government in its leader.
The U-turn/well-judged adjustment will prompt Westminster to ponder just what is going on with the Tories. Is it a core vote strategy, as I mention in my column on the EU referendum this morning? Is it differentiation? In the past few weeks, something has changed. Mr Cameron and Mr Osborne are like actors doing a frantic costume change.
And in case you missed it, Chloe Smith got herself into a tangle on Channel 4 and Newsnight last night. She refused to reveal when the Chancellor had made the decision on fuel duty, repeating that it had been “under consideration for some time”, and she couldn’t explain how it would be funded. Where’s Fireman Fallon when you need him, eh?
And the Lords reform plans emerge at last today. We report that Nick Clegg will treat Tory opposition to reform as an act of “bad faith” in the Coalition. But he’ll do so after announcing a series of last minute concessions to critics of his much-cherished proposals for a mainly-elected Second Chamber when he publishes them later today.
These include taxable £300 daily allowances for peers, rather than salaries, and 50 per cent more members, taking the total to 450, rather than 300 as originally proposed. All members of the new upper chamber will be able to work part-time, rather than be expected to be full-time legislators.
The Times has focused on Ed Miliband and Labour’s claim that it backs the proposal in principle, but not the timetable for debate. We’re assured their position has nothing whatsoever to do with hurting the Coalition. Nobody’s convinced.
This hasn’t dampened Nick’s spirits though. Apparently, he told his aides it's 'game on' after Cabinet yesterday. You can read more in the Guardian’s report.
I gather the Lib Dem leader is convinced the Tories are genuine and that Mr Cameron can deliver it, which is surprising given what we know about Tory opposition. Maybe all those rebels will fall away like a summer mist. I'm not sure they will: their dander is up, and as I blogged yesterday, they are being given discrete signals that it's safe to oppose the Bill, and in particular the programme motion. Indeed, it is said that Mr Cameron has told colleagues privately that he cannot be seen to oppose it but he doesn't mind if others do.
And the bad economic news keeps coming. Yesterday Sir Mervyn King told the Treasury Select Committee:
“When this crisis began in 2007, most people did not believe we would still be here. I don’t think we’re yet half way through this. I’ve always said that and I’m still saying it. My estimate of how long it will take to recover is expanding all the time.”
This is a step up on his previous statements on the health of the economy. Last year, he said the UK was in the middle of “seven lean years” – suggesting a full recovery was within sight in 2014. He also said that the Bank had not ruled out cutting rates from their current historic low of 0.5pc right down to zero. You can read our report here .
Meanwhile, over in the eurozone Angela Merkel flies to Paris to meet François Hollande today. They hope to forge a “concrete path” for Europe. Yesterday a blueprint for a eurozone political federation was unveiled. It'll be built over a decade entailing four stages and that will be fleshed out by the heads of the four of the main European institutions. The Guardian says the battle over the detail starts tomorrow.
The FT - following our story yesterday about Peter Sands and his EU memo to the PM - reports that the City of London is taking fright at Dave’s interaction with the EU. The Corporation believes that six out of the seven “safeguards” Mr Cameron has laid down were either unnecessary or potentially harmful to London’s commercial interests. The FT’s leader column says this “undercuts the government’s whole negotiating strategy.”
On the home front, Michael Gove is being accused of a U-turn over his O-levels plans. He hinted yesterday that he may not introduce a new CSE-type exam by saying every child would have the opportunity to take the tougher exam.
Aides later explained that he wanted "no separation of sheep and goats" and suggested that slower learners could simply take the O-level later in their school lives. They denied this was a "watering-down" of his proposals announced last week. You can read more in our report.
Nick Clegg will delight the cities of Birmingham, South Tyneside and Northumberland among others today by drawing attention to the fact they are Britain's youth unemployment hotspots.
At 9am at the Royal Society. He’ll say:
“Youth unemployment is a national problem but it is more acute in certain places. Maybe inner city areas with high levels of disadvantage, rural communities where businesses are struggling to take people on, former mining towns at the sharp end of industrial decline. Whatever the reason, these are the toughest parts of the country to be young, down, and out.”
But he’s got a plan. He’s offering to bring forward the wage subsidy and provide more training and coaching for young people.
Conveniently, the NEET figures are also out today.
Meanwhile, we’ve splashed on proof that foreign students are being offered places at top British universities with far lower A-level grades than school pupils in this country. Our undercover reporters caught the official agent in Beijing for Russell Group universities claiming that she could secure oversubscribed places for a Chinese student purporting to have scored three C grades in their A-levels - when British students are required to have at least A, A and B.
Dramatic stuff. It’ll be interesting to see how the Government - and David Willetts in particular - responds. We report that Mr Willetts has been lobbying privately for foreign students to be excluded from the immigration numbers, but Damian Green has publicly hit back. Yesterday Mr Green told the Commons business, innovation and skills committee that the idea “doesn’t accord with any kind of common sense”.
And finally, a small but telling thing to watch for today will be the publication of the Home Affairs Select Committee report on the appointment of Theresa May’s preferred candidate for Chief Inspector of Constabulary, Tom Winsor.
He’s the author of recent controversial report on police pay and conditions and didn’t go down too well in yesterday’s hearing. If the Committee recommends against him, many believe Mrs May will ram through the appointment anyway. Watch this space.
TWEETS AND TWITS
Labour MP Jamie Reed:
“@jreedmp: Tory MPs eh? Fuel duty eh? Rhymes with 'cumquats'. A word, if nothing, we don't hear enough of.”
Latest YouGov/The Sun results: Conservatives 34%, Labour 42%, Lib Dems 11%, UKIP 7%
Overall government approval rating: -36
In The Telegraph
Benedict Brogan: Winks and nudges are no way to run a European policy
Paul Bew: What shaking hands with Queen Elizabeth means to Sinn Fein
Leader: The NHS is paying for Labour’s dodgy deals
Leader: Duty freeze
Best of the rest
Nick Clegg in the Financial Times: Be alive to the risks and rewards of a banking union
Danny Finkelstein in the Times: People can take the pain if they share the gain
Christina Patterson in the Independent: The painful truth is that we have too many hospitals
Simon Jenkins in the Guardian: Despite the Queen's handshake with Martin McGuinness there is little reconciliation
Today: House of Lords Reform Bill published
Today: The Evening Standard hosts a public debate on London's 'aviation crisis'. Westminster, London
Today: Andrew Lansley gives a speech at the Commissioning Conference 2012
8.45am: Nick Clegg is speaking at the CBI jobs summit. The Royal Society, 6-9 Carlton House Terrace, London
9.30am: Schools Minister Nick Gibb and Charlie Taylor, the Government’s Behaviour Tsar, appear before the Education Select Committee to discuss behaviour in schools. Wilson Room, Portcullis House
11am: Iain Duncan Smith delivers speech on welfare reform at U.S. think tank. Heritage Foundation, Washington, DC
11.30am: Wales Questions
12pm: David Cameron at PMQs
12pm: The Home Affairs Committee publishes its report on the Appointment of Her Majesty’s Chief Inspector of Constabulary
2.30pm: Francis Maude appears before the Defence Select Committee to discuss defence and cyber-security. Wilson Room, Portcullis House
4.15pm: Lin Homer, the chief executive and Permanent Secretary of HM Revenue and Customs, Dave Hartnett, Permanent Secretary for Tax, HM Revenue and Customs and Jim Harra, Director General Business Tax, HMRC, appear before the Public Accounts Select Committee. Room 15, Palace of Westminster
6.30pm: Dr Arthur Laffer gives a talk his Laffer curve for the IEA. Harvey Goodwin Suite, Church House, Church House Dean's Yard, London
7pm: Boris Johnson takes part in the Talk London debate. Central Methodist Central Hall, Westminster, London