The five things you need to know on Wednesday July 8, 2015...
1) PACE MAKER
Soon after 12.30pm George Osborne will unveil the first Tory Budget since 1996 and it looks like being a true blue package. Never one to duck a strategic challenge, the Chancellor is setting out a vision for the coming five years that he hopes will lead to the re-election of his party in 2020 (under maybe even his own leadership). But more importantly, for all the charges that this is mere politics, he actually believes what he’s doing is right. To paraphrase Andy Burnham, Osborne wants to show he’s the ‘beating heart’ of the Tory party.
We are being told this will be a ‘big, bold’ statement of intent for the coming Parliament so expect some rabbits to be pulled from his hat as well as announcements on education and devolution.
The hot news from the overnight briefing is that Osborne is slowing the pace of the £12bn welfare cuts, spreading them over three years rather than two (£8bn in the first two, £4bn in the third). The FT and others have speculated previously about moves to ‘smooth the profile’ of austerity, not least as the OBR warned of the ‘rollercoaster’ and the OECD said front-loading could hit growth. One of Osborne’s masterstrokes in the last Parliament was to get away with a sharp change of tack in 2012, easing austerity, without it being pitched as a switch to Plan B (the Lib Dems had no interest at the time in telling it how it was). This time, he’s making a virtue of it, though there’s a difference between slowing the pace of welfare cuts and slowing the pace of austerity overall.
Osborne has a bit more wiggle room because of better than expected tax receipts but he’s going to use that to deliver some faster than expected cuts in tax at the low end and raising thresholds for the 40p rate. His mantra of late has been ‘lower taxes, lower welfare and higher wages’. It’s still hard to see how he gets the third bit of that equation, after suggesting on Marr that he won’t give tax breaks for firms who pay the living wage.
But the cuts are still coming. The Times, Mail and other papers report that child tax credits will be restricted to two children (though note that this is only for new claimants, so is not as punitive as it could have been). The ESA cuts will prompt ‘howls of protest’ that Osborne predicted. Watch not just for tax credits but for housing benefit, the real big ticket item. The Sun says young people will make up the lion’s share of the £12bn benefits cuts unleashed today – in a move dubbed “Earn and Learn on steroids” by one insider.
Watch today for stats on productivity (the OBR could forecast a modest improvement), a fresh round of Whitehall job cuts and maybe even some surprise attacks on the rich - in pension relief and/or a fresh ‘non-doms’ levy nicked from Labour. Hitting the wealthy, without scaring them off, would certainly offer some One Nation political cover. The Sun says VC and George Cross holders will get a bigger pension, but will we get hints on that 2% spending target?
Harriet Harman has a tough job in responding to Osborne’s speech today. Maybe she’ll get tips from Yvettte Cooper, who has written a blog for HuffPostUK in which she warns that for all the One Nation rhetoric, the Tories will today prove they are the ‘anti-working people’ party.
2) TUSK CAN SUNSET
Budget Bingo players will be ready for Osborne to say the word ‘Greece’ more than a few times today. But things are serious over the Channel.
Donald Tusk is to give a speech this morning in the European Parliament and can expect support for his latest hardline stance on Greece (though will Nigel Farage grandstand and accuse him of bullying a small referendum state?) Last night, with a stark warning to Athens that his final deadline was Sunday, the European Council President brought a refreshing end to the ‘kick the can’ tactics of previous Brussels bureaucrats. As a Pole, Tusk underlines the mood among Eastern European states who don’t want to either foot the bill for Greek woes or put at risk eurozone credibility.
Tusk’s words couldn’t have been clearer as he convened an emergency meeting of all EU leaders for the weekend: “Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system. And for sure, it will be most painful for the Greek people. I have no doubt that this will affect all Europe also in the geopolitical sense. If someone has any illusion that it will not be so, they are naive.The stark reality is that we have only five days left to find the ultimate agreement.”
David Cameron hates EU summits at the best of times and may not be overpleased at yet another meeting. But he knows how high the stakes are now.
The patience of eurozone leaders finally snapped after Euclid Tsakalotos arrived with a ‘dog ate my homework’ set of proposals yesterday, a series of bullet points sketched out on hotel stationery, including one that read ‘no triumphalism’. Angela Merkel is talking about the illegality of continuing to give ECB support. Tsipras’s only hope that he can get some debt restructuring in return for what looks like the very cuts he campaigned against.
3) MOTHER CHUCKERS
Some have complained that the Labour leadership race lacked spice but yesterday’s claims from the Liz Kendall camp certainly raised the temperature. Helen Goodman’s HuffPost blog, backing Yvette Cooper because she was ‘a working mum’, gets namechecked in many papers today.
When we first published it, the blog raised eyebrows among some in the Burnham camp (who felt it was a dog whistle about Kendall not having children) and then sparked fury in the Kendall camp (who felt it was a bloody great foghorn about Kendall not having children). What caused the backlash was not Goodman’s wider points about the need for better childcare, but her opening paragraphs in which she set out her personal thoughts. ‘Much more important to me than being an MP and a shadow minister is that I am a mum’. If anyone thinks those words were drafted by anyone other than Helen Goodman, they clearly don’t know her.
Goodman is definitely no fan of the Shadow Health minister, but her defenders say she was not trying to smear Kendall (though she believes it’s ludicrous if you can’t refer to a candidate being a ‘working mum’). Stephen Bush dug out a 2013 Goodman attack on Maria Miller for using the words ‘as a mother’, when she said the Tory should not be ‘talking about her family situation’.
Some in the party suspect that the Kendall camp reacted so vociferously in a bid to get some attention and further ‘definition’ in the race. But there’s no doubt that John Woodcock and Toby Perkins suspected negative campaigning.
And that negative campaigning is getting a whole lot worse. As we report today, there is now a Liz Kendall for Conservative Leader Facebook page and Twitter account. It looks like it has been created by Jeremy Corbyn supporters who were furious at the ‘ToriesForCorbyn’ campaign. The stuff on the spoof accounts is pretty vicious, while depicting Kendall as Maggie Thatcher. I’m sure the official Corbyn campaign will distance itself from it, but some of his backers clearly don’t like the woman from Watford.
BECAUSE YOU’VE READ THIS FAR...
Watch this ‘Queen’s Guardsman’ punch tourists who get up his nose. Love the cop half way through who says ‘got your video?’
4) STUDENT GROANS
The Indy and i splash on their own angle on the Budget: Maintenance grants for university students from low-income families will be scrapped and converted into loans as part of the austerity cuts.
At the moment, students in England and Wales from families with annual household incomes of £25,000 or less qualify for maintenance grants of £3,387 a year. Former Universities minister David Willetts backs the idea of conversion to loans, claiming that it could mean an increase in the cash students have to live on. Sajid Javid and Jo Johnson are determined to find savings in the BIS budget. But the NUS ain’t happy, even though the very poorest students may still qualify for a grant.
5) TWO EVEL AYES
The Government suffered its first symbolic ‘defeat’ in Parliament yesterday as only two MPs voted against a motion opposing plans to use Commons standing orders to introduce English Votes for English Laws. A total of 291 MPs voted for the Alistair Carmichael motion, while the Tories largely abstained.
Chris Grayling had clearly decided not to risk a tight vote and pulled his troops to the surprise of Labour, SNP, DUP (don’t forget them in all this) and Lib Dems. But what will worry the whips more was the Tory awkward squad was out in force (David Davis, Peter Bone, Edward Leigh). Davis’s point of order at the end made clear he and others had abstained because they agreed with opposition members that more time should be set aside to consider proposals. His request to “communicate that to the government” was heard on the front bench.
But Labour will have noted its own backbench unrest. Ed Miliband also got up to make a speech denouncing the EVEL plan as a ‘constitutional outrage’. As with the energy market revelations yesterday, he thinks he’s being proved right about many issues in the election campaign and he’s letting people know it. But once a new leader is in place, will he risk more back-seat driving?
ONES TO WATCH
The tube strike starts tonight, giving Labour a further headache in PR terms. Though given Aslef have backed Corbyn, he may well be on the picket line.
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