09/05/2012

IN A DIAMOND YEAR, QUEEN’S SPEECH FAILS TO SPARKLE

The fanfare and pomp of the first Queen’s Speech for two years contrasted with the pedestrian nature of the legislative package. Lords’ reform,  which was to be the cornerstone of the Government’s programme, plummeted to number sixteen on the list read out by the Queen with an expectation that it may drop off the list completely.  Difficult decisions around High Speed 2 and long term care have been postponed.

In 2010 wide-ranging reforms in health, welfare and education were laid out in the Queen’s Speech and set the political agenda.  Two years on the answers to the Government’s problems – a stagnant economy, increasing instability in the eurozone and an uphill battle in delivering public sector cuts – do not lie in its new legislative programme. Many of the Government’s growth policies have been set in train in the Budget and Autumn Statement and do not require legislation but the Queen’s Speech has done little to promote the Coalition’s growth narrative .

Safety first and stability (rather than growth) are the watch words with a focus on technocratic bills on financial services, utilities and security. The recommendations of the Independent Commission on Banking will be implemented seeing the separation of retail and investment functions of banks. There are also stronger powers for the security services and potentially significant changes to the law relating to adoption, children in care as well as children with special educational needs. 

Mixed reaction from business

The Government is positioning the Enterprise and Regulatory Reform Bill as the flagship Bill of the legislative programme. Provisions in the Bill to reduce burdens on business and repeal unnecessary legislation have been welcomed by business but overall the reaction of the business community to the Queen’s Speech has not been entirely positive. For the CBI the jury’s out on the Regulatory Reform Bill but they have applauded the inclusion of the Energy Bill, which will put in place reform of the electricity market. The Institute of Directors has said tweaking the edges of the system will not be enough, although has welcomed the moves to give shareholders a binding vote on executive pay.

The Queen’s Speech perhaps highlights the lack of a clear narrative from the Government with regards to the business sector. While the Government has trumpeted a focus on de-regulation, a number of the Bills will lead to additional regulation, for example on executive pay and the splitting of banking functions. Equally the Government’s focus on growth and its attempt to appear family friendly are not entirely coherent.  Flexible leave policies may appear progressive but will have a potentially significant impact on small businesses.

A typical mid term Queen’s Speech?

Overall the legislative programme is technocratic, not ideological, and indeed has a lot less content than alternative versions put forward, including the Conservative Home effort.  Some argue that this reflects the failure of the Coalition government to have a strong sense of purpose. However a remarkable number of the Bills announced today (reducing regulatory burdens on business, pension reform, changes to regulation of utilities and reform of special educational needs, as well as ubiquitous House of Lords reform)  were announced in a very similar form in 1999 when the Blair government was two years into its first term.

One benefit of this tentative approach is that Coalition relations, under strain following the Budget fall out and poor election results will not be worsened in Parliament.  The relatively thin programme has been presented under a united front, with an unusual joint statement from the Prime Minister and his Deputy.  Anticipated legislation likely to cause ructions between the two parties, particularly around gay marriage and an extension of the period of detention for terrorism suspects has not been included.

Potential headaches

The draft Communications Data Bill has been condemned as a snoopers’ charter by the civil liberties lobby and many Liberal Democrats which could present difficulties for the Government.  Indeed plans to enable the collection and storage of the records of e-mail, text, phone calls and web browsing were dropped by the Labour Government in 2009. The publication of this Bill in draft, rather than as a full Bill, is seen as a minor Lib Dem victory.

House of Lords reform does feature, despite protestations from a wide cross section of the backbench Conservative Party, but it appears that the reforms are largely watered down.  The Government will allow Parliamentary time to attempt to find a consensus, but given this has evaded our political class for over one hundred years, a new look House of Lords is not likely to be on the agenda any time soon.

A rebellious session

One danger of a light legislative programme is that increasingly restive backbenchers, particularly in the Tory Party, will have plenty of time to indulge in plotting and mischief. We have seen this over the past four months as the 2010 session has been winding down.  The Government is unlikely to earn rave reviews for the Queen’s Speech.  With both parties mired in the polls and on the back foot on many issues the case for Cameron to pursue an early reshuffle before the Summer is still a possibility.  This remains one of the few political levers at the Prime Minister’s disposal.

Coalition renewed but not re-launched

A light technocratic legislative programme is potentially reflective of dominance of civil servants in Number 10 and the focus of the political team on getting the presentation right.  This is unlikely to be remembered as an important moment in the life of the Coalition and certainly does not represent a re-launch, indeed it may be seen as a missed opportunity.

THE BILLS

Enterprise and Regulatory Reform Bill
The Bill broadly looks to continue the Coalition’s agenda of reducing and streamlining business regulation, with competition reform representing a significant element of this. It is also likely to be heralded by Government as the result of their ‘red tape challenge’ which reviewed business regulations that could be reduced or abolished. This Bill will create a single Competition and Markets Authority, establish a Green Investment Bank and strengthen the framework for setting directors’ pay by introducing binding votes. 

Energy Bill
One of the flagship Bills, the Energy Bill includes measures to introduce new long-term feed-in tariffs for electricity generation from renewable, nuclear and carbon capture and storage. The Bill includes measures to introduce an Emission Performance Standard which will prevent the construction of new coal plants which emit more than a certain level of carbon. The Bill also provides for an independent Office for Nuclear Regulation.

Banking Reform Bill
The Bill will further strengthen regulation of the financial services sector and implement the recommendations of the Independent Commission on Banking (ICB). This includes measures to force banks to ring-fence their retail operations from investment banking divisions and making it easier for customers to switch their account. Plans will be set out in greater detail by Chancellor George Osborne in his Mansion House speech on 14th June.

House of Lords Reform Bill
The House of Lords Reform Bill, which was heavily trailed ahead of the Queen’s Speech, proposes a reduction in the numbers of the Peers from over 800 to around 400, with 80 per cent of the Lords to be elected. However, reform will only go through if there is a cross party consensus.

Children and Families Bill
A raft of proposals are contained in the Bill including the introduction of more flexible parental leave, a shake-up of the support available to children with special educational needs, measures to speed up the adoption process and a strengthening of the role of the Children’s Commissioner. 

Groceries Code Adjudicator Bill
The Groceries Code Adjudicator (GCA) will enforce the Groceries Supply Code of Practice, which governs relationships between retailers and suppliers. The Bill contains measures to set up the Groceries Code Adjudicator, which will have powers to investigate reported abuses by retailers with a turnover of over £1 billion per year. The Bill has already been published in draft form and has received cross party support.

Crime and Courts Bill
The Crime and Courts Bill will officially establish a National Crime Agency to take over the work of the Serious Organised Crime Agency. The Bill will aim to tackle serious and organised crime and strengthen border security, as well as covering sexual abuse and exploitation of children and cyber crime.  The Bill will also look at improving road safety and include a clause to increase penalties for driving under the influence of drugs.

Justice and Security Bill
The Justice and Security Bill introduces new powers for the security and intelligence agencies. The Bill will allow for courts to hear a greater range of evidence even when national security prevents the information from being made public. The Bill will attract criticism from liberty campaigners.

European Union (Approval of Treaty Amendment Decision) Bill
This Bill will seek Parliamentary approval for the agreed permanent European Stability Mechanism. It will confirm that that the UK will not contribute to any future bailouts, as it did in May 2010. It will be popular with Conservative backbenchers and with the public, but it limits George Osborne’s ability to negotiate in future European fiscal crises.

Croatia Accession Bill
Croatia is set to become the 28th Member State of the European Union on 1 July 2013 after signing the Treaty of Accession in December 2011. All 27 current Member States must now begin the ratification process. The introduction of the Croatia Accession Bill is part of this process.

Pensions Bill
The purpose of the Pensions Bill is to introduce reforms to both state and private pensions.  The Bill will introduce a single tier state pension of around £140 per week in place of the current two-tier system and will allow the state pension age to increase to 67 between 2026 and 2028.  A number of reforms to private pensions are expected.

Public Service Pensions Bill
The Public Service Pensions Bill will introduce legislation to reform public sector pensions, changing pension schemes in line with the recommendations of the Independent Public Service Pensions Commission. The Bill will see public sector workers contribute more to their pension pots, with pensions based on average salaries rather than a workers final salary. 

The Defamation Bill
The Defamation Bill will introduce more protection for freedom of speech in England and Wales. It will also provide greater protection to operators of websites hosting user-generated content and seek to address so-called “libel tourism”.

Electoral Registration and Administration Bill
The Bill aims to modernise the electoral system, replacing the current method in which voters are registered by household with a system in which voters will be required to register individually. The changes will be phased in from 2014. The Electoral Commission, which has been calling for the reforms for a number of years, has expressed support for today’s Bill.

Small Donations Bill
This Bill aims to increase support for charities (particularly small charities) by reducing administrative burdens with the removal of the need to collect Gift Aid declarations on small donations. It is thought that this could boost incomes for charities at a time when their revenue is being lost though government cuts and falling donations.

DRAFT BILLS

Draft Care and Support Bill
The Draft Bill will seek to modernise adult care and support in England to help people plan, prepare and make informed choices about their care. The Bill aims to ensure local authorities fit their services around the needs, outcomes and experiences of people and local priorities and not have patients adapt their needs and desires depending on what is available.  The Draft Bill fails to address the funding gap which the Dilnot report (published July 2011) highlighted as crucial in providing a sustainable long term solution to social care.

Draft Water Bill
Building on the Water White Paper the Bill is likely to include reforms to extend competition in the water sector by increasing choice for business customers and public sector bodies and making the market more attractive to new entrants. It will also include proposals to improve Ofwat’s ability to regulate water companies as competition develops in the market.

Draft Local Audit Bill
The Draft Local Audit Bill will provide for the closure of the Audit Commission and set out new arrangements for the audit of local public bodies. The Draft Local Audit Bill will require councils to appoint their own auditors on the advice of an independent panel and establish an audit regime regulated by the Financial Reporting Council, along similar lines to private sector practice. 

Draft Communications Data Bill
This Draft Bill will set out proposed measures to allow law enforcement and intelligence agencies to have access to communications data relating to emails, text messages and phone calls. This will require communications service providers such as ISPs to retain communications data for twelve months so that it remains available to law enforcement and security agencies. These proposals are particularly controversial with civil liberty campaigners although its relegation to Draft form will be seen as a victory for the Liberal Democrats.

May 2012 Election Lexcomm

04/05/2012

2012 Election Lexcomm

THE MORNING AFTER: LABOUR MEET EXPECTATIONS

Predictably a bad night for both Coalition parties. The loss of seats was at the pessimistic end of expectations but, as the Tories are pointing out, Labour secured a lower percentage of votes in local elections in 2000 and 2004 than that secured by the Conservatives yesterday and still went on to win a general election.

Labour did quite well in the south, winning control of councils in Plymouth, Southampton and Reading. They also won Birmingham and Dudley in the Midlands and had a particularly strong showing in Wales, where they have regained control of Cardiff from the Liberal Democrats.  Importantly, they also took control of councils in areas where they lost Parliamentary seats at the last election, including Harlow.  The Labour leadership will be relieved to see a strengthening of the party in seats they need to win to in order to stand a chance of being the largest party at the general election.

Where UKIP did well, they helped Labour win seats. This is worrying for the Tories who fear that traditional Conservative voters, dismayed by a government they consider too liberal on issues such as gay marriage, will see UKIP as a real Tory alternative.  UKIP’s good showing at these elections will further the debate within the Conservative party about appealing to voters on the right, with those on that wing of the Party using the results to push the case for an EU referendum.

The votes against mayors in the big cities is pretty disastrous for what is a flagship Tory policy. Ministers are being blamed for not campaigning hard enough. The Labour leadership will be relieved that they have been spared difficult arguments about whether sitting MPs should be allowed to stand, causing by elections in their parliamentary seats.

A key consequence of the results is that it will strengthen those Tories who believe that Cameron needs to be tougher on the Liberal Democrats. It will be interesting to consider the impact on the presentation of the Coalition’s programme, to be outlined in the Queen’s Speech next Wednesday. The poor results have led to renewed calls from Conservative backbenchers for Cameron to avoid being bogged down in Lords reform and instead focus on growth policies. 

For the Lib Dems, the loss of so many seats has serious consequences as it reduces their activist base.  For Labour, it will be a largely satisfactory outcome. Livingstone’s expected failure in London will be pinned on the candidate’s own personal and political failings, underlined by a likely good Labour result for the Greater London Assembly. And the good results overall will be a boost for Ed Miliband.

What does this tell us about the next general election? Although we should be careful to read too much into these results, they give Cameron no comfort that his Party is positioned to win an overall majority in 2015. Unlike the 1980s when disastrous Tory local election results were followed by large general election wins, it is the right of centre vote which is in danger of fracturing, while left of centre voters are much more likely to support Labour. This is because the effect of the Liberal Democrats going into coalition with the Tories has been to boost Labour support by about seven to eight percentage points. And those left of centre former Liberal Democrat voters are showing no signs of going back to their former party.

This is not to say that Labour has made the crucial breakthrough either. Conservatives will say, just as Labour used to when in power, that their opponents have not gone through the magic 40 per cent barrier. Turnout was low and the public interest in these elections was limited. The rejection of directly elected mayors may indicate continued voter disillusion with the political class.

If Boris has a good victory in London, the Conservatives will hope the local election results will look like old news. The tentative conclusion from yesterday’s elections however, is that another hung parliament remains a strong possibility.

Coming up…

The London Mayoral result expected around 7pm (although this could be delayed by a power cut). Early indications are that Boris Johnson is ahead on first preferences.

The Scottish Councils started counting at 9am. Labour will be hoping their good night isn’t dented by the loss of Glasgow to the SNP. With three out of 21 wards declared as we go to print, the SNP have gained one seat from Labour.

Think Tank Quarterly: The Skills Edition

27/04/2012

Think Tank Quarterly: Skilling the Nation

SKILLING THE NATION

With youth unemployment passing the totemic one million mark and the economy officially re-entering recession, the issue of improving the UK’s skills base is rapidly rising up the political agenda. It is of critical importance to business and a vital element of the Government’s inward investment strategy.  In this edition of Lexington Communication’s Think Tank Quarterly, we look at the activity of think tanks in this increasingly important policy area.

There has been a renewed focus on the role of vocational qualifications, partly driven by the impact of higher tuition fees, the shortage of jobs, and the changes to league tables. Policy Exchange are due to publish a report on further education colleges in June and Reform recently held an event on ‘What can the private sector bring to higher education’. However, a Bill to open the higher education market to the private sector is now not expected to be included in the forthcoming Queen’s Speech.

The Government has not yet resolved the conflict between their drive to make the school curriculum more academic, while improving the standing of alternative vocational qualifications.  Apprenticeships are seen by Government as an important mechanism in delivering quality vocational education.  Compass held an event this month on ‘Vocational education and skills for the Good Society’ focusing on vocational education and apprenticeships and the IPPR published a report at the end of last year on ‘Rethinking Apprenticeships’ which looked at how to strengthen the role of apprenticeships in society and the economy.

On-the-job training is a crucial element of skills development. The IPPR published a report into skills and training earlier in April, which looked at the failure of employers to train their employees. They argued that not investing in training is often profitable but has long-term negative implications for employees, consumers and the state. Localis are particularly focused on the role of local businesses in providing skills in their area, arguing that they are best placed to identify which skills are lacking. Localis are considering the role of public-private partnerships in skills training.

Following the riots in 2011, a number of think tanks are looking at worklessness in the NEET (not in education, employment or training) generation and how disaffection among young people led to the mass disturbance.  The Centre for Social Justice are about to revisit their work in Breakthrough Britain on the Pathways to Poverty.  This new piece of work will look in part at the role the private sector can play in tackling poverty.

CentreForum are focusing on welfare to work programmes and youth unemployment. They are looking into the failure of previous work schemes and considering other ways to tackle youth unemployment.

Think tanks are also actively engaged in school reform, which is arguably one of the more successful elements of the Coalition’s programme, under the leadership of Education Secretary Michael Gove. He has succeeded in driving forward his free schools policy, despite powerful opposition and complications along the way. On school reform, think tanks are split along ideological lines. Progress recently published an article entitled ‘The missing middle: the government’s laissez-faire experiment with our schools is depriving local people of a voice’, whilst Reform have taken a more positive approach in their report, ‘Plan A+: Unleashing the Potential of Academies’.

The Institute for Economic Affairs are currently looking into the role of for-profit schools in education policy and Policy Exchange recently published a report on Social Enterprise Schools. Although education reforms have attracted controversy, education policy has continued to develop in a period where a number of other departments have seen u-turns and hitches.

FUTURE SKILLS ACTIVITY

Respublica are due to publish a report on ‘A New Intergenerational Covenant: Employment opportunities for the young – work-life balance for older people’ as part of their ‘New Economies, Innovative Markets’ workstream. This will look at youth unemployment as well as the needs of an older working population.

Localis intend to publish a Policy Platform on skills and employment, looking at the issue from a range of perspectives.

Demos have some upcoming workstreams relating to skills. We expect to see details of projects in the next few months.

Policy Exchange and the strong>Social Market Foundation are both planning to hold a number of events on education and skills at the 2012 party conferences.

NEWS & MOVES

We are entering a period of flux in Westminster, with a number of rumours circulating about potential changes in the Prime Minister’s team. Matthew Elliot from the Taxpayers’ Alliance was reportedly poised to join the Prime Minister’s team, although this may have been blocked by Lib Dems. Pollster Andrew Cooper may be heading back to Populus.

Following the departure across the Atlantic of Downing Street advisers Steve Hilton and Richard Reeves, Tom Clougherty, Executive Director of the Adam Smith Institute, has been appointed to the post of Managing Editor of the Reason Foundation in Washington DC. 

Chris Nicholson has left his post as Chief Executive of CentreForum to become a Special Adviser to Ed Davey, who was appointed Secretary of State for Energy and Climate Change in February, following the resignation of Chris Huhne. Nicholson said he is looking forward to helping the Coalition ‘become the greenest government ever’.

Another CentreForum alumnus, former Director Julian Astle, joined the Number 10 Policy Unit in January to cover Polly Mackenzie’s maternity leave.

Gavin Poole, the former Executive Director of the Centre for Social Justice, has been appointed CEO of iCTY, a project to develop the legacy uses of the Press Centre and Broadcast Centre in the Queen Elizabeth Olympic Park. Poole is being replaced by Christian Guy, currently Director of Policy at the CSJ.

Two new think tanks have been established. The Hannah Mitchell Foundation, launched in March, aims to provide a forum for ‘the development of a distinctive democratic socialism in the North’, and London-based British Future, launched in January, will study issues of ‘identity and integration, migration and opportunity’.

Back on the bottle: Government publishes Alcohol Strategy, Select Committee launches inquiry

28/03/2012

Back on the bottle: Government publishes Alcohol Strategy, Select Committee launches inquiry

With the premature launch of the Alcohol Strategy last week, David Cameron diverted criticism from his Chancellor’s Budget and turned his attention to the cheap price of alcohol.  The third alcohol strategy in five years, it is littered with initiatives clearly aimed at supermarkets which the Government feels are contributing to the problem of alcohol misuse.

Closely on the heels of the Government’s announcement, the Health Select Committee launched its inquiry into the Alcohol Strategy.  With such close man-marking of Government thinking Stephen Dorrell MP is almost the No 10 Special Adviser on health – ensuring the Prime Minister is kept informed of what his various Departments are up to.

But in contrast to their much more pragmatic approach in other areas of policy, the Prime Minister and the Health Select Committee are adopting a tough line on alcohol.  By now favouring minimum unit pricing the Prime Minister has bowed to pressure from doctors, principally the Royal College of Physicians.  Perhaps as a trade off for not opposing the Health & Social Care Act which still needs the support of doctors to be implemented?

More concerning, however, is the airing of an increasingly hard-line approach, as seen in anti-tobacco measures, which are creeping into the Health Select Committee’s inquiry.  The influential Committee will consider international evidence of the effectiveness of draconian measures such as raising the legal drinking age, plain packaging and marketing bans for alcohol.

Minimum price for alcohol
The Government proposes a floor price for alcohol of 40 pence per unit.  The Prime Minister’s aim is to hit binge drinkers, but in reality he will hit most taxpayers as his minimum unit price policy doesn’t raise any extra revenue to help pay down national debt.  Think-tanks from Policy Exchange to the Institute for Fiscal studies have criticised the Prime Minister’s approach because implementing a minimum unit price through duty rates and a floor price could raise an estimated £850 million for the Chancellor.

At least the Government recognises this problem, although its preferred policy solution, “to work with industry to use any additional revenue to provide better value to customers in other areas” needs more flesh on the bones.  Instead, taxpayers will have to fund the £3 billion it costs the NHS to deal with the problems of alcohol misuse.

Government approach to Public Health
The Health & Social Care Bill, soon to become law, transfers responsibility for improving public health from Primary Care Trusts to what many people say are untried and untested Local Authorities.  Cash strapped local authorities will receive ring-fenced budgets to ‘improve public health’ so expect that definition to be stretched to breaking point – fixing potholes and poor housing might soon become local public health priorities.

As with other areas of the NHS, this structural change will cause great upheaval and coming at a time when budgets are tight, it poses considerable risk for a Government keen to be measured on ‘outcomes’ in health.  The Government’s strategy, however, is a canny one.  By using price as the main (albeit the most effective) lever for reducing consumption of both alcohol and tobacco the Government will buy some time while the changes to the public health system take effect. 

The question for many commentators is whether the Government extends its policies on alcohol and tobacco into other areas of public health including obesity with whispers of a “fat tax” on high fat, salt and sugar foods.  Further details will no doubt become clear in the Public Health White Paper which is expected to be published shortly.

NPPF: from national controversy to local debate Lexcomm

27/03/2012

NPPF: from national controversy to local debate Lexcomm

The Government hopes that publication of the NPPF will show it is serious about delivering the growth it has staked its political credibility on.  Today ministers remained on the front foot, claiming the NPPF was “unashamedly pro-growth”. However, though a series of amendments it will also hope the battle with conservation groups like the National Trust and CPRE will come to an end.

The accusation that Government will allow vast swathes of the countryside to be paved over, however tenuous, is especially potent for Conservative inclined voters and politically unsustainable for ministers as a result. In the Framework’s final version ministers will hope they have emphasised the countryside will be protected without watering down the pro growth mentality that underpins the presumption in favour of sustainable development in particular.

However, implementation of the Framework by local authorities and subsequent judgement by the courts will ultimately decide whether the NPPF will deliver development.  This is where the focus now moves, with councils thinking about how new transitional arrangements will impact on their plans and decisions. They will also be making judgements, which are inherently political, about how to plan for growth and justify this to an often sceptical public.

Reaction

CPRE – cautious welcome
Shaun Spiers, Chief Executive, said Government had listened to public views but:

“… While recognising the scale of the housing crisis, we remain very concerned to ensure that the Planning Framework does not place undue emphasis on short-term economic growth at the expense of other important long term, public interest objectives of planning, including the protection and enhancement of the environment.”

“We are also concerned about the length of the transition period, which at 12 months will pose serious challenges to many local authorities …”

BPF — clarity on implementation required
Liz Peace, Chief Executive, said:

“We believe the NPPF is now a more moderate and sensible document. The changes to the framework do not, however, alter its overall objective of supporting well-planned sustainable growth within a streamlined, plan-led system”

“… What’s needed now is clarity over how the NPPF is going to be implemented. Urgent questions remain over how local authorities should determine how many homes and jobs they need, and what the guidance that underpins the NPPF should be.”

Local Government Association —– local government needs a transition period
Cllr Sir Merrick Cockell, Chair, said earlier in the week:

“It remains crucial that the Government puts in place realistic transitional arrangements to give councils time to introduce Local Plans and the LGA will continue to press for this.”

Today Greg Clark confirmed the government had introduced a 12 month transition period which was supported by the LGA.

Labour Party — uncertainty is holding back investment
Hilary Benn, Shadow CLG Secretary said in the Commons:

“Far from giving us certainty, there is likely to be delay as developments are held up by appeals and by the courts having to rule on a new and untested approach,” Mr Benn said, adding that this would lead to “uncertainty and chaos.”

Budget 2012 Lexcomm: Osborne’s Budget in danger of unravelling

21/03/2012

Budget 2012 LEXCOMM: Osborne's budget in danger of unravelling

Today’s Budget was always going to be difficult for George Osborne. His room for manoeuvre was tiny so it had to be fiscally neutral and politically nuanced. He wanted to please his backbenchers with a tax cut, but needed to accommodate the Liberal Democrats with an assault on ‘tycoons’. Also, previous attempts to stimulate growth had failed to gain momentum leaving tax cuts as one of Osborne’s few growth options.

Fiscal neutrality means that winners have to be counterbalanced by losers. The end of the 50p tax rate was well trailed, but the same group of high earners will lose out with a new cap on tax reliefs set at 25% of total income for anyone claiming more than £50,000 in a year. Together with the additional stamp duty on houses worth more than £2 million, it could potentially be enough for Nick Clegg to be able to represent it as the Tycoon Tax he had called for.

Yet the tax cut for the wealthy is a major political gamble. It allowed Labour leader Ed Miliband, in an admittedly knockabout speech, to claim that the Tories were only interested in helping their rich friends. Osborne is hoping that his claim that the tax didn’t raise much anyway will convince enough voters that cutting it was sensible. He will also hope that in responding with a class based attack, Miliband will turn off aspiring Middle England.

The Government is also hoping that its cut in personal allowances to £9,205 from April 2013, which will make 24 million people £220 a year better off, will divert attention from the 50p tax rate.  Both Coalition parties are claiming credit and there are likely to be further moves towards achieving the Coalition aspiration of a £10,000 tax allowance ahead of the election.

Yet even the 50p tax gamble could yet be overshadowed by the reaction to the so-called ‘granny tax’, whereby 350,000 pensioners will have to pay an extra £285 a year. Some commentators are already comparing it to Gordon Brown’s politically disastrous decision to scrap the 10p income tax band which he later had to reverse. Again, such are the hazards of a fiscally neutral Budget.

The Chancellor used his Budget to try and undo some of the problems caused by the previously ill-thought through policy announcement of ending child benefit for higher rate tax payers. He announced an end to the so-called “cliff-edge” effect where the benefit is withdrawn in one go when one partner earns more than £43K. But commentators are already pointing out that it doesn’t deal with the single earner anomaly where a couple earning £100,000 (£50K + £50K) will still keep all of their Child Benefit, whilst a family where one partner stays at home to look after children which has a household income of £60,000 loses the lot.

Indeed some of the detail still emerging from the Red Book will have backbench Tory MPs scratching their heads. Even though significant numbers will not be paying tax with the changes to the personal allowance, a greater proportion of the population will be paying the 40p rate than ever – probably around 300,000 taxpayers. You now need to earn just £41,450 to be in the 40p rate band.

The Chancellor will have more success in portraying his Budget as pro-business and enterprise. The further cut in corporation tax will make the UK more competitive and his tax relief for high end television productions, animation and computer games will make Britain a more attractive destination for global investment in the creative industries. His announcement that there would be no transitional phase before planning deregulation is introduced next Tuesday will also be welcomed by business. Yet, as a whole, the Budget was light on pro-enterprise initiatives.

Overall, the winners are low income families, while the rich will have to balance their improved personal tax position with tougher stamp duty rates on expensive houses. Osborne also made cracking down on tax avoidance a key plank of today’s Budget, describing it as ‘morally repugnant’. Bankers will see a levy increase, but only to offset the benefits of the lowering of Corporation Tax, which Osborne has done previously. This was not an anti-banker Budget.

There was little about economic growth, other than ritual references to infrastructure projects and a nod to a potential change in direction from the Government on airport expansion in the South East (a delayed strategy will be published in autumn).

There will be nervousness in the Treasury tonight as they wait to see how the media and the voters react. So far, as more of the detail comes to light, the omens are not good. One of the downsides of the Twitter era is that minor elements of the Budget can quickly become political problems. Of course, the downside of so much of the Budget being trailed in advance is that unexpected announcements are that much more noticeable. The Treasury will be frantically fighting tonight to stop the ‘granny tax’ dominating headlines tomorrow.

KEY DOCUMENTS PUBLISHED TODAY

HMRC assessment of the 50p rate of tax
In the first comprehensive assessment of the impact of the additional 50 pence rate of tax, the report conducted by HMRC shows that there was a ‘considerable behavioural response’ to the rate change:
 Around £16bn to £18bn is estimated to have been brought forward to 2009-10 in order to avoid the introduction of the additional rate of tax
 Total revenue received from the additional 50p rate is ‘much lower than originally forecast’, in total collecting ‘around £1bn or less’
 The report even states that ‘it is quite possible that it could be negative’

RECENT ECONOMIC DEVELOPMENTS AND PROSPECTS
 The UK economy grew by 0.8 per cent in 2011
 The OBR and the Bank of England expect growth to remain uneven through 2012
 In 2011 the UK’s total trade balance improved by £8.7bn
 Business investment fell 5.6 per cent in the last quarter of 2011
 The OBR expects CPI inflation to fall close to the 2 per cent target from early 2013
 The OBR predicts that in the years leading to 2016 net trade and business investment will increase and Government spending will decline
 Public sector net debt is forecast to peak at 76.3 per cent of GDP in 2014–15, falling to 74.3 per cent in 2016–17

FORTHCOMING PUBLICATIONS, REVIEWS AND CONSULTATIONS
 National Planning Policy Framework to be published Tuesday 27th March and will come into effect immediately
 Corporation tax reliefs from 2013 will be introduced for the video games, animation and high end television industries, following consultation
 A White Paper on the recommendations of the Independent Commission on Banking, chaired by Sir John Vickers, will be published in spring 2012
 The Government will consult with a view to bringing forward legislation in the Finance Bill 2013 for a General Anti-Abuse Rule
 The Government will launch a detailed consultation on integrating the operation of income tax and NICs sometime after the Budget
 The Government will consult shortly after the Budget on the details of the small business tax scheme including on extending eligibility to businesses with turnover up to the VAT registration threshold of £77,000
 The Government will bring forward a White Paper in the spring on reform of the State Pension for future pensioners, with final decisions on the detailed implementation of the policy being taken at the next spending review
 A Gas generation strategy to be published in autumn 2012 and continued implementation of Electricity Market Reform
 A consultation on social housing real estate investment trusts will be published (no timeframe given)
 The Government will consult on the introduction of an annual charge on residential properties valued at over £2m owned by overseas owners, with the intention of legislating in Finance Bill 2013 for commencement in April 2013
 Lord Heseltine is to lead a review of how public money can leverage the private sector to deliver growth, reporting in autumn 2012.

BUDGET 2012: THE DETAIL

Income Tax
 Increase in the personal allowance by a further £1,100 in April 2013, taking it to £9,205 in total
 Basic tax rate limit will be reduced from £34,370 to £32,245 in 2013-14, so higher rate taxpayers will get one quarter of the benefit a typical basic rate taxpayer will receive.  This will affect those earning more than £41,450
 The Government will reduce the top rate of tax from 50 per cent to 45 per cent from April 2013

Corporation tax
 Main rate of corporation tax to be reduced by an additional one per cent to 24 per cent in April 2012, to 23 per cent in April 2013 and to 22 per cent in April 2014
 The full rate of the Bank Levy will increase to 0.105 per cent from 1 January 2013

Capping tax reliefs
 A limit on all uncapped income tax reliefs; for anyone seeking to claim more than £50,000 of reliefs, a cap will be set at 25 per cent of income

Property tax
 New Stamp Duty Land Tax rate of 7 per cent to be introduced for residential properties over £2m from 22 March 2012
 15 per cent rate of SDLT to be applied to residential properties over £2m purchased by non-natural persons, such as companies from 21 March 2012

Age-related allowances
 From 6 April 2013 existing age-related allowances will be frozen at their 2012-13 levels (£10,500 for those born between 6 April 1938 and 5 April 1948, and £10,660 for those born before 6 April 1938) until they align with the personal allowance
 From April 2013, ARAs will no longer be available, except to those born before 5 April 1948

VAT
 From 1 October 2012, VAT will be extended to close loopholes, including by applying it to hairdressers’ chairs, static holiday caravans and certain hot food

Child benefit
 Child benefit will be withdrawn through an income tax charge that will only apply to households where someone has an income over £50,000 a year

Gambling taxation
 The Government will move to a tax regime that ensures operators anywhere in the world pay gambling duties on gross profits generated from customers based in the UK

Motoring taxation
 Vehicle excise duty rates will increase in line with the Retail Price Index (RPI) only from April 2012, and rates for heavy goods vehicles will be frozen
 The Government will consider whether to reform VED over the medium term
 Budget 2012 sets out company car tax rates from 2014-14 to 2016-17, including the removal of the diesel supplements in 2016

Transparency
 From 2014-15, around 20 million taxpayers will receive a new Personal Tax Statement, detailing the income tax and National Insurance contributions they have paid, their average tax rates and how this contributes to public spending

Small businesses

        From April 2013 the Government will introduce a new cash basis for calculating tax for small unincorporated businesses

Encouraging investment in energy
 Package of investment and reliefs for oil and gas extraction in the UK

Skills
 Pilot scheme of enterprise loans to young entrepreneurs to be introduced later in 2012

Infrastructure
 Encourage private sector investment in roads via feasibility study of ownership and financing models, to be announced in the Autumn Statement
 Confirmation of a £130m investment in the Northern Hub rail scheme
 Review of streamlining the planning process for a Thames crossing in East London, and options for increased rail capacity using existing infrastructure

Technology investment
 Ten cities to receive ultrafast broadband confirmed, plus an extra £50m for ten smaller cities
 Review of mobile coverage for rail passengers and increased rural coverage
 Extra £60m for a UK centre for Aerodynamics to support aerospace innovation
 £100m fund for university research facilities to encourage matched private sector funding

Health Lexcomm : Health and Social Care Bill passes final hurdle

21/03/2012

Health Lexcomm : Health and Social Care Bill passes final hurdle

“It’s not been our finest hour” said a senior member of the Cabinet to Lexcomm. 

And it hasn’t.  As the Health and Social Care Bill finally limps onto the statute book in the coming weeks, we consider some of the key legislative changes and the impact they will have in the reformed NHS.

Commissioning in a reformed NHS.

The central part of the Government’s NHS reforms - the introduction of Clinical Commissioning Groups (CCGs) – has focussed on transferring commissioning away from largely managerial control into the hands of clinicians, principally GPs.  These CCGs will be supported and held to account by a powerful and independent NHS Commissioning Board that will also tightly control which CCGs are authorised to spend NHS money.

The exact authorisation process is yet to be determined, but CCGs will have to satisfy the commissioning board that they are competent across a number of domains which, unsurprisingly, are broadly similar to the duties of a Primary Care Trust.  Those CCGs that either do not wish to commission services themselves, or are deemed not competent to do so, will have their commissioning functions performed by the NHS Commissioning Board.

The concern is that these arrangements will see a two tiered approach to commissioning with, for instance, CCGs under central control perhaps favouring NHS providers, while authorised CCGs are more able to drive improvements in services for their patients.  Patients will only be able to choose between the two types of commissioning groups if the Government are successful in relaxing GP practice boundaries.

Specialised commissioning

The only function to benefit from the centralising approach of the legislation is the little known but big spending process of specialised commissioning.  The piecemeal collection of Specialised Commissioning Groups (SCGs) has delivered patchy care for patients with rare and complex conditions, principally because funding for these conditions was previously routed through Primary Care Trusts.

This £10.5bn worth of spending will now fall under the control of the NHS Commissioning Board resulting in greater consistency in policy and reduced transaction costs for organisations with an interest in this area. 
There are broader concerns, however.  Will services from SCGs be transferred en masse or be re-created by the Commissioning Board? And will the £10.5bn budget be an easy target for a cash strapped NHS in 2014 and 2015?

Commissioning Support Organisations

Since authorised CCGs will be free to determine how they carry out their responsibilities - including the purchase of commissioning support - the development of this market will be a key battleground.  The expectation is that commissioning support will be provided by a range of organisations – private sector, voluntary and public sector spin offs in the form of mutuals. 

The NHS Commissioning Board is to offer arm’s length support to Commissioning Support Organisations (CSOs)which are effectively the remainder of in-house PCT and SHA staff.  This arrangement does, however, raise a number of issues from a legal, conflict and competitive point of view.

Competition in the NHS

Monitor
During the passage of the Bill, Monitor has received a subtle change in title.  It is now to become known as the ‘sector-wide regulator’ rather than the ‘economic regulator’ albeit that its function remains the same.  It will have economic responsibility for both health and, in the future, adult social care with a core duty to protect and promote the interests of patients. 

Concerns that competition would be pursued as an end in itself have been allayed with changes which seek to limit ‘cherry picking’ of easy but profitable cases by the private sector.  Prices for NHS services will now be set by agreement between Monitor and the NHS Commissioning Board, perhaps with some form of weighting to the NHS tariff to reflect complexity of case mix.

Monitor will continue to act as the regulator for Foundation Trusts with the timetable for all hospital, mental health and ambulance trusts reaching this status by April 2014. Approximately 40% of acute trusts have still yet to attain foundation status and how and whether these organisations are granted freedom from the NHS Commissioning Board will be another test of the Government’s reforms.

Any Qualified Provider
The Government’s goal is for patients to be offered a wider choice of providers – public, private or voluntary - when they are referred for NHS treatment by a healthcare professional.  It is this policy, more than any other that has opened the Coalition up to accusations that the NHS is being privatised.

Whereas Labour was able to originate a similar policy utilising the language of ‘patient choice’, the Coalition have been hamstrung by their original references in Part 3 of the Bill to ‘competition’ and ‘pricing’.  Andrew Lansley’s “sub-optimal communications skills” in this regard have not helped the Coalition’s cause.

Private, voluntary or mutual organisations wishing to provide NHS-funded services will now have to be licensed by Monitor and the Care Quality Commission via a joint licensing process. While providers will have concerns about an all too onerous regulatory regime, the phased implementation of Any Qualified Provider, which is already underway, only opens up the NHS to a very small additional amount of competitive pressure in the short term.

A further list of services to be opened up to patient choice from 2013 onwards includes maternity (antenatal education and breastfeeding support); self management support for long term conditions; and community chemotherapy, including home chemotherapy.

In the future

From a political perspective the legislative battle is finally over, although the Conservatives will remain a deeply damaged party when it comes to the NHS.  Their credibility will surely be tested when in campaigning for the 2015 election they will, once again, have to promise no top down re-organisations to the NHS?

The real risk for the Coalition partners comes from the public and professionals equating the changes coming from the Act with austerity and cut backs required in order to meet the £20bn efficiency target.  There are two and a half years of painful transition which will only reinforce the public perception that these are the wrong set of reforms.

From a policy perspective, the Nuffield Trust and King’s Fund will continue to bang the drum for a faster move towards integrated care.  And since virtually every NHS organisation both old and new will now have a ‘duty to integrate’, greater collaboration between organisations looks likely.  Working out exactly how this is done should have been Andrew Lansley’s priority from the start.

The Health and Social Care Bill in numbers
Pages at start: 367
Pages at end: 472
Days in Parliament:           426
Days in debate:   77
Amendments: 402 from the Commons
374 passed by the Lords

London Mayoral Election Look Ahead

22/02/2012

BORIS AND KEN BATTLE IT OUT

Thursday 3rd May will see the third election of the UK’s most powerful directly elected politician, the Mayor of London, as other major cities across the UK hold ballots to decide whether or not to adopt their own elected mayoral model.  This election is unique in British politics – a great mix of character, policy and politics. 
 
With the polls on a knife edge, the next ten weeks will see a re-run of the 2008 election as big beasts Ken Livingstone and Boris Johnson squeeze out Liberal Democrat Brian Paddick to fight the most high profile political contest since the General Election.  The prize is not only to represent Londoners at City Hall but also at the Olympic Games in the summer.

Protecting the City 

Over the coming four years, whoever wins will face numerous challenges; a growing London population, rising unemployment and the capital’s biggest industry – financial services – under attack.  Promoting London as a global business centre in the current economic turmoil will be a key priority.
 
Ken Livingstone recently joked, ‘hang a banker a week until the others improve’ but the truth is that he was a pragmatic Mayor who supported the City.  Though now a less popular cause, neither Boris nor Ken will want to kill the capital’s golden goose.
 
Records under scrutiny

The election is likely to become increasingly dirty. Boris’s team accuse Ken of having run a regime of cronies, dishing out money to his favourite client groups. Ken has retorted that Boris hasn’t done what he promised – abandoning the chairmanship of the police authority after only a year, failing to deliver new housing and putting up fares.

In the first hustings of the campaign, organised by Age UK on 21st February, the three candidates tried to win over electorally critical older voters with various inducements. Reports suggest the audience warmed to Ken, who promised free bike hire for the over 60s, while Boris pledged to keep the age of eligibility for the Freedom Pass to 60.  Ken is certainly making the running on policy at this stage, but arguably he has set out his flagship ‘Fare Deal’ policy too early in the campaign.

Polls within a margin of error

Labour has been as much as nine points ahead in polls in London, but Livingstone is neck and neck with Johnson in all of the recent Mayoral polls. Labour’s task is to squeeze Boris’s Labour supporters – and they are making progress. Support for Boris amoung Labour supporters is down from one fifth to 11% in the most recent poll.

The result is expected to be close, and may once again come down to second preference votes. In 2008, the Labour Government was in the doldrums which was all helpful for Boris. This election will come shortly after a difficult Budget, just as the cuts are starting to bite. Boris will run as Boris, not as the Government candidate, but his ability to prevent voters using the election to pass judgment on the Coalition will be limited.

As Labour showed in the 2010 general election, when they held on to a lot of seats they should have lost, the Party’s machine in the capital is formidable. Ken will fight to turn out the inner city Labour voters and has taken note of Boris’s successful doughnut strategy in 2008 of targeting the outer London boroughs.  Boris remains the favourite with the bookies but there is all to play for. 

THE CANDIDATES…

Boris Johnson

Boris Johnson has carved out a niche as something of an anti-politician but has been a relatively safe pair of hands in office. A school and university contemporary of David Cameron, Boris is known to harbour higher ambitions. His doughnut strategy of targeting Outer London won him the election in 2008 but with Ken now well versed in this tactic he will face a tough race.

Ken Livingstone

Ken Livingstone has sought to establish himself as ‘Mr London’. Elected Mayor in 2000 as an Independent when his style was deemed incompatible with Blair’s New Labour revolution, such was ‘Red’ Ken’s personal draw he was brought back into the Labour fold for his second term.  Ken’s re-nomination was controversial amongst many Labour supporters who felt it was time for a new generation. However, he remains the consummate politician and will give Boris a run for his money.

Brian Paddick

Brian Paddick rose to the position of Deputy Assistant Commissioner. He came a disappointing third last time round with 9.8 per cent of first preference votes and will hope that the focus on crime in the coming election will help his position in the race. Since the 2008 election Paddick has sought to raise profile, appearing on ITV’s I’m a Celebrity… Get Me Out of Here!

FOCUS ON: THE POLICIES

This election, so far, has focused on just two policy areas: crime and transport and it is the latter which has consumed most media and voter attention. In a city of over 7.5 million people the challenge of simply getting around has a major impact on quality of life and the cost of living. 

Ken’s best hope of winning the election relies on his ‘Fare Deal’ pledge to cut fares on the tubes and buses by seven per cent, using Transport for London’s operating surplus, claimed by Boris to be earmarked for vital infrastructure investment.  Boris was planning a seven per cent rise (RPI+2%) to fund further improvements to service.  Boris’s instincts may be right on this one.  A February poll revealed that Ken’s promise to cut fares was approved by 68 per cent of Londoners but that fewer than half the voters, 46 per cent, think he would fulfil the promise.

Boris and Ken have both been pushing hard for infrastructure spending in London and got it in the form of Crossrail, which Ken has pledged to extend from Wimbledon to Epping via Chelsea.  Now Boris is calling for aviation expansion in the South East. ‘Boris Island’ is a controversial proposal but crucially would fall outside the GLA electorate area, so local backlash would have a limited impact on the Mayoral vote. Boris Island would effectively moth-ball Heathrow, removing the noise aggravation of aviation from a large swathe of voters in West London (along with over 100,000 jobs). However few in the industry and Westminster see it as a realistic option in the foreseeable future.

In a nod to concerns about the cost of living, Boris has pledged to cut the Mayoral Council Tax precept by 1% this year and has identified additional efficiency savings which could result in a 10% cut in the precept in forthcoming years.  This tax cut has been carefully chosen, as the precept increased every year under Ken Livingstone.

Think Tank Quarterly: Localism

13/01/2012

Think Tank Quarterly: Localism (PDF)

In this edition of Lexington’s Think Tank Quarterly we review the work of think tanks relating the Government’s localism agenda. This is a big year for localism, a theme which will have ramifications for organisations in a number of sectors including property and health.

Localism: the next steps
The Coalition Government achieved a number of significant milestones in their localism agenda last year and 2012 will see the focus shift to implementation.

Localism as a theme cuts across a number of policy areas and is one of the strongest sources of agreement between the two Coalition partners.  It has long been championed as a concept by a number of think tanks and is a good example of a policy agenda which has successfully made the transition from think tank reports to official government policy.

Think tanks’ focus on localism has now shifted into two broad areas. Firstly, how the Government’s localist reforms will work in practice and evaluating the success of their implementation. Secondly, looking at the longer term question of where the localism agenda should go from here, with a view to informing political thinking over the next five to ten years.

Local government finance
Late last year the Government unveiled its proposals to reform local government finance, including a recommendation to enable local authorities to retain a share of business rates and use tax increment finance.

Many think tanks including Localis and Policy Exchange have long argued for such reform although there have been some doubts expressed as to whether the current proposals go far enough. Zack Wilcox, Economic Researcher at Centre for Cities, has described the plans as ‘a growth-light approach to rates retention’.

The New Local Government Network will next year be looking at how local authorities can use new opportunities such as business rate retention and tax increment finance to promote growth, both economic and social, in practice.  Further to this, Localis will be looking to explore whether all local authorities could become self financing. They will consider whether councils already have the fiscal tools they need, what national taxes could potentially belocalised and whether it is time to allow councils to raise their own new, local taxes.

Planning and Infrastructure
The Localism Bill has now completed its passage through Parliament and the Department for Communities and Local Government is currently considering the National Planning Policy Framework. In the coming year, a number of think tanks are looking at planning and infrastructure as part of the localism agenda from a more radical perspective.

The Adam Smith Institute will publish a report later this year entitled ‘Towards Private Towns’, which argues for the introduction of private towns such as Owenstown in Scotland. The report will argue that radical innovations are necessary to solve problems around housing, access to services and community cohesion. The report will look at changes to planning law, in particular the proposed National Planning Policy Framework.

Localis will look this year at how changes to the planning system will affect local councillors and the role it will have on the local environment. In addition, Localis will look at infrastructure and energy generation and if local councils are a brake or an accelerator in terms of the generation of low carbon energy.

Policy Exchange made a significant and radical contribution to the planning debate with the publication of ‘Cities for Growth: Solutions to our planning problems’. This argued for a more liberal and competitive system and advocated the development of new Garden Cities to act as beacons for development.

Westminster Forum Projects is holding a number of events on localism, including one in February focusing on the respective roles of local and national government in delivering a national housing strategy.

Health
The Government’s localism agenda extends further than simply planning and local finance. The Health and Social Care Bill will establish Clinical Commissioning Groups and Health and Wellbeing Boards in a move designed to radically de-centralise the NHS. As the Bill approaches Royal Assent, think tanks have turned their attention to how the reforms will be implemented on the ground.

Health and Wellbeing Boards are due to be up and running by April 2013, but 132 ‘shadow boards’ are already being set up by councils across the country, to give an idea of how they will work. The New Local Government Network is currently running a project to assess the effectiveness and a guide to the working of the shadow boards as the Boards prepare to go live in 2013.

The health think tank, The King’s Fund, is currently conducting a piece of work on health and wellbeing. The project will give insight into how local authorities and their health partners are implementing health and wellbeing boards in the context of the government’s NHS reforms, its vision for adult social care and the Localism Bill. They are due to publish a report at the end spring 2012.

Looking to the future
The ongoing work of think tanks in the area of localism will have a key role to play both in judging the success of the Government’s current localist policies and in framing the localism debate in the longer term. The second half of this Parliament will see all three parties casting about for fresh policy ideas with an eye on a 2015 election and the pages of think tank reports will be a good place to start.

NEWS & MOVES

Mark Littlewood, Director General of the Institute of Economic Affairs has been appointed in a part time role as independent advisor for the Government’s ‘Red Tape Challenge’, focusing on streamlining the regulatory burden on businesses.

The Fabian Society is set to lose a key figure to a high profile political role, as Deputy General-Secretary Tim Horton leaves after five years to become a senior political advisor to Ed Miliband. He has been replaced by former Ed Miliband for Leader Field Campaigner Marcus Roberts.

As reported in the previous edition of the Think Tank Quarterly, David Goodhart has been confirmed as Director at Demos replacing former MP Kitty Ussher.

Gabriel Milland has left Policy Exchange to take up the role of Head of News at the Department of Education, and Chris Yiu as been appointed Head of its Digital Government Unit from HM Treasury

2012 New Year Lexcomm

06/01/2012

2012 New Year Lexcomm (PDF)

We enter 2012 sensing the tension in all three political parties; it’s not exactly going to plan for any of the party leaders.  The safe money is on a good year for David Cameron but we shouldn’t underestimate the scale of the challenges that lie ahead.  We all know how easily events can derail the best laid plans and the Prime Minister will be well aware that he remains vulnerable to international economic forces well beyond his control.
CAMERON CONFIDENT POST VETO
The Prime Minister will be starting the New Year feeling quietly confident.  His veto on the euro bailout has proved popular in the polls and buoyed the Tory right.  However, in doing so, Cameron has let out the genie which could contaminate the party’s brand, which he worked so hard to de-toxify in the public mind. 

Polling shows that the nation respects rather than loves Cameron but in the absence of any other strong or popular senior political figure (the ebullient Mayor of London aside) this won’t trouble him or his close advisers too much. Thatcher, too, was respected, not loved.

One headache for Cameron is the growing clamour from his backbenches for a reshuffle.  He hates the idea of reshuffles but knows that he needs to give some hope to frustrated backbenchers. Tory MP Louise Mensch wondered publicly what she had to do for a promotion but lots of her male colleagues feel that at least she has her gender going for her. The other issue is when — April to coincide with the Queen’s Speech, or May after the local elections or just ahead of the summer recess in July are all possibilities. 

A major rejig of the frontbench is unlikely but reshuffles have a tendency of becoming more complex than intended; just one difficult individual and the whole pack of cards has to be re-dealt. One possibility is a horse-trading of departments, with the Liberal Democrats exchanging their Secretary of State positions. 

Defra Secretary, Caroline Spelman and Justice Secretary, Ken Clarke, are mooted for departure but events could make Cameron’s decisions for him. Later this month the CPS will decide whether or not to pursue criminal charges against Energy Secretary Chris Huhne, which could trigger an earlier reshuffle.

CLEGG TO ASSERT HIS INDEPENDENCE
The Liberal Democrat leader continues to suffer in the polls but as the Coalition enters a new phase, post the European Treaty veto, we can expect Nick Clegg to be increasingly assertive in distancing himself from his Coalition partners.  While unpopular with the electorate, Clegg is in a relatively secure position, given his main frontline rivals, Huhne and Business Secretary Vince Cable, are in no position to challenge him.

Clegg has potentially made himself a hostage to fortune in his personal crusade to deliver Lords reform.  If by some miracle he succeeds, it will please his grassroots but will leave the wider public nonplussed.  However, alongside Vince Cable, Clegg is also pursuing a more voter-friendly agenda and enjoying maximising the political capital to be gained from the banking sector’s bonus season. 

Taxation will also remain a major theme with increased pressure on the Treasury to raise the tax allowance threshold to the politically significant £10k level, although Clegg appears to have talked down the prospect of a ‘Mansion Tax’ in recent interviews.  Clamping down on tax avoidance is one issue which has united the Coalition parties and will be a major plank of the Budget in March.

DIFFICULT TIMES FOR MILIBAND
Labour leader Ed Miliband has had a bad start to the New Year with bubbling criticism from all sides. The feeling that he’s not quite breaking through is resonating not just across Westminster and the media, but more worryingly for him, amongst Labour party members. Starting the year with criticism from former trusted advisor Lord Glasman, the Abbott twitter gaff and topped off by the leak of the party’s strategy memo has only served to heighten the pressure on Miliband to get a grip. 

The leaked memo revealed that the leadership intends to highlight the ‘squeezed middle’, focusing on the ‘cost of living crisis’. Consumer issues will continue to dominate and Miliband will gain political capital in appearing to be on the side of consumers against ‘vested interests’ such as the energy companies. Miliband will aim to ape the success of his condemnation of News International, his highlight of 2011 and will hope that the appointment of former civil servant Tim Livesey will help.

Speculation about his leadership and greater scrutiny of potential of rivals, notably Shadow Home Secretary Yvette Cooper, will continue.  A challenge is unlikely but if his ratings haven’t improved as he approaches his two year anniversary in September his future will be in doubt. 

To avoid this situation over the next year he needs to be seen to be credible on the economy; difficult when Labour continues to be seen by voters as primarily to blame for the current economic difficulties.  But on a more prosaic level his problem is presentational and his style is turning off the voters. While easy to identify, this problem is notoriously difficult to fix.

A YEAR OF NATIONAL PRIDE?
Ministers hope the Olympics will be a triumph dominating the second and third quarters of the year.  Representing Londoners at the Games will be a major prize for the victor in the Mayoral election.  Ken Livingstone will flag up his role in securing the Olympics but it is incumbent Mayor, Boris Johnson, who is expected to win, barring an upset.  However, it could well be a close run thing and is unlikely to be a landslide victory.

With the extra bank holiday for the Diamond Jubilee, the country could be bathed in a sport and royal-inspired feel good factor; not unhelpful for a Government struggling to convince the voters that the good times are around the corner.

THE AGE OF AUSTERITY CONTINUES…
The cuts will really start to bite in 2012 and this will inevitably lead to lots of firefighting and potentially more u-turns from the Government.  It will be a crucial year for Chancellor George Osborne and in the Budget in March he will aim to show that the economy is turning a corner and the Government’s growth agenda is working.  Many new measures, including investment in infrastructure and credit easing for small businesses have been trumpeted, and Osborne will now be judged on the extent which these measures are taking effect.

Whatever your reputation as a political strategist, the Treasury is never a comfortable place to be in a stagnating economy and a reputation for political cleverness can become counterproductive against such a background.  Despite Osborne’s strong grip on the bits of government that really matter, his presentational skills will be severely tested in 2012. 
Given the dependence on the private sector for growth, regional disparities in growth across the UK will become an increasingly important hot topic, and one which will be highlighted by the Opposition.

A NEW DAWN FOR LOCALISM
This year localism will emerge from its obscure beginnings to be a major feature of the political landscape. The Health and Social Care Bill is expected to gain Royal Assent in April and the Act will see local authorities take responsibility for public health. 

The inaugural elections for Police Commissioners, a radical innovation, will take place in November, as well as elections for Elected Mayors in those cities who vote in favour in referendums in May.  It will be interesting to see who stands in these new positions, with former frontline politicians likely to put themselves forward (including former Labour Welsh Secretary Alun Michael as Police Commissioner for South Wales).  This could create new power bases and a stronger voice for the regions but could also be a political danger for the government if extremist candidates win the posts of police commissioners in low turnout polls.

Alongside this, ongoing local disputes are likely (and possibly ministerial resignations) over major infrastructure developments, particularly High Speed 2.  It will be interesting to see the outcome of Osborne’s commitment to investigate the option of a hub airport in the Thames Estuary in the Autumn Statement. 

With the economic and political uncertainties, 2012 could be a rollercoaster year for all three party leaders. However the fundamentals – a relatively stable Coalition with a secure majority – are unlikely to change. The public doesn’t much like the cuts or some of the other government policies but nor are they much convinced with the alternatives.

Lexington will reveal latest thinking from the think tanks on localism in the next Think Tank Quarterly, to be published next week.

THE POLLS: STATE OF PLAY
2011 saw a lot of jockeying for position but the polls remained constant. Labour held a steady lead of approximately five percentage points over the Conservatives – only briefly extending its lead around ‘Hackgate’.  However, at the close of the year the turmoil brought about by the Euro crisis and the subsequent veto led the Conservatives to overtake Labour in the polls.

Ominously for both Ed Miliband and Nick Clegg, David Cameron has opened a dramatic lead in the leadership stakes.  Prior to Christmas, David Cameron – in part because of the veto – held large leads on personal qualities including ‘strong’, ‘decisive’ and ‘charismatic’.  The next twelve months are subject to events as much as any other political year, but how the leaders respond will be just as important to their party’s fortunes.

On the issues front, the economy still leads the way, with 81% citing it as one of the three most important issues facing the country at this time; this is followed by immigration and asylum, pensions and Europe.

Health Lexcomm: Life Sciences Review

05/12/2011

Health Lexcomm : Life Sciences Review (PDF)

Amid relentless gloom about the state of the economy, the Prime Minister has today announced a series of measures that he hopes will inject certainty into the health life sciences sector. Such political backing is unsurprising given that the sector is one of the UK’s longstanding success stories and a source of significant wealth generation.
The Prime Minister’s high profile support sends a clear signal that the Government is backing life sciences as an economic ‘winner’ and is open to working closely with industry to make its vision a reality. It also, however, exposes the Coalition to the potential fall out from any further job losses or significant closures in the future – factors that its opponents will use to judge the success or otherwise of the strategy set out today.

Anxiety about the retention of Britain’s advantage in life sciences has been brewing in the corridors of power following a series of widely reported decisions by global companies to reduce headcount. Concerted lobbying regarding the pressures affecting SMEs amid turbulent market conditions also added to the pressure on Government to be seen to taking action. Today’s announcements are designed to appeal to both multinationals and SMEs investing in Britain.

Appealing to industry, patients and academia
The Government has pledged to ensure the speedier adoption by the NHS of market ready innovations as well as additional help for researchers and start ups keen to turn their new discoveries into economic success stories.  There will also be some comfort for patient groups with the promise of earlier access to pre-approved treatments and a robust focus to ensure the adherence to NICE guidance.

There is a strong political consensus around the need for the UK to retain and increase the number of highly skilled professionals employed by pharmaceutical companies and the amount of intellectual capital that the sector produces. There is also a tacit recognition that without reform and support, a significant threat exists to the public sector infrastructure that these companies rely on to make investment decisions.

Academia in particular will be looking at the Government’s approach to address funding shortfalls and a potential brain drain of staff to more lucrative research sectors in emerging economies with a keen interest. The NHS, for its part, is more acutely aware than ever of the need for it to become more commercially savvy driving innovation through clinical trials to the benefit of patients and service efficiency.

Given the limited financial wiggle room available to the Government, the commitments, totalling around £500m, are not quite on the scale of previous bonanzas for research and development in the UK. Designed as a series of smart levers, the Government aims for the funding to encourage new innovations to be developed and demonstrate to companies that investment will be rewarded. Keen to avoid allegations that the package merely consists of some tinkering around the edges, the flagship announcement of £18m catalyst funding has been heavily trailed in the media in advance of today’s launch and case studies of previously announced commitments feature throughout the strategies.

“if we are to remain competitive, we must up our game in the UK. We must use our fantastic science base to its fullest potential and be at the forefront of life sciences in [the] new landscape.”

Rt Hon Andrew Lansley MP and Rt Hon David Willetts MP

A challenging wider environment
Underlying the measures set out today is a toxic cocktail of pressures. Commitments to increase the speed with which treatments are taken up and funded on the NHS will of course be welcomed by patient groups and industry alike, but this ignores the additional cost pressures that will be put on NHS Trusts already struggling under the weight of mounting demand.

Without significant efficiency savings there will inevitably be a continuation of the struggles seen to date between local formularies keen to preserve services, and nationally mandated approval processes. 

Similarly, the announcements appear somewhat at odds with the anticipated diminution of NICE’s national remit in the build up to Value Based Pricing (VBP) in early 2014 and the greater focus on localism. The lack of further detail on VBP included in today’s announcement will do nothing to alleviate the nervousness amongst biotech companies of all sizes that the designers of the new system of reimbursement have not sufficiently considered its impact on the take-up of innovation.

The Government will be acutely aware that the success or otherwise of its approach is somewhat at the mercy of global markets, in particular a European healthcare market suffering significant contraction and public expenditure pressures. Addressing depleted product pipelines and cost cutting pressures are big asks, but providing more certainty via one of the continent’s biggest customers – the NHS – will be a key test of the new approach.

Politically, Labour has made much of the promised opening up of patient data for use by private companies. Shadow Health Secretary Andy Burnham has claimed that the Prime Minister ‘sees no limit on the involvement of the private sector… he seems willing to put large chunks of our NHS up for sale’, a familiar theme from the battles fought over NHS reform. However, little has been said by the Opposition on the main economic measures included in the announcements. This is perhaps a tacit recognition that the UK must do all it can to nurture and encourage life sciences and not let political point scoring get in the way.

A sector worth £50bn to the country rightly deserves the attention placed on it by today’s announcements. The Government will hope that with little additional resource at
its disposal it has put together the right measures to help fledgling companies and global giants flourish in the UK in the face of a global economic storm.

Property Lexcomm: Will infrastructure deliver growth?

30/11/2011

Property Lexcomm : The Autumn Statement - will infrastructure deliver growth? (PDF)

George Osborne’s task was to prove that he has a credible plan for growth while confirming that UK economic forecasts were being cut back again. A tricky proposition to say the least. Proving the Government is serious about growth has been a challenge that ministers have struggled with since the Coalition formed. Recent months have seen that task increase and business grow more concerned.

The response was a Statement which promoted investment in infrastructure. And although a week of newspaper headlines left few surprises, there is much the property sector can welcome. The Government outlined commitments to deliver infrastructure that stimulates growth, business and job creation. Following the previous week’s Housing Strategy, the message was that large scale, popular projects will be given backing required to deliver the infrastructure they need.

Labour claimed that Government still needed a ‘Plan B’ with Ed Balls stating there was not enough cash to make a real impact. Many across industry will agree but the Chancellor’s attempt to harness investment from pension funds could be a useful way of delivering the vast sums needed for these critical projects to go ahead. However, some of the biggest initiatives may not make a mark until after the next General Election. That electoral fact will not be lost on backbench MPs keen to see growth supporting their prospects in the ballot booth.

Focus on infrastructure
So what was announced for the property sector?

Infrastructure was key. £5bn of new projects will be delivered in the next spending review. More immediate measures worth a similar amount included roads, superfast broadband and schools. A further £20bn of investments would be unlocked if new rules encouraging UK pension fund investment in infrastructure lift off. 35 new road and rail projects across the UK were named in anticipation of this new funding coming on stream shortly.

Osborne has previously used these occasions to emphasise the need for planning reform to deliver growth and there were more references today with a pledge to review the appeals procedure. In a move to help schemes underwater, there will be consultation on new proposals to allow reconsideration of planning obligations on stalled developments approved before April 2010.

There will also be a review of European ‘gold plating’ from the Habitats and Wild Birds Directive to remove excessive costs for developers. Again, more signs that the Government sees development as key to increased economic growth.

This comes alongside the aforementioned Housing Strategy, £1bn extra resources for the Regional Growth Fund and new powers for city mayors to raise money against future income from CIL where nationally significant projects can be delivered.

Conclusions

So has Osborne achieved what he set out to do?

Public funding for investment is limited under the Coalition’s strategy and it will be difficult to meet all the needs of capital-intensive sectors such as property. However, planning reform alone will not create growth from property if the finance to deliver is missing.

The Chancellor will be relying heavily on institutional investors to deliver cash and success; at the same time the performance of the wider economy will remain critical to progress of many development projects.

Autumn Statement Lexcomm

29/11/2011

2011 Autumn Statement (PDF)

George Osborne wants his Statement to be reported as three big announcements: building new infrastructure, supporting business by easing credit for SMEs and cutting red tape, and relaxing the squeeze on middle-income households.  Part of his problem with tomorrow’s headlines is that in the case of all three, they were widely leaked to the press ahead of his Statement today. The other problem is that the announcements were all overshadowed by the very gloomy economic report of the independent Office of Budget Responsibility.
Forecasts for debt, unemployment and borrowing are all up while economic growth is down. Even then, the OBR’s forecasts are based on the euro surviving. In the event of its demise, everything will look a whole lot gloomier.

Faced with this dark prognosis, Osborne defined his real task as protecting the UK’s AAA rating and, with a neutral budget which nonetheless allowed some stimulus through infrastructure investment being brought forward, he broadly achieved that objective.

Lower than forecast debt repayments allowed the Chancellor to invest £5bn of government money to support a £20bn fund for investment in infrastructure. Five hundred projects in the National Infrastructure Plan will see improvements in road and rail. The Chancellor artfully name checked projects in regions across the UK, clearly hoping to garner positive coverage in the regional press.

For a Chancellor who said his Autumn Statement wouldn’t be a Brown-like media circus but a low key progress report, there were real echoes of the former Chancellor in his raft of announcements and targeted schemes. Like Brown, the Chancellor also changed his target in terms of reduction of the structural deficit, effectively making it a movable target.  There is clearly nervousness on the Coalition benches that the goal posts have effectively been moved; a political trick that the Tories in Opposition attacked Brown for doing. 

At the heart of the package is a range of expansionary policies for business, all of which had been pre announced.  There will be a credit easing programme for small and medium sized businesses, with Government underwriting up to £40bn in low-interest loans, funded by reducing the ceiling of the Asset Purchase Facility. 

Other proposals to build up British business include the extension of the Business Rate holiday to April 2013 and a new Seed Enterprise Investment Scheme.  This will provide income tax relief of 50 per cent for individuals who invest in shares in qualifying companies and a capital gains tax holiday for investments made into the new scheme.

Responding to widespread concerns about rising prices, he announced a cut in fuel tax in the New Year, a lower than expected rise in rail fares and an expansion of free nursery places to 40% of two year olds.

In a move that will be welcomed by business groups, he announced a number of measures to reduce the burden of complying with employment law including increasing the qualifying period for unfair dismissal claims to two years. 

He will also please many business leaders by announcing a £250m package (over the lifetime of the Parliament) to help Energy Intensive Industries meet the cost of rising prices of energy.

Just a day ahead of the most widespread public sector strikes for a generation, the Chancellor was far from conciliatory in announcing a review of TUPE legislation and opening the door to pay variation by region in the public sector, long opposed by the unions. The Chancellor also announced a 1% cap on public sector pay rises for two years after the end of the current pay freeze in 2012.  This will undoubtedly lead to increasing pressure on executive pay in the private sector and has generated a furious response from the unions.

There was a small victory for Iain Duncan Smith and the Liberal Democrats with the announcement that benefits will be uprated by the higher September rate of inflation, rather than an average rate reportedly preferred by the Chancellor. Michael Gove at Education and Justine Greening at Transport were the big departmental winners with an additional £600m for Free Schools and an array of transport projects included in the Infrastructure Plan.

While the bank levy will be increased from 1 January 2012, the Chancellor avoided appearing to engage in banker bashing, explaining that the Government intends that the Bank Levy should raise at least £2.5 billion each year and that the levy needs to be raised to meet this target. Refusing to bow to growing pressure from business, he also confirmed Air Passenger Duty for all passengers will increase in April next year as set out in the Budget.

The Chancellor finished his statement by acknowledging that he does not have a miracle cure and even said that he will not get everything right.  The Coalition’s much hyped focus on growth has not yet come to fruition but the range of measures announced will be welcomed by some in the business sector, although they will be increasingly alarmed by the broad economic analysis.

NATIONAL INFRASTRUCTURE PLAN
The National Infrastructure Plan, published today, sets out the Government’s new strategy for meeting the infrastructure needs of the UK economy with three main elements:
 Bringing together the first comprehensive cross-sectional analysis of the UK’s infrastructure networks and sets out a pipeline of over 500 infrastructure projects, worth over £250bn.
 Setting out a new approach to coordinating public and private investment in UK infrastructure.
  A new Cabinet Committee, chaired by the Chief Secretary to the Treasury, has been set up.

Financing infrastructure investment
The Government has signed a Memorandum of Understanding with two groups of UK pension funds to support additional investment in UK infrastructure. The Government is also working with the Association of British Insurers to set up an Insurers’ Infrastructure Investment Forum. The Government will target up to £20 billion of investment from these initiatives. The Government will also explore innovative ways of financing infrastructure investment, including tolls.

Key objectives
  Achieving a secure, diverse and reliable energy supply for the UK while reducing the carbon intensity of electricity generation at the least cost to consumers.
  Improving the performance, capacity, connectivity and environmental impacts of the UK’s transport networks including maintaining the status of the UK as an international hub for aviation.
  Increasing superfast broadband and mobile coverage.

SUMMARY OF MAJOR ANNOUNCEMENTS

CREDIT EASING
  The Government will introduce up to £20 billion of guarantees for bank funding through a National Loan Guarantee Scheme, over a period of two years.
  An initial £1 billion will be made available through the Business Finance Partnership, which will invest in smaller and mid-sized businesses through non-bank channels.

ENTERPRISE
  The Government has announced the provision of 50 per cent income tax relief on investments and the offer of a capital gains tax exemption on gains realised in 2012-2013 through investment with a new Seed Enterprise Investment Scheme from April 2012.
  An introduction of an ‘above the line’ tax credit in 2013 to encourage research and development activities.

BANKING      
  The Government has also announced an increase in the rate of bank levy to 0.088 per cent from 1 January 2012.

FUEL AND TRANSPORT
  The Government has stated that it will defer the 3p increase in fuel duty to 1 August 2012, moved back from 1 January 2012. It will also cancel the inflation increase that was planned for 1 August 2012.
  On transport, the Government will also cap the increase to Transport for London fares and regulated rail fares to the Retail Prices Index plus 1 per cent for one year from 2012
  The Government has confirmed that Air Passenger Duty is to rise in 2012, as outlined in the Budget earlier this year.
  In addition, the Government has announced the extension of the Air Passenger Duty to flights taken on business jets from 1 April 2013.

PUBLIC SECTOR PAY
The Government will set public sector pay awards at an average of 1 per cent for each of the two years after the current pay freeze ends.
The Government will also be asking independent Pay Review Bodies to look into measures to make public sector pay more responsive to local labour markets, to report in July 2012.

BENEFITS
  The Government has stated that the £110 planned above inflation increase to the child element of Child Tax credit will not go ahead. Instead it will uprate it in line with the Consumer Prices Index 2012-2013.
  The Government will bring forward a raise in the state pension age from 66 to 67 between April 2026 and April 2028, previously set to take place in 2035.
  The Government will set plans for spending in the 2015-2016 period that fall into line with the spending reductions contained within the 2010 Spending Review period.

EMPLOYMENT
  The Government has announced that it will be looking into a range of measures to reform employment law.
  This has included looking into establishing a ‘Rapid Resolution Scheme’ as a cheaper alternative to tribunals, completing a call for evidence on the impact of reducing the collective redundancy process from 90 days, to 60, 45 or 30 days.
The Government will open a call to evidence on two proposals for the introduction of compensated non-fault dismissals for micro-businesses and for a more simplified dismissal process.

EDUCATION
The Government has stated that it will invest an additional £600 million to fund an extra 100 ‘Free Schools’ by the end of this Parliament
It will also invest an extra £600 million to support local authorities with ‘the greatest demographic pressures’. This is the equivalent of an additional 40,000 school places

HOUSING
  The Government has announced that it seeks to ‘reinvigorate’ Right to Buy for social tenants.
  The Government has re-announced the introduction of a new indemnity scheme to increase the supply of mortgage finance to new build homes.

UNEMPLOYMENT      
  The Government also stated that it will introduce a Youth Contract worth up to £940 million over the Spending Review 2010 period.
  It has also announced that it will extend the offer 15 hours a week free education and care for disadvantaged two year olds for an extra 130,000 children.


AUTUMN STATEMENT: EARLY RESPONSE

THE CITY
Reaction to the borrowing forecasts has been relatively subdued. Economic forecasters such as Jonathan Loynes of Capital Economics and Howard Archer of IHS Global Insight said that although the numbers were bad, the longer-term outlook remained good.  However, concerns about SME lending remain. Paul Aitken of Borro said that banks still are not meeting the demand for finance, and Paddy Earnshaw of Travelex questioned if the Government understands SMEs.  Tony Bernstein of chartered accountants HW Fisher & Co said that the statement was ‘deeply pro-business’, highlighting in particular the Seed Enterprise Investment Scheme.

BUSINESS GROUPS
Broadly, business groups welcomed today’s Statement. The Federation of Small Businesses welcomed good news on capital gains and credit easing.  The CBI welcomed ‘plan A+’ particularly capital spending and infrastructure.  The Forum of Private Business said there should have been incentives for new lenders, but that there was some good news for SMEs.

UNIONS
Brendan Barber of the TUC said there will be a ‘massive squeeze’ on the living standards of public sector workers.  Unite the Union General Secretary, Len McCluskey said that the infrastructure plans to rescue the British economy are ‘too little, too late’ and claimed that the Chancellor is determined not just to raid public sector workers’ pensions, but their wages as well, with the news that public sector pay will be capped at one per cent for two year.

Autumn Statement Look Ahead Lexcomm

11/11/2011

2011 Autumn Statement Look Ahead (PDF)

All eyes will be on Chancellor George Osborne as he delivers what will be the most difficult Autumn Statement in living memory on Tuesday 29th November.  In the wake of likely depressing economic forecasts from the Office for Budget Responsibility (OBR), it will take more than the second stage of the Growth Review to lift the spirits. Turmoil abroad and rising unemployment at home make for a very worrying time for the Coalition.  
Business will want to see that the Chancellor understands their concerns (the CBI’s recent business outlook survey will have made grim reading for Osborne) and is acting in the long term interest of the economy.  This is no time for clever political flourishes.  The Government’s constant refrain is that business is at the core of its growth strategy.  Now is the time for the Coalition to prove that this is the case. 

The circumstances, however, are challenging to say the least. The Bank of England Governor, Sir Mervyn King, warned that the global economic outlook had ‘worsened, with the eurozone crisis the biggest threat to UK recovery’. The OBR is expected to downgrade its projections, bringing into question whether the Chancellor will eliminate the structural deficit in this Parliament. 

Speaking at the CBI Conference ahead of the Autumn Statement, the Prime Minister called optimistically for a, ‘fundamental rebalancing of the economy: more investment, more exports, a broader base to an economic future’ but later admitted in the Q&A session that there is a danger of a lost generation of young unemployed.  Next Tuesday the Chancellor will have to reassure his audience that he has both the long term strategy to successfully rebalance the economy as well as measures in hand to tackle the immediate issues, particularly that of rising youth unemployment. 

Boosting investment will be the major theme of the Chancellor’s statement and the Government needs to show that it is rolling up its shirt sleeves and making real progress in building up the private sector, particularly mid-sized businesses.  It has been widely trailed that the Chancellor will outline how he intends to persuade investors to invest in infrastructure, notably in roads, super fast broadband, rail links, power stations and ports.  The exact nature of the vehicle for funding arrangement is reportedly still being debated by BIS and the Treasury. 

Further details of the Government’s housing strategy are expected, building on the proposal, announced by the Prime Minister on 21st November, for a ‘new build indemnity scheme’ with Government and house builders providing security for loans to first time buyers.  This is one of a number of measures aimed at getting people on the housing ladder.

As well as rising unemployment, inflation is a major issue, with the UK experiencing the highest rate in the EU.  Both issues are causing a rift in the Coalition. September’s Retail Price Index (RPI) is typically used to establish uprating for benefits for the following year and in September 2011 RPI was a 20 year record high of 5.2 per cent.  With wages in the public sector frozen and growing at just 2.5% in the private sector, Osborne has put the case for benefits to be uprated by a (lower) average measure of inflation. This position was derided only a week ago by Business Secretary Vince Cable but reports suggest that Osborne may have won this battle in recent days.

Fuel costs are, as ever, a source of political difficulty (political leaders shudder at the memory of the fuel crisis in 2000) and in a recent parliamentary debate, called in response to an e-petition signed by 110,000 people, MPs approved a motion urging action on fuel prices. Although not binding, it has served to raise the issue of fuel prices to the top of the political agenda.  Potentially the change in benefits uprating could pay for a freeze in fuel taxes.

The crisis in the eurozone will undoubtedly overshadow Tuesday’s announcement.  In the short term uncertainty is arguably convenient for Osborne who will use the crisis, in part, to explain the disappointing growth data. The flight of investors from the euro area to Britain, helpfully bringing down long term interest rates, also supports Osborne’s portrayal of the UK as a safe haven in a storm.

But while all agree that the situation is challenging, there is tension within Whitehall and between the coalition partners regarding the means of securing recovery.  The Chancellor not only has to find policies palatable to both parties, but also motivate departments to all work to the same end: that of creating jobs and growth.

The circumstances, however, are challenging to say the least. The Bank of England Governor, Sir Mervyn King, warned that the global economic outlook had ‘worsened, with the eurozone crisis the biggest threat to UK recovery’. The OBR is expected to downgrade its projections, bringing into question whether the Chancellor will eliminate the structural deficit in this Parliament. 

Speaking at the CBI Conference ahead of the Autumn Statement, the Prime Minister called optimistically for a, ‘fundamental rebalancing of the economy: more investment, more exports, a broader base to an economic future’ but later admitted in the Q&A session that there is a danger of a lost generation of young unemployed.  Next Tuesday the Chancellor will have to reassure his audience that he has both the long term strategy to successfully rebalance the economy as well as measures in hand to tackle the immediate issues, particularly that of rising youth unemployment. 

Boosting investment will be the major theme of the Chancellor’s statement and the Government needs to show that it is rolling up its shirt sleeves and making real progress in building up the private sector, particularly mid-sized businesses.  It has been widely trailed that the Chancellor will outline how he intends to persuade investors to invest in infrastructure, notably in roads, super fast broadband, rail links, power stations and ports.  The exact nature of the vehicle for funding arrangement is reportedly still being debated by BIS and the Treasury. 

Further details of the Government’s housing strategy are expected, building on the proposal, announced by the Prime Minister on 21st November, for a ‘new build indemnity scheme’ with Government and house builders providing security for loans to first time buyers.  This is one of a number of measures aimed at getting people on the housing ladder.

As well as rising unemployment, inflation is a major issue, with the UK experiencing the highest rate in the EU.  Both issues are causing a rift in the Coalition. September’s Retail Price Index (RPI) is typically used to establish uprating for benefits for the following year and in September 2011 RPI was a 20 year record high of 5.2 per cent.  With wages in the public sector frozen and growing at just 2.5% in the private sector, Osborne has put the case for benefits to be uprated by a (lower) average measure of inflation. This position was derided only a week ago by Business Secretary Vince Cable but reports suggest that Osborne may have won this battle in recent days.

Fuel costs are, as ever, a source of political difficulty (political leaders shudder at the memory of the fuel crisis in 2000) and in a recent parliamentary debate, called in response to an e-petition signed by 110,000 people, MPs approved a motion urging action on fuel prices. Although not binding, it has served to raise the issue of fuel prices to the top of the political agenda.  Potentially the change in benefits uprating could pay for a freeze in fuel taxes.

The crisis in the eurozone will undoubtedly overshadow Tuesday’s announcement.  In the short term uncertainty is arguably convenient for Osborne who will use the crisis, in part, to explain the disappointing growth data. The flight of investors from the euro area to Britain, helpfully bringing down long term interest rates, also supports Osborne’s portrayal of the UK as a safe haven in a storm.

But while all agree that the situation is challenging, there is tension within Whitehall and between the coalition partners regarding the means of securing recovery.  The Chancellor not only has to find policies palatable to both parties, but also motivate departments to all work to the same end: that of creating jobs and growth.

Autumn Statement 2011: What we know now
The centrepiece of the statement will be the outcome of the second stage of the Growth Review. The Chancellor is expected to outline a £50billion housing and road-building programme to be financed by the private investors who will be offered the opportunity to reap the proceeds from tolls, rents and energy bills in return for investment in infrastructure. Coming after yet another review of PFI, the big questions remain: what form will this new model take and will business be willing to invest in it?

The Government has promised ‘real help’ for business in the form of credit easing for mid-sized businesses, the flagship announcement of the Chancellor’s party conference speech.  Details and timeliness are the crucial issues here, with businesses calling for additional support and funds now. 

A compensation package is anticipated for energy intensive industries affected by climate change policies, potentially damaging further the Coalition’s reputation as a Green Government. This announcement follows the Chancellor’s call at the Conservative party conference for Britain to go no slower but also no faster than our fellow countries in Europe in cutting carbon emissions.

The Chancellor is likely to report on progress made in achieving one of the Coalition’s long term aspirations: the simplification of the tax system.  A consultation has recently opened on the merging of NI and income tax and a lower administrative burden potentially opens the door to a cut in taxes.  It is unlikely that the Coalition Chancellor will announce a reduction in the 50% top rate of income tax in the short term.  While this remains an aspiration it is arguably unpalatable in the current climate.

Health Lexcomm: Post Conference 2011

07/10/2011

Health Lexcomm : Post Conference 2011 (PDF)

Despite the build-up, health failed as a policy area to ignite a generally low key and unexciting conference season. In what turned out to be his swan song in Liverpool, former Shadow Health Secretary John Healey repeated Labour’s traditional charge that ‘you can’t trust the Tories with the NHS’, a theme picked up by Ed Miliband in his call to the faithful, but the message was lost in the debate over the Labour leader’s analysis of ‘producer versus predator’ capitalism. Similarly, although much was expected of the rebellious Lib Dems, the conference failed to further punish the Coalition’s reforms and instead concentrated on some back slapping selfcongratulation over the ‘victory’ of the changes made to the Health and Social Care Bill.
For the Conservatives, the beleaguered Health Secretary Andrew Lansley appeared tired of the long running saga concerning the reform agenda and made a somewhat unconvincing address to his party’s conference that made much of the Coalition’s commitment to spend more on NHS services. In keeping with David Cameron’s ‘One Nation’ position, Lansley made great play of the Conservatives’ commitment not to privatise services which did get the faithful cheering. However, the poor attendance at his speech in
Manchester and lacklustre accompanying presentations indicated that again, attention was focused elsewhere. The one speaker who did up the ante was Health Minister Simon
Burns whose populist address somewhat over shadowed his boss.

Away from the conference hall and the main stage, some slightly more exciting and controversial discussions could be found on the fringes of conference including the Institute of
Economic Affairs causing quite a stir at the Conservative conference by criticising the commissioning abilities of GPs and advocating for far greater competition in the NHS, much
to the upset of Dr Clare Gerada from the Royal College of General Practitioners. The Health Hotel’s flagship Health debate also provided some entertainment at each of the
conferences showcasing a scene of one-upmanship between John Healey and Stephen Dorrell at the Labour conference and a grumpy and belligerent Health Secretary at the Conservative conference.

However, as the dust settles on the conference season for another year much remains at stake on health as MPs and Peers get over their hangovers and return to Westminster.
Attention is very much focused on the House of Lords as the Health and Social Care Bill enters its next tortuous stage of becoming law. Lansley’s mood ahead of this will not have been helped by the letter published this week by 400 leading health experts calling for the Bill to be scrapped and, however unlikely this may be, further concessions could be required to appease this lobby via the mutinous Peers led by Baroness Williams. The Health Secretary is unlikely to give up without a fight given the large number of concessions that have already been made although the Department of Health will have one eye on the Parliamentary timetable and the need to press on.  In order to get the Bill finally passed there may need to be a willingness to concede on key points should the final cut-off date of next spring appear in doubt at any stage.

The debate over the reform agenda continues to rage against a backdrop of ever present pressures on the NHS to deliver on its efficiency targets. There is still a perception that pressures on budgets and the implementation of the Nicholson Challenge will lead to increased rationing and restrictions on access to the latest therapies and technologies. It is timely, therefore, that the Government now has at its disposal the responses from industry and others to its innovation review consultation. Officials are currently trawling through a mass of material to come up with some practical ways in which top class healthcare can be delivered for less. Rising inflationary pressures will not help the situation though – it should be remembered that the Conservative promise to raise the NHS budget in real terms was made using a very cautious assessment of what this actually entails in cash terms.

The Health Secretary will also be acutely aware of the simmering tensions building over potential hospital reconfigurations, with many of the stated closures set to take place in marginal seats. It will be a true test of his mettle whether or not he chooses to fight on yet another front or resorts to the default position of kicking decisions into the (very) long grass. The situation may not be as adversarial this time round as a number of high profile organisations have come out in support of some shifting of capacity to help cope with the financial challenges facing the NHS. With even Unison promising not to oppose every proposal, Lansley may find himself in agreement with some unlikely allies.

Back at Westminster, the political dynamic on health will, clearly, undergo a significant shift with the return of star performer Andy Burnham to the shadow Health Secretary role. With a good understanding of the detail of policy and a significant level of support within the associated vested interests who have been so vigorous in opposing the reforms (he was after all the proponent of the ‘preferred provider’ policy which minimised private sector expansion), Burnham will be seeking some quick wins to make his mark and keep Andrew Lansley on the ropes. It is certainly unlikely that the Health Secretary will relish the prospect of a tougher opponent on the Labour benches just when he might have felt the Coalition had turned a corner, finally increasing the pace of
reform after a long drawn out compromise process. In any event, all the pieces seem now to be in place to ensure another lively term on health matters in Westminster this Autumn.

Property Lexcomm: A view from the conferences

07/10/2011

Property Lexcomm: A new balance in planning reform

The climax of party conference season saw ministers take a softer line on planning reform in the face of
opposition from campaigners and local government. But the need for economic growth suggests they are
unlikely to re-write the entire draft National Planning Policy Framework with investors seeking certainty that projects in the pipeline will secure planning consent and economic growth can be delivered.

Party Conference Round-up Lexcomm

06/10/2011

ECONOMY TO DOMINATE AS PARTIES RETURN FROM CONFERENCE
 
After three weeks of spin, drama, and speeches…nothing has really changed. The post-conference polls look strikingly similar to the pre-conference ones and the performances of the party leaders brought no surprises. And despite cats, immigration, and the booing of Tony Blair, the positions on the leader board remain largely unchanged. 
 
While David Cameron was far from his best yesterday, he did as much as he needed to. Although his speech was widely criticised as pedestrian, he reinforced his position as the most convincing party leader and the Conservative Party’s best asset.
 
CATS, DEBTS AND BOOS
 
While the cat-gate row between Home Secretary Theresa May and Justice Secretary Ken Clarke on the Human Rights Act may rumble on, the Conservative Party remains remarkably united and the top team stayed largely on message all week. Even Mayor of London Boris Johnson stifled his rebellious instincts in his crowd pleasing appearances.
 
The PM’s speech could have gone wrong. The pre-briefing that he would call on people to pay down their debts backfired, reflecting poorly on Cameron’s inner circle. Even though Cameron altered the reference in his speech to be more of an observation than an order, the media coverage will not help convince voters that Cameron understands their difficulties and is ‘on their side’. The Conservatives are desperate to find simple political messages to back up their economic strategy.  Unfortunately, the current environment does not lend itself to simplification.
 
The defining political moment of the conference season was the booing of the name of Tony Blair during Ed Miliband’s speech by a small group of union delegates. Had Miliband taken the opportunity to deviate from his script and challenge the hecklers it would have provided the perfect illustration of leadership. Instead it gave Cameron and Osborne a gift for their conference speeches. 
 
While Miliband appeared to do all he could to distance himself from the New Labour years, many of the themes at the Conservative party conference had Blairite origins; notably academies, which are now attended by more than one million children, and the health reforms which the Conservative Party are keen to portray as an evolutionary step from the policies promoted by Blair and former Health Secretary Alan Milburn.
 
A POLICY LITE SEASON
 
The relatively light focus on policy at all three conferences is a symptom of both the nature of Coalition government (in the requirement for joint policy making) and the Labour Party’s understandably cautious approach to policy development at this stage in the political cycle.  Cameron only had one substantial announcement, a pledge to increase adoption rates, which was widely applauded. 
 
Chancellor George Osborne, who delivered a strong speech on Monday, made the major announcement of conference. ‘Credit easing’ will give established small and medium sized businesses access to government loans. Details are expected in the next few weeks but the immediate reaction was mixed with commentators uncertain about the practicalities of the scheme. 
 
RESHUFFLE DILEMMA
 
Ed Miliband emerges from the conference season weakened, but not catastrophically so. His call for a new tax regime to encourage producers over predators was not well received, although there is a sense on the left that he at least has a distinctive idea. He does have free reign now to reshuffle his team, following the abolition of party wide elections to the Shadow Cabinet and he is expected to announce a new team shortly.  However, Miliband will not be undertaking this delicate task from a position of strength.
 
If he decides to have a thorough overhaul of his team, promoting from the new cohort, he will have to manage widespread disaffection amongst those he sacks or demotes, and from the wider Parliamentary party. They will not be pleased if members who either did not secure enough votes in the Shadow Cabinet elections last year, or did not stand, are promoted to the front bench. 
 
STABLE COALITION
 
Conservative and Liberal Democrat Ministers will return to work pretty much unchanged by the conference season. They may be strengthened by the united approach of most of the front bench in their conference speeches; this was particularly noticeable at the Conservative Party Conference. There also appears to be a growing acceptance of the nature and realities of coalition amongst the Conservative and Liberal Democrat grass roots. Nick Clegg had an uneventful conference with a forgettable but reasonable speech. He will be relieved to have made it through his own conference with  no major rows or upsets. 
 
The Cabinet will be focussed on the need to find routes and means of securing economic growth. The Autumn Statement on 29th November will be a major focal point, although it will be more of a summary of the nation’s finances than  a roll call of new policies. The economic outlook is uncertain at best and the release of disappointing growth figures yesterday suggests that the UK’s recovery is slowing. This is the major political issue of our time and the 2012 conference season could be bleak for all of the parties if the trajectory of economic growth does not change course.
 
CONSERVATIVE CONFERENCE HIGHS AND LOWS

Good week
•  Mayor of London Boris Johnson was remarkably on message and gave the best received speech of the conference.  He also confirmed that he will not stand for Parliament if he is re-elected as Mayor, thus ruling himself out of any leadership potentially until 2016, following the next General Election.

•  George Osborne gave a solid explanation of the Government’s economic policy in his speech with strong sections on areas for future growth in the economy.  He was also tipped by fellow Cabinet Member, Michael Gove, as the most likely to succeed Cameron as party leader and this was followed by David Cameron’s quip in his speech about the ‘Boy who would be King’.

Bad week
•  Baroness Warsi had a low profile at conference, never a good sign for a party Chair, only raising her head above the parapet in a less than helpful intervention to describe some of the Boundary Commission’s proposals for the new constituencies as ‘insane’.
 
•  Chairman of the Treasury Select Committee, Andrew Tyrie, caused outrage amongst Tory command with his front page interview criticising the Government’s growth policies on the eve of conference.  He later retracted his comments and praised George Osborne’s speech, later denying that he had been ‘encouraged’ into doing so by Steve Hilton.
 
POLITICAL LOOK AHEAD

Ahead of the House of Commons returning on Monday we look at the important political milestones and key legislative developments.

Political developments
•  The Autumn Statement will be delivered by Chancellor George Osborne on 29th November. The Office for Budget Responsibility will publish its latest economic forecasts earlier in the day.
•  The Leveson inquiry into press standards and media ownership will begin taking evidence in mid November.  The inquiry is due to report to the Culture Secretary and the Home Secretary in summer 2012.
•  New leaders will be elected to the Scottish Conservative and Labour parties on 4th November and 17th December respectively.

Progress of flagship legislation
•  Health and Social Care Bill: Now in the House of Lords, the second reading, the general debate on all aspects of the Bill, is scheduled to take place on 11th October.
•  Education Bill: The House of Lords report stage is scheduled for 18th October.
•  House of Lords Reform Bill: The Committee stage is scheduled to start on 21st October in the House of Lords.
•  Localism Bill: Report stage in the House of Lords is scheduled for 10th October.
•  Welfare Reform Bill: Committee stage continues today (6th October) in the House of Lords.

Future legislative developments
•  The draft  Financial Services Bill is in its pre-legislative stage. Its First Reading is expected in early 2012.
•  The  draft Groceries Code Adjudicator Bill has been subject to pre-legislative scrutiny and is expected to be published in full in the second session.
•  The progress of the future Communications Bill will continue, with the call for evidence earlier this year resulting in 300 responses. A White Paper and Draft Bill to be published by April 2013.

Conservative Party Conference Lexcomm

30/09/2011

Next week in Manchester, the Conservative Party will set out a post-austerity agenda with the slogan ‘Leadership for a better future’. The Conservatives enjoy a healthy lead on economic competence over Labour but party strategists are acutely aware of the need to progress from ‘deficit fixers’ to ‘growth creators’ if the party is to retain its lead on this crucial electoral issue. 

Media interest will lie in spotting the dissonance between the hall and the fringe. On the conference floor expect coalition discipline, we will see none of the backbiting that prevailed at the Lib Dem conference. But frustrations with Coalition partners will be voiced on the fringe.  Backbenchers and activists see their Liberal Democrat partners as the real obstacle to the pursuit of growth, especially on taxation. 

While Chancellor George Osborne would dearly wish to announce the abolition of the 50p tax rate in his speech on Monday, coalition politics and fiscal pressures will prevent him from repeating his inheritance tax flourish of 2007. Activists will have to make do with a full blooded assault on Labour’s economic record instead.

EUROPE TO DOMINATE (ON THE FRINGE)

Rueful self-righteousness will be the dominant sentiment regarding the euro crisis, talk of which will no doubt dominate the conference. Delegates, including many MPs, will rage against an EU Tobin tax, proposed this week by Commission President, José Manuel Barroso. This tax on transactions is perceived by some in the Conservative party as being potentially ruinous for the City and the proposal has been swiftly opposed by the Treasury. Away from the euro crisis, the Commission’s ruling that the UK is discriminatory in not allowing EU nationals to claim the same benefits as UK citizens was met with a staunch response from Work and Pensions Secretary, Iain Duncan Smith, this morning.

Indeed, it is quite possible that Europe, namely the potential default of the Greek economy and the failure of the euro, will overshadow everything else. This presents a useful opportunity for David Cameron to show his statesmanlike qualities and float above the usual conference knock-about.  It will be interesting to see how much of the Prime Minister’s flagship speech on Wednesday is devoted to international affairs.

GUARDING AGAINST COMPLACENCY

Many in the Conservative Party believe they cannot fail while Ed Miliband is their principle opponent but wiser heads are aware that the Government is traversing an economic minefield. Labour will snipe from the sidelines and further bad news on the economy, especially if it cannot be attributed to international factors, will result in the electorate punishing the Conservatives in 2015. A few eye-catching, if relatively inexpensive, policy announcements will be delivered at conference, along the lines of the consultation on the increase in the speed limit and extra funding for weekly bin collections that have been trailed this week.

Recent research published by Lord Ashcroft revealed a potential fault line for Cameron. While he is streets ahead in terms of credibility and leadership ability, he struggles to demonstrate empathy with the wider public during these difficult times. Some swing voters perceive him to be detached from ’ordinary people’s lives’, which he will try to address in his speech.

Generally most effective when under pressure, Cameron has little to live up to following Clegg’s solid but workmanlike performance and Miliband’s less than successful speech this week. Cameron also has the significant advantage of a united party, meaning he can focus his message almost entirely on the audience outside the conference hall. He will leave the bad news to Chancellor George Osborne, Cameron will deliver the vision of a ‘better tomorrow’. 

The Prime Minister also has to demonstrate that he understands widespread and growing concerns about living standards and rising prices, particularly in relation to energy prices which was a key theme at both the Labour and Liberal Democrat conferences. 
 
STRENGTHENING CORE VALUES

As well as the economy, there will be a focus on ‘values’, with party strategists keen to cement their advantage on traditional Tory strengths such as welfare, immigration and crime.

Cuts to police budgets will be high up the agenda following the summer riots. Home Secretary, Theresa May, will be well aware that her opposite number, Yvette Cooper, was widely regarded as having delivered the best speech at the Labour Party Conference. She also had one of the few concrete announcements, the well received review of policing led by former Met Commissioner John Stevens. The Home Secretary has been noticeably absent from the debate on the riots and she needs a bold and convincing narrative to demonstrate that she understands their causes and consequences, and is leading the Coalition’s response.
 
The Work and Pensions Secretary, Iain Duncan Smith, will give a staunch defence of the flagship universal benefits policy which is vitally important to the Coalition’s ambitions to reform the UK’s welfare system. It is the one area where there is clear blue water between the Coalition and the Labour Party. Ed Miliband’s recent socially conservative proposal of awarding social housing on the basis of contribution to society shows that Labour is keen to engage on Conservative territory.

Andrew Lansley will hope for a quiet conference after a turbulent year.  Not generally a favourite of conference, many in the party question his management of the health reforms but respect him for making it through the battle with the Liberal Democrats.

ON THE PATH TO MAY 2012…AND BEYOND

Boris Johnson will make a fleeting visit, arriving on Monday evening for his rally. He will use his conference speech on Tuesday morning to fire up Conservative activists in his last appearance before the London Mayoral election next May. As usual he will take a liberal approach to party discipline and he is likely to play to the grassroots, airing their concerns over the 50p tax rate, police cuts and Europe.

The fringe will provide an opportunity to hear from the new intake. Well aware that opportunities for promotion are severely limited by the politics of the Coalition and Cameron’s wise decision to avoid reshuffles, they are thinking ahead to 2015. Five new MPs, including David Davis’s former special advisor, Dominic Raab, have recently published After the Coalition with policies based around the idea of personal responsibility. 
 
While a number of MPs are expected to avoid conference altogether, or just attend for a day or two, the new intake will use the opportunity to engage in healthy debate about the future of the party. A future, it must be noted, the vast majority agree is under David Cameron.

CONSERVATIVE PARTY CONFERENCE DIARY

Sunday
• William Hague will deliver a barnstorming speech on the opening day at 4.30pm.

Monday
• Chancellor George Osborne will address conference at around 11.30am.
• Steve Richards interviews Cabinet Office Minister and leading proponent of ‘nudge’ theory and the Big Society, Francis Maude at 5.30pm.

Tuesday
• Mayor Boris Johnson addresses the hall at 10am.
• The SMF have invited an unlikely triumvirate of Lib Dem Chief Secretary to the Treasury, Danny Alexander; Cabinet Office Minister, Oliver Letwin; and the General Secretary of the TUC,Brendan Barber to discuss growth at 7.30pm.

Wednesday
• David Cameron’s speech will bring conference to a close at 2.30pm

LOOK OUT FOR…

– Fast gaining party grandee status, Foreign Secretary, William Hague, who will upstage party chair Sayeeda Warsi on the first day of conference with a keynote address to the hall. 

– Eric Pickles, generally a conference favourite, will face a trickier time than usual. The grassroots are deeply concerned about the reforms to the planning system and the National Trust’s campaign has been very successful in agitating Telegraph readers. The extra funding for bin collections may go some way in placating local councillors at conference.

– Economic Secretary Justine Greening is widely regarded as one of the best performers at her level and will be deployed to defend the Government’s economic record and attack Ed Balls and Labour.

LABOUR PARTY CONFERENCE HIGHS AND LOWS

Good week
• Yvette Cooper delivered the best speech of the week, leading many commentators to anoint her leader in waiting.
• Her husband, Ed Balls, also had a good conference. His speech was typically robust and his decision to attend just the one ‘In Conversation’ fringe event enabled him to show his human side and left him plenty of time for media appearances. 
• Shadow Defence Secretary, Jim Murphy, delivered a well received speech without notes. In declining the opportunity to contest the leadership of the Scottish Labour Party he remains in contention for the main job if it becomes available.

Bad week
• Ed Miliband’s keynote speech was not the turning point he needed. Cut off in his prime by a technical fault, he raised the heckles of the business community with his attack on the ‘predators’. The kindest reviewers labelled it a speech worthy of a Progress rally.
• Miliband’s pronouncement that he is not Tony Blair led to boos at the name of the party’s most successful leader from some sections of the hall.  This will play badly with centrist floating voters who Blair so successfully wooed.
• Shadow Culture Secretary, Ivan Lewis, got into a pickle over his register of journalists policy. Swiftly shot down by the press and the leadership team, Lewis had to issue a clarification on Twitter.

Labour Party Conference Lexcomm

23/09/2011

MILIBAND ON THE LONG AND WINDING ROAD TO 2015
 
As the Labour Party meets in Liverpool, Ed Miliband will seek to capitalise on the boost he received earlier in the summer when he led from the front on ‘hackgate’. Yet with his personal poll ratings below those of David Cameron there is a deep rooted uncertainty in the party about his performance. Coupled with the party’s perceived lack of economic credibility at a time of deepening economic unease, Ed Miliband has a tricky week ahead and it will suit him just fine if observers complain that the conference is dull and uneventful.
 
Miliband needs to establish his authority as a Prime Minister in waiting and will do all he can to avoid any gaffes or potentially humiliating photo opportunities. He will also attempt a rapprochement with those in the party who would have preferred to see his brother as leader. Given David received a majority of the votes of the Parliamentary and constituency party in the leadership election, Ed has a significant proportion of the party to still win over. A few rumours swirl about the return of a New Labour big beast in a post conference reshuffle, which might help to reassure his doubters that he is willing to learn the lessons of the success from the Blair years.
 
Calling it on the economy

As always, the party in Opposition will spend more time attacking the Government than establishing their own message, and Labour will accuse the Government of calling it wrong on the economy.  Ed Balls will denounce Chancellor George Osborne for being in hock to his allies in the City, intent on the abolition of the 50p tax rate and of kicking reforms of the banking system in to the long grass while cutting public sector jobs and hitting ‘hard working families’.
 
The question is to what extent Labour’s attack on the Coalition’s economic policies will resonate.  While Labour is the most trusted party to protect public services, recent polls suggest that Labour’s economic credibility is on the slide and they will have to show they understand that public spending needs to be reined in.  
 
Ed Balls will be watched closely to see if he deviates from his economic argument which has failed to convince a sceptical public.  The scope of his conference speech will also be revealing.  He may grasp the opportunity to assume a leadership position on issues outside of his remit ahead of Miliband’s speech the next day.
 
Taking on the Coalition

It will be interesting to see how the Labour leadership couch their attacks on the Coalition.  It is likely they will be relatively warm to the Liberal Democrat left, including the likes of Tim Farron, who Labour will view as a potential ally in any future Coalition negotiation.  Nick Clegg is guaranteed to be in the firing line following his conference speech which included a personal ‘no time for the backroom boys’ attack on Miliband and Balls.  
 
The conference will be heavily focused on internal party matters. Delegates will endorse Ed Miliband’s decision to abolish Shadow Cabinet elections fuelling rumours in the bars about the likely winners and losers in a post conference reshuffle. Miliband will avoid a head on confrontation with the unions but will seek to show his independence with vocal support of academies and a call for strike action to be avoided. 
 
Broad policies emerging

Four documents are expected to be published as a staging post for the party’s policy review which will incorporate broad themes rather than offer specific policy solutions. As such they are unlikely to receive much in the way of media interest. Progress, the self-styled New Labour pressure group, has attempted to get a head start on the policy development process with the publication of the ‘Purple Book’, containing policy chapters from Labour MPs who behind the scenes are unconvinced about Ed Miliband’s leadership. Miliband has written the foreword but the policies put forward, which coalesce around the idea of ‘Leaving the Big State behind’, do not sit naturally with his approach. 
 
Ideas are clearly needed but at this stage competence and electability are more important. The party will not persevere with another leader who cannot deliver at the ballot box and Ed Miliband will have to deliver a convincing performance in his speech on Tuesday and persuade his party and the wider electorate that he is capable of providing a better alternative to the Coalition. 
 
LABOUR PARTY CONFERENCE DIARY

Sunday
• Ed Miliband’s supporters including Chuka Umunna and Peter Hain gather for the Compass Rally at 6pm
 
Monday
• Shadow Chancellor, Ed Balls, delivers his speech to conference at 12 noon
• Steve Richards interviews Ed Balls for an RSA/Independent event at 5:45pm
 
Tuesday

• Party leader, Ed Miliband, delivers his keynote speech at 3pm
• IPPR ask if Labour can win in 2015 with Douglas Alexander and Stella Creasy at 5:30pm
 
Wednesday

• Ed Miliband answers questions from delegates in a Q&A in the conference hall at 5.30pm

Thursday

• Deputy Leader, Harriet Harman, brings conference to a close at 11am
 

LIBERAL DEMOCRAT CONFERENCE HIGHS AND LOWS
 
Good week
• Overall, the conference was good for the leadership team who appeared fairly united behind Nick Clegg and realistic about the opportunities and limitations of their role in Government.
• Vince Cable gave a curmudgeonly but well received ‘grey skies’ speech on the economy and his bizarre reference to the Tory right ‘sending children up chimneys’ played well in the hall.

• Conference seemed to reinvigorate Nick Clegg and his keynote speech was, like the conference, fairly low key but focused and statesmanlike.
 
Bad week
• The party membership were disappointed with the paucity of big announcements. Danny Alexander’s 2,000 extra tax inspectors and Nick Clegg’s £50m summer school were not seen as groundbreaking policies to woo the voters.

• Children and Families Minister, Sarah Teather, has risen up the list of likely reshuffle casualties with a cringe making turn including a number of very poor taste jokes about her coalition colleagues.
 
Good week…then bad week
• Illustrating the dangers of pursuing a leadership campaign during conference, Party President Tim Farron started the week with a raucously received speech, looking ahead to a Coalition divorce. Over the course of the week he was shot down by senior colleagues, including Vince Cable, and his poor performances in subsequent media interviews left him looking exposed.

Think Tank Quarterly: The Growth Edition

19/09/2011

Think Tank Quarterly - The Growth Edition

In a speech earlier this month, the Chancellor said Britain’s model of growth was, ‘the most badly broken of any major economy.’ Against this backdrop think tanks are pursuing various approaches and projects focussed on growth. Broadly those on the centre right are concentrating on practical measures to secure a path to growth, making the case for a lower tax, lower regulation economy. Think tanks on the left and centre left are looking at big picture, long term research to appeal to the more aspirational elements of the Coalition and to the Labour leadership which is looking in earnest for new ideas.

2011 Pre-Party Conference Lexcomm

16/09/2011

BOUNDARIES & ECONOMIC WOES DOMINATE AGENDA
 
We look back on a tumultuous summer and analyse the state of the parties as they enter the conference season. Ahead of the Liberal Democrat conference in Birmingham we assess the issues and the personalities in the first of a series of three LexComm party conference specials.
 
Almost 17 months on from the election, all three parties look more settled in their roles. The two Coalition parties have found their distinct voices, discarding the rose-tinted oratory of the first few months of partnership. Labour seems to be slowly emerging from mourning its loss of office.
 
The ‘silly season’ turned out to be serious with Greece on the verge of economic collapse, English cities looted and burned and Britain’s most powerful private sector media group brought to its knees. It is these three strands which will define the politics of this year’s conferences.
 
David Cameron’s task at his party’s conference is the easier of the three leaders, if only by a whisker. As Prime Minister, he can reprise his liberator of Libya triumph, describe grand social and economic themes and has the authority to announce initiatives which he can deliver in legislation. Cameron will celebrate his party’s achievements after more than a year in Government. His themes will be economic toughness to cut the deficit, social intervention to mend ‘broken Britain’ and sideswipes at irresponsibility from bankers and Eurocrats.
 
He will want to navigate a difficult path as father of the nation, above party, leading a successful Coalition, while reassuring his sometimes disaffected activists and MPs that he is one of them. They will be keen for him to demonstrate traditional Conservative values and balancing these internal demands with his usual instinct to speak direct to the nation will be his main challenge.
 
Nick Clegg has the most difficult job of all and carries the burdens of office heavily, navigating the tricky relationships with his Coalition partners and his own backbenchers and activists. At his conference he will face complaints over health, welfare reform, the impact of expenditure cuts and a wide range of other government initiatives.
 
Over time, the Liberal Democrats have developed a harder edge in their approach to the Coalition Government. They have found a distinctive voice and a way of criticising the Conservatives without fatally undermining the Coalition. In the current climate even the most die-hard Tory-phobes in the party recognise they cannot afford to ditch the Coalition yet.
 
Ed Miliband has a slightly easier task than he might have anticipated a few months ago. His more sure-footed performance on the News International crisis when he forced the pace means that he enters the conference season without the political commentators talking about Labour in crisis. Labour’s event will be the third most interesting which probably suits Miliband just fine. He will however be desperate to keep the unions away from the headlines during conference week.  He can rally his party and prepare, if he wishes, for a wide-ranging reshuffle of his front bench team after the conference.  Ed Balls’ first conference speech as Shadow Chancellor will be interesting to see if he assumes the role of the conference attack dog or takes a more nuanced approach.
 
Polling Review
 
During the summer, opinion polls have remained fairly consistent with Labour holding a steady lead over the Conservatives and the Liberal Democrats trailing a long way behind (although their position is only slightly below historical norms at this stage in the electoral cycle).
 
Ed Miliband’s problem is that he is less popular than his party with 63% of respondents in a recent Times poll finding it difficult to imagine him as the country’s Prime Minister. Conversely, David Cameron is more popular than his party and while his ratings have declined (albeit with a narrow improvement in September) he remains the most popular party leader.  All three leaders will seek to maximise a hoped for conference bounce.
 
LEX BRIEF: Boundary Changes
 
The publication of the new draft constituency boundaries earlier this week, in line with the Coalition’s policy to reduce the total number of constituencies from 650 to 600 with broadly equivalent electorates, has stirred a hornet’s nest in Westminster.  This issue will be at the forefront not only the conference season but also the rest of the Parliament. MP will be pitted against neighbouring MP and outgoing Members will have little to dissuade them from acts of rebellion. 
 
All but 77 of the seats in England are revised to some degree by the proposed boundary changes, with the North West and Wales facing a significant reduction. Major players in all parties, including Ed Balls, George Osborne and Danny Alexander are affected.
 
Post expenses, the link between MPs and their local  constituencies is increasingly sacrosanct and the incumbency bias is recognised as a vital factor in securing re-election.  It is likely that many MPs will stay and fight marginal local seats rather than go on a ‘chicken run’ to secure a safe seat in another part of the country.
 
This is only the start of the process; public hearings will take place across the country and the Bill will then make its way through Parliament with MPs expected to vote on the final plans in October 2013.  Labour will oppose the Bill and a rebellion is possible on the Government benches.
 
LEX BRIEF: Planning reform   
 
The Government’s new planning policy, which seeks to make the default answer to new development‘yes’ in the name of economic growth, faces stiff opposition from a coalition of environmental bodies who would perhaps prefer the answer to be ‘no’. A new ‘Presumption in Favour of Sustainable Development’ has drawn particular criticism with the accusation that vast swathes of countryside  willbe paved over, an emotive issue for many Conservative inclined voters.
 
Recent u-turns on the NHS and forests mean the press smell blood, but the Government has held firm so far with George Osborne making the case that planning reform is vital for economic growth and David Cameron emphasising that the green belt will remain protected. Helpfully, for the dynamics of the Coalition, Vince Cable has given the policy his strong backing. Opposition from Conservative activists and MPs in rural areas, where large scale development can be particularly controversial, could be harnessed by this well orchestrated campaign over the conference season. But whilst planning policy remains central to the Government’s growth strategy, a u-turn remains unlikely.
 
LEX BRIEF: Health Reform      
 
The most far reaching reform package for the NHS in 60 years created one of the biggest headaches for the Coalition Government with backbenchers on both sides of the House, the clinical community and patients up arms.
 
The Liberal Democrat Spring conference was dominated by endless rows and controversy about the health reforms. Cameron, Clegg and Lansley had to react quickly in order to save the reform programme and their own reputations. The Government’s listening exercise was announced in early April, in the hope of calming nerves, leading to the publication of a revised Health and Social Care Bill in June.
 
The revisions to the package, particularly in relation to the new commissioning structure, appeared on the surface to have appeased many opponents of the reforms with a warm yet cautious reaction from politicians and clinicians alike.
 
However, a storm is brewing, with key critics of the Bill including Dr Evan Harris, the former Liberal Democrat Shadow Health Minister who lost his seat in 2010, and party grandee, Shirley Williams back on the airwaves raising concerns about the private sector involvement in the health service.
 
The Health Bill is likely to dominate the Liberal Democrat conference and whilst Harris’s attempts to table a motion on the Bill were stymied, there will be a health reform Q&A on Tuesday and an emergency debate on Wednesday (which could be on the subject of the health reforms), just before the leader’s keynote speech. These opportunities for conference to raise its concerns are likely to put further pressure on Clegg to seek additional concessions when Parliament returns in October and the Bill begins its passage through the Lords.
 
LIBERAL DEMOCRAT CONFERENCE LOOK AHEAD
 
Nick Clegg will have to face the malcontents in his own party and beyond as the Liberal Democrats meet in Birmingham amid heightened security. A fence has been erected around the conference hotel (a decision taken following the August riots) and Birmingham will host the ‘March for the Alternative’ on Sunday, a gathering of tens of thousands of trade unionists who will march against the Coalition’s public sector cuts.
 
Nick Clegg’s personal ratings are the lowest of the three party leaders and have not recovered from his perceived betrayal over tuition fees. Conference provides a much needed opportunity for Clegg to try and improve his popularity with his party and the public at large.
 
Clegg will also have two specific objectives during the conference period. First, he will have to secure the forgiveness of his party for his failure to secure a yes vote in the AV referendum back in May. It may feel like light years ago but Liberal Democrat members, many of whom spent their lives campaigning for electoral reform, remain  disheartened that the once in a generation chance for a new voting system was lost.
 
A debate on an internal party report, which places the blame at the door of Nick Clegg for his decision to call the referendum on the same day as the local elections, thus spreading too thin the party’s campaigning ability, will be buried in a consultative session early on Saturday before many of the delegates and the media arrive.
 
Second, Clegg will use the opportunity provided by the media spotlight (away from his Coalition partners) to show that he is standing firm on a range of issues.  He accepts that he may not be popular with his party but he will seek to emphasise that he has their best interests at heart and use the occasion to highlight to the wider public the positive impact his party is having on the Coalition. 
 
Other leading members of the Liberal Democrats, particularly Vince Cable (who will be looking to steal the limelight), will be testing the waters, seeing how far they can stretch collective cabinet responsibility while appealing to the party membership. While there is no obvious successor to Nick Clegg, Party Chair Tim Farron (whose seat has entirely disappeared in the boundary review) will be highly visible at the conference and is likely to join calls for a slow down in the cuts programme.
 
It will be interesting to see the extent to which Clegg will challenge the assumption that he has to be critical of Conservative elements of the Coalition agenda and whether he will be prepared to say to his party that there are limits on how confrontational the party can be, as the minor partner in the Coalition.
 
As was the case last year, there will be more interest from business attendees now the Liberal Democrats are a party of Government, although party membership attendees are slightly down on last year.
 
LIBERAL DEMOCRAT CONFERENCE: AT A GLANCE
 
Chief Secretary to the Treasury, Danny Alexander, will deliver his conference speech on Sunday lunchtime. Expect a staunch defence of the Coalition’s spending plans. 
 
Tim Farron will address Conference as Party Chair on Sunday afternoon. Leading light of the anti-Coalition brigade (and likely future leadership candidate) he is critical of the leadership’s lack of communication of the party’s message.
 
Business Secretary, Vince Cable, will deliver his speech on Monday lunchtime and will be judged by the extent to which he   decides to play to the audience in the hall or stay loyal to the Coalition’s policies.
 
A Q&A session with Nick Clegg on Monday afternoon will provide an opportunity for Conference to raise their concerns with their leader: it could be a difficult session.
 
Nick Clegg will bring conference to a close on Wednesday afternoon. The response of his party will be revealing.
 
On the fringe:
•  Sunday 1pm: ‘Two tribes’,  CentreForum/Fabian Society event with Norman Lamb and Labour MPs
•  Monday 1pm: Guardian Debate, ‘Midterm makeover’ with Vince Cable and Paddy Ashdown
•  Tuesday 8pm: ‘Do we need a Coalition exit strategy?’ a Lib Dem Voice panel discusses future options

Summer Recess Lexcomm

21/07/2011

Difficult times for Cameron as the summer recess approaches
 


– David Cameron should survive this period but his Government, and his own personal authority as Prime Minister, are damaged

– Ed Miliband has led his party effectively through ‘Hackgate’ and has gained credibility with the political class but has not yet made a breakthrough with the voters

– The politics of the crisis have pushed the Liberal Democrats closer to Labour and will allow them to be more assertive in Government
 


David Cameron has faced the most difficult two weeks of his leadership and will hope that the pressure on him will ease as MPs depart for the summer recess. His decision to employ former News of the World editor Andy Coulson, his close links to Rebekah Brooks, and even his trip to Africa in the midst of the crisis have raised doubts about his judgment. While Cameron should survive, some commentators have suggested that the phone hacking scandal could come to haunt Cameron in the same way that the Iraq War dogged Tony Blair’s premiership.


The Coalition remains stable but this period has shown that scandals can creep up and swiftly engulf a Government. As Cameron said in his statement to Parliament today, ‘You live and you learn. And I have learned.’ He will have to show better judgment in spotting the potential issues that might blow up and have a surer touch in managing crises that cannot be avoided. Conservative backbenchers are not so concerned about his initial decision to hire Coulson but in his day to day management of the crisis.


It has certainly been a good crisis for the Opposition. While the intervention by former Prime Minister Gordon Brown misfired, his protégé Ed Miliband has been on the front foot throughout. Arguably his decisive actions led directly to News Corporation’s decision to withdraw its bid for the remaining stake in BSkyB. He has been widely praised by the political class and as a result will be spared calls for him to be replaced in the run up to the Labour Party conference. Recent polls have improved his personal ratings which are at similar levels to David Cameron’s but Miliband has not yet made a definitive breakthrough with the public. He will look to consolidate on this period and push the theme, developed over recent weeks, that David Cameron is light on detail, weak in judgment and in thrall to business elites.
 


The politics of the crisis have pushed the Liberal Democrats closer to Labour. The junior partner in the Coalition shares the Labour leadership’s concerns about the concentration of media ownership and the Liberal Democrat’s overt hostility to News International has served them well during this period.  Recent polling is far from consistent but broadly the Liberal Democrats have enjoyed a small improvement in their standing over the past two weeks and this puts them in a stronger position to be more assertive within Government, coming so soon after their successful battle over health reform. Nick Clegg has had a good crisis and the period has helped to differentiate his party from his Coalition partners.

A new media landscape


Rupert and James Murdoch’s remorseful appearance before the Culture, Media and Sport Select Committee on Tuesday shored up the share price of News Corporation and answered some of their critics. While BSkyB and News International will remain an important part of the British media scene, News Corporation as a political force is significantly diminished. The takeover of BSkyB is unlikely to be resurrected any time soon, certainly not before the outcome of the Leveson inquiry, which will consider issues of media ownership. While previous changes in media ownership have tended to favour News Corporation, the inquiry will be under significant pressure to recommend more robust plurality and ‘fit and proper’ tests. The Prime Minister confirmed that the inquiry may report within a year, allowing the Government to publish a White Paper in autumn 2012 followed by legislation in Spring/Summer 2013, a full year before the Government planned.
 

More widely relationships between politicians and the media will undoubtedly change, not least because all meetings between members of the press and Ministers, senior civil servants and special advisers, including social meetings, are to be published quarterly following a change to the Ministerial Code.

Populist drift?


The decision of the political class to unite in bringing down a commercial takeover deal will raise concerns among multinationals with interests in Britain. Over recent years governments have distanced themselves from takeover decisions, particularly when a foreign owned firm is involved, because political leaders understood that businesses need and value consistency. While politically understandable, the decision of the Government to publicly speak out against the News Corp bid could have lasting consequences for Britain’s reputation in the global business community.
 

Following the banking crisis the general political drift has been towards tighter regulation and diminished faith in free markets. This trajectory has been reinforced by recent events. The watering down by the Labour leadership of pro-market policies promoted under Tony Blair puts the Conservatives in a difficult position. There are a wealth of populist campaigns, similar to the blocking of News Corporation’s bid for BSkyB, that Labour might look to promote. David Cameron has always strived to not be seen as in thrall to vested interests and following this crisis he will look to position himself as both cautiously supportive of business but also on the side of the consumer.

Looking ahead to the summer

Whilst further revelations could keep ’Hackgate’ on the front page we would expect attention to swing back to the major political issue of our time: the economy. After the shock fall in growth at the end of last year, George Osborne will be hoping the second quarter growth figures, due out in August, show conclusively that the economy is returning to growth. However, with inflation dominating public concerns even a stellar rise in growth is not likely to improve the public’s view of the Government’s handling of the economy. The recent announcement of double digit rises in energy prices were greeted with widespread dismay. The trade unions have talked up a summer of discontent, in protest against stagnating public sector pay and pension reforms, but so far this has largely failed to materialise, and public opinion is not with the unions.
 


September looks to be an unusually busy political month with the final stage in the Commons of the troubled Health and Social Care Bill and the publication of the draft boundaries for the 2015 General Election. With the number of constituencies to be cut from 650 to 600 a significant number of sitting MPs will face having to fight for a new constituency, often in direct combat with neighbouring MPs. Looking ahead to the party conferences, Ed Miliband will celebrate his first year in office, and will hope to build on the News Corp row whilst Nick Clegg will hope to avoid major rows during his party conference. David Cameron will look to secure his position with his party, aware that his backbenchers are growing restless and increasingly mutinous. Research by Nottingham University’s Philip Cowley found that backbench dissent amongst Government MPs is running at a historically high level, with a rebellion in almost one in every two votes in the Commons. Ed Miliband’s proposal to abolish bi-annual elections to the Shadow Cabinet, supported by MPs and almost certain to be endorsed by Labour’s autumn conference, will enable him to reshuffle his team, possibly following conference.
 
Legislation round-up


While the current session of Parliament will be one of the longest in recent history, departmental business plans published in June indicate that the Coalition Government is falling behind its legislative milestones. There are concerns on the Conservative benches that further constitutional reform, in particular House of Lords reform, could come to dominate the second half of the session, and that Peers will seek to disrupt the Government’s wider legislative programme.
 


After an intense period of political manoeuvring, the Health and Social Care Bill, which aims to modernise the NHS through significant structural change, finally finished its Committee stage in the Commons last week. The final stage of the Bill’s passage through the Commons will take place during Parliament’s brief return in September, followed by what is likely to be a lengthy and difficult period of scrutiny, dominated by a sceptical and weighty contingent of medical experts, in the House of Lords.



In terms of anticipated legislation, reports suggest that a White Paper to reduce regulatory burdens on industry will be delayed until October and the Government’s Social Care Bill is now not expected until 2012.

Health Lexcomm: Finding The Right Remedy

20/07/2011

A continuous flurry of activity since the General Election in 2010 has made health one of the key bellwethers for the success or otherwise of the Coalition. The track record so far has been less than convincing. The publication of an ambitious reform programme by a new Government is not without precedent, but the energy with which the Coalition has gone about attempting to reform public services has been impressive, with difficulties in achieving the overall vision perhaps inevitable.

The health reforms initiated a concerted campaign of opposition by a diverse range of vested interests and others, resulting in public humiliation for the Health Secretary and concessions on key parts of the Health and Social Care Bill. The Liberal Democrat party faithful will undoubtedly look back on the debate over the legislation as a strategic victory; revenge for the painful concessions made to the Conservatives on tuition fees and the outright defeat faced in the AV referendum. For their part, Conservative backbenchers found an unlikely hero in the form of Andrew Lansley who held firm under a relentless barrage of criticism from the junior coalition partner. Health became a test of what the Tories were willing to concede in order to get their plans onto the statute book within the constraints of the Coalition.

Despite the political horseplay there are still doubts that the Bill has indeed changed substantially and if the NHS Future Forum report and subsequent modifications of the legislation were largely a change of rhetoric to help satisfy opposition. Political anger toward the reforms has dissipated but the major premise of the Bill has not. The concept of devolving purchasing power to the front line, of expanding choice of provider, of shifting more care into the community and of separating out the delivery of public health policy by local authorities and Public Health England all remain.

Concerns over the sweeping away of bureaucracy and the development of a knowledge gap have now been replaced by fears that the compromise will result in a confusing mishmash of responsibilities, increasing costs at exactly the time that the health service needs to produce unprecedented savings. A creeping timetable for implementation and the development of further ‘transitional’ arrangements give weight to the argument that reform will fail if costs begin to impact on service delivery.

When the Bill returns to Report Stage in the Commons in September and is then debated by the House of Lords in the autumn session, the Government can expect numerous grievances to be aired by Peers keen to influence the final measures. The vast majority of political opposition to the reforms has come from those most affected at an operational level – trade unions, NHS organisations, patient groups and to varying degrees from health policy think tanks. Patient groups in particular will be seeking more clarity on how the commissioning of services in their disease area will be managed under the new system.

Labour has not been at its most effective when dealing with the Government’s difficulties on health, but there are signs that this is changing. David Cameron has been forced onto the defensive over waiting times by Ed Miliband, a classic Labour tactic straight out of the healthdebates of the 1990s where waiting time soared due to a lack of investment from the then Conservative administration. The charge that the present Government was elected on a premise of ‘no top down reorganisations of the NHS’ has also frequently come back to haunt it.

Aside from the battles over the flagship piece of legislation that will continue until it eventually becomes law, expected in April 2012, the Coalition is continuing with its plans for the implementation of a Value Based Pricing regime for the pharmaceutical industry. This far reaching attempt at redefining the cost of medicines and their societal benefit has not yet hit the political headlines but tough negotiations lie ahead.

On social care, grand reforms of the existing political settlement are also in the offing following the conclusions of the Dilnot Review. Whilst a Bill has been promised for next spring, the Department of Health will have its work cut out in convincing the Treasury that such plans are affordable at a time of severe constraint and a lack of growth in the economy as a whole. Progress in this area of policy will depend on whether the promised all party talks turn out to be something more substantive than cover for acting on the Review’s findings further in the future.

The major political battles over the NHS appear to have subsided for now. The Government has settled on a compromise (some might say compromised) piece of legislation that has satisfied its junior partner and a proportion of the many groups that joined the bandwagon of opposition to the original proposals. The essence of much of what was contained in the original plans remains but there can be no doubt that health has acquired a degree of toxicity for the Conservatives and for Andrew Lansley in particular. He has, however, shown resilience and has proved those predicting his demise wrong, for now.

The House of Lords committee stage could be a lengthy drawn out process where interest groups spot a further opportunity to thwart the policy process. Front of mind for those at the top of Government will be the potential cut off of April 2012 when the Queen’s Speech will effectively guillotine all remaining outstanding measures. When the grandstanding, resignations and inquiries into events in Wapping fade from the headlines, we are likely to once again face the prospect of health policy having a major role in influencing the Coalition’s success or failure.

Health Lexcomm: The Listening Is Over. It’s Back To Business.

14/06/2011

The two month pause is over. The Future Forum has reported and the Government has set out its response. Now it is time for action.

In a joint press conference the Prime Minister, Deputy Prime Minister and Health Secretary joined forces to put the trials of recent weeks behind them and state in no uncertain terms that the Government had listened. The NHS reform agenda is officially back on following wholesale changes prompted by Professor Steve Field’s NHS Future Forum report published yesterday.
 
Following months of unrest from political audiences and healthcare stakeholders, the Government has made a spectacular climb down on some of the more controversial elements of its flagship Health and Social Care Bill. The concept of promoting competition is top of the hit list, with Lansley’s ideological vision ‘significantly diluted’ to instead focus minds on the founding principles of the NHS, as expressed in the NHS Constitution.

Crucially, Monitor’s primary duty to ‘promote’ competition has been removed and the Bill has been amended to require support instead for choice, collaboration and integration. Whether this will be enough to face down the Government’s critics remains to be seen. 

Since yesterday’s report presentation, Nick Clegg has been in a buoyant mood, claiming victory on 11 out of 13 areas of concern expressed by his Party at its Spring Conference. However, behind the scenes many believe that the significant concessions won by the junior partner in the Coalition have been achieved in a blunt and counterproductive way – with the Deputy Prime Minister unwilling to stick to his brief or avoid making ambitious claims in public that have put the plans in an impossible position.

The devil in the detail


Whilst Lansley was at pains today to be clear that the fundamental principles of his vision remain intact, he also tacitly accepted that the developments do constitute a significant rewrite of the Bill.  Outlining few details on what exactly these changes constitute, the Health Secretary followed Cameron and Clegg in accepting the vast majority of the recommendations made by the Future Forum and signalled the Government’s intention to make ‘improvements’ to the Bill. A subsequent policy document released by the Government illustrates the extent of these changes which capture all of the spirit, if not all of the precise detail, of the calls made by the Future Forum.

Nick Clegg was handed perhaps the most significant announcement of the day when he confirmed that to ensure Parliament is given sufficient opportunity to scrutinise the proposed changes the Bill will be “recommitted” to a Public Bill Committee, with exact details to be announced in due course.

Are the Government’s NHS woes over?


For Andrew Lansley today’s piece of political theatre was the culmination of a hard few months of climb downs and public humiliations at the hands of his political masters. However, it did not draw a line under the difficulties faced by the Coalition as difficult questions emerged over the bureaucratic nature of the new structures agreed on.

Cameron, Clegg and Lansley are right to feel a sense of satisfaction at successfully pausing, listening and engaging but their ease in accepting the changes demanded by the Future Forum leaves all three in a delicate position.

Cameron called today’s announcement a ‘show of strength’ but the Government’s stomach for a fight has been called into question. By backing down so publically, Cameron has opened up cracks in his resolve. Will he now seek to retreat on other tricky aspects of healthcare reform: the Nicholson Challenge, pledges on waiting lists and the ubiquitous fight against the postcode lottery? Or will all of these now become impossible to achieve and come back to haunt him come the 2015 General Election?

Professor Paul Corrigan said today that if the Government is to regain the initiative it must establish and own a “powerful post-pause narrative for change even more than pre-pause.” For Cameron the time to act is greater than ever. He cannot walk away from the personal responsibility for the NHS he has assumed over the last 10 weeks. And crucially, he cannot afford to leave the sales pitch up to his Health Secretary.
 
From now on the Government must strive to bring the public and the clinical community on side in every step of NHS reform. Failure to make the argument for how the reforms will improve value for money and patient’s experience in the NHS could yet prove fatal for the Coalition. The time has come for the infighting to cease and for the collective fight to achieve real reform to commence.

Key changes announced today

A shift to ‘clinical commissioning groups’:
A wider range of experts, patients and members of the public will be given the right to make decisions about health services. Gone are GP consortia and in their place sit clinical commissioning groups, mapped to the boundaries of Health and Wellbeing Boards. New clinical senates will be established and bodies such as cancer networks will be retained and expanded.

Stronger safeguards against a market free-for-all:
Monitor’s core duty will be to protect and promote patients’ interests. It will not promote competition but will instead focus on integration. The ‘cherry-picking’ of profitable NHS business will be avoided through the use of prices that reflect complexity in the tariff.

No fixed deadline for change:
Clinical commissioning groups will take charge of commissioning in April 2013 if they are ready, but will exist in shadow form if they are not. SHAs and PCTs will still be abolished in April 2013. There will be a more phased introduction of any qualified provider.

Greater information and choice for patients:
Commissioners will have a duty to promote patient choice. Following current pilots, the Government will make it a priority to extend personal health budgets across health and social care.

Lex Event: Business Wants More Focus on Growth

17/05/2011

British business is expectant, but nervous. Although the stability provided by the Coalition and its five-year programme is reassuring, companies worry that, as Mark Field MP pointed out at last night’s Conservative Home discussion, many of the longer term problems with the UK economy have been parked while the Government puts all its energies into deficit reduction.


Business needs successful and stable governments of whatever colour or colours. But they also need to feel that there is a broader strategy for enterprise.


In a pre-meeting poll of the audience, over half said that the Government did not have a credible strategy for growth. That may be a presentational problem. As Matt Hancock pointed out, it is difficult to explain growth while the focus is inevitably on cutting the deficit.


But business’ worries about growth are also about the substance. The Government (and the Conservatives in particular) rely on the economic bet paying off, but are almost entirely reliant on the private sector to achieve its goal. Yet the Government’s approach to the private sector isn’t entirely consistent.


These mixed signals are increasing nervousness. ‘Rebalancing the economy’ is a fine objective and the Government needs to be more supportive of manufacturing. but not at the expense of other successful sectors.


Financial services companies in the audience worried that banking regulation could end up as a bargaining chip in Coalition negotiations, which may lead to the UK gold plating already tough regulations coming out of Europe.


New immigration rules are frustrating global companies. Highly skilled individuals have to struggle with difficult and time consuming bureaucracy before they are allowed to locate to their UK offices. Many just give up.


And in response to external pressures the Government is in danger of developing sectoral blind spots. Aviation and retail, which could create thousands of jobs across the country, are sidelined because some worry that they fit uncomfortably with other agendas.


As all the speakers pointed out, many of the difficulties are within the parties, not between them. So on issues such as carbon targets and immigration, Vince Cable and George Osborne have supported the business case while ministers of both parties opposed them.


But maybe the problems for business are more fundamental than day to day policy squabbles within Government? For 30 years under both parties, the UK had governments which were largely in favour of enterprise, free and open markets, low taxation and liberalisation. The financial collapse caused all three parties to rethink as voters became more hostile to what they saw as the perils of the ‘unfettered’ market.


David Cameron has been wary of being seen to be ‘too close’ to big business, reflecting no doubt the polling evidence that the party is seen by swing voters as not for ‘people like me’. But have the Tories got the balance right between detoxifying the brand and creating the conditions for growth? As the deficit begins to come down and the economy starts to recover, the Government will need to re-build the case for economic growth based on free and open markets and will need a broad package of policy measures to underpin it.

Also see Mark Field MPs’ article on Conservative Home
http://conservativehome.blogs.com/platform/2011/05/mark-field-mp-keep-clegg-and-carry-on.html

Health Lexcomm: Crunch Time For Lansley

09/05/2011

The Liberal Democrat hierarchy, mainly in the form of Nick Clegg and Norman Lamb, have renewed calls for dramatic changes to be made to the NHS reform agenda as a way to salvage the Party’s tattered reputation following the resounding ‘No to AV’ vote. This somewhat pre-empts any conclusions of the ‘listening exercise’ Clegg jointly launched with the Prime Minister and Health Secretary last month. Of course, the Party’s grassroots delivered a damming verdict on the reforms at Lib Dem Spring Conference, calling for substantial changes to be made to ensure confidence in the purpose of remaining in Government. Mindful of this, the Deputy Prime Minister set out his stall over the weekend by calling for major concessions to the Bill and also raised the prospect that the proposals could be dropped all together if these are not forthcoming.

In a move that is more political posturing than real politik his comments are said not to be in keeping with private agreements with Cameron and Number 10 that the Lib Dems would rally behind the broad principles of the reforms to provide some respite from the torrent of criticism that they have received from almost all quarters. The aggressive stance has, however, met with some support from the Prime Minister who is increasingly concerned by the continuing row over the reforms and the potential for the debate to ‘re-toxify’ the Tory brand he worked so hard to reposition as trusted to run the NHS during the 2010 Election campaign. The Prime Minister is even, according to reports, warming to George Osborne’s ‘nuclear option’ of dropping the Bill on the table until Lib Dem demands are met. 

In reality, it will not be possible to drop the Bill in its entirety. So much is already in train. GP Consortia have formed to some extent in almost all areas of the country, with PCT staff transferring into the new structures and GPs taking on more of the responsibility for management of services. To now reverse this juggernaut is a near impossible task coupled with the inconvenient truth that the Bill was supported whole heartedly by the vast majority of Lib Dem MPs in its early passage through the Commons. In light of this and the existing listening exercise, concessions will most likely take the form of greater transparency within the new commissioning infrastructure and perhaps an easing of the timetable for implementation.

For its part, the Labour Party has been keen to paint the row as a clash of ideas over the rights and wrongs of ‘privatising’ the health service – goading left wing Lib Dems into joining their opposition to the greater use of private sector providers. This is of course a somewhat ironic position to take, given that it was New Labour itself that first introduced some plurality in providers to improve waiting lists and drive up standards. Egged on by the RCGP, who this morning claimed that the reforms could lead to charges for basic services and a fragmentation of provision, opposition Health Secretary John Healey today used an Opposition Day Debate to castigate the reforms as opening up the NHS to full-scale market forces with all areas open to private companies, removing measures for scrutiny, allowing NHS hospitals to go bust and face commercial insolvency and subjecting the NHS to competition law.

These developments pile yet more pressure on the man who has staked his political future on delivering the reform agenda – Andrew Lansley. The Health Secretary’s dogmatic approach to driving through a highly conceptual package of measures has faulted due to his inability to successfully sell them to a skeptical public. Forced into the already humiliating position of delaying the passage of the legislation and some public dressing downs from healthcare professionals, the extent to which he will be willing to accept further concessions is in serious question. He has received some backing from backbench Tories, upset at what they view as further unnecessary concessions on key planks of their reform agenda, although there have also been predictable interventions from the likes of Andrew George on the Lib Dem side, calling for a total re-think.

As the ‘man behind the reforms’ Lansley retains the trump card of being the only Cabinet Minister who fully understands the aims and ambitions of the measures going through Parliament and with so much already in progress, Cameron and others may view his loss as too heavy a price to pay for appeasing wounded Lib Dem pride. Perhaps of bigger concern is the headache of who could replace him. The retention of the Coalition balance will be resting uncomfortably on the shoulders of the Prime Minister as he considers his next move. It will be a key political test for him to retain the interest of his Health Secretary and the confidence of his junior Coalition partners.

Tory success overshadowed by concerns over future of the Coalition

06/05/2011

It was a very good night for David Cameron as Leader of his party but a more worrying one for him as Prime Minister of the Coalition Government. Suffering one of the worst election nights since the 1980s, the Liberal Democrats bore all the pain of the Government’s austerity programme. While they seem to have performed reasonably well in English rural areas, they suffered heavy losses in English Northern cities such as Liverpool, Sheffield and Hull where they were the main opposition to Labour.

Labour had a good night in England and will be pleased that it improved its position significantly in Wales. However Scotland was Labour’s worst ever result there and the SNP’s best. Alex Salmond secured an overall majority which is a major victory for him and his party. The main interest in these election results is the impact they will have on the Coalition Government.

Conservative backbenchers are likely to be more bullish to the point where some may even demand a snap election – although most recognise that they need to wait at least until the new boundaries are agreed.

Relations between the two parties have been seriously damaged by the referendum on electoral reform. Former Liberal Democrat Leader Paddy Ashdown attacked the Prime Minister this morning in an interview with the Guardian. The optimism of the Downing Street Garden press conference a year ago which launched the historic partnership between David Cameron and Nick Clegg will give way to a much more hard-headed coalition of necessity. Both sides recognise that they need to stick to the five-year programme but the suggestions a year ago of a potential realignment of British politics on the German model, involving a more centrist Conservative party cooperating with a more free-market Liberal Democrat party, are history.

It is unlikely that there will be major ‘concessions’ to the Liberal Democrats as part of a coalition relaunch in the next couple of weeks. However senior members of both parties recognise the need to renew the marriage vows. And the political reality is that the Liberal Democrats will complain more and will probably use the House of Lords to wring more concessions from Tory ministers on health, elected police chiefs, Lords reform and local government. The NHS bill which recommences its parliamentary progress in the summer is going to be a major challenge to Coalition nerves, with Labour doing its best to tempt potential rebels over to its side.

On most issues, concessions here or there on health or police won’t matter that much. But the challenge for Nick Clegg and his Liberal Democrat colleagues in Government is to persuade party colleagues to hold their nerve on the economy. Continued Liberal Democrat support for the deficit reduction programme is essential to their political credibility.

A reshuffle remains a possibility. At Cabinet level however, Cameron’s options are limited. Lib Dem ministers are a matter for Nick Clegg, not David Cameron, therefore Chris Huhne and Vince Cable are both unsackable despite their public attacks on the Government. But it may become a very difficult issue if they continue with their public aggression against the Conservatives. There are limits to Prime Ministerial patience with ministers who constantly undermine collective responsibility.

And although senior Tories are increasingly sceptical about Andrew Lansley’s ability to deliver health reform, removing him would be very costly politically and would be seen by many backbench Conservatives as a concession too far to their coalition partners. A more modest reshuffle of the junior positions is a stronger possibility which would see some of the poorly performing ministers in both parties replaced by some of the bright new intake MPs.

For Ed Miliband, the results are just about good enough. The Scottish performance was about Scotland, not the UK leadership. And Labour secured enough gains nationwide to be credible. However, they have a long way to go before they return to the pre-1997 heights where Labour won seats and councils across the country including the South of England.

Scotland will be more difficult. The SNP have won a renewed mandate after a successful first term as a minority government. The second term will be trickier with SNP ministers required to make substantial cuts in public expenditure. And, if Salmond secures his majority, he will be under considerable pressure to deliver a successful referendum on independence for Scotland. The evidence of the election seems to be that the voters like the general air of moderate competence of SNP ministers but remain deeply sceptical about independence.

In normal circumstances, local elections rarely change things. The difference today is that we have a Coalition Government where intra-party sensitivities have been significantly heightened by a bad-tempered and partisan referendum campaign. For almost a year following the creation of the Coalition Government, David Cameron managed to portray himself as almost being above party politics. The referendum campaign changed all that. The Coalition now looks slightly less stable and more fragile than it did a few weeks ago. Since both Cameron and Clegg know that it is in the interests of both their parties to stick it out for the five years, they will have to work very hard to re-stabilise the Government. Since the Parliamentary agenda is dominated by so much controversial legislation, they will have their work cut out.

New Year 2011

01/01/2011

The Lexington 2011 Political Forecast

Click the link below to download the pdf (414kb)

Power To The People: The Localism Bill

13/12/2010

The long awaited localism bill is finally published today. After a week of difficulties for the coalition, it will come as welcome relief. Localism is one of the glues that hold the Government together – a firmly established principle of the Conservatives in opposition and a long standing belief of the Liberal Democrats approach to community politics for many years.
 
Yet the decision to coincide the publication of the Bill with the local government settlement – forced onto the Government by the busy parliamentary timetable – means that the policy pledges of the 200 clause Decentralisation & Localism Bill is likely to be overshadowed by more stories of coalition ‘cuts’. Predictably, this was Labour’s line of attack this morning, accusing the Government “of offering councils devolution while holding a gun to their head (over finance)”. Labour will look to exploit this fault line between Tory and Lib Dem councillors and their national leaders all the way through until next May’s local elections.
 
At the heart of the Localism Bill is an aim to redefine the relationship between the individual and the state. By rolling back central government control they will give people, communities and councillors more power. Yet, within this rhetoric lies the central dilemma of the Government’s new approach – exactly who are they empowering? Councils may receive more powers under the Bill but so will local people. They will have the powers to take over council services or challenge excessive council tax rises and planning policies through a referendum.

Much of the Bill is peppered with the blue skies thinking of the Conservative Party’s most prominent thinkers such as Oliver Letwin and Steve Hilton, who are known to have taken a great interest in the Localism Bill. They believe that it will set the foundations for the Big Society.

The Bill will also bring about major reform to the planning system. As promised in the Conservative’s Open Source Planning paper, the Infrastructure Planning Commission will be rolled into the Planning Inspectorate, regional planning will be abolished and councillors and communities given greater powers to determine planning policy and development control. A new duty on developers to undertake pre-application consultation on major applications raises the prospect of applications being rejected on the grounds of inadequate engagement. In what looks like a significant concession to the Lib Dems, neighbourhood plans will become the new building blocks of the system.
 
Localism is a great policy for opposition. You can complain that too few homes are being built in the wrong place, and at the wrong price. Local candidates can be encouraged to run anti-development campaigns. The problem in Government is how you square this circle of providing local choice but to deliver what is clearly needed: more affordable homes and key infrastructure. A recent survey for the New Homes Marketing Board showed that while over 80% felt Britain needed more homes, just 50% accepted more housing in their neighbourhood.

At the heart of the Government’s approach of turning NIMBY’s into YIMBY’s is the replacement of the stick of regional housing targets with the carrot of financial incentives in the form of the New Homes Bonus, payable to councils that build new homes. Government ministers hope that this incentive will be even more significant in an age of austerity when council budgets will be reduced by 25% over the next four years. Although there are no further details about an incentive for commercial development, the Bill will give local councils discretionary powers to grant business rate discounts.

The Government does not appear to have said significantly more about the process for agreeing a new National Planning Framework or the definition of what is ‘a presumption in favour of sustainable development’. Without these, the uncertainty that has dogged the planning system since May looks set to continue.

The Bill proposes a major shake-up of social housing with reforms to encourage greater private provision of council housing and a new National Homeswap scheme to make it easier for social tenants to relocate. Both could be controversial within the social liberal wing of the Liberal Democrats. 
Finally, the Bill will devolve more powers to the London Mayor and the London Borough’s and formalise the streamlining of the London Quango’s. It will also pave the way for referenda in 2012 on setting up directly elected mayor’s in 12 other cities.

It will be interesting to see how Labour responds to the new agenda. In Government, Labour championed regional targets and once described the New Homes Bonus as a mechanism which will “rob Peterborough to pay Poole”. These positions are likely to be early causalities of Ed Miliband’s policy review as he searches for more populist policy positions.

The rhetoric of localism is strong and hugely ambitious but can the Bill live up to the rhetoric?  In a localist world some local authorities will innovate, welcome development and succeed; while poorly run authorities will perform badly, delivering poor services to their communities. This Bill institutionalises what some would call a postcode lottery for different communities.

For developers, the localism bill reinforces the trend of the past six months. Understanding the political dynamics of a local council and generating public support will be the essential ingredients of winning planning permission in the new system.

Further details can be obtained at:
http://www.communities.gov.uk/documents/newsroom/word/1795339.doc

For more information, contact Wyn Evans on 020 7025 2321.

Health Lexcomm: Public Health White Paper

30/11/2010

Today’s Public Health White Paper provides an insight into Health Secretary Andrew Lansley’s plans to create a healthier Britain. Hailed as a ‘radical new approach’ by Lansley, the White Paper looks outside of central government to deliver many of its aims.

Despite the claim, the White Paper lacks any specifics; Shadow Health Secretary John Healey MP stated that the White Paper was ‘96 pages long but short on detail’. Although lacking specific proposals, the White Paper provides a vision for public health and signifies the priority areas for the Coalition Government. Smoking, physical activity and childhood obesity are all targeted with further consultations and proposals set to follow.

The White Paper highlights the Coalition Government’s dilemma between ‘nannying’ on the one hand and improving people’s health through ‘nudge’ tactics on the other. Whilst Lansley signals his preference towards a less intrusive approach, this debate about the right role for regulation is echoed cross No. 10 and other Government Departments.

In many respects the Public Health White Paper is simply a forerunner to the much publicised Public Health Responsibility Deal – a voluntary agreement with industry to meet public health targets. Where the White Paper indicates the areas requiring reform, the Responsibility Deal will provide specific measures to be met to improve the nation’s health, setting out the commitments that industry has signed up to.

The Responsibility Deal has attracted significant criticism from health campaigners - who see Lansley as allowing the food and drink industry to write their own rules. This position has been championed by the Shadow Public Health Minister Diane Abbott MP, who has been vocal in her calls for a Select Committee inquiry into the influence of business. But in this age of austerity it is perhaps not surprising that Lansley and his team have looked to industry to deliver reform, opting for self-regulation over costly legislation.

It is under this backdrop of delivering more for less that Lansley has turned to local authorities to improve the nation’s health. A ring-fenced budget and over 150 public health directors will be created within local government in order to deliver health improvement strategies. However, with councils facing severe financial pressures, many have questioned the ability of local government to deliver the necessary progress. Lansley has also been keen to emphasise the importance of individuals taking ‘personal responsibility’ for their health and it will be interesting to see how he translates the ‘nudge’ theory in practice.

The White Paper also goes some way in ensuring employers take on social responsibilities. Despite the move towards greater self-regulation under the Coalition Government, Lansley is clearly keen to show he expects industry to take a lead in employees’ health and welfare. The plans to intervene to improve workplace health, such as the proposals to introduce better facilities to allow breastfeeding in the workplace, are in stark contrast to former Conservative policies which would have spurned state intervention in such areas.

Speaking to Andrew Marr on Sunday, Lansley stated he was ‘keen that we don’t over regulate.’ However, with increasing criticism from the public health lobby and Labour Opposition about his lenient approach to industry and the need to deliver tangible successes, a lot rests on the Public Health Responsibility Deal. The reaction to today’s proposals will likely result in increased activity from the health campaigners and the challenge to industry will be to make the partnership work.

Moreover, Lansley’s radical NHS reforms have faced criticism from many quarters, including the new Chair at the Royal College of GPs, and it has recently been announced that the publication of the Health Bill will be delayed until the New Year.  With such high profile policy proposals, Lansley’s public health plans may prove to be one fight too many for the Health Secretary and he will need to deliver political wins in public health or in his controversial plans to reform the NHS in order to keep his seat at the Cabinet table.

Criticised by many on the right as too ‘nannying’ and by those on the left as too lenient on the food and drinks industry, Lansley’s public health proposals will continue to attract controversy. For now, Lansley looks set to continue to work with industry to deliver the changes needed but industry should be in no doubt that should it fail to deliver and pressure mount on Lansley, the temptation to regulate will prove too much to ignore.

Lexington’s Property Bulletin: NOVEMBER 2010

02/11/2010

Countryside Properties has won permission to build 810 new homes at the former Harold Wood Hospital site in the London Borough of Havering.

Lexington was called in to support the project in the last month, following hundreds of objections from local residents. Our strategy was focused on building support from the wider community and emphasising to councillors that the project could generate over £7 million for the Council as part of the Government’s New Homes Bonus.

Despite 250 objectors attending the meeting, councillors backed the plans.

For more information about the campaign, please contact Chris Yearsley.

‘Build to let’ to provide affordable housing in London

Following the political furore over changes to housing benefit payments, one new property start up has promised to deliver ‘affordable’ rental housing in the capital.

For the last couple of months, Lexington has been working with the London Rental Housing Company, whose stated aim is to provide grant-free housing for the new and growing ‘sandwich class’ of economically active families who cannot get into social housing or onto the housing ladder.

The LRHC, which was set up by Iain Hutchinson, and is based on the housing model he discovered in Switzerland, intends to build 2000 private rented units over the next five years. Iain told Peter Bill from the Evening Standard: “The London Rental Housing Company wants to take the no-frills airline approach and build robust, spacious three-bed affordable flats that will last 200 years.”

More information can be obtained from Clare Coghill.

Lexington brief eco-towns

Lexington recently spoke at a TCPA seminar on how the local authority-led ‘first wave’ eco-towns manage their communications and build community support for their plans. 

Grant Shapps MP, the Housing Minister, has written to all eco-towns saying that “we will support an eco-town if the local community support it”.  Representatives from DCLG, HCA and CABE attended the seminar along with all four eco-town local authorities who presented their communication activities to date.

Kate Henderson, Chief Executive from the TCPA, said “It was great to get Lexington’s more strategic and political perspective on how to bring forward large-scale eco-developments and ideas for how to engage the local community. It was a great help to those that attended.”

For more information, contact Wyn Evans.

Making localism work

The localism bill is expected to be published this month, along with details of how a new national planning framework will be established. The Coalition Government has set an ambitious date of April 2012, when the new system will be in place.

The localism agenda has been a controversial issue within the property industry. On the negative side, many councils have stopped work on their local development plans while others have demanded development projects must ‘enjoy community support’ to secure approval.

But as we have illustrated above, the New Homes Bonus, which will allow councils to keep their council tax receipts, will give councils a big incentive to support development, particularly in light of the spending review which cut local authority budgets by 26%. 

Localism will require developers to re-consider their approach to planning. There will be a greater need to understand the political environment in which they are operating and win local support.

For more information on localism, and how you can make it work for your projects, please contact Lloyd Milton.

Keep informed of the big political issues

Lexington prepares regular political briefings. Recent briefings have covered:

• The comprehensive spending review 
• The 2012 London mayoral election campaign 
• The Conservative Party Conference
• The Labour Party Party Conference
• The Labour leadership
• The Liberal Democrat Party Conference

Lexington’s Property Bulletin: AUGUST 2010

06/08/2010

Pickles pushes ahead with reform

The Coalition Government has hit the ground running and no department is running as fast as the one for Communities and Local Government (DCLG).  
At a recent reception, the Secretary of State said “My name is Eric Pickles and I like abolishing things.” Within his first twelve weeks in charge, regional plans have been abolished; density guidelines discarded and the scope and scale of regeneration agencies have been paired back.
 
What’s more, the pace of change shows no sign of slowing. The minister told his audience that he has a major announcement planned for each week from now until Christmas.

The planning system has been turned on its head. Work on local plans has stopped in some councils; housing targets have been ripped up in others. Sites that were a shoo-in are now under threat, while no-hopers a few months ago are back in the game. Liberated local councillors are rejecting schemes, confident that applicants are unlikely to appeal in the current climate.
 
For responsible investors who crave stability and certainty, these have been a difficult three months. But for those willing to take a risk, business opportunities abound.

Reassuring messages 

To reassure industry, ministers have been entertaining industry leaders. Central to George Osborne’s economic strategy is a private sector led recovery. The success of the development, construction and housebuilding sectors will be critical to this.

In a letter to all councils, the DCLG’s Chief Planning Officer, Steve Quartermain said “the revocation of Regional Strategies is not a signal for local authorities to stop making plans for their area.”  The DCLG has also emphasised that local planning authorities will need to justify their housing supply policies in line with the current policy in PPS3.

In the next few months, work is expected to start on the new national planning policy framework to replace the current PPSs and PPGs. This will be critical to establish a positive framework for development.

The Government will also bring forward details of its financial incentives package to encourage councils to promote development. Eric Pickles has told MPs that “local authorities which take action now to consent and support the construction of new homes will receive direct and substantial benefit from their actions.”

The opportunity of localism

The introduction of the new planning system is creating opportunities for many sites and schemes that previously had little chance of securing support.  
Furthermore, some developers are recognising that the principle of localism could result in fewer national requirements on developers. There is therefore an opportunity to shape local plans that are more supportive of development.

Lexington is being appointed by developers wanting to promote supportive local planning frameworks and new projects. Please contact Wyn Evans on 020 7025 2300 for an informal chat on any project that you are currently promoting.

Peel secure Wirral Waters scheme

Wirral Council has approved Peel Holding’s plans for the £4.5 billion Wirral Waters regeneration scheme. The 5 million sq m redevelopment will include high-rise buildings, green spaces and 13,000 homes. Lexington North has been advising Peel. 

For more information, contact Paul Boyfield on 0161 247 8410.

MPs to scrutinise regional planning reform

The all party select committee of MPs overseeing the DCLG has established an inquiry looking into the abolition of the RSSs. The committee will consider “the implications of the abolition of regional house building targets for levels of housing development” and make recommendations to Government. The entire focus of this debate has been on house building while commercial development has been completely ignored. The terms of reference of the select committee reinforce this perception.
 
It does, however, provide an opportunity for industry to feed in ideas for how the new system should be introduced.
 
Please contact Lloyd Milton on 020 7025 2300 if you would like support and advice on submitting evidence to the committee.

Local Enterprise Partnerships launched

Business Secretary Vince Cable and Local Government Secretary Eric Pickles have written to local council and business leaders formally inviting them to create Local Enterprise Partnerships (LEPs) – the new Government’s alternatives to Regional Development Agencies.

The LEPs could promote helpful economic development frameworks that will establish positive local attitudes towards development. The first round of submissions needs to be with the Government by 6 September.  

For more information, please contact Lloyd Milton on 020 7025 2300.

Government introduce new schools

The legislation introducing new academies creates the opportunity for new providers to enter into the education sector and sponsor academy schools.  As is often the case when new opportunities are presented in an unfamiliar area, there are potential political and practical challenges.
 
Lexington has prepared an analysis of the new legislation and the opportunities and potential risks that it presents for businesses that may be interested in becoming involved with the Government’s academies programme.  The legislation has already been rushed through parliament enabling new academy schools to open from September 2010.

For more information about the Academies Bill and what it means for you, please contact Claire Neilson-Noble on 020 7025 2300.

New public engagement guide launched

Planning Aid England and Planning Aid for London have published a free guide to promote “good public engagement in development schemes.”

If you require consultation support to promote planning projects, please contact Clare Coghill on 020 7025 2300.

And finally – how about abolishing the planning system?

The new Coalition Government has invited people to put forward ideas for which laws and regulations should be scrapped as part of its Great Repeal Act. One idea being promoted online is to repeal the 1947 Town and Country Planning Act and all subsequent Planning Acts.

Health White Paper Analysis

12/07/2010

Almost as soon as the ink dried on the coalition agreement, the Health Secretary Andrew Lansley set about putting his ambitious and radical reforms of the NHS into practice. Despite anxieties at the highest levels within Treasury, wrangling amongst coalition partners and warning signs from the NHS Chief Executive David Nicholson, the Health Secretary has today launched his vision for the NHS in the form of the long awaited Health White Paper, setting out a package of reforms that will shakeup the NHS in its biggest overhaul since its creation over 60 years ago.


After much scene setting in the weekend press, Andrew Lansley announced the publication of the Health White Paper using rhetoric familiar to close followers of the healthcare debate in recent months: to promise increased patient control over healthcare through shared responsibility for decision making with their doctors, and a framework to enable GPs to take more responsibility for the commissioning of care for their patients.

Lansley also pledged to rid the NHS of the much maligned ‘tick box target’ culture that defined the Labour years, shifting the focus to outcomes.

How will the proposals fare politically?

The scale of the restructure announced today may seem at odds with the promise made in the coalition agreement that the NHS would be “free from wide scale reorganisation.” However, with the NHS budget ring fenced, today’s prelude to a more detailed consultation over the summer and the formal publication of the Health Bill in the autumn, comes with a commendable aim of cutting £1bn a year in ‘central bureaucracy’ through the phasing out of Strategic Health Authorities (SHAs) and the scaling down of the functions of Primary Care Trusts (PCTs) with many responsibilities passing to GPs. However, it is this headline measure of the Bill which has caused most difficulties behind closed doors in Government and is thought to have been responsible for the considerable delays to the publication of today’s White Paper.  Although Lansley’s proposals for the NHS have been in shape for some time, eleventh hour support was needed from the Prime Minister to allay Treasury fears that the £80bn budget for GP Commissioning would be a good use of public money at a time when all other Departments have been charged with making savings of up to 40 per cent. 

Professor Chris Ham, the Chief Executive of The King’s Fund, said cutting managers meant a large initial payout in redundancy and increasing the number of commissioners could mean more paperwork. He also suggested GPs would be likely to demand more money for the additional work. Others said the savings to be gained from trimming the ‘management fat’ from within the NHS are often overstated. The BMA is likely to negotiate hard on this point, arguing that much of the work undertaken by many of the organisations targeted by the proposals still needs to be carried out even if the organisation disappears.
One key question remains: how GPs will be held accountable for their stewardship of public funds.
 The Paper places great emphasis on the devolution of budgets to GPs to enable them to commission care but history tells us that for every enthusiastic and capable GP comes one who won’t be. The proposed Independent NHS Commissioning Board (to be established by April 2011) will certainly have a tough role to play here. 

It is this which presents to biggest political headache for the Health Secretary. The former Health Secretary Andy Burnham MP, now the Shadow Health Secretary, has been a harsh critic of the plans accusing the Health Secretary of “deeply flawed thinking” which will rob the NHS of much needed stability through “an £80 billion political experiment” – an experiment which he sees as “a huge gamble with an NHS that is working well for patients.” The Liberal Democrats have been slightly cooler thus far in their response, having capitulated on much to please their coalition partners we wait to see who, if anyone, on the backbenches will emerge as a voice for the Liberal Democrats on healthcare.

Today Andrew Lansley began his personal crusade to transform the NHS. It will be this that is the defining venture of his political career. If he can succeed where previous Governments have failed to improve the speed of care, reduce waiting times and widen the range of NHS services available to patients, his legacy as one of the most passionate and visionary Health Secretaries of our time will be set. Should he fail, he risks presiding over inevitable cuts to frontline services and a legacy of broken promises – a scenario neither he nor the coalition Government can bare to contemplate.

Lexington’s Property Bulletin: MAY 2010

25/05/2010

Coalition Government to scrap IPC and regional plans

Today’s Queen Speech has confirmed that the Coalition Government will bring forward legislation this year to scrap regional spatial strategies and abolish the Infrastructure Planning Commission. The speech set out a reasonably ambitious programme for an 18 month Parliamentary session, with a full 22 Bills promised to keep MPs entertained.
 
Deputy Prime Minister Nick Clegg will probably face the most difficult task as he looks to steer highly controversial constitutional reform through both Houses of Parliament. In particular the commitment to fixed term parliaments, a referendum on a new electoral system and the funding of political parties are highly sensitive and complex issues which could face significant opposition in both Houses.

The legislative programme also anticipates major battles with vested interests. The commitment to improve police accountability will be bitterly opposed at all levels of the police service. Business Secretary Vince Cable has one of the more controversial jobs of reviving Labour’s previous Royal Mail Bill, abandoned following a highly effective campaign by the Communication Workers’ Union.

The Decentralisation and Localism Bill

The most significant element of today’s Queen’s Speech for the property sector is the Decentralisation and Localism Bill which aims to devolve greater powers to councils and neighbourhoods and to give local communities control over housing and planning decisions. The Bill will largely carry out the proposals made in the Conservative Party Green Paper entitled: Open Source Planning.
 
It will abolish the Regional Spatial Strategies. It had been anticipated that ministers would have abolished RSS’s more quickly, using direct ministerial powers rather than legislation (which could take 12-18 months to get onto the statute book). This could mean that RSSs will survive for another year or two, although the Government may choose to twin track this reform more speedily.

The Bill will also abolish the Infrastructure Planning Commission and replace it with ‘an efficient and democratically accountable system’, designed to provide a fast track system for major infrastructure projects. On the face of it, the proposed changes to the infrastructure planning process do not look significant. Much of the fast track structure established in the 2008 Planning Act by Labour will be retained.  But promoters of infrastructure projects will be anxious that the Coalition Government does not compromise with further amendments as the Bill makes it’s way through parliamentary scrutiny.  This week, IPC Chair, Sir Michael Pitt, tried to reassure applicants that already have schemes in the IPC process.

The Bill will also create joint local authority-business bodies known as Local Enterprise Partnerships to replace the Regional Development Agencies. Other provisions include empowering local communities to takeover local state-run services and to create new trusts designed to make it simpler for communities to provide homes for local people.

A test for the coalition

All told, the next 18 months will be fascinating in both Houses of Parliament. Conservative and Liberal Democrat backbenchers are already showing signs of irritation with the new coalition government. The test will be whether that translates into rebellions on controversial pieces of legislation.

For Labour and its new Leader, the tests are just as great. How will the party deal with the Royal Mail they previously supported in government but which was shelved because of backbench opposition? What will the party do on constitutional reform – favoured by a number of the candidates for Leader but unpopular with a lot of backbenchers?

For all three parties, the next 18 months threaten to be the most dangerously unpredictable period in British politics since 1931.

New face at DCLG: Andrew Stunell MP

Andrew Stunnell is the Liberal Democrat appointment to the Department of Communities and Local Government, taking on the position of Parliamentary Under-Secretary of State. He previously held the position of Shadow Secretary of State for Communities and Local Government from 2006 until 2007. He is seen as a ‘pragmatic localist’ and had a non political career as an architect.

Stunnell was elected to Parliament in 1997, on his fifth attempt. He became Deputy Chief Whip in 2001, serving until Charles Kennedy stepped down as Liberal Democrat Leader in 2006.

Stunnell has extensive experience in local government and was Political Secretary of the Liberal Democrat’s Councillor’s Association as well as a leading councillor himself, remaining a member of the Stockport Council for five years after becoming an MP.
 
Stunnell has spent the last thirty years advising Liberal Democrat councillors on coalition agreements with other parties at local authority level. For this reason, he was brought into the Liberal Democrat’s negotiating team that reached agreement with the Conservatives following the 2010 General Election.

Cancer Hits Centre Stage – But At What Cost?

07/04/2010

Cancer services have already been under the spotlight during the ‘pre-election’ campaign period, with Labour’s 2009 Conference pledge that patients will only have to wait one week for test results frequently cited and more recent promises of specialist care at home for all cancer sufferers the key differences between the two main parties. However, on the eve of the election being called, the Conservatives have grabbed headlines with a major announcement over the weekend that NHS cancer patients will no longer be denied cancer drugs that are widely available in mainland Europe. To pay for this increase in the medicines bill, the Party is claiming that its proposal to partially scrap Labour’s planned rise in National Insurance contributions for employers and employees will lead to £200m of savings for the NHS which will then be redirected to pay for expensive treatments. The proposed rise is due to come into effect in April 2011. Access to medicines has long been a contentious issue and whilst electorally appealing, the Conservative Party’s pledge leaves many questions unanswered.

Where will the money come from?

Some have already questioned where the £200m funding will actually come from as crucially this is not new money. In announcing the scheme, Shadow Secretary of State Andrew Lansley MP stated that Primary Care Trusts (PCTs) and other budget holders will have already planned for the rise in National Insurance in April 2011 and that it will simply be a case of re-allocating this funding. However, it remains unclear what will happen if budgets have not taken the rise into account or, even if they have, whether the budgets are currently within the tightening fiscal limits being imposed on the health service. Funding for the scheme has also been questioned by the King’s Fund Chief Economist John Appleby who described (and later retracted) it as a ‘sleight of hand’ because other services will inevitably and directly suffer.  The reaction from Labour and the Lib Dems has been similar to that expressed at the wider policy of reducing the proposed rise in National Insurance payments – that the party has not got its sums right and is duping the public, businesses and institutions into believing that they can do more with less.

Why is cancer a special case?

Patient organisations representing those suffering from other chronic or long term diseases will rightly question why the party has put so much emphasis on cancer – what of the campaigners who have fought for access to drugs for conditions such as MS or Parkinson’s – does this render their efforts pointless? Those representing and indeed suffering from other chronic conditions will rightly feel nervous about the implications for the funding of other expensive treatments, especially given the tightening budgetary environment in which the NHS finds itself. We can therefore expect a backlash against the continued ‘special’ case made for cancer patients which will lead to more uncomfortable political debates in the weeks and months to come.

What are the implications for wider funding reform?

The pharmaceutical industry will need to study the proposals closely as it could have a significant impact on drugs pricing and the longer term reliance on the current health technology appraisal system. The Conservatives had previously committed themselves to introducing a value-based pricing system within the next Parliament – thought to be planned for 2014. However, the announcement that treatments for very rare conditions or for those that extend life by a matter of months will receive special funding could force this to be brought forwards – especially if the pot of available money isn’t as large as the party hoped. There are also implications for the Pharmaceutical Price Regulation Scheme (PPRS), with the current settlement potentially being difficult to honour in a pressurised spending environment post-election. Alongside the funding announcement, the Party has indicated its support for greater use of drugs outside existing NICE guidelines, raising the spectre of off-label use and greater doctor autonomy over indication, whilst risking the wrath of the industry who will see such a move as counter to the work of the Office of Life Sciences (OLS).

Is this a threat to the independence and the remit of NICE?

By effectively over-ruling NICE’s decision making process, the policy appears to challenge previous assurances from the Conservatives that, should they be elected, political interference in the health service and medicines management by Ministers will be a thing of the past and that a beefed up NICE is the way to ensure value and access for patients. Quite what role the proposed ‘independent’ NHS Board would have in implementing this policy is unclear and there could be negative consequences for NICE as a decision making body free of political pressure. This presents a major weak point for opponents to attack. 



Given the often emotive and hard hitting press coverage that the non-approval of drugs by NICE for cancer patients creates, it is unsurprising that the Conservative Party has chosen to target policy at what is apparently a cast iron vote winner. However, industry will need to ensure it is prepared for potential conflicts over funding that may not be too far away in the future, given the bold pronouncements made on blockbuster therapies. Labour has already made it clear that cancer policy will be a central part of its attack on the Conservatives and their claim to be the party of the NHS, but this headline grabbing initiative could be a significant pull at the ballot box.

Social Care Disunity – The Key Issue For The General Election

30/03/2010

At a high-tech launch event in London today, Health Secretary Andy Burnham published the eagerly anticipated Social Care White Paper, Building a National Care Service. Following months of high profile disputes and bickering between the top three parties, the publication of the White Paper is unlikely to keep the issue of social care reform out of the media or away from the campaign trail as we approach the General Election.  



As an indication of the political muscle to be used in the debate going forward, Gordon Brown endorsed Burnham’s reforms this morning. It surely will not take long for David Cameron and Nick Clegg to rally behind their teams. At the very least, they will be expected to provide answers when they go to the country after Easter. 



Social care has for a long time been an embarrassment to the New Labour project and the Party has been all too aware that it has taken 13 years for the Government to address the issue.  Over the last two years it has been clear that there has been a consensus on the need for reform – the current system is perceived to be unfair, underfunded and in the words of the Health Select Committee, politicians’ failure to achieve reform “would betray future generations”.  



Where a consensus could not be reached, however, was how the system should be reformed and who should foot the bill for care. As the considerable media coverage highlighted, for a short while a consensus amongst the three parties did exist, with Burnham, Andrew Lansley and Norman Lamb all meeting privately to agree a way forward. This was not to last long and the public collapse of the talks – most neatly summed up by the raucous appearance of all three spokesmen on the Daily Politics in February – ensured that the issue would become the key health issue in the run up to the 6 May. The Conservatives appeared to have spotted a political opportunity and cringe-worthy exchange of accusations and criticisms continued to fly back and forth, demonstrating the adversarial and emotive nature of the debate.



For the Conservatives, Labour’s favoured funding option – where everyone would make a contribution to fund their future care – was no more than a “death tax”, and the publication of the their controversial billboard, said to have divided Conservative Central Office, continued the negative tone of the debate on this issue. Today’s White Paper has very much been framed to nullify this assessment, with issues relating to funding social care to be deferred to a new commission to be established after the election. This move will only achieve so much and the Conservatives will be quick to portray the Government as dithering on this issue. 



The Conservatives alternative – the £8k insurance option – will do much to appeal to middle England and their core vote, setting out the perceived evil that is the need for the elderly to sell their homes and give up their savings to pay for care. On Sky News this morning, Lansley repeatedly emphasised the importance of choice and the need for individuals to choose what option was right for them, rather than face a compulsory tax in their lifetime. Whilst they are supportive of the principle of a National Care Service, for them the issue boils down to choice. This said, the popularity of Lansley’s favoured funding option is not clear – with only 22% of those consulted as part of the Government’s “Big Care Debate” endorsing the insurance option. In this respect, he would be wise to focus his comments on the concerns relating to the Government’s proposals rather than the specifics of the Tories own plans.



The reaction from stakeholders is mixed. Counsel and Care’s Stephen Burke has argued that the White Paper provides “a road map and a clearer direction towards better care”, whilst Anna Dixon of the King’s Fund states that the “White Paper still leaves many questions unanswered.” Yet, they will be united in the view that the momentum for reform was lost some months ago, and the reality is that the White Paper is intended for political audiences. With an election in our midst, reform of the social care system is up in the air and will remain the key dividing line between the three parties on health. In the meantime, Burnham will be worried that the proposals will fall at the first hurdle – as the Personal Care at Home Bill risks being scuppered in the Lords this evening, despite commitments today that the Government will “give what they can” to get it through before Parliament rises for the election.

Lexington’s Property Bulletin: MARCH 2010

01/03/2010

Lexington get go-ahead for housing scheme in Lewisham

Councillors in Lewisham have given the go-ahead to a nine storey mixed use development of 117 homes, including family houses as well as a ground floor shop and a café/restaurant along the Bromley Road in SE6.

A similar scheme was rejected by the Council in the summer of 2008 following over 450 objections from local residents. Lexington was appointed by the site’s new owner, Lowbridge, in October 2009 to manage the pre-application consultation with the local community and to promote the scheme up to Planning Committee. There were just 10 objections this time while over twenty residents registered their support.

More information can be obtained at www.335bromleyroad.co.uk or from Richard Thomas at Lexington on 020 7025 2300.

Government publish climate change policy

The Government has launched a consultation on new climate change and coastal erosion planning policy statements, including proposals to provide tougher rules for planning to reflect the Government’s carbon reduction and renewable energy targets. Under the proposals local authorities will be expected to plan for the provision of low carbon and renewable energy in their areas.
 
It also includes proposals to ensure that more energy comes from renewable energy sources and comes alongside an announcement of further funding to support a second wave of eco-town bids.
 
Further details of the proposals can be found here.

HBF launch property manifesto

The HBF has published its manifesto calling for all political parties to support the development industry and increase the supply of homes in the UK. The HBF has highlighted that development of new homes is nearly one million units behind the targets set by the Government.

The manifesto argues that a lack of finance, the growth in policy and regulatory demands, and the lack of schemes receiving planning permission has hindered the supply of new homes. They call on all politicians to provide incentives to local authorities to ensure they advance their local plans, as well as calling on the Government to provide more funding for infrastructure.

Government announce route for high speed rail link

Transport Minister, Lord Adonis has today announced the route for the new high speed rail link from London to the North. The new network would see journey times between London and Birmingham slashed to around 30 minutes, with trips between the capital and Leeds, Sheffield and Manchester taking 75 minutes or less. The estimated cost would be £30 billion.

Pre-Budget Report 2009

09/12/2009

The Pre-election Giveaway – RIP

Chancellor Alistair Darling today defied conventional political wisdom by increasing National Insurance, cutting spending and all but freezing public sector pay. With the country still in recession, Darling has gambled that ‘fair taxes’ to fund jobs will work as a message to voters.

‘Fairer’ taxes

It was the least New Labour Pre-Budget Report since Labour came to power in 1997. Continuing Brown’s departure from the centre ground, today’s Pre-Budget Report was grounded in a core vote strategy.

The Chancellor took from the bankers to give to the unemployed; squeezed the wealthy to deliver a fairer tax system; and ring-fenced schools, hospitals and the police to put the Tories on the back foot.

The headline of the Pre-Budget Report was always going to be the windfall tax on bank bonuses. In the event the Chancellor re-branded his raid on the bankers, saying that he had rejected a windfall tax on profits and instead was presenting banks with a ‘choice’ – use profits to strengthen balance sheets or face a 50% tax on bonuses over £25,000. This proposal looks simple on paper but may be difficult in practice. But by emphasising that it is a one-off measure, Darling is counting on bankers not to flee the UK and banks not to work too hard at avoidance.

The £500m of revenue the Chancellor expects this measure to raise will be used to fund commitments to work and training for the long term unemployed – both under-25s and over-50s. There were also a small raft of announcements designed to promote innovation and enterprise – a reminder that there will be life after the recession.

Spending squeezed

The tax on banks, combined with increased taxes on the wealthy, may play well with voters, but will make little impact on a fiscal deficit that is now officially due to peak at £178bn next year. Ultimately there was no disguising the hard choices that need to be made on public spending.

Frontline services in health and education had funding streams protected past 2011, while the armed forces and overseas aid were also ringfenced. But there was a telling silence around the fate of the rest of Whitehall, where deep cuts will be required alongside painful efficiency gains.

The misery of the public sector will be compounded by pay cuts for Senior Civil Servants and a 1% cap on pay rises across the board for the next three years. Industrial strife from public sector unions is almost guaranteed.

These measures were essential for the Chancellor to announce if he was to maintain a commitment to tackling the deficit and meet the terms of his own Fiscal Responsibility Bill. Politically, he will be banking on voters being sanguine about spending cuts so long as core services are protected.

He will also be hoping that the pleasure of seeing bankers hit with a 50% levy on their bonus pots will outweigh concern at rising taxes for the rest.

Conservative response

Shadow Chancellor George Osborne avoided falling into Darling’s traps. He focussed his fire on competence and credibility, questioning the Treasury’s growth projections and attacking the irresponsibility of Darling’s failure to deal with the fiscal deficit head on.

Characterising it as a ‘pre-election’ rather than merely a ‘Pre-Budget’ Report, Osborne skirted around detailed comment on specific measures and, while highlighting the tax rises that had been announced, he did not commit to remove any of them when in power.

Those looking for succour from Opposition benches and a relief from the tough messages on tax and spending would have been disappointed. Political though the Pre-Budget Report may have been, the divisions are over the timing and size of the cuts to come, not the need for them.

More to come?

The least popular aspect of today’s package may well be the 0.5% National Insurance increase coming on top of the 0.5% increase already announced at the Budget.
Many voters and businesses may well suspect that Labour has gone back to high taxes as a matter of ideological conviction and a Labour election victory will mean more to follow. If this was a pre-election sweetener, voters may well worry about the bitterness ahead.

Economic forecasts
• Economy forecast to shrink 4.75% in 2009
• Growth of 1%-1.5% expected in 2010, rising to 3.5% in 2011-12
• Borrowing in 2009 predicted at £178 billion, dropping to £176 billion in 2010 and £140 billion in 2011, reaching £96 billion by 2013
• Estimated cost of bank bailouts cut from £50 billion to £10 billion
• Public spending in 2010-11 rises by £31 billion
• The Government will introduce a Fiscal Responsibility Bill that will enshrine in law the commitment to half the Budget deficit by 2014

Business taxes
• VAT will return to 17.5% on 1 January 2010
• With immediate effect, a one-off 50% tax has been introduced on banks making discretionary bonus payments to employees of over £25,000. This should raise over £500 million
• Planned increase in corporation tax for small businesses to be deferred for a further year

Personal taxes
• NI contributions for all earning over £20,000 will rise by 0.5% from April 2011
• Inheritance tax threshold frozen at £325,000 until 2011
• Stamp duty holiday on certain properties will end on 1 January 2010
• Personal tax allowances will be frozen for the 40% tax rate (i.e. those earning over a £43,000 threshold)
• The restriction of pension tax relief from April 2011 will apply to those on £150,000 gross incomes, where this income includes all pension contributions, including those funded by an employer
• This will be subject to an income floor, so that individuals with pre-tax incomes (excluding employer pension contributions) of under £130,000 will be unaffected

Benefits and employment
• The basic state pension will be rise above inflation with a 2.5% increase in April 2010
• Child and disability benefits will also rise by 1.5% in 2010
• Revenues raised from the bank bonus tax will be used to fund a commitment to provide jobs or training to all under 25s unemployed for more than 6 months and some older workers
• Free school meals will be extended to an extra 500,000 low income families

Enterprise and innovation
• £500 million capital growth fund to target small businesses
• New 10% corporation tax rate on income derived from UK registered patents
• Enterprise Finance Guarantee Scheme extended by 12 months Environment
• A boiler scappage scheme will be introduced to provide incentives for 125,000 people to replace their existing boilers
• £160 million investment in low-carbon and renewable projects
• £200 million extra investment for Warm Front insulation scheme
• Electric cars to be exempt from company car tax for five years

Public sector
• Planned levels of departmental spending will be adhered to in 2010-11 and there will be no new Spending Review in advance of the General Election
• Spending on front line services in health, education and policing have been ring-fenced
• Commitment to £12billion per annum efficiency savings in the public sector by 2014
• £5billion of savings from scrapping or scaling back projects, including phasing in the roll-out of personal accounts, cutting back on scope of major IT projects, reforming legal aid, refocusing regeneration spending and cutting the cost of residential care for older people by caring for them at home
• Overall commitment to £4.5billion savings from public sector pay and benefits
• Contributions to public sector pensions to be cut by £1billion a year
• Public sector pay settlements to be capped at 1% for two years from 2011 and the senior civil service will see wage costs cut by up to £100million over the next three years
• All appointments over £150,000 and all bonuses over £50,000 will need to be specifically approved by the Treasury
• £2.5billion will be set aside for military operations in Afghanistan
• £5million allocated from the expanded Strategic Investment Fund to help ex-service personnel who want to set up their own business

Lexington’s Property Bulletin: NOVEMBER 2009

01/11/2009

Boris’ advisor joins Lexington

Alex Crowley, Boris Johnson’s former political adviser, has joined Lexington Communications as Associate Director.



Alex worked with Boris for almost 2 years, both at City Hall and as Boris’ policy director during the Mayoral election campaign. 

Before that, he worked for the London Assembly Conservative Group.

Alex brings unique insight into London politics at the highest level and will strengthen the Lexington’s offer to those clients that have policy issues in the Capital.  



Wyn Evans, who heads up Lexington’s Property & Planning team, said: 

“We are delighted that Alex has joined Lexington. Boris is stamping his personal authority on planning and economic development issues with the publication of the London Plan and his increasing interventions on individual applications. Understanding the political dynamics of City Hall is essential for companies wanting to engage with the Mayor and the GLA on property and planning issues.”



Alex can be contacted on 020 7025 2300 or alex.crowley@lexcomm.co.uk.

Slough Trading Estate Masterplan gets the go-ahead

Slough Borough Council has given the go-ahead to the first stage of SEGRO’s 20 year development plan to transform Slough Trading Estate.

Working closely with the team of professional consultants, Lexington developed a comprehensive communications plan that resulted in SEGRO securing the support of occupiers, a diverse local community, a cross party of MPs, regional agencies and positive local press coverage.

SEGRO described Lexington as: “great organisers and quick to pick up on political sensitivities amongst stakeholders.”
 
For more information about the consultation and promotional plan, please contact emma.cerrone@lexcomm.co.uk

Government publish the first National Policy Statements

Plans to speed up the delivery of major infrastructure in the UK have taken a step forward with the publication of the draft National Policy Statements (NPSs) for energy and ports.
 


Energy and Climate Change Secretary Ed Miliband MP has published the eagerly awaited framework for energy. As anticipated, there is one overarching policy with five individual NPSs covering particular areas from nuclear to renewable energy.  Following the Government’s earlier Strategic Site Assessment, the nuclear NPS is the only statement to identify specific sites.


The Department for Transport has also published the first of a number of NPSs within its remit with the publication of the consultation on ports.
 


All the statements are now subject to consultation until February. House of Commons Select Committees have also announced plans to scrutinise the policies in January. 
 


However, it is highly unlikely the final policies will be published before the next election, and with most commentators expecting a change of Government, industry will look to the Conservatives to maintain greater certainty in the planning process. 

The Conservative’s Shadow Energy Minister Greg Clark MP has indicated his support for the concept of NPSs to speed up the planning process for major infrastructure projects, although remains committed to abolishing the Infrastructure Planning Commission as the determining body.
 


For more information, contact Chris Yearsley on 020 7025 2300 or chris.yearsley@lexcomm.co.uk

Tories to publish planning reform proposals

Bob Neill MP, the Conservatives’ shadow Planning Minister, has confirmed that the Party intends to publish its consultation paper on reforming Britain’s planning system “ahead of Christmas”. 
 


The paper is expected to confirm the Party’s much trailed policy to abolish regional plans and housing targets while giving local councils financial incentives to support development.


It is also expected to propose the abolition of the new Infrastructure Planning Commission (rolling its functions into the Planning Inspectorate), and to introduce a new over-arching national planning framework while streamlining existing national planning policies.
 


Lexington has been running policy workshops and briefings on the potential implications that these changes could have for individual property companies and their development proposals.
 


If you want more information about this service, please contact Wyn Evans on 020 7025 2321 orwyn.evans@lexcomm.co.uk

Focus on: The London Plan

In October 2009 the Mayor published his draft replacement London Plan, along with his draft Economic Development and Transport strategies. Lexington’s Associate Director, Alex Crowley, sets out his analysis:
 

The central theme running through this draft of the London Plan is the idea that economic growth and the continued development are compatible with a high quality of life and the ‘beautification’ of the city. High quality housing with enhanced space and design standards, mixed communities and improved urban realm are particular political, as well as personal, priorities for the Mayor. Therefore, this draft contains a lot on improving the local environment, protecting strategic views, protecting small shops, setting very clear guidelines around tall buildings and protecting back gardens. A new housing design guide was published by City Hall earlier this year.



Throughout the process of developing the new London Plan, the Mayor has had to maintain a fine political balancing act between satisfying the demands of business and the development community, and the demands of Tory Councils, London Assembly members and activists. The latter groups feel very strongly that outer London areas should be ‘protected’ against further development. These groups oppose tall buildings, want to protect strategic views and feel that City Hall should not dictate to councils what should or should not be built in their areas. Therefore, the Mayor has been at pains to accommodate these views in his published documents and public rhetoric- although he also accepts you cannot have a strategic plan that is too narrow in its focus and he is not a NIMBY at heart.  So although the document proscribes specific circumstances where tall buildings could be approved, they aren’t ruled out completely- as many outer London Tories would like to see for their areas. 
 


Overall, this draft delivers most of those political promises, whilst making clear that the Mayor wants to position London as the undisputed business capital of the world, and wants to broadly encourage sustainable growth. Crucially, unlike Tory proposals at a national level, the Mayor has not called for the return of planning powers to local councils. To satisfy calls for this to happen, he has worked hard to engage with local councils and has stuck to his promise to use his powers of intervention sparingly. This approach has won broad support across party lines.
 


Comments on the plans need to be submitted to the Mayor by 12 January 2010. More information can be obtained here or via Alex Crowley on 020 7025 2300 or alex.crowley@lexcomm.co.uk

Conference Season

09/10/2009

Tories the winners from the Conference Season

David Cameron will be pleased with the outcome of the political party conferences, which see the Opposition retaining a comfortable lead in the polls. Labour needed the Tories to have a poor conference and were pinning their hopes on a Eurosceptic rebellion on the Leadership’s position on the Lisbon treaty following the Irish ‘yes’ vote.

It was a measure of the discipline of Cameron’s Conservatives that the story was contained into a single day of discussion, and with no dissention from major figures, a far cry from most of the last 20 years.

It was a sign of Labour’s new indiscipline that a trade union leader tore up a copy of The Sun on the conference platform in response to that newspaper’s endorsement of the Tories.

The contrast between the Leaders’ speeches was equally stark. Cameron just wanted to look Prime Ministerial. It contained some memorable lines but little news. The Prime Minister’s was defiant and policy-heavy – more prose than poetry.

Cameron’s was also a more comfortable middle England speech. Gordon Brown never manages to sound convincing when he talks of the ‘squeezed middle’. In contrast, Cameron’s pitch was to traditional small ‘c’ conservative values. It was one nation Toryism of a style not seen in a Leader since Harold Macmillan.
The conferences were more a tale of the deputies than the leaders. Shadow Chancellor George Osborne gave a strong speech, which outflanked the Chancellor on public sector pay restraint and spending cuts. Business Secretary Peter Mandelson moulded the Labour conference around a vision of New Labour in the post-crash world. And Liberal Democrat Treasury spokesman Vince Cable outshone his own Leader with his ‘mansion tax’ speech.

Conference winners:
• Cameron– looks ready to govern
• Mandelson – lifted Labour spirits
• Osborne – no longer Boy George
• The Sun – created season talking point

And the losers:
• Grayling – made only major gaffe
• Milliband (D) – low profile
• Theresa May – lost chunk of her brief to former leader IDS

But the real contrast was with last year’s conferences, which took place at the beginning of the financial crisis. The 2008 debates were still about the proceeds of growth. The 2009 talk was of spending cuts and banker restraints. Populism was in and, with the exception of Mayor Boris Johnson, the City was definitely out.
This will be the backdrop to the new parliamentary session about to start and which will come to a quick end by Easter next year. The Pre-Budget Report next month will outline details of cuts a reelected Labour government would make. Labour’s last chance is to convince voters that the Tories will cut more gleefully and too soon. The signs so far are that the argument is not cutting through.

Conservatives
• Raise age to start receiving state pension to 66 for men by 2016 and women by 2020
• A public sector pay freeze for workers in 2011, except for those earning less than £18,000 pa and the armed forces
• State backed insurance scheme for residential care with contributory payment of £8,000 at the age of 65
• All schools free to become Academies
• General Sir Richard Dannatt to advise Conservatives on defence and take peerage Labour
• Extension of car and van scrappage scheme
• Pay freeze on 40,000 of the highest paid public sector workers in 2010/11
• Fiscal Responsibility Bill to ensure that the Government reduces the budget deficit year on year
• Cancer patients to be entitled to diagnostic tests completed and with results within one week of seeig their GP
• Cancel car parking charges at all NHS Hospitals for all in-patients

Liberal Democrats
• ‘Mansion tax’ – plans for a 0.5% annual levy on homeowners who have a property valued over £1m
• Scrap Strategic Health Authorities, tuition fees and Titan prisons
• New streamlined National Curriculum

Brown Clings to Power

08/06/2009

Brown clings to power

What does it take to get rid of a Prime Minister? Not the worst election results since 1918. Nor the resignation of five members of the Cabinet. Nor even what is now constant pressure, hour by hour, of people calling for you to quit. Still Gordon Brown hangs on.

It is worth recapping just how bad the results were for Labour. As the Financial Times has pointed out:
• Labour is now the third party of local Government in England, with fewer councillors than the Liberal Democrats for the first time since the First World War. The party now controls no county councils
• Labour secured the lowest vote share ever recorded by a serving government in both elections
• Labour fell under 20 per cent vote share for the first time since 1910, when the party was four years old
• Labour lost a poll in Wales for the first time since the First Word War
• Labour was beaten by four parties in two UK regions of the country
• Labour recorded an eight per cent vote share in the South East.

So why does he still look as if he will survive? First, he has been helped by the weakness of his opponents. Jacqui Smith, Hazel Blears, John Hutton, and Geoff Hoon all left the Government for very different reasons, and there is no evidence that the most anti-Brown of the rebels, Purnell, was part of a conspiracy. Only James Purnell publicly called on the PM to quit and he acted alone.

Indeed, there is an argument that Purnell’s resignation helped Brown to survive. Coming on the Thursday night after the polls closed, his letter helped position Mandelson as the key player. It also prevented Brown from making what could have been fatal Cabinet changes, particularly the Balls move to the Treasury.

Brown was also helped by the indecision of the putative pretenders, David Miliband and Alan Johnson, both of whom decided – probably at the last minute – that now was not the time to strike. They may have decided it was more important to ‘stay clean’ for the post-election defeat jockeying or doubted they would secure sufficient Cabinet support.

As PM, Brown also held more cards. The reshuffle – uninspiring though it was – was used as a loyalty test. That led to a couple of resignations but nothing dramatic. The reshuffle has been more about filling vacancies left by departing ministers than bringing in new blood.

The appointments of ministers of state have been similarly rushed. There have been few promotions of bright, up and coming MPs. Half a dozen ministers including Lord Paul Drayson (MoD and DBIS), Phil Woolas (Treasury and Home Office) and Rosie Winterton (Communities and DBIS), are working in two different departments.

The biggest winner from the reshuffle is Lord Mandelson himself. He was beside Brown when Purnell resigned. He called other Blairite ministers to secure their loyalty. He helped shape the reshuffle. His ‘baroque’ First Secretary of State title apart, he is now Deputy Prime Minister in all but name and has eclipsed Ed Balls as the PM’s right hand man.

The next 72 hours will be critical, particularly tonight’s meeting of the Parliamentary Labour Party, although backbench MPs rarely cause damage to a Leader. It now looks as if Brown will survive to fight another day and he will hope that a period of relative calm will return.

But, it probably isn’t all over for Brown. The strongest argument Mandelson used was that ditching the Leader now would cause a general election which would see half the PLP without a seat. In a few months’ time, that will no longer be a credible threat as the final date of the general election approaches. The rebels may feel that a disastrous result in the up-coming Norwich North by-election, or a major rebellion by backbench MPs on some yet to emerge issue could still be a serious threat to Brown’s continued but precarious hold on power – although that is probably wishful thinking. Number 10 will be congratulating itself on a job well done.

The Conservatives have the largest number of UK MEPs (24) and are the only party to have one in every region of Great Britain. However, resulting from the public outrage to the MPs expenses scandal and the boost of support this gave to UKIP, they did not make the gains anticipated in these elections a couple of months ago.

They will now see through their pledge to leave the EPP group of centre right parties in the European Parliament and to create a new group of European Conservatives who are against the creation of a federal Europe. This would include supporting Conservative opposition to the Lisbon Treaty. The rules of the Parliament state that an official group requires at least 25 members and that these should be drawn from 7 or more countries. The Conservatives are confident of achieving this and are expected to make further announcements on the membership of their new group within the ‘next few days’.

They have stated that members will be drawn from mainstream centre right parties across the EU, but they are mostly expected to come from Northern and Eastern Europe. The Conservatives have already announced that the Czech Civil Democrats (9 MEPs) will be members. It is also expected that the Polish Law and Justice Party (16 MEPs) will join along with the Latvian National Conservatives (1 MEP). There is a good chance that this new group could have over 50 MEPs which would make it the fourth largest in the European Parliament and give it the right to claim committee Chairs and memberships.

Despite opposition from other European centre right leaders and leading ‘pro-European’ Conservatives like Chris Patten, David Cameron has been determined to deliver on the promise he made during the leadership election and would face considerable public criticism from the right of the Party should he change his position now.

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