Monday, 24 June 2013

Signed, sealed, delivered..

Good morning. There's a hint of anti-climax in the air. All that talk of blood on the walls, pain in the Star Chamber, and political violence turned out to be over-done. The CSR settlement was completed in an atmosphere of calm and with a striking degree of collegiality. If anything, I detect a sense - certainly in the Treasury - that more could have been achieved, as I recorded in my blog last weekToday's FT (£) quotes an Osborne aide: "The cuts aren't that big - it's entirely manageable", which sums up the view. The final piece was the deal with BiS. Beware the spin that suggests Vince Cable's department has got off lightly. The Treasury insists "it's not a sweet deal". I'm told their deal is "pretty deep", with cuts the same level as the Home Office and more than the MoD. According to one account Mr Cable's position was more about a political argument in favour of more borrowing to fund his capital ambitions - and tilt towards Labour's Plan B.
We now get the lull before publication on Wednesday, which is a dangerous time as parties and ministers jockey to shape the narrative in their favour. The Chancellor needs the story to be one of competence, of a necessary job being done with a minimum of fuss. He also needs it to advance the case for his political recovery, as Matthew d'Ancona argued yesterday. The more the process of securing cross-Whitehall savings is managed with a degree of ease, the easier that is. But with debt still climbing, the peril must be that it starts to look too easy, not serious enough. The Chancellor can't afford accusations that he is giving his colleagues an easy ride.
Unsurprisingly, it was Mr Cable who proved most difficult. He accused the Treasury of "amateur dramatics" in handling the final stages of the negotiations, as the FT (£) notes. Mr Cable has sought a budget that allows him to tell a "convincing story on growth". One aspect of this would be an increase in infrastructure spending. Amid criticism that figures show infrastructure spending in the first quarter fell 50 per cent on the previous quarter and nearly 40 per cent on the previous year, as reported in the FT (£), Mr Osborne will commit to a new focus on infrastructure in the CSR. Danny Alexander last night tweeted "On thursday I will set out our infrastructure plans to build the recovery".
It all means that George Osborne has no need to use his instrument of political torture, the Star Chamber, as I predicted last Thursday. Despite all the talk about the stubbornness of the National Union of Ministers, the Treasury has been remarkably successful in extracting the £11.5 billion cuts it wanted, helped by agreeing efficiency cuts with Philip Hammond to avoid further troop reductions. For unprotected departments, this averaged eight per cent - which is why an unlikely coalition including Vince Cable, Philip Hammond and Eric Pickles all attempted (unsuccessfully) to reclassify parts of their budget as "health spending".
We applaud the developments, noting that,  "By sheer force of financial necessity, we appear to be moving to a situation in which the debate has a rather different and rather more important focus: namely, what exactly the state can afford in the first place." The Times (£) is of the view that, "it is not only 2015 that will be an austerity election, it is likely that 2020 will be too." Meanwhile Philip Stephens in the FT (£) thinks that the best spending cut of all would be to shut down the Treasury.
Mr Osborne has reason to be buoyant now, as his tweet last night - "With thanks to all my cabinet colleagues and hard work of Treasury team, today we've settled all departments ahead of the spending round" showed. But even more will be asked of ministers in next year's CSR.
Until the next election, universal benefits for pensioners are safe. But that won't last much longer, with Mr Osborne's comments yesterday that he would "look at" the affordability of these benefits after 2015 meaning that all three main parties are now committed to reviewing universal pensioner benefits. Interestingly, I'm told that Labour would have already committed to means-testing free TV licences, but the party is unconvinced over whether the administrative costs of doing so would outweigh the savings.
For Labour, a little difficulty on the economy remains. It is not clear exactly how Ed M's promise of "ruthless" control of government spending (that was Saturday) ties in with Ed B's admittance that Labour would borrow more for capital projects (that was Sunday). The Mail cannot be alone in thinking: "Truly, the thought of the two Eds side-by-side in Downing Street, embarking on yet another debt binge, is terrifying."
This confusion obscures an important Labour policy announcement.Liam Byrne writes for us suggesting that jobless over-50s deserve higher benefits - a huge step towards Labour favouring a contributory system of welfare whereby those with strong work histories receive higher out-of-work benefits.
Dave may have found a way to improve relations with the backbenchers. How? Return to the old guard. The new reshuffle will send a message (too late, some would say) to the pre-2010 intake that they are still in the ministerial running: indeed, some MPs could return as ministers after a 16 year interval, while Sir George Young will survive as Chief Whip. Not all would want to serve, but names that could be considered include John Redwood, Stephen Dorrell, David Davis and Sir Malcolm Rifkind.Read more on my blog
And even if he ignores the 2010 intake in the reshuffle, Dave's appeal with the younger generation is assured. Just look at him riding his scooter in Regent's Park in the Mail.  
Forget the CSR, the real news is that Michael Gove's new history curriculum is nearing completion. Such is the controversy caused by the draft curriculum released in February that David Cameron and Nick Clegg have now been sent a rewritten curriculum for their approval,reports The Times (£). The new version is more global in outlook, and aims to avoid the  "defect of explanation or interpretation" that Mr Gove admitted featured in the first draft. But if Mr Gove thinks the unions are now his friends he should think again: teachers in nearly 3000 schools plan a day of strikes on Thursday in protest at pay and pension curbs, reports The Independent (not online).
In a week when the wisdom of protected budgets attract more scrutiny than ever, someone had to defend the international aid budget. That someone is Andrew Mitchell. Writing for us, Mr Mitchell explains his pride in Britain using 0.7 per cent of national income on aid. Through measures like cutting the number of countries receiving bilateral aid from 43 to 27 and branding donations with a Union flag, an aid strategy "that is both moral and pragmatic" has developed, Mr Mitchell argues. Well-argued as his case is, I suspect a good deal of Mr Mitchell's party will still require convincing to keep aid protected in the next manifesto. Mr Mitchell himself may have little say in that: I am told his ministerial comeback, if it comes, will have to wait until after 2015.

Danny Alexander tries to steal a little of Mr Osborne's thunder:
@dannyalexander: With all budgets settled, we have delivered the savings we need. On thursday I will set out our infrastructure plans to build the recovery

In the Telegraph
Jeff Randall - It can't be done, George
Best of the rest
Tim Montgomerie in The Times (£) - Build homes. Give hope to the next generation
Philip Stephens in The Financial Times (£) - The best spending cut of all? Shut down the Treasury
Today, Belfast: India conference. Speakers include Anand Sharma, Minister of Commerce and Industry for the Government of India, and Vince Cable, UK Business Secretary.
1610 London: Government troubled families czar Louise Casey gives evidence to Commons Communities Committee. Wilson Room, Portcullis House, London.
1730 Cardiff: Wales Secretary David Jones speech on "Wales in the continuing Union".