PSA Communications

Tuesday, 12 July 2011

The changing face of British Politics

It’s been a hectic few weeks of allegations, revelations and of course the closure of a 168 year old national newspaper. The political ramifications of the hacking scandal will run and run, but at this early stage it seems Ed Miliband has as last found his voice on this issue, his tone has been pitch perfect reflecting a growing public anger. He forced David Cameron to agree to his call for a public inquiry (The PM ended up calling two).

On this issue at least it seems the Labour Party has finally got the leader it has been looking for.

Surprisingly, the Prime Minister has been on the back foot since the story broke and criticism of his decision to bring Andy Coulson into the heart of government shows no signs of abating. His refusal to apologise for this evident error continues to provide ammunition for the opposition. Expect to hear Ed Miliband and others plug away at this for quite some time.

So what next? With the BskyB takeover now referred to the Competition Commission (see Jeremy Hunt’s statement below) it would seem that News International have bought themselves and the Government some breathing space. However, if the drip feed of hacking revelations continue – and it seems likely that they will - the danger is that News International’s other titles may become infected. News International may feel confident that they could pass the hurdle of the Competition Commission whose remit is to look at media plurality. But the steady stream of allegations which now include attempts to access the medical records of the former Prime Minister’s son, will make it difficult for OFCOM to consider James Murdoch a “fit and proper person” to own his own TV platform should the media regulator have to apply this test.

The Home Affairs Select Committee heard evidence from Assistant Commissioner John Yates, who received a hostile reception from his inquisitors led by Chairman Keith Vaz MP. Yates expressed regret that he failed to properly review the hacking evidence in 2009 but ruled out resigning. Instead he put the blame squarely at the door of News International (there will be no post retirement Times column for Mr Yates). The Committee seemed unsatisfied with Mr Yates responses with Mr Vaz finishing the session by stating: "It is the view of this committee that your evidence is unconvincing. Please do not regard this as an end to the matter."

In another twist, the Culture, Media and Sport Select Committee have requested James Murdoch, Rupert Murdoch and Rebekah Brooks to appear before them next Tuesday (19th July). It is highly unlikely that the old man will – he cannot be compelled to. But if Mr Murdoch or Ms Brooks attend then expect sparks to fly.

Adding further fuel to the fire is Labour’s opposition day motion: “This House believes that it is in the public interest for Rupert Murdoch and News Corporation to withdraw their bid for BskyB” which will be debated on Wednesday and is likely to attract strong Liberal Democrat support (the government may concede this in its entirety). Wednesday is also (thankfully for the Prime Minister) the final Prime Minister’s Questions prior to a long recess.

Longer term implications
It is difficult to predict the longer term implications for the Prime Minster. David Cameron has been hurt badly by the saga and will continue to be as the drip-drip of appalling or salacious news continues. Rebekah Brooks told News International employees that there was a year’s worth of revelations as yet published. Mr Cameron, who will not want his premiership defined by this issue, may want to reconsider his decision to start the judicial inquiries after the police investigation.

Ed Miliband has rolled the dice on this. Not someone one would naturally associate with risk taking (other than blackjacking his Brother on a dark night in Manchester), he has gambled that there will be a sea change in the relationship between the media and political establishments. He will be keen to ensure the cross party discussion on the terms of the two inquiries hasten that. If they do not then Miliband can expect a torrid time from the Murdoch titles.

Equally it could be that the generally close relationship between the Murdoch empire and the Conservatives will also be transformed; wedding invitations, summer parties and Christmas dinners may be consigned to history. The danger for David Cameron is that he remains tainted by his association with the “Evil Empire” while his party moves on. Supporting Labour’s call to stop the whole NI/BSkyB merger would be a smart move for Mr Cameron even if it is again at Miliband’s behest. MP expenses anyone?

The reputation of the Metropolitan Police has also taken a pounding. The inquiry into their initial handling of the hacking revelations will undoubtedly create further embarrassment. An effective, forensic judge has the power to cause them significant pain. Of the current serving officers connected with this grand saga, it would appear John Yates has the most to lose.

BSkyB bid referred to Competition Commission

Friday, 8 July 2011

June Structural Reform Plans

The Government has published June progress updates for each department’s Structural Reform Plans.

Download the update reports for each department:

Monday, 20 June 2011

Who does what in Whitehall...

The Government has published departmental structure charts showing the name, job title and salary for all senior civil servants, plus team information and job descriptions across central Government.

Wednesday, 15 June 2011

Ed gets angry at PMQs

It’s been difficult few weeks for Ed Miliband with the disquiet surrounding his leadership beginning to grow louder, thanks in part to a new biography and leaked documents illuminating Brown/Blair feud a little further.

Miliband decided to use all six of his questions to raise a very specific element of the Government’s welfare proposals. He claimed that cancer patients in recovery would be £94 worse off under the proposed system. He was passionate and angry and at one point lambasted backbench Tory MPs as a disgrace for shouting whilst such an important issue was being discussed and called on Cameron to pause the legislation.

The PM failed to grasp the point he was making and looked somewhat confused as a result. He insisted that the Government did not have plans to reduce welfare payments to cancer patients and told Miliband to “check his facts before coming to the House”.

Verdict: Miliband performed well and he needed to more than ever after a shaky week. The PM held his own but once again showed that he is not completely comfortable when questioned on policy minutiae but is the master of the sound bite calling Miliband “the weak leader of a divided party”.

Overall, a much needed win for Miliband.

Friday, 3 June 2011

Structural Reform Plans for May

The Government has published May progress updates for each department’s Structural Reform Plans.

Download the update reports for each department:

Friday, 27 May 2011

Departmental business plans

Updated business plans for 2011 were published in May. The 2011 business plans reflect an updated assessment of when the Government will implement its commitments set out in the Programme for Government.

The Business Plan for the Department for Health will be published after the NHS listening exercise.

A document has also been published outlining amendments to the Structural Reform Plans in the 2011 Business Plans.

Monday, 9 May 2011

April Structural Reform Plans

The Government has published April progress updates for each department’s Structural Reform Plans.

The Government has also published an update on their cross-government Carbon plan (pdf, 98kb).

Download the SRP update reports for each department:

Friday, 1 April 2011

March Structural Reform Plans

The Government has published March progress updates for each department’s Structural Reform Plans.

Wednesday, 23 March 2011

Budget 2011

1. The politics and economics of today’s Budget

A one-time-only opportunity

1.1 Chancellor George Osborne’s Budget today was extremely important for the future of the Coalition and, potentially, for Mr Osborne’s own future. Even though we are less than a year into this Government, today represents arguably the last – and best – chance to set a strategy for growth and electoral success in 2015.

No more room for savings

1.2 Mr Osborne’s earlier “emergency” Budget last summer was designed to identify where the painful spending cuts would come. Having done that, he had very little “wriggle room” either to adjust the cuts programme or to identify other savings – he told everyone last summer that the emergency Budget was a one-off and permanent change to spending patterns.

Growth good…

1.3 Better economic times therefore had to come from real growth, not more savings. With growth so sluggish and little economic good news to tell, the Chancellor’s task today was to produce proposals which would remove his perceived structural obstacles to a brighter, high-growth future. Without removing obstacles now, there would be little chance to make an impact before the next General Election: the UK economy simply doesn’t move fast enough for such policy changes to show results.

…but reform better?

1.4 Mr Osborne has a deeper ideological agenda than simple growth. He wants permanent systemic fiscal reform. So today’s Budget wraps up serious structural reform proposals in the language of growth promotion and entrepreneurship. For example:

· By talking about tax “simplification” and “removing anomalies” between income tax and National Insurance, for example, the Chancellor can give the impression of reducing taxes and increasing personal spending power, whilst making future revenue collection more responsive and future fiscal policy levers easier to manipulate.

· By promising to make tax “more transparent”, and better linking personal deductions to public spending, he hopes to encourage a culture where taxpayers monitor Government expenditure more closely and are more resistant to “Big Government” projects.

A significant prize awaits

1.5 If he is successful, the Chancellor will probably have altered the UK’s tax and benefits system irrevocably, and he clearly stands ready to gain electoral and personal political success. Labour’s Budget response today was necessarily sharp and combative, but the Opposition party will need strong predictive modelling to establish which of Mr Osborne’s wheezes today are designed genuinely with growth in mind and which are designed for the 2015 General Election.

2. The Budget headlines

The Chancellor said that today’s Budget “is about moving from rescue to reform, and reform to recovery”. He said the measures he announced were “fiscally neutral across the period” and, in a nod to his strategic aims, published his “Plan for Growth” alongside the traditional Red Book of facts and figures about the Budget Statement. These are the key points from today’s Budget Statement:

Economic forecasts

2.1 Forecasts by the Office for Budget Responsibility show annual GDP growth forecast for 2011 revised down to 1.7%. In 2012, it is expected to hit 2.5%, then 2.9% in 2013; 2.9% in 2014; and 2.8% in 2015.
2.2 OBR expect inflation to remain between 4 and 5% for most of this year, before dropping to 2.5% next year and then to 2% in two years’ time.
2.3 The inflation target will remain at 2% CPI.
2.4 Borrowing to fund the deficit this year is now set to come in at £146 billion, below target. It will fall in subsequent years to £122bn; £101bn; £70bn; £46bn in General Election year 2014-15; and £29bn by 2015-16.

Business and general taxes

2.5 There will be a consultation on the Office of Tax Simplification’s proposals to merge the operation of National Insurance and Income Tax.
2.6 The Budget abolishes 43 complex tax reliefs and removes over 100 pages from the tax code.
2.7 From April 2012, the default indexation assumption for direct taxes will move to CPI but there will be protection through this for employers National Insurance Contributions.
2.8 Also from April, corporation tax will be reduced by 2% not the previously-announced 1% and will continue to fall by 1% in each of the following three years.
2.9 No further change to VAT rates or categories this year.
2.10 Major changes were announced to the Enterprise Investment Scheme and generous new allowances for “business angels” introduced to encourage investment in start-ups and SMEs.
2.11 Mr Osborne confirmed that he views the 50p income tax rate “as a temporary measure”.
2.12 The business rate holiday for small businesses is extended for another year – to October 2012.
2.13 From April small companies research and development tax credit will rise 220% this year and 225% next year.

Skills

2.14 2.14 Funding for 12 further university technical colleges.
2.15 Extra 40,000 apprenticeships for young people out of work.
2.16 Funding for 100,000 new work experience placements.

Regulation and legislation

2.17 £350 million worth of specific regulations will be scrapped and Lord Young’s health and safety recommendations will be implemented in full.
2.18 The Treasury is publishing a new strategy paper, “Tackling Tax Avoidance” and will close down various Stamp Duty Land Tax avoidance loopholes, tighten capital gains rules for companies; end the practice of disguised remuneration and “tackle the exploitation of low value consignment relief that has left our high street music stores fighting a losing battle with warehouses in the Channel Islands”.
2.19 The tax avoidance measures tackled will raise £1 billion a year.

Other points of note

2.20 The Green Deal remains on schedule and Mr Osborne said, “I now confirm that we will act to incentivise and encourage its take up”.
2.21 The Green investment bank will begin work one year early in 2012, with an extra £2bn in funding.
2.22 £100m funding for science facilities announced.

3. A cautionary note

Mind the gap

2.23 Budget Statements are famous for “gaps” – the hidden detail and stealth consultation that eventually emerge from the mass of paperwork released on the day. Over the next week, think tanks, MPs, academics, tax and economic experts will pick the Budget apart word by word and graph by graph.

Keep on track with PSA

2.24 As and when greater detail emerges on key issues, we will let you know. However, if there is something in particular that you would like us to look out for, or to follow in detail, please let us know.

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