Can Clegg stop the rot..

Good morning. The absence of other political news means that there is plenty of time to go over the gory details of the Lord Rennard affair, and work out what it says about the Liberal Democrats. The underlying lesson boils down to this: the decentralised and democratic structures that were so appealing to Lib Dems when they were an eccentric fringe party suddenly don't seem so clever. And Nick Clegg is coming out of it all very badly indeed. Note the last line of Cathy Newman's compelling account in The Times of how the silence was broken: "Nearly a year after we broadcast her allegations, we’re still waiting for Nick Clegg to appear on our programme about the Rennard affair, to tell us what he knows is right." In the Telegraph, Dan Hodges reckons that the significance of the Rennard affair is to prove that the Lib Dems could not make the transition from a party of protest to a party of government. Once again, Mr Clegg comes out badly, with Dan saying that he "has clearly learnt nothing about the basics of leadership and issue management at a national level. His statement 'I don’t think it is my job as leader of the party to try to micromanage this' wasn’t so much an abdication of responsibility as the political equivalent of removing his uniform, donning a dress and making a dash for the lifeboats."

It gets worse: Lord Rennard seems adamant that his political career should not end. His allies now warn Nick Clegg that he faces a "bloodbath" that will "rip the Liberal Democrats apart" unless he blocks an inquiry into Lord Rennard's conduct. Lord Rennard is also preparing to take legal action over his suspension from the Lib Dems, which is initially for 14 weeks, while the party investigates whether he had brought it into disrepute by refusing to apologise. A Times/YouGov poll shows the voters don't think very much of this all: 41 per cent think that he should leave the party, compared with 33 per cent who think that he should stay, and 41 per cent now think of the Lib Dems as sleazy. Can Mr Clegg stop the rot? Indeed, with the Lib Dems' structures being what they are, does he even have the power to?

TIME FOR A MORE POSITIVE CONSERVATISM?

This is an intervention Conservatives will feel they could have done without. With shades of Theresa May's "nasty party" comment, Treasury minister Nicky Morgan has popped up to tell the Tories they need to stop being haters: "If we talk about what we hate all the time, we're not talking about we like and what we want to do to help people who want to do well." It's hard to say who Miss Morgan is attacking - some will see the intervention as a counter to the Lynton Crosby school of doing politics, others as a way of imploring the Chancellor to sound just a little more jolly. In the Guardian, Melissa Kite gives the party five ways to start sounding a bit more upbeat.

IS OWEN PATERSON GOING TO BRUSSELS?

As I detail in my blog, Owen Paterson's name is being advanced by the Right as a possible candidate to be Britain's next European Commissioner. Mr Paterson ticks a number of boxes: the Right wants to send someone into negotiations who will be unashamedly in favour of renegotiation, if not in favour of leaving, and he's also a polyglot. When Baroness Ashton steps down in the Summer, the Tory Right will press Mr Cameron to show he means what he says by sending one of their own into the lion's den.

MAY v CAMERON

This could be an explosive fight between the modernisers and the Right of the Conservative Party - but many will be surpised to see who is playing which part. The Times reports that Theresa May wants to curb use of stop-and-search powers - but Dave, worried about being soft on law and order, doesn't agree. The real significance is liberalising stop-and-search laws are seen as crucial to expanding Tory appeal with BME voters, only 16 per cent of whom supported the Conservatives in 2010.

THE ALTERNATIVE TO LEANER GOVERNMENT

 

Ahead of today's PMQs, Ed Balls could have done without this: the BBC using a photo of his girth (from 2008) as an example of men trying to lose weight. The alternative to "permanently leaner government", the Conservatives might say.

LABOUR'S PLAN TO KILL THE EU REFERENDUM BILL

Will the EU Referendum Bill be approved by both houses before its deadline at the end of February? Not if Labour has anything to do with it. Peers have tabled over 50 amendments for the committee stage of the EU Referendum Bill, including holding a petition of a million voters, posing the questions in Gaelic, Doric and Cornish and giving prisoners the vote. No wonder that Lord Dobbs says that "Labour intend to filibuster this Bill."

UKIP GEAR UP FOR BY-ELECTION

Ukip has chosen its candidate for the Wythenshawe and Sale East by-election next month - and it's a former Labour supporter. John Bickley, a self-made businessman and son of a Labour trade unionist who grew up in the constituency, will be officially launched as Ukip's candidate tomorrow morning.

THE RISE OF GREEN C**P

Who was it who wanted to get rid of "green c***p" again? The Times reportsthat green taxes on energy bills will more than double by 2020, and tariffs to fund wind turbines and solar panels will lift average gas and electricity bills to £1,500 a year. Tim Yeo yesterday took to attacking the energy bosses in the Energy and Climate Change Select Committee, telling them: "Your attitude is typical of a monopoly, particularly whose charges are not visible to the customers who are paying for them."   

BILL GATES BATS FOR DAVE

Dave has received an endorsement from an unlikely source: Bill Gates. In an interview with The Sun, Mr Gates predicted that, "by 2035, there will be almost no poor countries left in the world." He also praised the Coalition's decision to ring-fence the international aid budget, to 0.7 per cent of GDP, saying that "The UK's generosity is something people should feel good about" and the money wasn't being wasted: "Your ministry is smarter about doing measurement systems now, we work in partnership with them."

The Morning Briefing email is edited by Tim Wigmore. Follow Tim on Twitter 

TWEETS AND TWITS

The man with the Midas touch:

@chhcalling: King Midas accidentally touched two babysitters once and turned them into an Au pair.

BEST COMMENT

In the Telegraph  

Dan Hodges - The Lord Rennard shambles proves that the Lib Dems are still unfit for government

Benedict Brogan - There will be Tory trouble on Europe unless David Cameron sends a Right-winger to Brussels

Mary Riddell - Britain is educating its children for jobs that soon won’t exist

Telegraph View - Energy costs are holding back Britain’s growth

Best of the rest 

Cathy Newman in The Times - Lord Rennard: how the silence was broken

Daniel Finkelstein in The Times - Dave and Nick, time to prepare divorce papers

Melissa Kite in The Guardian - 5 ways to cheer up the Tories (and kill off the 'nasty party')

John Kay in The Financial Times - Look to the Bard for immigration lore 

THE AGENDA

Foreign Secretary William Hague to attend Geneva II peace talks on Syria.

9.30am HM Chief Inspector of Education, Sir Michael Wilshaw, gives evidence to the Commons Education Committee. Grimond Room, Portcullis House.

9.30am Unemployment figures. Latest unemployment figures published by ONS.

9.45am Latest ruling on legal challenges brought against the Government's HS2 high-speed rail scheme.

10.45am Business Secretary Vince Cable gives evidence to the Commons Business, Innovation and Skills Committee. Wilson Room, Portcullis House.

12pm Prime Minister's Questions.

12.30pm Culture Secretary Maria Miller gives keynote speech. Ms Miller will discuss The Value of Culture in front of figures from the arts, culture and heritage worlds. British Library Conference Centre, British Library.

2.15pm Commons Public Accounts Committee takes evidence on the impact of infrastructure investment on consumer bills.

3pm Environment Minister Dan Rogerson gives evidence to the Commons Environment, Food and Rural Affairs Committee on the winter floods. Thatcher Room, Portcullis House.

4.15pm Communities Secretary Eric Pickles gives evidence to the Commons Communities and Local Government Committee. Grimond Room, Portcullis House.

Rennard & the Lib Dems..

Good morning. How does Nick Clegg get out of this one? The headlines are terrible, in particular those on the front of the Mail and the Times, which have gone for the Lib Dem leader. 'Sex pest storm: Clegg in crisis' says the Mail; 'Clegg engulfed in crisis over Rennard sex case', says the Times. The coverage is hardly better elsewhere. 'Sex claims peer tries to smear his victims' says the Telegraph. There is little politics around this morning, so the story dominates. The Lib Dems are evidently in chaos, hampered by their own internal democratic processes. Mr Clegg has aligned himself with the women accusing Lord Rennard and those sections of the grassroots which want the party to address bad behaviour at Westminster. Against him is an array of party fixers and power-brokers who have rallied to the former chief executive. At least one of his alleged victims is threatening legal action against him. In turn he has released his 2000 word defence in which he claims to be a victim himself who contemplated self-harm. The detail, though, which has grabbed attention is his claim that he has done research into his accusers and has uncovered what Lord Carlile has told him is 'devastating' evidence about one of them. We've spoken to one of them who has told us she fears he may be threatening to release private information about her. She says she is contemplating going public about it to 'spike his guns'. Can it get any nastier?

The consequences for the Lib Dems are ominous. There is no obvious way out. In the public imagination, to the extent that it notices, what it hears is Lib Dems, peers, sex. The polls suggest the party is now stuck in fourth place behind Ukip, and is struggling to stay out of single figures. Mr Clegg has tried to be noted by launching periodic attacks on David Cameron on the Tories. His strategy seems to be an intensified attempt at differentiation, as a way of reminding voters that he and the Lib Dems exist and are making a difference by tempering the excesses of the Tories in Coalition. The voters appear not to be noticing though. Certainly they aren't giving Mr Clegg any political credit for his work in government. As I set out in my column today, Team Dave has concluded that the Lib Dems are finished. They want to be able to ignore them between now and the election, and focus their efforts on an onslaught against Labour. 'The Lib Dems are nowhere, they are insignificant, finished. We can just ignore them,' one senior figure told me. This year marks the 20th anniversary of George Osborne joining CCO as the junior officer on the Lib Dem attack desk. As he contemplates the papers this morning, and the polls, he may be tempted to conclude that his life's work is complete. As ever, it's hard to argue with Matt:

CAN UKIP GIVE LABOUR A SWEAT IN THE NORTH?

Nigel Farage has popped up again with another comment that will keep Ukip in the headlines. Mr Farage told an audience in the City that women who have children are "worth less" to employers in the financial sector than men and that "In many, many cases, women make different choices in life to the ones that men make simply for biological reasons." While this may create a bit of a storm, all eyes now will gravitate towards the Wythenshawe and Sale East by-election, which is scheduled for February 13. It is a safe Labour seat - Paul Goggins won with 18,000 votes and a majority of 7,500 at the last election - but the question being asked is: how well can Ukip do? Despite winning only 3.4 per cent of the vote in 2010, they can be backed at odds as short as 4-1 to win, and Labour MPs including John Healey have warned that the threat is a serious one.

Tim Wigmore reports from Doncaster, where Labour's three MPs - including Ed Miliband - lost 40,000 votes between 1992 and 2010, to explain why Ukip is such a threat to Labour in the North; even in his own back yard, they think Mr Miliband went to Eton and, with the Coalition parties very unpopular in the urban North, Ukip could be poised to pounce. In case you missed it, Nigel Farage recently told me how he was targeting the North, arguing that "There are some Labour-held marginals in this country where only Ukip has a chance of beating them, not the Tories."

WHY LABOUR CAN'T BE HEARD

Labour announced their big policy on welfare but, much like their announcements on banking reform last Friday, it all fell rather flat. Rachel Reeves outlined plans to give those who have worked for more than five years a £120 unemployment bonus as a reward for their contributions to the system. Whitehall sources accused Miss Reeves of economic illiteracy, saying the plans amounted to an "unfunded spending commitment" that would "end up punishing vulnerable groups"; Dan Hodges thinks that Labour should just shut up about welfare. Janan Ganesh says that Ed Miliband's case for competition seems to stop at the boundaries of the state.

The failure of these Labour policies to gain traction is partly a result of the booming economy - just today comes the news that the IMF is expected to upgrade Britain's growth forecast to 2.4 per cent this year. Yet it's also a result, as I argue in my column, of the Conservatives' success in closing down areas where Labour may have an electoral advantage. As I write, "Mr Osborne wants to fight Labour on the economy, welfare and education – not energy prices, the minimum wage or pensioner entitlements. To him, the short-term pain and embarrassment that come from changing tack or backing down are worth it, if they deny Labour an advantage."

WHY ARE TORY WOMEN DESERTING DAVE?

Bad news for Dave: they'll be talking about his "women problem" again. Jessica Lee, a Commons aide to Dominic Grieve, is stepping down as an MP- becoming the fourth female Tory from the 2010 intake to leave Parliament. Ms Lee cited her "personal circumstances and responsibilities". Here's the nub. Her seat, Erewash, has a majority of 2,500 - so without the incumbency factor, the Conservatives should now be regarded as odds-against to hold onto the seat, which is one of Labour's main targets. Does the number of premature retirements points to failures in party management from the PM?

BLAIR ARRESTED - FOR A MOMENT 

This would not have been on Mr Tony's agenda when he went out for a dinner at Tramshed in east London. A barman, Twiggy Garcia, tried to put the former PM under citizen's arrest, putting his hand on Mr Tony's shoulder and saying "Mr Blair, this is a citizen's arrest for a crime against peace, namely your decision to launch an unprovoked war against Iraq." A debate between the two followed, though Mr Tony tried to change the subject, before one of his sons went to get security. Mr Garcia then left the restaurant. 

NO EU FLAGS HERE, WE'RE BRITISH

We are free from the EU - rejoice! Well, not quite. But Eric Pickles had a spring in his step in the Commons yesterday as he announced that EU regulations that obliged Government departments to fly the European flag have been renegotiated, and governments can now hang a small emblem bearing the ring of golden stars inside the building instead: "This burdensome law to fly the EU flag has now gone. This small step shows our nation can and should claim powers back from Brussels."

The Morning Briefing email is edited by Tim Wigmore. Follow Tim on Twitter 

TWEETS AND TWITS

Nigel Farage replies to UkipWeather's warning that "Tonight for the first time, just about half past ten. For the first time in history it's gonna start rainin' men":

@Nigel_Farage: I shall tell the girls in the press office. They'll be delighted.

BEST COMMENT

In the Telegraph  

Benedict Brogan - George Osborne’s Whack-a-Mole tactic is denying Labour any advantage

Joan Bakewell - Lord Rennard scandal: It was 'just what men did’ in my day – but that's not the case now

Tim Wigmore - Why Labour should be terrified of Ukip

Telegraph View - The Lib Dems really are a sorry lot

Best of the rest 

Janan Ganesh in The Financial Times - Miliband’s mysterious aversion to public sector reform

Rachel Sylvester in The Times - Rennard won’t budge. The world moves on

Katharine Sacks-Jones in The Guardian - Can Rachel Reeves change the way we talk about benefits?

Steve Richards in The Independent - Nick Clegg can’t sack Lord Rennard, and Lord Rennard can’t apologise. It’s just another day of lose-lose politics

THE AGENDA

9.30am Commons Public Administration Committee takes evidence on crime statistics. Witnesses include the chair of the UK Statistics Authority, Sir Andrew Dilnot, and Home Office Minister Norman Baker. Committee Room 15, House of Commons.

9.30am Council of Mortgage Lenders (CML) releases its gross mortgage lending figures for November.

9.30am Power company bosses give evidence to Commons Energy Committee on power cuts during recent bad weather.

10am Commons Treasury Committee takes evidence on Project Verde - the planned sale of more than 600 Lloyds bank branches. Witnesses include Lord Levene of Portsoken, the former chairman of NBNK Investments. Thatcher Room, Portcullis House.

2.30pm NHS England medical director Sir Bruce Keogh gives evidence to the Commons Health Committee on emergency care. Committee Room 15, House of Commons.

6pm Douglas Alexander speech on British Foreign Policy in the 21st Century. Royal Institute of International Affairs, Chatham House, 10 St James's Square London

It's about welfare..

Good morning. Rachel Reeves is unveiling a Labour pitch for toughness on benefits today. The party has been comprehensively outdone by the Tories and Lib Dems on welfare, and need a counter-strike to show they aren't a bunch of softies happy to throw buckets of our money at undeserving scroungers. To judge by the preview, which we carry on p1, the idea is to put pressure on the illiterate by requiring claimants who can't read or write to take a literacy test within six weeks of signing on or lose their benefits. Labour estimate this concerns 300,000 people. Those who refuse will have their money taken away. Some reformists will applaud the introduction of yet more conditionality, in this case for Jobseeker's Allowance, though they might also ask whether the bureaucracy required to first test, then educate those judged to be functionally illiterate will be worth the effort. Let's see. For the moment, it's the politics that are telling.

The Tories have launched a thundering pre-emptive strike, a sort of Stalin's organ barrage from not one but two of the Cabinet's heavy artillery. Iain Duncan Smith and Theresa May have placed a joint oped in the Mail promising - as the Mail's splash has it - a "Housing benefit ban on jobless migrants". They lay into Labour for throwing cash at immigrants when it was in office. And they say that from April new EU migrants who claim JSA will not be able to claim Housing Benefit as well. So there we have it: Labour joining the competition to sound tough on welfare, and the Tories retaliating to deny Labour any advantage on an issue they think is both a vote-winner and a decisive one for the general election. The point though surely is that neither party is addressing the big question facing Westminster: how to reduce the overall social security bill in a way that can make a substantive dent in the deficit. What about tax credits? What about pensions? The changes each side is proposing amount to fiddling at the margins in monetary terms. The sums involved are a rounding error. The value to each is political. For the moment the Tories have public support, while Labour is not taken seriously. Rachel Reeves takes a significant step forward today, but as with so much else she is constrained by Labour's legacy of profligacy.

CLEGG'S NIGHTMARE RUMBLES ON

Breaking news: Nick Clegg has just been on the Today programme discussing the Rennard scandal. Mr Clegg said that he had not spoken to Lord Rennard about the allegations, and said that "I don't think it's my job to try and micro-manage this." Mr Clegg said that "I hope even at this late stage [Lord Rennard] will issue an apology" and that "If he doesn't apologise, he shouldn't rejoin our party. Let's see what happens today." As if things couldn't get worse for Mr Clegg, he even failed to tell the time correctly.

Lord Rennard says that he's going to return to the Lords as a Lib Dem peer - and threatens legal action if, as Nick Clegg would like, he does not have the party whip restored. Whether Lord Rennard is returned the whip depends entirely on the Lib Dem peers, and they are ready to welcome him back. The Guardian reports that Lord Rennard's supporters say that there is a conspiracy to damage him. His supporters have released an email inadvertently sent to them showing the four women taking up a suggestion to petition the Queen to have Rennard stripped of his peerage.James Landale asks what this tells us about the Lib Dems, and says that "Regardless of the rights or wrongs, regardless of what actually happened, no other party would have allowed 10-year-old allegations about the behaviour of a party official to cause so much damage today."

HOW TO ALIENATE ALLIES

Dave is losing friends in Britain - and fast. That's the message from an FT report, with several EU powers that should be Britain's closest allies saying that they would resist the PM's attempts to restrict the ability of citizens from new member states to travel freely across the union. The most telling quote is from Frank-Walter Steinmeier, the new German foreign minister, who says that his anti-immigration posturing "damages Europe and damages Germany." All of which is a gentle way of pointing out that, if Dave is going to get the changes in Europe that he wants, he's going to need all the friends he can get. Right now, he gives the impression of not having many. The car industry is not one either, and is leading calls for Britain to stay in. Over 80 per cent of cars produced in Toyota’s factory near Derby are exported to continental Europe.  

AWKWARDNESS FOR ED

There's a few stories lurking in the papers that hint at Ed Miliband's leadership problems. The Times reports on frustration that Mr Miliband has allowed in-fighting to fester, with a Labour insider saying that "there is no grip and no direction just a whole lot of separate spheres of influence" and complaining of a "lack of a real plan for the election". But the Labour leader appeared to confirm Ed Balls' position yesterday, telling Marr yesterday that "Ed Balls is doing a really good job and, absolutely, I've said he is going to be the shadow chancellor going with me into the election". Mr Miliband also said that he wants to create a "fairer" system, which will get Tories warning that this could mean not reinstating the 50p tax band or introducing a mansion tax, but both. We aren't convinced by his claims to be the saviour of the middle-class: "What the middle classes really need is relief from punitive taxes. That Mr Miliband prefers to lay out his own vision of social democracy, rather than discuss the practical details of people’s problems shows that he does not understand the audience he is trying to address."

CALL HIM EDDY ROOSEVELT

So who is Mr Miliband trying to be? The answer, according to his aide Stewart Wood in a Coffee House article, is Teddy Roosevelt. Lord Wood writes that the Tories' "assumption of an automatic affinity between the interests of the private sector and the public interest that would have shocked Teddy Roosevelt, the progressive conservative." Tim Stanley looks at who Roosevelt was - and finds the answer to be a racist, imperialist, power-hungry megalomaniac. Perhaps not such a good model for Ed after all.

UKIP STILL THE FRUITCAKES PARTY

Is this really the way to win over Tory deserters to Ukip? Michael Fallon has said that "there clearly are one or two fruitcakes still around" in Ukip.

SHAPPS LAYS INTO HOLLANDE

The Conservatives are trying to exploit Francois Hollande's troubles for all they're worth, recognising them as a way of inflicting damage upon Ed Miliband. The latest Tory to pop up with this line of attack is Grant Shapps, who says that the French economy has been "run into the sand" and ordinary families have been made to "suffer" for Mr Hollande's "socialist" agenda. That'll do wonders for relations ahead of this month’s annual Anglo-French summit.

A CHEQUERS COVER-UP?

The Mail says there's a whiff of a Chequers cover-up because the Government's failing to publish a full list of visitors to Chequers, exploiting a loophole which means that visitors there funded by the Conservative Party, or Dave personally, can be kept secret. The latest annual Chequers list was published on Friday night, and includes the Emir of Qatar and Rebekah Brooks. The Mirror has a similar line of attack on the PM, saying that Lord Leigh of Hurley landed a peerage after his company negotiated the sale of Smythson of Bond Street, which employs Samantha.

OLLERENSHAW CALLS FOR ACTION ON PANCREATIC CANCER 

Eric Ollerenshaw has given a moving interview about the death of his partner from pancreatic cancer, and his attempts to improve standards in its diagnosis, treatment and research. He says that "There has been no improvement in mortality rates for pancreatic cancer in 30 years".

38-YEAR MYSTERY SOLVED

A great political mystery has been solved. In an autobiography published posthumously, Malcolm Wicks has admitted that as a civil servant he leaked the content of cabinet discussions in 1976 revealing that the Callaghan Labour government resorted to "downright lies" to try to shelve the introduction of child benefit. The back led to the introduction of child benefit.

The Morning Briefing email is edited by Tim Wigmore. Follow Tim on Twitter 

TWEETS AND TWITS

What do the Lib Dems do about Lord Rennard?

@lfeatherstone: I agree with Nick! The whip should not be returned to Lord Rennard.

BEST COMMENT

In the Telegraph  

Boris Johnson - Cleggton Keynes in England’s rolling hills? No thanks, Nick

Tim Stanley - Racist, imperialist, power-hungry megalomaniac. Why Roosevelt is not the model for Miliband or Labour

Iain Martin - Taxpayers face a loss of up to £10bn on RBS privatisation

Telegraph View - Mr Miliband must put a price on his policies 

Best of the rest 

Theresa May and Iain Duncan Smith in The Daily Mail - This shameful betrayal

Stewart Wood in The Spectator - Ed Miliband is better placed than the Tories to follow Roosevelt

James Landale on The BBC - Lord Rennard row: What does it tell us about Lib Dems?

Trevor Kavanagh in The Sun - Cameron really needs to act on Europe... and quickly

THE AGENDA

0800 LONDON: Nigel Farage speech and Q&A on the City and Europe. Fishmongers Hall, London Bridge

0900 LONDON: Nick Clegg mental health conference. Deputy Prime Minister Nick Clegg and Care Minister Norman Lamb are holding a conference on mental health. Coin Street Neighbourhood Centre, South Bank

0900 LONDON: Secretary for Culture, Media & Sport Maria Miller joins Tate director Nicholas Serota and Tate Modern director Chris Dercon to announce Tate Modern's plans for the Turbine Hall and an international partnership

0930 LONDON: Defence due to start in trial of Constance Briscoe. The barrister and part-time judge is accused of perverting the course of justice in connection with the Chris Huhne case. She denies two counts of intending to pervert the course of public justice, relating to statements made to police and one of falsifying a document. Southwark Crown Court

1030 LONDON: Rachel Reeves speech. The shadow work and pension secretary will make her first major policy speech since taking on the role. IPPR, 14 Buckingham Street, London

The day of reckoning..

Good morning. The Day of Reckoning, says the Mirror's headline, alongside a piece from Ed Miliband setting up his speech today on banks, the economy and the cost of living. His efforts have been dented by George Osborne's announcement on the minimum wage last night - the Chancellor supports a 69p rise in the minimum wage to £7 an hour - which secured the coverage this morning. I'm not the only one to have picked up on the politics of the Chancellor's move - and its risks. Once again he has stolen Labour's thunder by adapting its policies, calculating that it increases Tory chances in 2015 (you can read my take on my blog here). "Now Osborne wages war….to spite Mili" says the Sun. The Tories intend to harry Labour and its leader at every opportunity, in particular on the economy. They don't want to cede their advantage, and are nervous of Mr Miliband's capacity for identifying populist issues and putting himself on the side of voters frustrated by the Government's seeming failure to make their lives better. The economy is going the right way for the Government, and as the Mail delights in pointing out Mr Miliband will concede that wages will finally overtake prices this year. "Osborne puts Labour on the spot" says the Times. Its leader welcomes an increase: "A small increase in the minimum wage will pay for itself and there is no better welfare policy than better pay."

So now, over to the Labour leader. He has to find a way of rebuffing Mr Osborne's tactic of out-Labouring Labour in search of blue collar, anti-toff votes. He would say he's the real deal so you'd think that should be straightforward. But he must also convince with his prescriptions, today on banking. To judge from the initial briefing (the FT has a useful summary), he may expose himself to accusations that he is playing fast and loose with ailing banks by injecting uncertainty into their future, undermining their share price and therefore their chances of being sold back into private hands. Chuka Umunna has accepted on Today that in the short term there may well be a "a hit on the share price". Mr Miliband in reply might say that he's not in charge and is entitled to set out what he would do in office. There's an interesting perspective on Labour's populism from Fraser Nelson, who reckons that "The EU may end up being the only thing to remind Ed Miliband that British companies are not his to play with."

As a PS, what about Boris? Where does Mr Osborne's lunge leave the Mayor's campaign for the living wage? Bet they're pleased in City Hall.

HAGUE DEFENDS THE UNION

William Hague has just been speaking about the Scotland referendum on the Today programme: "We make much more impact on the world because we are the United Kingdom." The Foreign Secretary said that Scotland's EU membership negotiation would be of "uncertain length and outcome" and said that the Yes campaign "want to have debates about debates" rather than debate the issue. Mr Hague will launch the latest Scotland Analysis paper at 9:30 this morning.

WHAT DO THE LIB DEMS DO NEXT?

While Lord Rennard has been cleared, the difficulty for the Lib Dems continues: one alleged victim yesterday said that she had been harassed by him, and told Nick Clegg to "man up" and block his return. Susan Gaszczak, a Lib Dem parliamentary candidate, warned that working alongside him would be "extremely difficult" and demanded an apology. Lord Rennard is still supported by the majority of Lib Dem peers in the Lords, which creates a further political complication for Mr Clegg. TheDeputy Prime Minister has not read a 100-page report into the Lord Rennard sex allegations and is regarded by its author, Alistair Webster QC, as a "passenger in the process". As we say, "It is not merely Mr Clegg who emerges badly. This episode casts a revealing light on the nature of the Lib Dems’ organisation. An admirable commitment to internal democracy became distorted into a system whereby powerful men could use the party’s machinery to do as they wished." 

ED v THE UNIONS

Ed Miliband wants to reform the voting for Labour leadership elections, by scrapping the electoral college and replacing it with a 'one member, one vote' system - radically reducing the influence of both trade unions and MPs in choosing a leader. It won't be easy: GMB general secretary Paul Kenny has said the talks have broken down, though Labour says they're continuing. Perhaps the real question is: has Mr Miliband left all this until too late in the electoral cycle? And what does that say about his leadership?

ANOTHER IT COCK-UP

Philip Hammond's reputation rests on steely competence, but escalating IT costs and a botched computer system (sounds familiar?) is putting that under threat. Mr Hammond told MPs on Tuesday that £4.5 million was needed to pay for a replacement computer system to handle army recruitment, well under the original £10 million budget. But The Times suggests that the picture is rather less flatting, and Ministry of Defence's options are  either to spend an extra £43 million on trying to rescue the system, or to switch to another at an additional cost of £47.7 million: "There’s ‘more than meets the eye’ to his figures," said Tory MP John Baron.

DAVE STICKS UP FOR FREE PRESS

The Prime Minister may not always appreciate it, but, after the farce of Francois Hollande's press conference, Dave used a Westminster Correspondents’ Dinner to call the British press the "linchpin of democracy" and praise it for being "rowdy and tenacious". And Dave didn't miss a chance to attack his deputy either: "I keep reading in the newspapers that Nick Clegg is going to spend 2014 differentiating himself from me. The privileged Old Etonian who went to Oxford. Him from the ‘mean streets’ of Westminster and Cambridge. Good luck with that one Nick".

CYCLING ON THE PAVEMENT?

Here's an eccentric idea - the sort that many felt we'd seen the last of with Steve Hilton's departure. Transport minister Robert Goodwill wantspolice to stop penalising cyclists for moving off the road and onto pavements at congested junctions after complaints £50 fines are being handed out too readily. Is this a vote winner?

The Morning Briefing email is edited by Tim Wigmore. Follow Tim on Twitter 

TWEETS AND TWITS

Greg Hands is stirring:

@GregHands: And nothing from @edballsmp on Twitter all week. No comments on banking. No comments on Minimum Wage. Nothing. Something is up.....

BEST COMMENT

In the Telegraph  

Fraser Nelson - It may take the EU to save this country from Ed Miliband’s economic agenda

Jeremy Warner - It's no good just whipping the bankers

Con Coughlin - If we’re not talking to Assad, we should be

Telegraph View - Britain's freedom depends on military strength

Best of the rest 

Ben Macintyre in The Times - We can’t escape our bloody role in Sikh history

Philip Collins in The Times - We should keep our noses out. This is private

Polly Toynbee in The Guardian - Ed Miliband's pitch is radical – but his party is stuck in 1997

Philip Stephens in The Financial Times - Nothing can dent bankers' divine right

THE AGENDA

North of England Education Conference. Schools Minister David Laws is on at 9am. Burton Street, Nottingham Conference Centre.

Nick Clegg and Justice Secretary Chris Grayling announcement on youth justice.

Retail sales figures for December are published by the Office for National Statistics.

9.30am Foreign Secretary to launch latest Scotland Analysis paper as part of the referendum campaign. William Hague to be joined by Chief Secretary to the Treasury Danny Alexander for the launch of the EU & international issues document.

11am **Ed Miliband speech on the economy**. Senate House, Malet Street, London.

Labour's economic credibility under attack..

Good morning. After struggling in PMQs, there's more difficulty for Ed Miliband this morning: the FT reports that Mark Carney has attacked his idea of a "crude bonus cap" and of reducing retail banks' market share. Mr Carney's candid jibe amounts to him questioning Labour's economic credibility, which is already under such scrutiny. Labour hope that they will be able to "neutralise" the business lobby at the election, but Mr Carney's intervention suggests this remains far away. Mr Miliband still has to convince many that his model of "responsible capitalism" doesn't amount to facile populism. He may have some rowing back to do if he is to avoid being saddled with the "anti-business" tag.

As a more candid Labour MP admits, "the cost-of-living stuff is not a substitute for an economic policy": Mr Miliband needs some economic credibility. That's what the Labour leader is trying to address in his speech on banking reform tomorrow: the attraction of this topic is anger with banks extends to the middle classes Mr Miliband made a pitch for in his Telegraph piece. The Guardian has a preview of the speech, which will say that Labour will refer the high street banks to the competition authorities immediately if it is elected in 2015. Nils Pratley asks five questions about Mr Miliband's proposals, pointing out that "forcing a sale of (RBS's) assets to reduce that figure below 25% would probably damage the value of the state's 81% holding in RBS."   

But Mr Carney's words may have another significance. Rumours have long circulated that, far from being an independent, non-partisan figure who keeps his counsel on the merits of our politicians, Mr Carney has made no attempt in private to disguise his contempt for Mr Miliband, Ed Balls, and Labour's economic credentials. At which point, I wonder, will Labour reply by asking about his impartiality?

EURO ELECTION TROUBLE FOR DAVE

The Conservative Party. Europe. Ukip. You probably feel like you can fill in the blanks by now. But The Sun has a fascinating new poll - and Tories won't like it. It shows Ukip piping the Tories to second in the European elections - Labour is on 32% (which would give them 28 MEPs), Ukip 26% (which would give them 23 MEPs), the Conservatives 23% (which would give them 15 MEPs) and the Lib Dems are on 9%, which would cost them all 11 of their MEPs. If those results come to pass, CCHQ will have to work overtime to prevent the airwaves from overflowing with MPs angry with Dave.

George Osborne's speech yesterday telling the EU to reform or risk Britain leaving gets a good write-up in the Mail, even if Mr Osborne is unlikely to take kindly to being told to explore an electoral deal with Ukip. We call for more honesty in the debate: "In the case of Mr Cameron and Mr Osborne: what are the reforms that absolutely need to happen and how much must be accomplished for them to decide to campaign to stay in? Or would they, as some of their backbenchers suspect, stay in at any cost? As the time of negotiations approaches, we need to know more."

Meanwhile, the mystery of the letter calling for the PM to veto new laws passed by the EU has deepened: The Times reveals that No 10 never received such a letter, and Bernard Jenkin admits that "the Government has not received this letter". A full list of the 95 reported signatories has never been released, but Mr Jenkin gives an assurance that he has them. It's all enough for Peter Oborne to ask: whatever happened to Tory loyalty?

SNP IN TROUBLE  

Alex Salmond’s plan for an independent Scotland to continue to charge English students tuition fees is "illegal" and would trigger legal action from the European Commission, according to Jan Figel, a former European Commissioner for Education. The awkwardness for the SNP is this directly contradicts one of the central education pledges in the SNP White Paper – that after independence Scottish universities would continue to charge tuition fees for students from the rest of the UK while Scots could attend for free - and, more significantly, adds to the impression that there are great gaps in the SNP's vision for a better tomorrow. Over to you, Mr Salmond.

RENNARD FALLOUT

Lord Rennard was yesterday cleared of sexually harassing female party activists. But that doesn't mean that the difficulty has disappeared for the Lib Dems. One alleged victim said that "Faced with the opportunity to take strong action, the Liberal Democrats have once more opted for cowardice."  An independent review commissioned by the party said that despite "credible" evidence that he "violated" the personal space of women, it was not enough to prove that he sexually harassed them. What seems clear is that, despite Lord Rennard's hopes, he will not resume his old position in the party. Nick Clegg has already said that Lord Rennard will have no role in the election campaign.  

FAT BOTTOMED NICK

Nick Robinson was left red-faced on the Daily Politics yesterday, after Fat Bottomed Girls by Queen started blarring out of his iPad. You can watch Nick's embarrassment here.

CAMERON PRESSED TO RELEASE GOLDEN TEMPLE PAPERS

Pressure is being ramped up on Mr Cameron to release all the documents relating to the UK’s secret involvement in preparations before the assault to clear militants from the Golden Temple in 1984; the PM is committed to publishing the findings of Sir Jeremy Heywood's inquiry but has not pledged to release all the papers.

ARTHUR SCARGILL: THATCHERITE?

Was Arthur Scargill a secret Thatcherite? It's a question asked by the Mail after it was revealed that Mr Scargill tried to buy a property under the Right to Buy scheme.

The Morning Briefing email is edited by Tim Wigmore. Follow Tim on Twitter 

TWEETS AND TWITS

Anne Milton's dilemma:

@AnneMiltonMP: Almost no standing room but would the sacrifice of getting up half an hour early and catching the 7.07 be worth it for a seat...?

BEST COMMENT

In the Telegraph  

Peter Oborne - One question for the Tory rebels – whatever happened to loyalty?

Sue Cameron - The Civil Service undergoes a peer review

Jesse Norman - It’s time to throw a lifeline to regional arts

Telegraph View - The EU debate calls for calmness and honesty

Best of the rest 

Sarah Wollaston in The Guardian - Dying patients should be exempt from social care charges

James Forsyth in The Spectator - Cameron’s mission for 2014: stay out of third place

Jeremy Hunt in The Guardian - Polly Toynbee should not call us nefarious. Conservatives genuinely care about the NHS

Andy McSmith in The Independent - PMs and prudes: What if it was David Cameron accused of having an affair in office?

THE AGENDA

The Royal Institution of Chartered Surveyors releases its latest housing market survey.

George Osborne announcement on aerospace research.

8.15am Industry report. Press conference to launch a report into foundation industries. Speeches from Business Secretary Vince Cable and Tata Steel managing director Karl Kohler. The Shard, London Bridge.

8.40am Airports Commission chief Sir Howard Davies among speakers at Runways UK event. Grange Tower Bridge Hotel, London. 9am Call Clegg on LBC radio.

9am Open Europe and Fresh Start Project conference on EU reform, including panel debate with Europe minister David Lidington. One Birdcage Walk. Conference opens 9am, panel debate at 9.15am