Wednesday, 19 June 2013

Mr Osborne must resist the anti-banker mob..

Good morning. The Parliamentary Commission on Banking Standards report is the doorstopper of the day. George Osborne has made welcoming noises, but beyond the enthusiastic-ish reception the Chancellor has to work out how to endorse it, and implement it, without doing anything that would stuff the City and the financial sector. The way the recovery is going, Mr Osborne can't afford to hobble one of the greatest contributors to UK wealth just because it suits the anti-banker mob. The point about a new tort of reckless behaviour is a case in point: those who want bankers swinging from lampposts will delight in the idea, but others might say it is fraught with peril: can a "reckless manner" be quantified? What to some is reckless might to others be no more than the kind of healthy risk-taking that must be part of how the financial sector works. When Mr Osborne is taken to task for the occasional spot of banker-bashing, he replies that he has to have mind to public opinion. But that's a short-term thing. It changes. His other duty is to the long-term health of the City and its contribution to the British economy in the global race Dave talks about. In his Mansion House speech tonight he might give us an idea how he proposes to marry the two.
Andrew Tyrie the Chairman of the Commission on Banking Standards, explained his proposals on Today this morning:
Bankers are different. Bankers and banks are in a position where they can not just do harm to their shareholders but do harm to the whole economy and end up putting taxpayers on the hook. Remember this can only be triggered - the reckless misconduct investigation - when there has been taxpayer support for a bank.
The report weighs in at a cool 571 pages. Besides the "reckless" point, the most important comments refer to the government's interference in the running of RBS, described as "not acceptable". Other key recommendations include urging the regulator to do more to promote competition; a new approval process for senior industry personnel; and plans to limit sales-based incentives across the banking sector, with bonuses being deferred for up to 10 years. The FT (£) has a useful breakdown.  Speaking of the link between politics and banking, Mark Carney has appointed Charlote Hogg to the new post of Bank of England chief operating officer - as well as a distinguished banker, she is also the son of the former Tory minister Douglas Hogg.
It won't surprise anyone to learn that Ed Balls has already laid down the gauntlet to Mr Osborne, welcoming the report's "radical blueprint" for change. Mr Osborne's response tonight is crucial: if the Conservatives aren't going to defend the City, then who is?
The referendum Bill is published in full by James Wharton for today's First Reading of his Bill. The choice of sponsors is telling: he's gone for a spread of interests, geographical areas and influence, with Guto Bebb, Dr Liam Fox, Zac Goldsmith and Graham Brady among the more interesting names. Intriguingly, David Cameron and William Hague were keen to be sponsors (the maximum allowed is 12, including the Member in charge) but were told by the Clerks and the Speaker that this would make it a Government Bill.
Labour and the Lib Dems are expected to abstain from the Second Reading on July 5th. Crucial to the Bill's chances of passing will be how quickly it can get out of Committee stage and so avoid being timed out. November 8th would then loom as Report stage, when the wrecking efforts would begin by an unholy alliance of those opposed in principle and those who want to save Ed Miliband from embarrassment. The overwhelming likelihood, as I write in my blog, is that the Bill will die in the Lords: but by then it could have served its central purpose.
With the aim of giving the Bill a push, the Let Britain Decide campaign has announced that, from today the public will be able to co-sponsor the EU Referendum Bill online. Full details at Let Britain Decide. But there is also a more traditional option for the non-Facebook savvy, with the Conservatives allowing the physical co-sponsoring of the Bill before the Second Reading of the Bill on July 5th.
The G8 summit didn't fail to deliver. Dave got his historic announcement:a global crackdown on the wearing of ties, as Michael Deacon notes. But there was a bit of substance to go with all the smart casual attire, with Mr Cameron earning a significant win on tax avoidance to take back. And he also dared to make the case that a tax avoidance clampdown could be linked to lower taxes. Of course, what would really make the global beanfeast worthwhile would be an EU-US trade deal, as we note.
For all the grand hopes, the Syrian issue hasn't been resolved. Vladimir Putin is still refusing to arm the rebels, although Barack Obama and Mr Cameron did get Mr Putin to agree plans for a transitional government which could eventually replace the Assad regime. Mr Cameron also insisted that Britain had "learnt the lessons of Iraq" and Syria would not turn into a repeat. Ed Miliband was doubtless far from Mr Cameron's thoughts as discussions on Syria progressed, but Labour's opposition to intervention might cause it problems down the line, as Mary Riddell observes
If a Commons vote is called, if powerful US brokers such as John Kerry urge British co-operation, if the special relationship is at stake and if the worst disaster since Rwanda worsens, could Mr Miliband still vote against the Government?
We know that the NHS budget will not be cut in the Comprehensive Spending Review, even as defence suffers unreasonable cuts. But a new Reform report makes the interesting case that NHS innovation is impeded by a lack of spending cuts: if cuts can stimulate innovation in policing, defence and local government, why not health and schools? A timely example of the benefits cuts can have comes with the Ministry of Defence's growing confidence that its latest cuts will be achieved through efficiency savings and renegotiation of equipment contracts rather than further manpower cuts, as the FT (£) notes.
Meanwhile planned Treasury savings in pensions have not materialised, at least not yet. The plan to raise the pension contributions made by nurses, teachers and civil servants by an average of 3 per cent was expected to save £3 billion in the Treasury top-up by 2015-16; instead the sums paid by the Treasury will actually rise by £300 million, as the Times (£) reports
Aged 45, Michael Gove's descent into middle-age is complete. That's the verdict of his wife Sarah Vine, who laments his new golf obsession in The Times (£): "I would rather my husband bought his entire wardrobe from the Peter Christian catalogue than see him take up golf." Reports than Diane Abbott is joining Mr Gove on the golf course are as yet unconfirmed.
If playing golf is considered one sign of getting older, then voting Conservative is often viewed as one too. But a new IPSOS-Mori poll suggests that old assumption may need revisiting, with the baby-boomer generation not becoming Conservative with age in a way that the pre-war generation did.
Ed faces more headlines he could have done without courtesy of those pesky unions. The leader of Unison, one of Labour's largest backers,made these remarks:
In the tabloid press, so much is written about benefits abuses - young women having babies to get state hand-outs. But conference, that's enough on Kate Middleton.
It's a reminder of less refined aspects of the Left - those same parts which got Mr Miliband elected. If he is to become PM, Mr Miliband will have to find a way of clamping down on these periodic outbursts from union leaders.

Chuka Umanna welcomes the banking recommendations:
@ChukaUmanna: It is absolutely right, as the Parliamentary Banking Commission says, that senior bankers guilty of reckless misconduct should be jailed

In the Telegraph
Best of the rest
Daniel Finkelstein in The Times (£) - We must never forget our debt to America
Martin Wolf in The Financial Times (£) - The toxic legacy of the Greek crisis
Ian Birrell in The Independent - Aid isn't ending world hunger. It's a sham
1230 London: PM to make statement to MPs on G8 summit. House of Commons.
1830 London: Japanese Prime Minister Shinzo Abe speech on Japan's economic policy, following this year's G8 Summit. Guildhall.

1900 London: Chancellor George Osborne and the Governor of the Bank of England speeches to the Lord Mayor's banquet. Mansion House.