Treasury Questions end in a score draw as Ed Balls makes his debut

February 8, 2011 1 comment

Well that was rather disappointing.

New shadow chancellor Ed Balls took to the dispatch box for his first question time since getting the job after replacing Alan Johnson, who resigned for personal reasons.

On the day that George Osborne announced that he was increasing the banking levy to £2.5bn this year, up by £800m, you would have been excused for thinking the Osborne was nervous heading into his first confrontation with Balls.

The problem for Balls—who is undoubtably more economically astute than his predecessor in the role—is that he is tarnished with Labour’s economic record during their 13 years in government.

Clashes over the economy are becoming rather predictable as the Coalition turns everything back on Labour. They point to the deficit run up by the now opposition and use that as the explanation for their policies.

The negative economic growth in the final quarter of 2010 should make the Government think again about the cuts they’ve made, and desperately need to provide more plans for growth.

Osborne and his front-bench team argue that the UK had the biggest real estate bubble in Europe and was more profoundly affected by the economic crises than other countries.

But the US—whose growth during the first half of the last decade was just at predicated on house prices as in the UK—recorded a 3.2% growth in GDP over the same quarter.

As Balls pointed out this was despite cold weather shutting airports and impacting upon infrastructure. So, he asked of his opposite number, if the “wrong sort of snow” was responsible for the UK’s poor performance.

Osborne deflected with usual line about Balls being a deficit denier and said that if they were in power, Labour would have made many of the same decisions as the Coalition.

Actually, a key difference between the US and the UK is that Obama’s recovery plan involved increasing state spending with a massive impetuous package. In comparison, Osborne has presided over massive cuts and a VAT rise.

One area where Osborne does have the upper hand over Balls is when it comes to regulation of the financial sector.

One of the key coalition policies currently being formed involved the replacement of the tripartite regulatory system. Gone will be the system whereby regulation is split between three bodies: the Treasury, the Bank of England and the FSA.

In comes a “twin peaks” arrangement: a Prudential Regulation Authority within the Bank of England, and the Consumer Protection and Markets Authority.

Although the exact roles of the two new creations are yet to be decided, the aim should be to ensure that Banks no longer are allowed to take gambles that put the taxpayers and the economy at risk. Breaking up the banks to separate the high street deposit functions from investment practices will also protect taxpayers, as well as having the added advantage of increasing competition in the sector.

Instead of focusing on bankers’ bonuses—which would be difficult philosophically to legislate against and any taxes directed at them could be easily avoidable—the opposition should be ensuring that the new system prevents the practices that lead to the economic crisis from reoccurring.



Upcoming week in Westminster

February 7, 2011 Leave a comment

After an interesting weekend including Cameron’s “multiculturalism has failed” speech and Paul Maynard’s excellent but deeply concerning interview in The Times, we come back to a windy Westminster with a tasty week ahead.

Today sees Education Questions with Secretary of State Michael Gove. John Stephenson, Conservative MP for Carlisle, will ask Gove about the standards of teaching, while David Wright (Labour, Telford) raises the thorny issue regarding the size of the EMA replacement. We can bet that awkward questions will be asked about the cost of setting up the Free Schools programme, and I’m personally hoping that someone will tie in Cameron’s speech on Saturday. With Cameron bemoaning the lack of integration, how can this situation be helped by supporting the founding of faith-based schools, one might ask.

We’ve also got a statement from Cameron on all things EU and North Africa, including the release of Abdelbase Al-Megrahi, while William Hague is in front of the Foreign Affairs Committee.

Gove is back in action on Tuesday when the Education Bill returns to the Commons for its second reading. The Bill is supposedly aimed at giving schools more freedom to operate, although opponents of the Bill argue that the effect will actually be the opposite.

Thursday will bring challenges to the Coalition as Members debate voting rights for prisoners. Paul Waugh is reporting that Ministers will have a free vote on the debate and Number 10 expects them to abstain. One Minister who apparently won’t be is Home Office minister Lynne Featherstone.

The Parliamentary Voting System and Constituencies Bill rears its ugly head once again in the Lords as it returns for the Report Stage. There were no all-nighters last week as a deal had reportedly been struck between the two sides, although this week will see Labour peers fighting to ensure that promises are kept to.

Civil servants struggling under the Coalition leash

February 3, 2011 1 comment

Research published by the Institute for Government shows that civil service morale has drastically fallen—unsurprising given the massive budget cuts that most departments face.

The research uses the results of  a massive survey undertaken by the Civil Service. Just over 60% of civil servants across all departments responded to the survey, which is designed to measure the engagement of staff.

The news comes in the same week that a Civil Service leak questioned the work ethic of Deputy PM Nick Clegg.

Two of the departments who have proposed massive reforms experienced the biggest reductions in positive staff reception.

In the Department for Education, only four in every 10 members of staff felt that higher ups had a clear vision for the future. This at a time when Michael Gove is pushing through curriculum reforms and removing the EMA (although there are rumours that he is about to do a u-turn on this). Only 23% thought that when changes were made in the department, they are usually for the better.

As for Health, where Andrew Lansley is trying to transform the NHS, the picture is just as bad. Less than 70% have a good understanding of the departments direction, and there has been a 13 percentage point decrease in the number of staff who believe the executive know what they are doing.

The director of the Institute said that:

Whitehall is facing an unprecedented challenge in overseeing an ambitious agenda for reform at the same time as facing major cutbacks in spending. Most departments are also having to reduce their own administrative costs by a third. Falls in staff engagement levels are not unusual as organisations start tackling challenges on this scale. The important thing is for departments to have a clear vision and effective leadership, so any falls are rapidly turned around.

The last sentence is doubly true when staff are facing cutbacks at the same time as implementing major changes. I have to question again whether the Coalition is right to introduce such large scale reforms without financial backing.

If it continues with this strategy, then it is clear that ministers will need to be clear in their purpose and have to take their staff with them.

Categories: Uncategorized

Health Bill makes it past the Second Reading stage

February 1, 2011 1 comment

The Health and Social Care Bill passed the second reading stage in the House of Commons yesterday and will now progress to a Public Bill Committee. The first meeting of the Committee is expected to take place next Tuesday.

The Bill is pretty wide in scope but the main parts have been well reported in the press, albeit with various reactions. There is a great deal of disagreement about whether the reforms laid out in the Bill are a radical reform, or the next logical step in creating an improved NHS.

Simon Burns, Minister of State with the Department of Health, touched on this during his summing up:

In fact [our plans] are evolutionary and an extension of the policies of previous Administrations, notably the Blair and Brown Governments

The key reform will be the eradication of Primary Care Trusts (PCTs) and Strategic Health Authorities (SHAs). These will be replaced with GP consortia. As PCTs and SHAs are abolished, they will be replaced with a new NHS Commissioning Board. The Commissioning Board will received a budget from the Department of Health, and will then be responsible for allocating this to each consortia based on number of patients and the local health demographics.

Basically, the idea behind the Bill seems to be to give GPs more control over how they treat their patients. This makes sense—GPs know the needs of their patients better than bureaucrats.

However, it’s also a cost cutting exercise and critics of the Bill argue that it will produce more competition within the public health system—competition that will harm patient care.

These were the main arguments that dominated the second reading debate yesterday. Labour rounded against it while Tory MPs spoke in favour.

We saw the maiden speech from Debbie Abrahams during the proceedings—a natural choice for her as she was formally Chair of Rochdale PCT—and she delivered an impressive performance.

After going through the traditional platitudes to her constituency and her predecessor (the shamed Phil Woolas, who Abrahams said had “incredible attention to detail” and showed “kindness” to his constituents), she attacked the argument that competition is good for health care. Instead of widening choice, it will “give rise to a new postcode lottery.”

The only Lib Dem to speak at length about the Bill was Andrew George. A member of the Commons Health Committee, George praised the intentions of the proposed reforms, but questioned the timing—an argument I believe carries a lot of weight.

The NHS is being asked to make major reforms at a time they are expected to make record savings. If the Bill becomes legislation, there is a chance that the reforms will be implemented without the financial backing they need. Indeed, the Coalition estimates that the cost of reorganisation will be £1.4 billion, compared to other assessments that put the figure nearer £3 billion.

It is unclear whether the difference in figures is down to government under-funding, or opposition over-costing.

The Bill passed easily, 321 votes to 235. There were no coalition Members who voted against the plans, although George purposely abstained.

I haven’t made my mind up over the plans. My instinct is that they need some work. I’m planning on having a closer look at the Bill before posting my thoughts.

So there’s something for you to look forward to…

Upcoming week in Westminster

January 31, 2011 Leave a comment

Highlights in Parliament this week include:

The Second Reading of the Health and Social Care Bill. The week gets off to a fast start as the contentious Health and Social Care Bill gets its Second Reading this morning. Remember, this is the Bill that will put GPs in charge of their own budgets. It is sure to be angrily opposed by the opposition who will claim that the Tories are stripping away public health care. And if we are to believe the Manchester Evening News, then the Bill will also see the maiden speech of the newest MP, Debbie Abrahams.

Opposition day on Wednesday. The two Opposition Day motions on Wednesday will target contentious issues for the Government. First, they attack Vince Cable’s Business, Innovation and Skills Department in light of the recent dissapointing growth figures. This is followed by criticism of plans to sell off England’s public forestry estate. Margaret Thatcher had similar plans in the early 80s, but quickly abandoned them. With public opinion firmly against such a proposal (see Saturday’s Guardian article), this could present an open goal for Ed Miliband and his team. Expect this to also pop up once of twice in Thursday’s DEFRA question.

Parliamentary Voting System and Constituencies Bill. Yes, the PVSC is back in the Lords for days 15, 16 and 17 of the Committee stage. With the deadline looming for when the Bill needs to return to the Commons in order to allow for a May 5 referendum, expect late-night sittings and more threats of gillotine motions.

Consumer Credit Regulation is a popular theme this week. Thursday’s Backbench Business debate focuses on payday lending, and is led by Stella Creasy (whose twitter feed is always worth a read). Ms Creasy also has a Private Members’ Bill due up on Friday focusing on the same topic, but as it is fourth on the list, it’s unlikely we’ll see it debate.

What we will see debated on Friday is Anna Soubry’s PMB on anonymity for arrested people who are yet to be charged. Speaking on Radio 4’s Today programme this morning, Ms Soubry outlined the inspiration behind her bill. A former journalist herself, she was shocked by the way in which a suspect in the Joanna Yeates murder investigation had his life displayed on the front pages of Britain’s papers, despite that fact that he was never charged. She told the show that in her day there was an unwritten law that the media did not give out names and addresses of suspects until they were charged.

We may also see the Gerry Adams situation sorted out as well as a statement on the political situation in Egypt.

A hurting Lib Dem and the stagnant economy

January 31, 2011 1 comment

This post appeared on Lib Dem Voice this week:

For the first time since his election as leader of the Labour party, I found myself agreeing with Ed Miliband during Prime Minister’s Questions this week.

With his new Shadow Chancellor sat next to him and in response to the news earlier in the week that the economy had contracted by 0.5% during the final quarter of 2010, Miliband urged David Cameron to think again over the upcoming spending cuts and VAT rise.

To make matters worse for the Coalition, the outgoing director-general of the CBI accused the government of putting politics before growth. Sir Richard Lambert argued that “politics appear to have trumped economics on too many occasions over the past eight months”.

And I have to agree. Yes, the deficit needs to be addressed, but the economy also needs to be given time to recover and grow. Unemployment is still increasing, inflation is rising and wages are stagnant. The problem is that it’s very hard to sort both problems at once.

The Coalition seems to have become obsessed with the deficit—something that was true of Osborne and Cameron in the run up to the election—and has taken steps to reduce it. So far, these steps have primarily comprised slashing public spending by almost a fifth and increasing VAT to 20%.

These policies have started to take grip now and their effects will be seen in GDP figures during the coming years. What we are yet to see, however, are any policies for encouraging growth. Yes we have a Green Investment Bank on the (distant) horizon and a lot of talk about encouraging small businesses, but there is no equivalent to the relatively speedy action taken on the deficit.

By attacking the deficit so quickly, the Coalition risks stifling growth for years to come. Two of the determinant factors for GDP are government spending and consumer spending. But the measures so far introduced will decrease both of these.

By cutting government spending, you reduce government contracts. Government contracts are vital in encouraging growth as the money feedbacks into the economy. Firms make money, they contracts create jobs. People get paid, and then people spend their money and pay taxes. Welfare costs increase.

By increasing VAT, at a time when the cost of living is increasing and wages are stagnant, the spending power of consumers is decreased. Less money is spent, demand is lower, and there are less jobs and lower growth.

The reductions in public spending will remove just under half a million jobs from the public sector. The Coalition is confident that the private sector will more than pick up this tab. What is the basis for this confidence? As Sir Lambert asked “where’s the growth going to come from?”

The old saying “you have to spend money to make money” is surely never truer than when applied to governments during recessions. The deficit needs to be brought under control, but it is a question of timing.

The Lib Dem manifesto reflected this sentiment:

“We must ensure the timing is right. If spending is cut too soon, it would undermine the much-needed recovery and cost jobs. We will base the timing of cuts on an objective assessment of economic conditions, not political dogma.”

And in a statement ( issued at the beginning of 2010, Vince Cable responded to news that the economy had grown by 0.3% that:

“This news underlines again the folly of rushing into rapid cuts which could push the economy back into recession and inflict further structural damage on the UK, making it harder to sustain our credit rating and creating an even larger budget deficit.”

Unfortunately, it seems that when it comes to these matters, either the Lib Dems in the cabinet have changed their minds, or economic policy is being dictated to them by the blue side of the coalition.

The misguided notion that by tackling the deficit first you can encourage growth because market confidence will be that much stronger ignores the importance that consumer spending plays in economic growth. It also misses the more human consequences that high unemployment and rising prices accompany.

To make matters worse, both the stagnating economy and the deficit reduction tactics will hit the most disadvantaged hardest. As a member of a party founded on equality and fairness, this is a bitter pill to swallow.

Categories: deficit, economy, vince cable

Is Gerry Adams still an MP?

January 26, 2011 2 comments

Did Gerry Adams know just how much of a fuss it was going to cause when he decided to run for the Irish Parliament?

Adams, as the leader of Sinn Féin, has of course never sat in the Commons, despite being an elected Member, as he refuses to swear the Oath of Allegience to the Queen.

Adams could, if he chose to, remain an elected MP and serve in the Irish Parliament, but has expressed his reluctance to do so.

He wants to resign.

The problem is, MPs cannot resign.

Erskine May, the Parliamentary bible, sets out this long-standing rule:

“It is a settled principle of parliamentary law that a Member, after he is duly chosen, cannot relinquish his sit”

There are a few ways around this. Firstly, Adams could take the office of steward or bailiff of Her Majesty’s three Chiltern Hundreds of Stoke, Desborough and Burnham, or of the Manor of Northstead. These roles are purely nominal and can be given to any Member who applies to the Chancellor for them. Upon appointment, the Chancellor can then take away any Parliamentary privileges.

During Prime Minister’s Questions today, David Cameron seemed to suggest that Adams had taken on one of these rolls. However, Sinn Féin press releases countered this and when Nigel Dodds, leader of the DUP, asked a point of order for clarification, the deputy Speaker was unable to give a straight answer.

Applying for these positions would be an odd step for Adams, as he would have a position bequeathed to him by the British Government.

The other options are that he could be appointed to the House of Lords – which of course is highly unlikely.

The more entertaining option is that Adams could turn up at Parliament and try to vote. As he has not sworn the Oath, he would be ejected from the Commons and have his membership revoked (he would be treated as if he were dead).

This could create some great pictures.

Adams will undoubtably want to solve this problem before the Irish General Election, whenever that may be. But for now, it seems that he remains a Member of Parliament – list of MPs.