1 BEAR SHRUG?
As the National Security Council meets this morning, Theresa May has some big calls to make if it concludes that Russia was indeed behind the attempted murder of Sergei Skripal and his daughter. Last night’s midnight deadline to provide answers on the poisoning was ignored by Russia, but the real danger is of over-threatening and then little changing. A great big shrug from Moscow is not the response No.10 is looking for, especially with so much at stake for our reputation on the global stage. But are we prepared too for the Russian retaliation if we do get tough? The Russian Embassy in London ominously tweeted a graphic of Newton’s Third Law that ‘every action has an equal and opposite reaction’.
Expelling large numbers of Russian diplomats and officials may be one option that tempts the PM, though the danger is we lose our own assets in Moscow (still much prized by Washington for their expertise) as part of the retaliation. Tougher EU sanctions look tricky despite the warm words from Merkel and Macron. The UN route may give us some moral support but of course Russia has a veto and China may not want to get involved. As for cyberwarfare, ex GCHQ boss Robert Hannigan has told the Times an escalation is not in anyone’s interests.
As Anne Applebaum (one of Russia’s strongest critics) pointed out on Newsnight, a World Cup boycott and ban on Russia Today would have little effect (and the latter would result in all UK media being banned from Russia). No, the real deal is on finance and Russian money laundering. The UK could enact its own new tough laws, but will need help internationally getting a unified approach. But the comeback will be tough too. Will we really risk BP seeing its holdings in Rosneft axed, for example?
Jeremy Corbyn has his own challenge today to get the tone right. His own MPs think he made a serious tactical error in attacking Tory Russian donors on Monday, misjudging the need for united national outrage at the attempted murders. John McDonnell defended his boss on the Today prog, saying critics like David Miliband ‘misunderstood what was being said’. Still, some around Corbyn know he needs to show some real passion in condemning Moscow, in order to give him space to make his wider points about the need for an effective, rather than a grandstanding, response. McDonnell said Corbyn was “being objective” and added “we have to hit them hard where we can and that’s in the pocket”.
Follow the money, goes the saying. When the PM makes a statement at 12.30pm, will she really adopt a Chamberlain-style “I have to tell you now that no such undertaking has been received, and that consequently this country is at [economic] war with Russia...”?
2. TUNNEL VISION
Philip Hammond’s Spring Statement was as underwhelming as many expected. The lower borrowing of £4.7bn was not the windfall some had spun and his main political aim was to signal some possible extra spending in the November Budget. That ‘jam tomorrow’ pledge may not reassure either public sector workers or those on squeezed incomes. We gave our HuffPost Verdict on the announcement HERE, and I pointed out that it felt like yesterday was solely aimed at buying time for the Treasury and the Government while they focused more on Brexit (see below).
The main problem for Hammond’s line that he could see ‘the light at the end of the tunnel’ (he said it twice in case we missed it) is that the independent Office for Budget Responsibility showed just how dark and deep the tunnel is. The ‘new normal’ for UK growth is now around 1.5% rather than the 2% plus of days gone by. The Resolution Foundation and the IFS are today engaged in their friendly rivalry of spotting the biggest holes in the Treasury calculations. Both suggest the tunnel’s end is still a decade away, and Hammond can’t simultaneously hit his deficit targets, increase spending and avoid tax rises.
Among the bad news the Treasury tried to bury was the plan to axe the 1p and 2p coins. Given that David Cameron warned Osborne off the idea years ago, it feels like another pasty tax idea that officials have long wanted to push. A similar move to axe the cent in Australia was popular with voters (the end of misleading pricing and inconvenience of coppers in your pocket) but charities suffered. Surely a canny Chancellor would compensate by giving charities a new tax break? Shadow Chancellor John McDonnell pointed out today real earnings are unlikely to get back to 2007 levels until 2022. Meanwhile, McDonnell’s pick for the next Labour general secretary looks like a dead cert for the job as longlisting takes place today. Unite’s Jennie Formby has won the crucial backing of the GMB union. Just as important in Labour circles was the resignation of HQ veteran Emilie Oldknow, who in normal times would have been a strong contender to replace Iain McNicol. A big moment.
3. SEPARATE LIVES
Events can catch Governments off-guard and the Russia news has indeed overshadowed what was meant to be a big day for the Government’s community integration strategy. The headline is that five English councils (Bradford, Blackburn, Peterborough, Walsall and Waltham Forest ) have been told they must adopt new plans to deal with the problem of segregation, with £50m invested in schemes to improve community relations over the next two years.
But yet again, there’s a sense of drift as yet more ‘consultation’ is launched. It’s nearly three years since the first report on this was commissioned and Communities Secretary Sajid Javid has been sitting on Louise Casey’s findings since December 2016. Writing for the Sun (which says tougher visa curbs have been watered down amid rows between ministers), Casey sets five new tests for ministers.
One of the biggest problems the Government faces is that between 2010 and 2016, funding for English for speakers of other languages (ESOL) fell in real terms by 60% cent (from £203m to £90m). Charity Refugee Action says that proves the proposals are “all mouth and no trousers”. Chuka Umunna, chair of the all-party group on social integration, has welcomed the report but warned integration is a ‘two-way street’. Labour’s Yvonne Fovargue makes the wider point that cuts to youth services and Sure Start makes the conditions for shared community spaces much harder.
BECAUSE YOU’VE READ THIS FAR...
Watch Donald Trump explain his plans for a transparent wall on the Mexican border: ”You have to have see-through…” He added: “If you don’t have wall system, we’re not going to have a country.”
4. BREXIT BILLING
Brexiteers have been showing impressive patience and self-discipline overnight despite some pretty bad news for those who wanted a clean break with the EU. The Spring Statement confirmed just how enduring our financial links with the bloc will be, with the OBR revealing the UK will save no money at all over the next five years and could be paying its Brexit divorce bill until 2064. We look set to pay £7bn a year on memberships of EU agencies and farm payments. The UK in a Changing Europe think tank also reports today that Brexit could result in longer waiting times in hospital, though Leave voters may see that as yet more Project Fear.
What may also worry Leavers on the Tory backbenches is the Sun’s story that the Cabinet sub-committee yesterday agreed to keep free movement of migrants until 2021. They will be suspicious that high on the agenda was a “communications plan” to spin the climbdown to voters and MPs.
Still, many Brexiteers will be pleased (and Remainer Cabinet ministers dismayed) if the UK has indeed agreed to shorten the transition period to the end of 2020, rather than March 2021. Meanwhile, it’s nearly a year to our exit. Here’s our Owen Bennett explaining how you, our readers, can get involved in what we are calling The People’s Negotiation for the best Brexit deal.
5. ALL LOVE-DUP
The Tory party’s alliance with the DUP was underlined again yesterday with the Chancellor’s new review of air passenger duty and tourism VAT to help the Northern Ireland economy. Treasury officials confirmed this was indeed part of the deal with the unionists. But there was even more evidence of the Tory-DUP love-in as nine of its MPs voted with the Government to back restrictions on free school meal eligibility in England last night. This is despite people like Jim Shannon signing an early day motion calling for ministers to continue to provide free meals to all universal credit claimants.
What surprises me is that the Government didn’t equalise the eligibility threshold in England (£7,400) and Northern Ireland (£14,000) to the upper rate. I’m told Labour will today step up its attack with targeted Facebook ads aimed at all the Tory MPs in marginal seats who voted for the changes. It plans to make this “a moral wedge issue” in 26 seats with majorities of less than 2,000 votes.
Still, Labour’s Angela Rayner and Tracey Brabin can claim a major victory after the Government’s decision to suspend for another six months its plans to axe employer childcare vouchers. Campaigners say the switch to payments through the tax system will leave lower earners losing out. And (as previewed here yesterday) the DUP played a big part in pushing back the vouchers scheme closure date from April until November. Backbencher Emma Little-Pengelly was given the pledge personally by Education Secretary Damian Hinds in the chamber (after some key meetings between the DUP and Treasury and whips earlier). The regulations were passed, however, and cynics believe ministers will still get their way later this year- and without a vote.