Good news for the Government in the new labour market statistics

By Mark Wallace
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The latest labour market statistics from the ONS contains five key pieces of good news for the Government:

1. The number of people in work in March-May 2013 rose by 16,000 on the previous quarter, and is up 336,000 on the same quarter last year - to 29.71 million
2. Unemployment in March-May 2013 is down by 57,000 on the previous quarter, and down 72,000 on the year, to 2.51 million
3. The number claiming Job Seekers' Allowance in June 2013 is now 1,479,000 - down 21,200 on May 2013 and a fall of 117,700 since June 2012
4. March-May 2013 saw redundancies fall to 118,000, down from 137,000 in the previous quarter and 147,000 in the same quarter last year
5. There are more job vacancies, with an average of 529,000 unfulfilled vacancies in April-June 2013, up 24,000 on the previous quarter and 56,000 on a year ago

More jobs, fewer people relying on JSA and fewer redundancies will undoubtedly stir some smiles in the Treasury.

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George Osborne, the best political strategist we've got. (Indeed, the only one we've got.)

By Paul Goodman
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Yesterday, Mark Wallace set out in detail on this site George Osborne's patchy record as Chancellor.  Progress on deficit reduction has stalled.  There have been some welcome tax cuts, but little tax simplification.  Big infrastructure decisions have been slow to come, though there may be some good news today about nuclear.  (Patrick McLoughlin takes to this site today to make the case for the money-guzzling HS2 project.)  The proof of the Michael Gove schools and skills pudding will be in the eating, which won't take place for a decade - in other words, until today's generation of children become tomorrow's workers.  Michael Fallon is striving mightily at BIS, but while £4bn of regulatory costs have been eliminated, £3bn of new costs have been imposed in the last two years.

Indeed, the Chancellor has compromised his original version of a German model for Britain's economy (what Tim Montgomerie called in opposition "a heavy emphasis on economic fundamentals like skills, high-end manufacturing, science investment and regionalism") and is staking his hopes on a good, or rather bad, old-fashioned British housing boom - talking of which, today's papers remind us of the possible consequences for Britain's indebted homeowners when the Bank of England abandons quantitative easing.  Why, then, are the centre-right papers - with the exception of the Sun - positive, on the whole, about yesterday's spending review, which announced a mere £11.5 billion of savings: little more than the total Government spend of well over £700 billion?

I think there are three main answers.  First, because the review will have reminded them that there is no alternative to a Cameron-led Conservative Party as a governing force - when it comes to comparing it with Ed Miliband's unreformed and unready Labour Party, at any rate.  Second, because they will have liked most of Osborne's announcements: the cap on the welfare bill, the requirements to learn English, the seven-day wait before signing on, the end to automatic pay rises for millions of public sector workers.  There will be devils in the detail of some of these plans: I'm curious to know, for example, exactly how they will apply to disability benefits.  But the broad thrust of them is right, and they thus have merit regardless of whether or not they place Ed Balls on the wrong side of a dividing line.

Furthermore, the Chancellor got them past the Liberal Democrats and, in doing so, held out a tantalising glimpse of what a majority Conservative Government - or rather, to be realistic, a second blue-yellow Coalition - might look like after 2015.  Very slowly, imperfectly, but unmistakably all the same, Osborne is striving to shape a Conservative idea of Britain, in which Gordon Brown's client state is, if not rolled back, at least trimmed, and in which the state pension, the NHS, science, the security services, free schools and defence (up to a point) are protected.  Rab Butler once agreed with the suggestion that Anthony Eden was "the best Prime Minister we've got".  The Chancellor is not only "the best Chancellor we've got" but the best political strategist the Conservatives have got.

This is certainly a compliment, but less of one than it seems.  For the fact is that Osborne is the only political strategist the Conservatives have got.  None of his Tory Cabinet colleagues quite fit the bill, at least yet.  Iain Duncan Smith's long crusade for social justice has helped to change the climate of opinion about welfare.  Michael Gove is the Government's most effective reformer to date.  Eric Pickles's achievements at CLG are under-rated.  Theresa May is beginning to spell out her view of what the Conservative Party should be and do.  But none of them have produced a big plan that has put Labour on the back foot - and is helping to change the content of national debate about welfare, immigration, integration and public sector pay in a way that was almost unimaginable until very recently.

Was the Spending Review worth the effort, when it is the economy right now that demands our attention?

By Mark Wallace
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Today, the great Spending Review circus comes to a close – the custard pies have been thrown, Ed Balls has done a lap in his clown car and now the Chancellor will walk the House of Commons high wire as the final act.

While it has provided much entertainment, from the National Union of Ministers’ early noisemaking through Star Chamber threats to Vince’s brinkmanship, we must ask: what is it all for? The negotiations refer to spending in the 2015/16 financial year, meaning that the measures announced today might only be in place for a month, should Labour win the General Election.

Given that, might attention not be better spent looking at economic performance during this Parliament? How is the Government doing on the deficit, tax, deregulation, infrastructure and education, the key policy levers for restoring growth in the UK?

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At last, the prospect of getting some taxpayers' money back for our bank stake

By Mark Wallace
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According to the Chancellor's Mansion House speech, the Lloyds sell-off could start within a few months - with the prospect of a sale of shares to the public following the initial tranche being sold to institutional investors.

There had been calls for all of the shares to be given away to the people in thanks for the huge amounts taxpayers paid for the bank bailout, or for a purely market-focused sale. Instead, George Osborne has sought to strike a compromise between the two.

The rationale for a giveaway was obvious - a rare thank you to taxpayers and a handy pre-election contrast with Labour, who spent their last two years in power passing cash the other way. But it risked being too obvious a bid for votes in return for a freeby.

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If Cameron is to defuse Leigh's criticisms, he must get on the front foot over renegotiation

By Paul Goodman
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Cynics will say that now Edward Leigh has his knighthood in his pocket (so to speak), he will feel free to be as openly critical of the Government as he likes.  But I think this would be to mis-read the significance of his sweeping dismissal on this site today of the Queen's Speech as "the weakest legislative programme in recent memory", and his warning that "unless there is a change of course, and a firming-up of our Conservative instincts, we could lose the election".  He writes: "A group of like-minded Members of Parliament – the Centre-Right Steering Group – have been coming together in recent weeks to question the path the leadership are taking and to scrutinise their policies".

The steering group brings together some of the main groups on the centre-right of the Party - including Cornerstone and the No Turning Back Group.  It is likely that some of its key members will have been aware of Leigh's article in advance of publication.  And David Cameron is acutely aware that views of his leadership on the Party's centre-right range from the loyally critical to the contemptuously hostile: hence his recent appointment of John Hayes, who co-founded Cornerstone with Leigh, to Downing Street as his Parliamentary Private Secretary.

Signs of economic recovery and of progress in the polls, and attempts by the Prime Minister to reach out to his right (such as the masterminding of James Wharton's EU referendum bill) seem to have done nothing to pacify some of Cameron's critics, for whose grievances he must take some of the blame.  I believe that Leigh is right on some points (same-sex marriage, HS2) and wrong on others (tax and spending).  David Cameron isn't going to tear up his election pledges, and un-ring fence aid and NHS spending.  So to suggest that he does is a waste of breath.

In which case, the economies that Leigh wants - and for which he has such a keen eye in his role as a former Chairman of the Public Accounts Committee - wouldn't be enough to deliver tax cuts on the scale he implies.  The Government would need billions of pounds in savings, not millions - and to find them, it would need drastically to re-think the role of state, along the lines set out by Harry Phibbs set out recently on this site, and pursued by Liam Fox in a recent speech in which he praised our Local Government correspondent.

I am all for such a re-think - ConservativeHome is one of the few centre-right publications to have run a series on how to scale back public spending further - but, when it comes to cutting spending, much of the right is all mouth and no trousers.  All in all, Leigh's worry about "a percentage of our people [peeling] away to the right" is absolutely correct but, if such imagery is to be used, David Cameron must worry no less about the Party's appeal to the centre.  Successful conservative leaders abroad, such as Stephen Harper, appeal to both at the same time.

The leitmotif of this site since it was set up has been that to campaign on such Tory staple issues as tax and Europe is necessary but not sufficent.  To maintain power, it must recognise that most of the seats it needs to win and hold are urban and suburban ones in the midlands and north, where the public sector is larger, selling a scale-back of the state is more difficult, and voters (as they are elsewhere) are at least as concerned about, say the NHS as the EU  - to put it mildly.  Leigh places an electoral stress on the issue that the polling evidence doesn't justify.

But in doing so, he sends an important message to Downing Street.  Only a majority Conservative Government can deliver the In/Out referendum to which David Cameron is committed.  The promise of the latter has satisfied some of the Prime Minister's former critics on the EU who simply want Out.  But it hasn't quelled the appetite of many of his backbenchers for a major renegotiation, and Leigh's views are an eloquent expression of them.  If Cameron delays setting out his own view until late next year, he risks a destabilising row about its scale and ambition during the run-up to an election.  Better for him and everyone else to have it sooner rather than later, rather than let the matter drift through inertia and irresolution.

Stephen Hester's eventual replacement is walking into a political minefield

By Peter Hoskin
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“Us? Encourage Stephen Hester to stand down? Nah, really? You mean the RBS Stephen Hester, right? Pffft, nothing to do with us. I mean, why would we even...? It’s not like we want the bank privatised according to some sort of timetable, y’know. We’re completely hands-off. See my hands? Off. Completely. Why would you even think…? Nah. Us?”

And so on and so on.

The above quote many not be – how you say? – real, but it captures the general noise coming out of the Treasury today. They don’t want their paw-prints anywhere near the Hester resignation, and for very understandable reasons. This state-owned bank may be state-owned, but no-one wants to create the impression that politics is determining its future. Any privatisation must be done for the good of the bank, the public and the public finances – not for the Tories’ electoral chances.

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Voters have good reason not to believe politicians and their statistics

By Mark Wallace 
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"Pity the rational politician", laments the header on Peter Kellner's Telegraph article today. Leaving aside the question of how many rational politicians there are, why should we pity them?

Do so, Kellner tells us, because they're lumbered with such a stubborn electorate. Voters just won't believe the facts. The numbers and the academic analysis tell us that immigration is falling, educational standards are rising and crime is down, but the people don't buy it. That, he argues, leaves us prey to a "knee-jerk", "populist agenda".

It's undeniable that the people do not trust the political class. Saying that voters think politicians are prone to lying is about as insightful as revealing that Wayne Rooney doesn't keep a copy of Wittgenstein's collected works in his kit bag.

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Before making spending decisions, the Government must learn to count

What should George Osborne cut? How should he cut it? And how should those cuts be sold? These questions will be investigated in our week-long series on the Spending Review, which begins with this article by Peter Hoskin. Follow Peter on Twitter.

What if I told you that, as he prepares to deliver his latest Spending Review on 26th June, George Osborne can’t count? He has plenty of important decisions to make: should benefits be cut ahead of defence spending? Should schools, health and aid be protected from the axe? Should he ice the Department for Culture, Media and Sport? But, when it comes to it, he doesn’t even know that 2 + 2 = 4.

Okay, so I’m exaggerating. But it’s a fisherman’s tale with some truth to it. For years now, successive Chancellors haven’t been able to count as well as they would like. It’s got nothing to do with their respective educations, nor with their ability, but with the departmental machinery at their disposal. The abacus on Mr Osborne’s desk is wonky. Its beads do not add up, and it does not give the proper answers.

A good example of the problem is the Treasury’s COINs (or Combined Online Information System) database, which is meant to tot up spending across Whitehall. A department buys a box of paperclips, and adds it to the database – simple, yes? But the Treasury has had trouble with this set-up for years. Sometimes the receipt for the paperclips falls behind a filing Cabinet. Sometimes it gets mixed up with the one for Dave from IT’s lunch. And, even when the system works, the result is a near-unintelligible list of thousands of items of spending. As one civil servant lamented to me before the last election, “it’s full of junk”.

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Getting to know U-KIP 3) What are UKIP’s policies?

By Peter Hoskin
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Policies? What policies?! That used to be the cry when UKIP were less a political party and more a pressure group for our departure from Europe. But such scoffs and sneers are, if not entirely unwarranted, certainly less relevant nowadays. The party’s website provides a fairly clear list, split in to several sections, of their thinking on defence, on welfare, on energy, and most of the other areas where governments actually ought to do a spot of governing. There are gaps to mind – some hastily covered over with promises of reviews to come – but what party outside of government couldn’t say the same, two years away from a general election? Indeed, if you compare the UKIP website with, say, Labour’s, it offers a firmer sense of ideology and of policy. Can we even be sure that Ed Miliband’s policy on Europe won’t change before 2015? We can be sure that Nigel Farage’s won’t, and of more besides.          

The Big E

While Europe may not represent the sum total of UKIP’s aspirations, let’s start this five-point distillation of their policies on the Continent, as it were. After all, leaving Europe’s political union is not just the totem they bow before, it also provides the basis for many of their other policies. It’s all about freedom, you see. Apparently, once we’re free from what Mr Farage would no doubt describe as the “shackles” of the Brussels bastille, then so many other opportunities would present themselves; whether it’s opportunities to cut taxes, to severely reduce immigration, or to trade with the rest of the world.

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The Tory leadership is betting the house on house prices – it might not end well

By Peter Hoskin
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Strolling through Brixton a couple of weeks ago, it wasn’t so much the new, half-finished block of flats that caught my eye as the way those flats were being promoted. A sign had been pinned onto the boarding outside, highlighting the bare facts of the Government’s new Help to Buy scheme: “5% Buyer’s Deposit, 20% Government Loan, 75% Mortgage.” And then, underneath that, the words “Don’t Miss Out”.

For those in No.11, it’s probably the happy housing equivalent of those “Cheers to the Chancellor” signs appearing outside pubs to mark the fall in beer duty: homebuyers can have one on George, and don’t you forget it when the next election comes around. But, to my eyes, it’s all rather worrying. The two-part Help to Buy scheme announced in the Budget – £3.5 billion’s worth of government loans for people buying newly-built homes, and £12 billion’s worth of underwriting for mortgages – contains plenty to fear.

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