Good morning. There is more confusion over Labour's spending plans, following Ed Balls' declaration that Labour's cap on welfare would cover the elderly. It amounted to a pledge to limit the state pension, which is legally difficult given the statutory triple lock introduced by the Coalition. The Mirror pointed out the obvious implication - that Mr Balls would have to raise the retirement age to pay for it. Having taken so long to make any substantive policy announcements, it was puzzling that Labour seemed so lacking in clarity.
In many ways the short-term political fallout - reflected in The Times' (£) headline "Balls accused of plan to cut state pension", and the Mail's reference to "outrage" - is unfortunate. It will distract from the wider issue here - the welfare budget for pensioners currently accounts for £110 billion of the total £165 billion annually spent on social security. As I blog, George Osborne should be thanking Mr Balls:
By raising 'the truth' that politicians dare not mention – that we are not, in fact, all in it together because the elderly have been protected from austerity – Mr Balls has done Mr Osborne and the political classes generally a huge favour. His difficulty, of course, is that spending on pensions is guaranteed by law. The triple lock means growth in retirement spending is automatic.
Andrew Haldenby agrees that Mr Balls has thrown down the gauntlet to the Conservatives. But Rob Colvile notes that, following Labour's housing problem, their pensions policy now also looks exposed. The wonder is whether, given the huge significance of the grey vote, the Conservatives really will look again at pension spending?
DAVE CALLS EU A STRENGTH
Dave will use his speech in Essex today to make the case that membership of the EU is a British strength. Mr Cameron will also outline the key challenges for Britain in the global race:
We have identified, very clearly, our key areas of national weakness compared to the rest of the world. One – our debt-fuelled, unbalanced economy. Two – our bloated welfare system. Three – our under-performing education system
While the words on Europe won't be too popular among his party, the rest of the speech should sit well with disgruntled backbenchers. This matters, given the perennial concern over Graham Brady receiving the 46 letters necessary to trigger a no-confidence vote. On that topic, The Times (£) reports that the Whips' Office are accused of leaking the name of Andrew Bridgen as one of the estimated two dozen MPs who have demanded a no-confidence motion.
HAMMOND GETS INTO LINE
There's good news for Dave as one of the most dogged opponents of spending cuts gets into line ahead of June 26th's Comprehensive Spending Review. Philip Hammond will today publish a Defence Procurement White Paper that will outline how a new independent watchdog could ensure value for money from sensitive defence contracts which are currently not put out to tender. These efficiency savings will mean that cuts to front-line troops and services can be avoided. Providing it's not too good to be true, it will prove short-term relief for the Government - and would be a further indicator that Mr Hammond is not to be under-estimated in any future Tory leadership race.
Meanwhile, Mr Osborne will focus on transport projects as proof of his commitment to growth, with the FT (£) reporting that he plans to allocate £15bn for major infrastructure projects between 2015 and 2020.
GOVERNMENT SELLING OFF BANK SHARES
Mr Osborne is also preparing to set out his exit strategy from the banking sector, reports the FT (£). Mr Osborne is expected to use his Mansion House speech on June 19 to outline his wish to begin reprivatising both Lloyds and RBS. One idea is to transfer shares worth a total of between £1100 and £1650 in the banks to members of the public, who would only gain if the share price rose, which is advocated by Policy Exchange's James Barty in the FT (£):
It is the best mechanism for ensuring the highest price in the near term and a stable share price in the after-market. It also enables a sizeable initial raise of money for the Treasury. Finally and most importantly it gives the taxpayer the chance to benefit properly from the recovery in both banks.
YEO NO SHOW
Following a sting in which he claimed he could introduce businessmen to members of the Government, Tim Yeo pulled out of a series of Sunday interviews. Mr Yeo's decision promoted one broadcaster to show a picture of an empty chair captioned "No show Yeo", as we report. While Mr Yeo denies all allegations, it is all something that Dave could do without at a time when John Major comparisons - unfair as they are - seem back in vogue. The Mirror's "Yeo Must Go" headline is echoed byPaul Staines in The Times (£), who says that "There is a clear conflict of interest that cannot be overcome by Mr Yeo merely staying silent".
HAGUE NOT WORRIED ABOUT SNOOPING
William Hague has said that Britons have "nothing to fear" from the US intelligence services' harvesting of online communication. Mr Hague yesterday said that intelligence gathering in the UK is governed by a "very strong legal framework" to protect personal liberties. The British agency Government Communications Headquarters last year commissioned 197 reports from Prism, which is operated by the US’s National Security Agency, and Lord Carlile the Government’s former independent reviewer of counter-terrorism, has asked for guarantees that the Patriot Act had no jurisdiction in the UK. The Times (£) says that "In an age when everybody has an e-mail address, it is not enough to simply ask the public to trust that all is well."
BRITAIN'S HIDDEN £10 BILLION IRELAND BAILOUT
We may not have realised it, but Britain gave an extra £10 billion bailout to Ireland. The Times (£) reports that the sum was pumped into Ulster Bank, a subsidiary of the state-owned Royal Bank of Scotland, and was never explicitly approved by Parliament. Amid all the talk of the secrecy of the Bilderberg Group, it's a reminder that we suffer from a lack of transparency closer to home. Talking of Bilderberg, it's worth watching our video of a conspiracy theorist's mad rant at Andrew Neil yesterday.
BRITAIN IN THE EURO - AND BALLS IN NO 10
For anyone despairing of Britain's current economic plight, it's worth looking at Dominic Sandbrook's piece on a parallel world, ten years after Britain had decided to join the euro. One day, Gordon Brown will receive a lot of thanks for keeping Britain out of the euro.
TWEETS AND TWITS
Stewart Jackson is confused by Labour's policy development:
Stewart Jackson is confused by Labour's policy development:
@SJacksonMP: Labour seems to be in an incoherent unconvincing shambles re its welfare spending "cap." They've had three years to develop a saleable policy
In the Telegraph
In the Telegraph
Boris Johnson - The proud moment when I realised I was worth hacking
Andrew Haldenby - At last, the parties get serious on spending
Charles Moore - Little things that made it big in the Fifties
Telegraph View - Scrimping and saving should define the debate
Best of the rest
Gaby Hinsliff in The Times (£) - We've made it so easy for the data snoopers
Paul Staines in The Times (£) - Yeo must go. He cannot have this conflict of interest
Dominic Sandbrook in The Daily Mail - What if we HAD joined the euro?
James Barty in The Financial Times (£) - A blueprint for returning Lloyds and RBS to the private sector
09:15 London: Government to set out UK plans to mark the Centenary of the First World War next year will be announced by Culture Secretary Maria Miller, Communities Secretary Eric Pickles and Andrew Murrison, the Prime Minister's Special Representative for the Centenary. The Department for Culture, Media and Sport, 100 Parliament Street
10:00 London: Prime Minister David Cameron to make a speech ahead of the G8. The PM will do a site following the speech. London Gateway, Essex