RSS Feed     Twitter     Facebook
Blog > Archive by tag 'George Osborne'

Posts Tagged ‘George Osborne’

Treasure Zest?

July 29th, 2010 | No Comments

You may have noticed there’s been quite a trade mission from the UK in the past few days to India.

The new British prime minister – fresh from establishing his country as the ‘junior partner’ to the US in Washington – that should play well among the shires of England – has hotfooted it with an extraordinary collection of British top industry brass to India.

Cameron’s got a shiny British Airways 747 for his jaunt – with 60-plus top industrialists there should just be enough bizzo seats to go round – although why the British PM – as in his French and German counterparts – hasn’t  got his own aircraft is a mystery.

The former colonial master is now very much the pupil as India starts to flex its muscles and nowhere was this better illustrated than with British Chancellor of the Exchequer George Osborne’s visit to Tata Industries headquarters in Mumbai.

Tata is now the UK’s largest manufacturer through its purchase of British manufacturing luminaries such as Jaguar Land Rover and the steelmaker, Corus.

So, bright eyed and bushy tailed and fired up by the new government’s mantra “Open for Business” I eagerly rang Her Majesty’s Treasury for chapter and verse on the Chancellor’s visit to the hugely influential Tata.

But instead of optimistic soundbites and tub-thumping tales of manufacturing opportunities and inward investment, all I got was, well, nothing.

Not a dime, zero, niente, the Treasury seemed to know almost next to nothing about La Osborne’s visit. “Just to confirm, the Chancellor did not make a speech,” was as much as I got.

This is a pretty important visit isn’t it? To the UK’s largest manufacturer. On its home turf in India. And the Treasury has nothing to say.

I shouldn’t be surprised. A quick look at HM Treasury’s website still lists the British Chancellor of the Exchequer as: Rt Hon Alistair Darling MP, complete with his team.

Who lost the election nearly three months ago.

Read More »

The week ahead

June 20th, 2010 | No Comments

World leaders gather for G8 and G20 summit meetings

• LEADERS of the G8 group of rich countries gather in Muskoka, a Canadian holiday resort, for a two-day summit starting on Friday June 25th. The meeting overlaps with the two-day G20 summit that begins the next day in Toronto. Both get-togethers will give the opportunity to world leaders to discuss global financial regulation, reforming international financial institutions and responses to the crisis in the euro zone. The Canadian hosts have been criticised at home for the vast cost of the summit, in particular on the creation of a huge artificial lake for the media centre in a country with more real lakes than anywhere else in the world.

• ANXIETY in Britain is likely to be high as George Osborne, the country’s new chancellor (finance minister), unveils details of a tough emergency budget on Tuesday June 22nd. The new budget will set out the overall trajectory of spending, which is likely to be sharply downward. Mr Osborne’s colleagues have been making scary speeches about the parlous state of public finances. And gloomy independent forecasts for growth and the public finances from the new Office for Budgetary Responsibility suggest that hefty spending cuts and tax rises are inevitable. …

Read More »

Youth vs Experience

September 22nd, 2009 | No Comments

Waiting to get off the train on the way home last night, two geeky teenagers were talking about collecting original versions of albums. One was bragging about his Prodigy CD collection (keep it to yourself bud). The other countered that he had original vinyl Beatles albums. He is currently locked in the trunk of my [...]

Read More »

UK GDP falls faster than expected

July 25th, 2009 | No Comments

• GDP down 0.8% in threee months to June
• City had expected a 0.3% decline, with some expecting growth

The chancellor’s forecasts for economic growth were blown out of the water official figures revealed Britain’s economy contracted by a record 5.6% over the last year as output fell for a fifth straight quarter.

Dashing hopes that the steepest decline in growth since the 1930s might be nearing an end, the Office for National Statistics said gross domestic product – the total value of goods and services in the economy – fell by 0.8% in the three months to June. The size of the drop surprised the City, which had expected only a 0.3% decline following recent signs of a pickup in the housing market and strong growth in high street spending.

But although the news caused the pound to fall 0.5% against the dollar to $1.64, the FTSE 100 saw its 10th straight day of gains, ending up 16.8 points, or 0.4%, at 4,577.

Economists believe GDP will almost certainly contract by more than the Treasury’s forecast of between –3.25% and –3.75% this year.

“It would be a miracle [if the government's target was met],” said Colin Ellis, European economist at Daiwa Securities SMBC. “Not on the scale of water into wine but not far off.”

The economy has already contracted by 3.16% this year and analysts are predicting a drop of 4.5% for 2009 as a whole.

Hetal Mehta, senior economic adviser to the Ernst & Young Item Club, said the economy would have to grow by 1% in the third quarter of the year and by 1.8% in the final three months to meet the government’s target of –3.75%.

The Liberal Democrat Treasury spokesman, Vince Cable, said: “These figures blow a hole in the chancellor’s GDP forecast for this year. The government’s failure to address the crisis in bank lending is only making the economic outlook worse. As a result, the deficit will balloon further, leading to bigger spending cuts or higher taxes.” The shadow chancellor, George Osborne, said: “These disappointing figures are much worse than expected and show that the recession is longer and deeper than the government had led us to believe. The sad news is this will mean the rise in unemployment is likely to be even steeper.”

Before yesterday’s data, some economists had even predicted the UK could post its first positive growth since early 2008, and the size of the decline prompted immediate speculation that the Bank of England would be forced into fresh emergency action to kickstart activity.

While the pace of decline in GDP slowed from the 2.4% seen in the first three months of 2009, the economy has suffered a cumulative contraction of 5.7% in the last five quarters.

The ONS said this was double the drop in the recession of the early 1990s and almost as big as the 6.4% retrenchment during the 1980-81 slump. The 5.6% drop in GDP in a year has not been matched since comparable records began in 1955.

Business services and finances, a sector that has boomed for much of the last decade, accounted for more than a quarter of the GDP decline in the second quarter. Overall, services fell by 0.6% on the quarter and by 3.8% on the year.

Describing the figures as “shockingly bad” Vicky Redwood, UK economist at Capital Economics, said they “firmly dash any hopes that the UK had already pulled out of recession”. Getting the economy back on track “looks likely to be a long hard slog”, she said.

The TUC’s general secretary, Brendan Barber, said: “There are no green shoots here. Unemployment is growing and a recovery that brings hope to the jobless looks ever more distant.

“Immediate big spending cuts are the last thing we need. They could tip the economy into an ever deeper downturn and make the deficit worse when the tax take falls and spending on unemployment goes up.”

Meanwhile, US consumer confidence fell this month to its lowest level since April amid growing pessimism about the long-term economic outlook, especially about income and jobs.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »

FSA considers sanction moves

July 24th, 2009 | No Comments

• Advisers who help their customers pay less tax could be fined or struck off under watchdog’s new code of conduct
• FSA chief defends regulator’s record during recent crisis and says its culture has been transformed

Bank bosses who allow their firms to devise schemes to help customers avoid paying tax could face sanctions from the Financial Services Authority.

The City regulator is considering its position on the government’s new code of conduct on tax after Nigel Harper, banking adviser at HM Revenue & Customs, took the unusual decision of raising the matter the regulator’s annual public meeting today.

The code, which is out for consultation, is intended to be voluntary and is designed to save the taxpayer billions of pounds lost through complex but legal avoidance schemes operated by some banks.

The government has already said bank that refuse to sign up or act against the “spirit” of the current tax laws will be subjected to heavier scrutiny from HMRC.

Until today the FSA’s involvement had been unclear. Harper told the packed meeting in the City that he was particularly referring to the structured finance operations of banks, which often specialise in tax planning, when he asked whether individuals employed by banks not signing up to the code would still be considered “fit and proper” under the FSA’s rules.

The FSA authorises people to work in the City on the basis that they are “fit and proper”. It has the power to strike individuals off the register or fine them.

Hector Sants, chief executive of the FSA, said the topic was likely be included in a consultation on the FSA’s “fit and proper” test, which is expected in the autumn.

The FSA has not yet reached any conclusions on how it will handle the voluntary code. Sants said: “I’m sure [the consultation] will pick up on HMRC codes and any other codes”.

Lord Turner, the FSA chairman, said: “The whole overlap between tax and regulatory arbitrage and the fit and proper test is one we are still thinking about.” Turner also said the regulator was encouraging banks to have simpler operational structures, noting that international banks had “extremely complicated legal structures”. “It is a very complicated area. We are not a tax enforcement agency,” he said.

HMRC also noted that the FSA did not have tax enforcement powers and was forced to stress that Harper was attending the meeting in a personal rather than professional capacity.

“HMRC already has very good relations with the FSA, we talk about a range of issues of mutual interest, including the code of practice on taxation for banks,” HMRC said.

Turner warned that the uncertainty surrounding the future of the regulator, created by Gordon Brown when he was chancellor, was affecting recruitment and the implementation of changes that were needed after the worst financial crisis since the Great Depression. The shadow chancellor, George Osborne, announced on Monday he would disband the FSA and give more powers on bank regulation to the Bank of England.

“It would be idiotic to deny that uncertainty is a complicating factor. It is a challenge for us to maintain focus on what really matters,” Turner said.

Sants insisted the FSA, after embarking on a more intensive approach to regulation, was “fit for purpose”. Turner added: “I don’t think any other magical organisation out there can do better.”

The chairman has warned the Conservatives how difficult it would be to implement the handover to the Bank of England.

Turner said banks could in some instances be required to hold up “three or five or six times” more capital than they do now to underpin their riskier businesses.

He said the City was only slowly realising the extent of extra capital it might need, citing research by JP Morgan this week which suggested Barclays might need £12.8bn and RBS £8.5bn to meet new rules.

Turner also admitted that the capital requirements might be delayed in some instances because of the recession – a time when banks might ordinarily be allowed to eat into surplus capital.

Sants was forced to defend the FSA’s decision to pay out bonuses to its staff this year. He said: “The marketplace we are hiring from and at risk of being recruited into is highly competitive.”

The FSA has begun interviewing boardroom candidates at banks since the crisis, not only to test their probity but also their competency. Sally Dewar, managing director of wholesale regulation at the FSA, said: “We have seen several potential non-executives withdraw their applications.”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »

Britain ‘will take until 2014 to recover’

July 22nd, 2009 | No Comments

• NIESR forecasts a further fall in house prices
• Cost of servicing national debt set to double

The UK economy will not fully recover from the recession until 2014, according to a top thinktank which also warned today that house prices will keep falling for another three years.

The National Institute of Economic and Social Research (NIESR) predicted that it will take another five years until income per head has returned to the level seen before the recession started in the second quarter of 2008. In a gloomy assessment of Britain’s economic prospects, it also warned that the cost of servicing the country’s soaring national debt will almost double within four years.

NIESR’s latest forecast is that the UK economy shrank by 0.4% between April and June, which would mean the recession would have lasted for five quarters. It believes the recovery will not begin until the last three months of 2009, and then only with anaemic growth of 0.5%.

“The recovery will be weak,” warned NIESR economist Simon Kirby yesterday. “We see continued contraction in consumer spending and business investment [in 2010].”

On house prices, NIESR does not share the recent optimism that the market might be bottoming out.

“There has been talk of stabilization and some recovery in the housing market, but we don’t think this is the case,” said Kirby. “We only see growth in the housing market returning in 2012.”

Faced with the worst economic downturn since the Great Depression, the UK government is planning to spend its way back to recovery. NIESR warned that the resulting public borrowing will put a heavy burden on the public finances, and called for aggressive cuts to public spending.

“The introduction of a more credible plan to return the public finances to a path of fiscal sustainability remains a necessity,” it said, in a clear warning to chancellor Alistair Darling – and his possible successor, George Osborne.

Even after assuming that public spending will indeed be slashed, NIESR has calculated that annual borrowing will still be over £120bn in 2014 – some £23bn more than Darling’s own estimate.

The government is expected to borrow £165.7bn this year to balance the books, with further massive borrowing already inked in for future years. Last month alone it borrowed £13bn to cope with a sharp fall in tax receipts.

According to NIESR’s forecasts, the cost of servicing this debt will swell from £25.6bn this fiscal year to £50.7bn in 2013/14.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »

Cameron unveils plan to scrap FSA

July 20th, 2009 | No Comments

Tory leader says the tripartite system for City regulation introduced by Gordon Brown was directly to blame for the crisis facing the country

David Cameron today accused the government of a “policy failure of historic proportions” as he unveiled plans to abolish the Financial Services Authority and divide its responsibilities between a beefed-up Bank of England and a new consumer protection body.

In a speech in London, the Conservative leader said the tripartite system for City regulation introduced by Gordon Brown was directly to blame for the crisis facing the country.

He dismissed the government’s proposed reforms as inadequate measures that jeopardise recovery, promising instead to give sweeping new powers to the Bank of England.

Under Conservative proposals, the Bank would regulate City pay structures, risk-taking and the size of financial institutions, while the rest of the FSA’s functions would be performed by a new Consumer Protection Agency (CPA).

The government plans to keep the “tripartite” system – involving the Bank, the FSA and the Treasury – but introduce an overseeing Council for Financial Stability.

Launching a Conservative white paper on banking alongside George Osborne, the shadow chancellor, Cameron said: “The decisions that led to this crisis represent a policy failure of historic proportions. We now need deep, wide-ranging reform that matches both the magnitude of the crisis and the scale of the hardship inflicted on the British people.

“That reform must be based on a clear understanding of what went wrong in the first place and a clear determination to put it right.”

The debt crisis had been “at best ignored and at worst encouraged”, he said.

“For this, I believe the finger of blame points directly at the system of financial regulation established by Gordon Brown in 1997.

“At its heart was the tripartite system; a system in which no-one was looking at the big picture, no-one had responsibility and authority to act and no-one was effectively in charge.

“So those bad debts, those risky loans, the soaring house prices, the systemic risk, the asset price bubble – they all fell between the cracks of the system.

“I’m afraid the government’s proposals that all we need are a few more tweaks and a little bureaucratic tinkering are totally inadequate and risk preventing a recovery.”

Under the Tory plans, bank and credit card customers would also have the right to receive a “data file” about the payments they make, allowing them to find out easily online whether rival companies offer cheaper services.

This proposal is based on an idea being pursued by Barack Obama’s administration. The Tories believe that current price comparison websites are flawed because customers cannot compare price information in a way that takes into account their personal spending behaviour.

The Tories are also proposing a review of the competition implications of the Lloyds/HBOS merger and insist that high street banks that engage in high-risk investment banking should pay a penalty in the form of “much higher capital requirements”.

They are in principle attracted by the idea of separating investment banking from retail banking – the so-called Glass-Steagall option, after the act once used to enforce this split in the US – but think this would only work if new regulation was agreed internationally.

Other proposals in the Tory white paper include:

• The creation of a financial regulation division at the Bank of England, overseen by a new financial policy committee that would work alongside the monetary policy committee. There would also be a new deputy governor for financial regulation.

• Higher salaries for City regulators, funded by an increase in the industry levy used to subsidise the FSA. City firms would have to second staff to the Bank of England to provide the regulators with better access to market experience.

• The Bank of England using capital requirements to impose a “tax” on risky bonus structures.

• The appointment of a Treasury minister, who would be based largely in Brussels, with specific responsibility for European financial regulation.

Lord Myners, the Treasury minister, condemned the Tory plans. “These proposals are window dressing that ignore the failures that led to the global financial crisis,” he said.

“While George Osborne talks about who’s in charge, we are focused on the lessons of the crisis, including greater scrutiny of the shadow banking sector and a crackdown on excessive city bonuses.

“The Tory proposals would abolish an independent, expert regulator, while diverting attention from banks that took excessive risks that led to this crisis.”

And Liam Byrne, the chief secretary to the Treasury, also criticised the Tories.

“David Cameron and George Osborne can talk all they like about banking reform, but when it mattered, they showed their inexperience and called it wrong,” Byrne said.

“They opposed the government’s action to protect Northern Rock irrespective of the risks to savers and the wider economy.

“Since that misjudgment, they haven’t learned their lesson. They’re the only politicians in the developed world who think that it’s a good idea to cut back spending in the middle of a recession, and deny the economy the boost it needs to get Britain out of the downturn.”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »

Oleg Deripaska ‘may quit Britain’

July 14th, 2009 | No Comments

By Tim Whewell
BBC Newsnight reporter

Oleg Deripaska

Russian billionaire Oleg Deripaska has told the BBC he is considering breaking his connection with Britain.

"I’m not sure I will have any links with Britain in the future," he said in an exclusive interview with Newsnight.

The possible move follows the collapse of a Birmingham-based van firm Mr Deripaska once owned.

Last summer then EU trade commissioner Lord Mandelson and shadow chancellor George Osborne were involved in controversy after a party on his yacht.

Mr Deripaska was speaking as he took me on a personally-guided tour of his Russian industrial empire – the most extensive the publicity-shy tycoon has ever given a journalist.

One of Russia’s richest men, Mr Deripaska still owns a house bought for an estimated £25m ($40m) on one of London’s most exclusive squares.

"I wasn’t considering in those days whether they were British politicians. It was my summer holiday"

Oleg Deripaska on the "yachtgate" scandal

He said firmly that he still regards Lord Mandelson, now the business secretary, as his friend.

And he described their relationship as "good", asking: "Why should it have changed"

But he also told me: "I don’t understand your country.

"You have a lot of achievements, but at the moment you are in a kind of fire.

"You need to change so many things you inherited from the post-industrial economy – I just can’t see any benefit in what the media are doing with your politicians right now."

‘A good dinner’

He is particularly annoyed at the reporting of the party last summer including Lord Mandelson and the shadow chancellor, Mr Osborne, when his 72-metre yacht, the Queen K, was moored off Corfu.

Mr Deripaska said: "I wasn’t considering in those days whether they were British politicians. It was my summer holiday."

The Queen K yacht

"We had a good dinner, there were many people and I’m surprised they picked on these poor guys and screwed them in the press," he added.

The scandal erupted because Mr Deripaska controls most of Russia’s aluminium – and Lord Mandelson then oversaw EU metal tariffs.

I asked Mr Deripaska if he ever benefited from their relationship.

"Benefited from friendship" he asked indignantly. "It’s not my business. Whatever I did in my life, I did myself."

Lord Mandelson has already denied he did "any favours" for Mr Deripaska – and the EU commission has said a 2005 decision to remove punitive import tariffs on aluminium foil, that appeared to benefit Mr Deripaska’s company Rusal, was taken without Lord Mandelson’s personal intervention.

After the meeting in Corfu, George Osborne was accused by Mr Deripaska’s friend – the banker Nathaniel Rothschild, who was at also at the party, of having used the occasion to solicit a donation to the Conservative Party – a claim he has strongly denied.

Disappointment with Britain

Speaking about the allegations for the first time, Mr Deripaska said: "I tried to stay away from Russian politicians – why should I move towards British politicians

"I can’t see that anyone from Britain would ask me – it’s unbelievable."

George Osborne and Peter Mandelson

He says he has not been in Britain for more than a year and does not currently hold a British visa.

His disappointment with the country is fuelled partly by the failure to save LDV, the British van-maker he owned, from bankruptcy.

As the recession bit, his car company, GAZ, stopped funding the loss-making LDV and backed a management buy-out bid.

But hopes that the government might support the project with a substantial cash injection came to nothing.

After "yachtgate", did Mr Mandelson keep the Russian tycoon’s interests all the more firmly at arm’s length

It was Ian Pearson, the junior business minister, who spoke for the government on LDV, while his boss remained silent.

Perhaps, I suggested to Mr Deripaska, one reason LDV was not rescued was that politicians now feel they have to be over-careful in dealing with him.

"I know what the minimum level of life is – and anything extra looks like paradise"

Oleg Deripaska

"In this sense, it would be so wrong for the country," he answered.

"You have a good company, good people and complex manufacturing.

"There are only a few left in Britain — engineering companies that can support production — and based on a wrong press, someone could push them out of business. Why"

When pressed on whether the government should have bailed LDV out, he said simply: "It’s their decision – I can’t judge."

Disputed figures

For now, Mr Deripaska has wider problems than Britain.

According to Forbes magazine, his fortune has shrunk over the last year from £28bn to just £3.5bn.

Mr Deripaska disputes those figures, saying he was never as rich as has been claimed.

Oleg Deripaska

He said: "Whoever counted, it was based on assets only, in the most positive scenario."

He says he doesn’t know how much money he has, but he admits he took risks as his company, Basic Element, has diversified into more and more sectors including metals, cars, construction, aviation, financial services, and energy.

It has depended partly on huge foreign bank loans which he is now attempting to restructure.

"If you want to grow at 2-3% a year it’s not a problem," he said. "But if you want to grow 15-20% a year it’s a risk, it’s a ride on a wild horse."

He says he likes horses – and then laughs. He is disarmingly charming – at 41, boyish not only in his looks, but also in energy and enthusiasms.

Expanding into nuclear

As we toured the assembly line at the GAZ plant at Nizhny Novgorod – the most automated, he says, in the country – he told me he is convinced his new Russian car, the Volga Syber, will be a best-seller when the economy picks up.

Later, as we took a helicopter trip over the Sayan Mountains of southern Siberia, near his aluminium smelter, he talked of expanding into other metals – and even of building nuclear power stations.

And where does his determination come from

Mr Putin driving a 1956 Volga

He doesn’t like talking about his childhood, a time without luxuries, his father dead and his mother often absent.

But eventually he said: "I was raised in a small village.

"I know what the minimum level of life is – and anything extra looks like paradise."

He laughed. "That’s why I prefer not to count problems, but just think about what may be in the future."

Newsnight featuring the interview with Oleg Deripaska is at 2230 BST on Tuesday 14 July 2009 on BBC Two.</p

This article is from the BBC News website. © British Broadcasting Corporation, The BBC is not responsible for the content of external internet sites.

Read More »

Tory top brass stand by their man

July 9th, 2009 | No Comments

David Cameron and George Osborne threw a protective arm around Andy Coulson today as the Tory high command insisted that their communications director would not be forced to stand down.

Amid unease among some backbenchers at the party’s determination to stand by Coulson, Cameron, the Tory leader and Osborne, shadow chancellor, praised Coulson for “upright” conduct in his work for the party.

The leadership decided on Wednesday, soon after the story broke on guardian.co.uk, that they would protect Coulson, a key member of the Cameron and Osborne inner circle.

A message was sent out that there was “no question” of removing Coulson after he reiterated an undertaking he had given in the lengthy negotiations which preceded his appointment as communications chief in 2007. Coulson made clear once again that he knew nothing of the phone hacking at the News of the World but had resigned as editor because he took ultimate, but not personal, responsibility.

“There was extensive due diligence done into Andy before he was appointed,” one senior party figure said. “It became clear that he had paid a price by standing down as editor. That is the line we are sticking to.”

A bullish Tory leadership intensified its defence of Coulson today by sanctioning an aggressive attack on the Guardian and the Labour party after the Metropolitan police said they would be taking no action over the phone hacking.

Tory sources were so sure of Coulson’s position that they issued a point-by-point rebuttal of the Guardian’s claims. They said the Guardian had uncovered nothing new, apart from the payment to Taylor.

“Little is new,” a source said of the Guardian reports. “Much of its claims have already been considered by the Metropolitan police, the information commissioner and the high court.”

The Tory leadership decided to rally round Coulson for three broad reasons:

• Cameron believes Coulson is an invaluable asset, who has played a key role in sharpening the Tories’ act in the last two years.

• Losing such a senior figure would raise questions about Cameron’s judgment.

• A determination not to allow Labour – which was severely damaged by the resignation of Damian McBride, an adviser to Gordon Brown – to exploit the new allegations to damage the Tories.

Cameron agreed to step up the Tory operation to protect Coulson after finding himself in the rare position this morning of having to answer hostile questions on his doorstep. The Tory leader, who has enjoyed a relatively easy ride in the media over the last two years, criticised the News of the World for invading people’s privacy and said it was right that Coulson had taken ultimate – but not personal – responsibility by resigning as editor. “Of course I knew about that resignation before offering him the job,” Cameron said. “But I believe in giving people a second chance. As director of communications for the Conservatives, he does an excellent job in a proper, upright way at all times.”

Osborne spoke in almost identical terms. “Andy Coulson has conducted his job in a totally upright and proper manner and will continue to do so,” he said.

While the leadership is determined to protect Coulson, there is unease in the party on two levels.

• Some MPs fear that the continuing revelations about the News of the World’s tactics could mean that Coulson will break a famous rule established by Alastair Campbell, Tony Blair’s director of communications. This states that a press officer is finished the moment they become the story. One senior Tory said: “This is a breathtaking story. What the hell has happened? Andy Coulson seems to have a very narrow definition of what he did and did not know. I can’t imagine as editor he did not know what was happening.”

• Some backbenchers said the decision to stand by Coulson highlighted a pattern of behaviour by Cameron: that he protects members of his inner circle while doing little to support other Conservatives. There was particular anger at Cameron’s claim that he believed in giving people a second chance, something he did not show to veteran Tory MPs who were ordered to stand down by the leadership when embarrassing details of their expenses were published.

“There does seem to be one rule for the golden circle and another for everyone else,” a senior MP said. “Sir Peter Viggers [MP for Gosport] made a silly claim for a duck island which was actually refused. But he was told as soon as the story appeared that he would have to stand down as an MP. Is that fair?”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »

Osborne investigated over expenses

July 2nd, 2009 | No Comments

Parliamentary commissioner for standards confirms he is looking into allowances of shadow chancellor

George Osborne, the shadow chancellor, is being investigated by parliament’s standards watchdog over his expenses, it emerged today.

John Lyon, the parliamentary commissioner for standards, confirmed that he is investigating a complaint relating to the way Osborne claimed for a mortgage worth £450,000, which he used to fund a house that cost £445,000.

A spokesman for the commissioner would not discuss details of the complaint, which was submitted by a Labour activist.

But, in a letter to Laurie Burton, the chair of the local Labour party in Osborne’s Tatton constituency, Lyon said: “I have accepted your complaint and am inviting [Osborne's] comments.”

In his letter, Lyon said he would look into a claim that “Mr Osborne claimed for mortgage payments that were not necessarily incurred, contrary to the rules of the house.”

Osborne took out a mortgage of nearly £5,000 more than the reported price of his house and claimed Commons allowances to cover interest payments on the whole debt, rather than just the cost of buying the house.

“Since your complaint involves allegations relating to events of over seven years ago, I have consulted the House of Commons committee on standards and privileges and they have agreed to me initiating an inquiry into this part of your complaint,” Lyon said.

He said he put the claims to Osborne, adding: “When I have received his response, I will consider best how to proceed.”

The commissioner said he would not launch an inquiry into Burton’s other complaint – that the shadow chancellor had “flipped” his second home and avoided paying capital gains tax.

“This is a matter for HMRC [HM Revenue and Customs],” he told him.

Osborne has strongly denied any wrongdoing and has always insisted that he acted within the rules.

He has defended the decision to take out a mortgage worth £450,000 on the grounds that he needed the extra money to pay for repairs and removal costs. These took the total cost to more than £480,000, he has said.

Osborne has also said that his claim was approved by the Commons authorities.

In a statement issued in response to the news that he was being investigated, a spokesman for Osborne said: “This is a political complaint by the local Labour party. We note that one has been made against Alistair Darling as well. George is relaxed about it and has always been very open in answering questions about his expenses.”

The spokesman also said that the cost of moving into the Cheshire home and doing essential repairs was more than £480,000 and that “thanks to the tracker mortgage deal he is currently on, the monthly interest costs on his Cheshire home charged to the parliamentary allowance are now close to zero”.

In regards to the allegation that he “flipped” his second home, the spokesman said: “When George Osborne became an MP in 2001 he sat down with a representative from the fees office. He explained that Harrop Fold Farm in Cheshire was his second home but that he had increased the interest-only mortgage on his existing home in London to cover the cost of purchasing and moving into it.

“The representative of the fees office advised him to claim ACA [the additional costs allowance] against that mortgage until he could change the mortgage arrangements. In 2003, when he was able to change the mortgage arrangement without incurring penalty charges, he secured a mortgage against Harrop Fold Farm – and from then on claimed ACA against it.

“Since he became an MP, George Osborne has always made it clear to the House of Commons authorities and the Inland Revenue that he regarded his home in Cheshire as his second home.”

Burton said he believed Osborne had breached the MPs’ code of conduct and brought the Commons “into disrepute”.

And he denied his complaint was politically motivated, insisting he was acting as an ordinary voter feeling “outrage and disgust” over widespread abuses of the system.

“When they [expenses details] were published I was extremely concerned at the way he flipped his mortgages on his first and second homes in order to claim the maximum amount possible on mortgages and also to avoid paying capital gains tax,” he told Sky News.

“He bought a house outside his constituency of Tatton about a year before he was elected and he bought it for cash. Then he took a mortgage on it two years later after he was elected and he just went on from there.

“He first called it his main home and then he called it his second home and he is just a prime example of the way some politicians have been bending the rules to get most benefit.”

The commissioner is investigating complaints against several MPs relating to expenses, including the former ministers Jacqui Smith and Tony McNulty, but Osborne is the most senior Tory to come under his spotlight.

The commissioner’s office also said today that he would not be taking any further a complaint about the Alistair Darling.

One of Darling’s constituents was understood to have lodged a complaint that he “flipped” second home designations four times in four years to maximise expenses.

That was lodged on the same day as the complaint against Osborne amid signs of a tit-for-tat row.

A spokeswoman for the commissioner’s office said the correspondence concerning Darling was not being acted upon.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds



Read More »

Mandelson accuses Osborne of lying

July 1st, 2009 | No Comments

Business secretary challenges shadow chancellor to withdraw comment suggesting Gordon Brown refused the Tories permission to see a government database

Lord Mandelson today accused George Osborne of lying after the shadow chancellor claimed that he was refused permission to see government spending figures by Gordon Brown.

The business secretary challenged Osborne to withdraw a comment he made in a BBC interview which Mandelson described as a “deliberate untruth”.

Mandelson said that if Osborne did not withdraw it, Brown would raise the matter at prime minister’s questions today. A spokesman for Osborne did not have an immediate response when told about the statement, which Mandelson issued this morning.

Over the last few weeks Brown has been strongly criticised, by the Tories and by some independent commentators, for issuing misleading statements about the future of public spending. Brown has been depicting Labour as a party committed to spending increases, although in practical terms departmental spending is forecast to go down after the general election.

But today Mandelson went on the offensive, throwing the accusation of dishonesty at the Tories.

Last night, in an interview with the BBC, Osborne said the government had told the Tories that they would not be allowed to see a government database known as the combined online information system, providing information about Whitehall spending in 12,000 categories.

“Gordon Brown is denying to the opposition the information on spending items in the government budget which would help us plan for government, help us plan for dealing with the debt crisis,” he said.

But, according to the BBC, the decision to refuse the Tory request, which was made in February, was taken by Sir Gus O’Donnell, the cabinet secretary, not Brown.

Today Mandelson accused the shadow chancellor of smearing the prime minister.

“There is a very unattractive pattern of behaviour that is starting to emerge with George Osborne, of innuendo in pursuit of a smear,” said Mandelson.

“Yesterday George Osborne issued a very serious allegation that the prime minister had intervened to deny the opposition of information they were entitled to. This claim has been flatly denied by the cabinet secretary. I suggest George Osborne withdraws this deliberate untruth to avoid embarrassing his leader at prime minister’s questions today.”

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds


Read More »
Page 1 of 11