Greg Clark MP: The five principles that should shape the Government's response to bankers' bonuses

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

A rite of spring is upon us again: the banks’ bonus announcements. For years now, these declarations have become an annual focal point of public anger. Certainly, many of the problems – and scandals – of banking in this country and overseas can be traced, directly or indirectly, to the way some people have been paid in the industry.

In the run-up to the financial crisis, trades and transactions in products of dizzying complexity were made by people whose apparent success was known to trigger National Lottery-style payouts – sometimes in advance of any profits actually being realised. With the downside risk of these bets falling on shareholders or – as it turned out – taxpayers, the gross distortion of appropriate behaviour driven by bonuses contributed to the vulnerability of the entire banking system.

Then – and now – we must never forget that the ultimate source of the money paid out to the Masters of the Universe was not some process of alchemy, but, in large part, the hard-earned cash of those who Leona Helmsley contemptuously called “the little people”: pensioners, whose investments were put into the British banking industry, that bluest of blue chip sectors; businesses, who saw funds that might have been available to finance their growth being diverted to pay packets; and taxpayers, each of whom had to stump up £2,000 to save RBS and Lloyds.

Greg Clark MP: Lessons for modern government from Victorian visionaries

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

From most parts of the Palace of Westminster you can’t actually see the River Thames. But in the summer of 1858 you could have certainly smelled it. The so-called Great Stink was so bad that Members of Parliament were finally persuaded to do something about London’s need for a proper sewerage system.

The great engineer, Sir Joseph Bazalgette was commissioned to build the Thames embankments and the vast sewers that run beneath them. A century-and-a-half later the embankments and the sewers are still serving us well – thanks, in no small part, to Bazalgette’s foresight. Realising he only had one chance to get things right, he worked out the sewer-pipe diameter required for the demands of the time and then doubled it – an object lesson in the benefits of long-term thinking.

For an object lesson in the disbenefits of short-term thinking it’s hard to do better than the present-day banking crisis, itself just one part of an even bigger debt crisis. Here we saw Bazalgette’s principles thrown into reverse, the needs of the future disregarded in favour of immediate gain.

In 2011, the Government asked Professor John Kay of the London School of Economics to undertake a review of UK equity markets and long-term decision making. His final report is available here and the recent Government response here.

Greg Clark MP: EU renegotiation can be achieved

 

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Britain’s financial services sector is our single most successful industry. It is our biggest exporter – providing the foreign currency we need to pay for other imports; it contributes one in every eight pounds of the taxes that pay for our public services; and it employs (directly and in related businesses) over two million people: not only in the City of London – but all over the United Kingdom.

The success of UK financial sector over the years is rooted in its internationalism. The industry is not just concerned with servicing the domestic economy, but also with trading with the rest of the world – especially the rest of Europe. More than twice as many euros are traded in London than in all of the eurozone countries put together.

As a result of the crisis in the eurozone, a fully-fledged banking union, with the Frankfurt-based European Central Bank at its head as supervisor, is beginning to take shape. Britain will not be part of the euro and will not be part of banking union. But it is absolutely critical to our prosperity that our financial services industry is not excluded from Europe’s single market as a result of banking union.

The Ecofin meeting (of the economic and finance ministers of the 27 EU countries) last month followed a long series of formal and informal discussions throughout the year. The outcome – agreed unanimously – should be welcomed by every taxpayer in Britain. We achieved an agreement that the new arrangements for eurozone countries cannot, as a matter of law, be used to block the UK’s access to the single market. The words that George Osborne proposed, and which were agreed, are clear: “no action, proposal or policy of the ECB shall, directly or indirectly, discriminate against any member state or group of member states as a venue for the provision of banking or financial services in any currency.”

Greg Clark MP: It’s not all about ‘shirkers’ and ‘strivers’ – we must be the party of ordinary working people

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Politics is polar – left versus right; liberal versus authoritarian; europhile versus eurosceptic. But out in the real world, and to the frequent bewilderment of the political class, most people decline to conform to the archetypes that others invent for them.

Take the debate over welfare reform, in which, supposedly, the country is polarised between the ‘shirkers’ and the ‘strivers’.

Earlier this month, Labour’s Liam Byrne told the House of Commons that the debate should not be reduced to a “basic division between Britain’s shirkers and strivers.” However, few have done more than Mr Byrne has to introduce the word ‘shirker’ to the political lexicon, for instance in a speech to the LSE last year or in his 2011 speech to the Labour conference.

Leaving Labour hypocrisy to one side, we need to be aware that worklessness is a complex problem. No doubt there are those who do choose benefits over work. But, as Iain Duncan Smith has shown, welfare dependency is characterised, for the most part, by a tangle of root causes, each of which needs to be unpicked – for instance, by making work pay, improving literacy and dealing with the impact of social breakdown.

If talk about ‘shirkers’ is too simplistic, then what about the ‘strivers’ who are the heroes, not the zeroes, of the tale?

There’s certainly nothing wrong with being a striver. In fact, strivers deserve our highest admiration and support. People who are determined to work exceptionally hard to improve their situation, to push themselves constantly for as long as it takes, are the drivers of economic and social progress. These are the people who start up companies; who lead their communities; who “fill”, as Rudyard Kipling had it, “the unforgiving minute with sixty seconds worth of distance run.” Our party, in particular, should be the one that celebrates their achievements and makes it possible for them to achieve even more.

But – whisper it quietly – not everyone is, nor wants to be, a striver. What many people want from life is not a relentless struggle for advancement, but a reasonable working day, in which they can do a good job, but still have time for friends and family.

Not being a striver doesn’t make you a shirker – it’s simply a matter of working to live, not living to work.

Last year, Policy Exchange published Northern Lights, a landmark report into how parties can connect with voters beyond their core support. As part of the YouGov polling undertaken for the project, people were asked to give their verdict on the labels that politicians use to describe the general public. Table 17 on page 44 gives the results:

As you can see from the figures not many people identify strongly with the striver label.  They’re even less likely to see themselves as ‘aspirational’ or ‘upwardly mobile’. The most popular description by far is ‘ordinary working people, trying to get on in life.’

What this shows is that most people identify with plain language and modest ambitions. For the mainstream majority, ‘ordinary’ is not a dirty word.

What does this mean for Conservatives? A great deal. 

We must be the party of ordinary working people. The party of people who want a decent job to support themselves and their families; the security of a home of their own where they can be stable and settled; reliable back-up from well-run, caring public services; and enough money left in their pay packets to afford a car, a holiday, savings for a rainy day and a reasonable pension in retirement.

These are not the demands of those who think the world owes them a living. It is an attitude to life distinguished by quiet responsibility, mutual reliance and family loyalties. That which is asked of government is to all it can to provide a shield from risk and turbulence – instead of adding to life’s uncertainties. 

As a party we must show that we understand these instincts just as much as those of the strivers. After all, these are values that can be justly, and approvingly, described as conservative.

I believe that, in this respect, we have a powerful story to tell.

The actions we are pursuing in government – whether paying down the deficit; keeping interest rates on mortgages low; safeguarding spending on the NHS; replacing failing schools with well-run academies; freezing council tax and cutting fuel duty – accord with what we owe to the ordinary working people of this country.

While other parties stand for recklessness in economic policy and irresponsibility in social policy, the Conservative Party must always do what it says on the tin.

Greg Clark MP: City Deals - delivering the skills that employers need

Greg Clark is the Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Last week I escaped the confines of Westminster to meet with business and city leaders in Liverpool, Hull, Stoke-on-Trent, Wolverhampton and Coventry. The main topic of discussion was the City Deals programme, which is all about decentralising resources and responsibilities from Whitehall to local communities.

The idea of the City Deals is that economic policy should have a dimension that reflects the different strengths and opportunities of different parts of the nation – and a big part of making sure that happens is to empower local decision makers.

In a country like Britain, where so much economic and political power is concentrated in one city, the London establishment often overlook the local factors that matter so much to our other great cities. 

This was certainly something I was reminded of last week. 

In all the meetings I had and places I went to see, I was struck by how often employers mentioned skills shortages in their particular locality as one of their most important worries over the long-term.

Greg Clark MP: Ed Balls's policies are designed wholly and entirely for the purposes of opposition, not government

Greg Clark is the Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

When I ran the Conservative Party’s Policy Unit in opposition we had a straightforward task: to develop the policies that we would implement if we formed the Government after the forthcoming election.

Yet that no longer seems to be the way things are done. On Friday, Ed Balls announced a new policy – a Heath Robinson affair built from bits of an old Gordon Brown-era employment policy, driven by cash diverted from tax relief on pension contributions.  The policy itself unravelled within the day, as it turned out to be poor pensions policy, poor employment policy and funded from money that had already been spent. But I think that Ed Balls’ botched announcement is worth a closer look for two fascinating insights that were revealed in the unravelling.

The first is that the Shadow Chancellor, in his first major economic policy statement of the year, dropped his standard mantra that the Government’s cuts are going “too far and too fast”. Moreover, there was no repetition of his usual call for a ‘fiscal stimulus’.  In the past he has argued strongly that his own plan “means, in the short term, more borrowing”, yet this time the words he chose to use were “of course we need spending cuts and tax rises to get the deficit down”. It will be interesting to discover whether, as Tim Montgomerie predicted in yesterday’s Times, we are witnessing a French-induced crisis of confidence in Labour’s plans to borrow more.

Greg Clark MP: This government is decentralising the public sector for the first time in more than a century

Greg Clark is the Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. Follow Greg on Twitter.

Whitehall has a long history of turf wars. Most vicious of all was the struggle between Tony Blair and Gordon Brown, but political memoirs are full of other tales of territorial conflict. The details differ from case to case, but the general pattern resembles a fight between Larry and Freya, the Downing Street cats.

Undaunted by the experience of previous governments, David Cameron took office determined that his administration should work along more cooperative lines. For instance, while I was still in my previous ministerial job – at the Department of Communities and Local Government – he asked me to prepare a personal report on the progress made by thirteen Government departments (the twelve domestic "spending departments" plus the Cabinet Office) towards the key Coalition goal of decentralising power. Given the criss-crossing of departmental boundaries that would be required, it was an unusual position for a non-Treasury minister to be in. Nevertheless the work was done and the report, published recently, can be read here.

Greg Clark MP: The UK economy, excluding the financial and North Sea sectors, has grown by over 4½ per cent in real terms since the beginning of 2010

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. This - his third Letter - reflects on last Wednesday's Autumn Statement. Follow Greg on Twitter.

Last week’s Autumn Statement confirmed that progress has been made towards our key economic goals. Despite conditions which have been more severe than anyone expected, we have brought the deficit down by a quarter from the disastrous level we inherited; over a million new jobs have been created by growing businesses; and we are currently on track to haul back the State’s share of the economy from the ruinous 47.7 per cent of national income it reached under Labour to 39.5 per cent within 5 years.

It is headline figures like these – the high-level analysis of the whole economy – that have predominated in the commentary on last week.  Yet an overlooked – but very important – section of the Autumn Statement looks beneath those headlines, and it reveals an economy much of which is more resilient than many think.

If you look at the British economy in terms of the industrial sectors that comprise it, it is apparent that two – financial services and North Sea oil and gas – have had a particularly torrid time.  The financial sector has contracted by 12½ per cent in real terms since the economy’s pre-crisis peak, while the North Sea oil and gas industry has shrunk by a brutal 38½ per cent. Both of these sectors are crucial to Britain’s future prosperity and in forthcoming Letters I will say something about how we can help revive them.

Greg Clark MP: Mark Carney is the best central banker in the world and we've got him for Britain

Greg Clark is Financial Secretary to the Treasury and MP for Tunbridge Wells. Most Tuesdays he will be writing this new 'Letter from a Treasury Minister' for ConservativeHome readers. He starts with this celebration of the recruitment of Mark Carney as Governor of the Bank of England. Follow Greg on Twitter.

The ‘Great Man’ theory of history is the idea that world-changing events are shaped by exceptionally heroic (or villainous) individuals.  It was very popular in the Victorian era, but came under challenge from the opposing view that history is shaped by impersonal forces, especially those of technological and economic change.   

But whatever the academics might think, the more that I see of the process of decision-making, whether in Whitehall, the City or elsewhere, the more that I’m convinced that which people we have in which positions can have an important influence.

As with so much else, when it comes to decision-making, people really do matter.

That’s why it’s important that for a position as important as Governor of the Bank of England, the very best person for the job is found. Right now, and even with the depth of talent within this country and within the Bank of England, that person is Mark Carney. To get “the best for Britain”, to use George Osborne’s phrase, we got the best in the world.

Greg Clark MP and John Howell MP: The Coalition's blueprint for sustainable development

Greg Clark MP is Minister for Decentralisation and Cities and John Howell MP is his PPS and the principal author of Open Source Planning.

Yesterday the Government published the final version of the National Planning Policy Framework following last year’s public consultation.  Taken together with the important changes introduced in the Localism Act, this amounts to a fundamental reform of the planning system.  Our intention to undertake these reforms was clearly set out before the General Election in a Conservative policy paper entitled ‘Open Source Planning’.  In it we set out a clear statement of why we were going to make these changes and who we were making these changes for.  What we said was:

“Rather than have one planning structure determined centrally and then applied unvaryingly across the country, we want to create a planning system where there is a basic national framework of planning priorities and policies, within which local people and their accountable local governments can produce their own distinctive local policies to create communities which are sustainable, attractive and good to live in.”

We recognised that the planning system was vital for a strong economy, for an attractive and sustainable environment and for a successful democracy.  We recognised too that the planning system in England achieved none of these goals.

The changes we have made have been designed to achieve three things:

• First, they have been designed to restore democratic and local control over the planning system.
• Secondly, they have been designed to produce a simpler, quicker, cheaper, less confrontational and less bureaucratic planning system, and
• Thirdly, they have been designed to rebalance the system in favour of sustainable development.

Greg Clark MP: Directly-elected mayors in Britain's big cities will put Whitehall in its place

Greg Clark MP for Tunbridge Wells is Minister for Decentralisation and Cities. Follow Greg on Twitter.

Something significant happened last week, but because it didn’t happen in the Westminster village you may not have heard about it.  Liverpool City Council voted to be run by a directly-elected mayor. By the end of this year, nearly all of England’s biggest cities could have directly-elected mayors - and if they do, it will be one of the most important of this Government’s legacies.

At present, decisions about how Liverpool is run, as with most of our largest cities, are taken by a “Cabinet”.  But thanks to last week’s decision, the people of Liverpool will on the 3rd May choose for themselves a man or woman to lead their city.  And on the same day, the Government is giving the people of Birmingham, Bradford, Bristol, Coventry, Leeds, Manchester, Newcastle, Nottingham, Sheffield and Wakefield the chance to decide if they wish to follow suit.  In many of these cities, there are already cross-party yes-campaigns in place and serious figures expressing an interest in putting their names forward.  If local residents vote yes, elections for the new mayors will be held on 15thNovember, the same day as the elections for the first police commissioners.

As Conservatives, we should warmly welcome this resurgence in local democracy.  One of this Government’s key missions is to loosen Whitehall’s grip, to disperse power throughout the country.  No team of ministers or officials in London – no matter how bright or well-intentioned – can devise policies that fit the different circumstances of Newcastle and Bristol, of Nottingham and Manchester.  We need to allow our communities to take charge of their own destinies.

Greg Clark MP: The power to prosper. Strengthening our cities.

Rt Hon Greg Clark MP is Minister for Decentralisation and Cities. Follow Greg on Twitter.

Today’s Cities Outlook report provides a timely reminder that the battle for Britain’s economic future must be won in our cities.

London today – in its energy, beauty, diversity, and as a cradle of opportunity and excellence – is one of the most admired cities the world has ever known.

Many of our great cities outside London have been household names all over the world.  After decades of decline in the second half of the last century, the last 25 years have seen a real sense of renaissance – city centres reversing the flight of population, and creating more jobs.

But for all that, I believe our cities can do much better.

Take, for example, the eight largest English cities outside of London:

Manchester, Liverpool, Leeds, Sheffield, Newcastle, Nottingham, Bristol and Birmingham.

Known collectively as the ‘core cities’, together they contain:

• sixteen million people, almost a third of the population of England;
• more than a quarter of our highly skilled workers;
• and half of the country’s leading research universities.

Unsurprisingly, they generate a huge part of England’s wealth – 27% – which is more than London.  And yet, there is strong evidence that, compared to the national average, most of our core cities are doing worse than the equivalent cities in Germany, France and Italy:

Greg Clark MP: How we are turning government upside-down and inside-out

Greg Clark is Minister for Decentralisation and MP for Tunbridge Wells.

Recently I visited Liverpool with the Prime Minister and a number of other colleagues. We had the privilege of meeting representatives from a wide range of local charities, social enterprises, churches, businesses and other community groups. The purpose was to share a fresh vision for the relationship between state and society.

For too long those with the best ideas, the greatest commitment and the most innovative responses to social and other needs have either not been taken seriously enough – or have been held back by centrally-imposed rules that make no sense on the ground.

This has to change. The state should exist to service civil society, not the other way round.

Since becoming a minister, I have experienced the way in which the enormous resources of the state are placed at the disposal of the political and bureaucratic chain of command. On one level, I am very grateful for this. My civil servants work diligently to keep me informed, to open channels of communication and to overcome obstacles to those parts of the Coalition programme for which I’m responsible. However, I am acutely conscious that the experience that others have of the state can be very different: in particular, the institutions of civil society that, far from being helped by the bureaucracy, are hindered by it.

Greg Clark MP: After years of Labour failure to plan ahead, we need a Conservative energy policy that will deliver secure, sustainable and affordable supplies

Greg Clark MP is Shadow Secretary of State for Energy and Climate Change.

Next Wednesday, the Budget will provide a further testament to thirteen years of Labour irresponsibility. However, it won’t tell the whole story – not even in the small print. To the purely financial debt that Gordon Brown has bequeathed to future generations, we need to add another kind of liability: Labour’s failure to ensure Britain’s energy security.

When Labour came to power, we were still enjoying an age of energy abundance. Thanks to record levels of oil and gas production in the North Sea, this country was a net energy exporter. Meanwhile, ample power station capacity meant that our ability to keep the lights on wasn’t an issue.

However, it was always clear that circumstances would change. The Government knew that our North Sea reserves would soon peak and go into decline – leaving Britain increasingly dependent on fossil fuel imports. They knew that much of our coal-fired and nuclear generating capacity was approaching the end of its working life, creating the need for new investment. They knew that UK commitments to reduce greenhouse gas emissions and local air pollution would bring additional challenges.

With so much changing so fast, a responsible Government would have prepared us for all the challenges ahead. But despite – or rather because of – an endless stream of energy ministers, reviews and consultations, the fundamental decisions were left too late or haven’t been made at all.

For instance, ministers didn’t lift their moratorium on new nuclear power until 2007 and then took another two year to make essential changes to the planning framework. That means the first new reactors aren’t scheduled to come online until 2018 at the earliest, i.e. after most of our existing nuclear capacity is scheduled to close. And nuclear isn’t the only energy technology where progress has been held up by Government inaction – others include energy efficiency, natural gas storage, CCS, renewables and smart meters.

Greg Clark MP: Helping people in poor countries adapt to climate change is a policy which can unite those who do and don't believe it can be halted

Greg Clark MP is Shadow Secretary of State for Energy and Climate Change

In November 2007, Cyclone Sidr, a category 5 cyclone - the most severe there is - tore through the Bay of Bengal and into Bangladesh.  Three thousand people died – a terrible loss of life.  But the number of victims was a tiny fraction of the 500,000 and 140,000 who perished in the cyclones of similar force of 1970 and 1991.  This wasn’t because the events affected fewer people – in each case around 5 million families had to leave their homes.

One of the main reasons more people survived is the measures that have been taken to adapt to extreme climatic events.  I saw some of then at first hand when I visited Bangladesh last month with the development charity Christian Aid.  Since 1991 a network of around 2,500 cyclone shelters has been built across the most flood-affected areas in southern Bangladesh – structures built on elevated platforms, doubling as schools and community centres in normal times, in which the population can seek refuge.  When Sidr struck, the alert was sounded and 600,000 people were lifted above the waters until the floods subsided – lives saved by a network of latter day Noah’s Arks. 

At Copenhagen this week, world leaders are making fitful progress in seeking a global deal on climate change.  I believe that no such deal is worth signing unless it helps poor countries like Bangladesh adapt to changing climatic conditions.

Until recently, it was considered taboo even to discuss adaptation to changing climatic conditions. "Don't talk about adaptation," went the argument, "because that will signal that we've given up on stopping global warming."   An interest in adaptation was thought to reveal a sceptical cast of mind – unsurprising, because one of the principal arguments of Bjorn Lomborg and Nigel Lawson has been efforts should be directed to taking steps to cope with the impact of climate change, rather than seek to influence its course.