Iain Anderson: The Chancellor reboots monetary policy?

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He has worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

The debate about whether or not the Bank of England should have a specific mandate for growth has already been set firmly in train by incoming Governor Mark Carney.

It’s been a significant debate in the past few weeks.

Today’s Budget showed George Osborne has been listening to his new Governor – after all, he hand- picked him.

It sounds good to me for two main reasons.

Firstly, in the Budget, the Chancellor said he wants an active monetary policy to play a full role in supporting the economy. That has been a key question for most commentators since interest rates hit rock bottom. And an ‘active’ monetary policy needs to be just that – active.

So the "updated remit" for the MPC has all the makings of a serious move to address monetary failings and inflexibility though the downturn. The Chancellor said: "The new remit explicitly tasks the MPC with setting out clearly the trade-offs it has made in deciding how long it will be before inflation returns to
target."

Now – while this needs to be watched – it does provide Bank of England policymakers with some much
needed flexibility.

Moreover, changing the timing of the requirement of the Governor to write to the Chancellor – when
inflation veers more than 1 per cent above or below the 2 per cent target – to the day of the MPC meeting itself feels like a move towards more joined-up policymaking. It also allows the Chancellor to be able to comment on that trade off and take a more activist stance.

Secondly, the MPC is also being given powers to provide more guidance – publically – on the future
path of interest rates. This mirrors the powers which the US Federal Reserve already has.

This is a very interesting passage of the Budget speech. "This can help the economy because it gives families planning their futures, and businesses wondering whether to invest, more confidence that interest rates will stay lower for longer," said the Chancellor.

This also sounds good to me. Confidence remains the key ingredient of economic recovery. A much better predictive handle on the future path of monetary policy may help provide just such a trajectory.

Just as Bank of England independence was seen as a masterstroke for Gordon Brown, today’s MPC move by George Osborne may be seen, in future years, to have a profound effect on promoting effective policymaking.

Iain Anderson: Personal finances at last getting their place in ‘The Sun’

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The Chancellor seems set to give personal finances a big boost in this week’s Budget.

In his Sunday Sun column this weekend and on the Marr Show he focused on ‘aspiration’. “Whether you want to buy a new home, start up a business, get an apprenticeship or save for retirement, this Government is on your side,” he said.

Later on Marr, the Chancellor made key announcements including the introduction of the single tier state pension earlier than planned from 2016 as well as introducing a lower savings cap of £72,000 for the much debated long term care reforms.

So far in this Government there have been limited reforms to the personal finance policy agenda. 

Scrapping compulsory annuitisation for pensions was a great start and to be welcomed while limiting overall pensions tax relief has proved a lot more controversial.

But some of the zeal of radical personal savings reform which took place in opposition - like the introduction of Lifetime Savings Accounts to allow savings flexiblility from cradle to grave  - have not made it to the agenda while in Government. 

Iain Anderson: What to do about the EU?

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He has worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

When it comes to Europe, there are a lot of sore heads right now in Whitehall. The latest EU:UK row on bankers bonuses has not done anyone any good. The relationship with Brussels just seems to get more and more strained.

Much has been done to try to deepen relations with Berlin, in particular – and this has paid some dividends lately, most notably during the recent EU Budget negotiations. But on many of the day-to-day EU legislative dossiers, there seems to be a growing resignation that the UK can shift the dial.

What to do about it?

The main problem continues to be a lack of focus on EU policy from UK policymakers until the last possible minute. The ‘veto’ in November 2011 and banker bonuses are clear examples of that, but it also rings true elsewhere. Just think about tax policy.

Before the last election, the Conservative Treasury front-bench talked about having a permanent ministerial presence in Brussels. I believe that idea needs to be revived right now. Perhaps our Europe minister needs to be located at UKRep – the UK’s EU Embassy – rather than in the FCO. 

Iain Anderson: Osborne should stay on his immediate course but chart a bolder future

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The highly informed readers of ConservativeHome will, of course, recognise 19 November 1967 as a key point in British economic history.

That day Labour Prime Minister Harold Wilson announced the devaluation of Sterling. After months of economic ‘strife’ [strangely it’s a word that does not seem to be used these days – maybe it should be] Wilson cut the value of the Pound 14% from $2.80 to $2.40 at a stroke.

He took to the airwaves with the infamous line: “It does not mean that the Pound here in Britain, in your pocket or in your purse has been devalued.”

It was the beginning of the end of the Sterling Area – and a shot in the arm for Britain’s eventual decision to join the European ‘club’. But more importantly it hugely impacted the Wilson government’s economic credibility at home and abroad.

Government, at that time, seemed to have no control over its destiny and voters seemed resigned to Britain’s continued decline.

Iain Anderson: This is the week to unlock private sector infrastructure investment

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He has worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

For too long now there has been 'talk' of unleashing infrastructure funding. In the Chancellor's Autumn Statement this week - talk needs to give way to 'action'.

I have found myself in recent weeks locked in combat with those who use the term infrastructure investment as an interchangeable term for Plan B. It is not.

There is plenty of private sector capital ready to invest - this does not need to be public spending - but it needs to be turned into willing capital. Up until now the signs from Government have been just that - signals. On Wednesday this needs to change into policy action which will unlock investment.

Iain Anderson: New Governor of the Bank of England will place Britain at the heart of the global debate

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He has worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

The appointment of Canadian Central Bank Governor Mark Carney will prove to be the most significant public appointment of the Cameron administration.

Said to be one of the "brightest of his generation", Carney commands respect globally for his approach towards the global financial crisis. Having watched him throughout, he offers a no-nonsense style which I have no doubt will prove refreshing to many in the UK.

He is also currently Chairman of the Financial Stability Board. This is the global body formed out of the London G20 in April 2009, which has laid out the routemap for financial regulatory reform. He was appointed to that role just because of this candid, can-do approach. 

Given the intensity and increasingly protectionist nature of this debate around the globe, it is going to be immensely helpful for the Bank of England Governor to be at the heart of the conversation. At EU level – at a stroke – this will add considerable counterbalance to debates on bank capital or the planned financial transaction tax.

Iain Anderson: The US election suggests that micro-targeting is the key to winning 21st Century elections

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He has worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

So the good 'ol Karl Rove strategy worked well in 2012 - for the Democrats. His maxim, that you just need to get out 50.1 per cent of America for your side, comes immediately to mind when you look at the re-election of Barack Obama. As I write, Obama stands at 50.4 of the national poll.

I admit it's brilliant. But you'd call me a "Blue Dog" Democrat anyway. A Tory in the UK and Democrat in the US. I supported Obama. But what really impresses me is the Obama machine - in 2008, and even more so in 2012. It worked, whereas the candidate sometimes didn't.

Of course Mitt Romney's off the cuff dismissal of the "47 per cent" was never going to help build any electoral "coalition" to take him to 50.1 per cent. But this campaign has still unleashed "micro-targeting" techniques that reached into Middle America and grabbed voters by the heart as much as the head.

Iain Anderson: Five months and five ideas to reshape and bring more purpose and clarity to this Government

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He was worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

Commentary on the state of the Government - and Conservative fortunes within it - is starting to resemble that of the Eurozone crisis. Like that crisis everyone knows what needs to be done, but no one seems to be able to do it. It’s like knowing there is a slow motion car crash about to happen but everyone seems afraid to grab the wheel and steer a better course.

Competence is a fragile thing in politics. Voters understand the economics have dealt the Government a cruel hand. But clearly they want to know that their government is in control of events rather than the other way round.

For me, the next five months leading up to the Budget are crucial. For they will set the dial permanently on the Coalition and its fortunes.

A lot of "electronic" ink has been spilt in the last few days analysing David Cameron’s government. By March, that commentary will have become the accepted wisdom taking us to the General Election. There is time to change the political weather. The Prime Minister gets endless advice, but here are five ideas that can be made to work quickly.

Time to think... tank

The Prime Minister got the tenor of his conference speech just right. But that now needs to translate into policy action. Being on the side of those who work hard and do their best has to be the political test for all policy initiatives, and especially for the March Budget. So that must point towards giving middle Britain the right personal and fiscal incentives to continue to strive.

Iain Anderson: Will Britain vote for enhanced co-operation on a Financial Transaction Tax?

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He was worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

Well, they’ve done it. After months of wrangling, the EU Commission is pressing ahead with the Financial Transaction Tax.

Brussels has decided to use "enhanced co-operation" to attempt to push the policy through. So that means ten EU states – France, Germany, Italy, Spain, Austria, Belgium, Greece, Portugal, Slovakia and Slovenia are going to press ahead with the plan.

This time the United Kingdom has not been alone in its fight. It is no longer the only voice in the room. It has support from the Netherlands, Sweden, Malta, the Czech Republic, Luxembourg, Ireland, Cyprus, Finland, Denmark, Latvia and Bulgaria – against the tax. What we don’t know yet is if whether the tax will just apply to activity taking place within these countries or if it will have wider - known as extra-territorial - application across all 27 EU member states. Keep an eye out for this.

The initial Commission document proposing the FTT showed EU policymakers were keen to apply the tax across the EU – and in that regard to capture London – by far the EU’s biggest financial market. So how can the EU press ahead with the idea? Well here’s how. An application to proceed with the FTT under the “enhanced cooperation” procedure can be successful if:

• At least 9 out of 27 Member States want to move forward under enhanced cooperation;
• 14 out of 27 Member States vote in favour; and
• The combined number of votes of these 14 countries is at least 255 out of 345 votes.

Iain Anderson: Prime Minister - It's time to hire your Chief Operating Officer

Iain Anderson is co-founder of Cicero Group and is an expert in global political risk and economic public policy issues. He was worked for a range of Conservative policymakers. He writes in a personal capacity. Follow Iain on Twitter.

David Cameron did what he does best this week - inspire.

But while inspiration is a potent political weapon - it's not enough. 

Speaking to the many former Labour special advisers who attended Conservative Conference this week and have now found their skills being heavily utilised by UK plc’s brightest and best organisations, they all spoke to me about that wasted first Blair term. “We just didn't grip Whitehall fast enough,” said one former SPAD. ‘And we inherited Ken Clarke’s economic legacy. You don't have that luxury.”

In the pre-election period the Maude agenda to radically reshape Whitehall promised much - but it has taken almost half this Parliament to gain traction with its basic idea - that elected politicians should be running the show and civil servants are there to work at the pleasure of the administration they ‘serve’

Later that evening I bumped into a minister who told me her Whitehall team were not returning calls on an urgent issue.  Well it was 7pm after all!

Iain Anderson: Today's Sanderson Report opens up the possibility of radical change for the Scottish Party

Iain Anderson, Cicero Consulting, was involved in the Scottish party in the 1980s and 1990s and now regularly works and spends time in Scotland. In this Comment piece he analyses the Sanderson Report's recommendations for the future of the Scottish Conservatives, published today.

At first sight the Sanderson Commission – the review of the Scottish Conservatives – appears to be a very small ‘c’ conservative document.

There is no radical big, bang solution for the party north of the border. Certainly no thumbs up to the idea of dropping ‘brand Conservative’ which has been touted by some in the Scottish commentariat as a way of revitalising the party’s fortunes, but which has little support among the party’s albeit diminished Scottish membership.

I am glad the Commission rejected that idea. It would not have been the immediate panacea to the party’s fortunes that has been proclaimed and merely a synthetic communications exercise.

But the Scottish Conservatives 2010 Commission – Building for Scotland: Strengthening the Scottish Conservatives – may yet turn out to be one of the most radical sets of proposals put on the table within the Conservative Party across the UK.

The most eye-catching idea is to elect a Scottish Leader to have overall responsibility for the party’s Scottish performance. Well that’s clear enough. With responsibility for ‘performance’ there can be no more buck passing between London and Edinburgh on just who is in ‘charge’. Or can there??? Wait a minute. Already commentators are asking how the leader of the MSPs at Holyrood will work with this new Scottish Leader. This question needs to be resolved and quickly if this big idea is to be taken up and made to work.