Wednesday, 26 June 2013

Suspense missing from CSR..

Good morning. Westminster is struggling to muster enthusiasm for the spending review. There are a few trails around - we report that the spy agencies will be winners, with an inflation-busting increase in their budgets; the Times (£) says incremental public sector pay will be scrappedthe Mail says expat pensioners won't get the winter fuel allowance - but no bombshells. Even the prospect of a showdown between Ed Balls and George Osborne has been diminished after their joint outings on Marr on Sunday and at Treasury Questions yesterday where, as Michael Deacon observed, "It doesn’t matter what the question’s about, or who’s asking it – George Osborne invariably answers with an attack on his opposite number." The Treasury was relaxed enough last night to release a photo (the Times (£) have it here) of the Chancellor at the table in his office putting the finishing touches to a burger and fries (another great office of state diminished by the let-it-all-hang-out tyranny of the digital age IMHO but what do I know?).
Unprotected departments are taking another whack, but AME spending remains perilously high and growth isn't doing anything to bolster tax revenues and reduce the need for the automatic stabilisers. As Jeremy Warner keeps reminding us, the public finances remain critically bad and we are just a crisis away from disaster. Mr Osborne hopes today will go some way to restoring his political credibility. We'll see. One thing the CSR seems to have done is bolster the Coalition. The relative ease with which the deals were done suggests the partnership will last the distance; indeed, the same goes for Nick Clegg's acceptance that avoiding further cuts in welfare and pensions is "unrealistic". But from tomorrow, for the Treasury and Mr Osborne, it's back to work. This spending review is a footnote.
Ed Miliband has just spoken to the press giving a preview of his response in the Commons today:
What we see again today is the British people paying the price for this government’s failure. The government tell us the economy is healing but actually it is getting worse for ordinary families. What we actually need is a fairer plan to get growth moving, living standards rising and the deficit down.
There are signs of another U-turn from Dave, this time on the idea of migrant bonds. The PM's allies said that Dave had "not signed off" details of the policy, reports the FT (£), amid concerns it could undermine his "open for business" message. Neither Dave nor Nick Clegg have agreed either the scope or the size of the mooted migrant bonds. Others in the Cabinet understood to have voiced concerns include Vince Cable and David Willetts. To the FT (£), the idea is a flawed policy that will hobble Britain in the global race.
If Michael Gove needed more motivation for his education reforms,yesterday's OECD report may have provided it. The OECD described British drop-out rates from education and employment as the country’s "biggest challenge"; almost a quarter of under-30s who lack secondary school qualifications are so-called Neets - neither employed, nor in education or training. Andreas Schleicher, the OECD’s deputy director, warned that some of these unemployed young people had "given up". As we argue, the report reaffirms the vital importance of the Coalition's welfare and education reforms.
Those who suspected that yesterday's announcement of a marriage tax break was a cynical attempt to get Conservatives to canvass for Dave in 2015 have some fresh ammunition this morning. A senior Lib Dem source told the Mail: "Cameron and Osborne made no effort at all to get the marriage tax break in the Queen’s Speech." Internal Tory pressure on marriage tax breaks is growing, with Tim Loughton compiling a letter urging MPs to take a stand, while a Private Member's Bill is also being introduced to bring in proposals for a marriage tax break.
The economic situation has destroyed many old certainties in British life. One is that the young hate the Conservatives: a recent YouGov poll had 31 per cent of 18-24 year-olds supporting the Tories, compared with 27 per cent supporting Labour. The Guardian seem very worried, running a special report on the development (not online). Perhaps they are impressed by Dave's efforts at a school sports day run with other dads yesterday: running barefoot, he finished in the top half, fresh from chairing a Cabinet meeting. Another Tory who is down with the young is Mark Harper, he of table dancing in Soho fame. Unfortunately Mr Harper fell off and broke a bone in his foot, as yesterday's Standard reported; but he is now "cracking on" with his ministerial duties.
Sir Mervyn King yesterday made his 103rd and final appearance before the Treasury Select Committee, warning of the "tremendous pressure" banks are putting on politicians when faced with recommendations from banking supervisors at the Prudential Regulation Authority. He also warned that financial markets had "jumped the gun" in predicting a return to normal interest rates. Sir Mervyn's farewell has prompted assessment of his reign, with the FT (£) having a useful debate about his legacy. Chris Giles praises him as a man who "held his ground, defended the operational independence of the BoE and performed this extremely difficult public service without complaint", while Philip Stephens thinksSir Mervyn "bears particular responsibility for underestimating the risks in the good times, failing to act quickly enough when they turned bad, and then advocating a too-far-too-fast approach to necessary fiscal retrenchment." Iain Martin takes a similar line, writing that, for all his affability, Sir Mervyn "is a central banker whose lovingly crafted theories turned out to be hopelessly misguided."    
The battle to replace Eric Joyce is becoming increasingly vicious. The local Labour party in Falkirk has put in "special measures" after claims some unions were packing membership lists to influence the vote. A Labour spokesman said an inquiry "found sufficient evidence to raise concern about selection", as the Mirror reports (not online).

David Drew won't be raising a toast to Sir Mervyn King:
@DavidEDrew: So farewell 'Montague' King worst Governor of BoE since Norman in 1920s not helped by Osborne thinking he"s Churchill's reincarnation#down

In the Telegraph
Best of the rest
Daniel Finkelstein in The Times (£) - Osborne must stick to his Scalextric model
John Kay in The Financial Times (£) - Britain leads the world on banking reform
1230 London: Chancellor George Osborne will publish his spending review. House of Commons.