Wish you were here – a summer holiday for Fox to forget?

The summer break is supposed to be the quiet period for politicians, or at least the silly season filled with trivial matters given far more media attention than they deserve. However, it’s been nothing of the sort this time around; with the global markets falling to the lowest levels since the 2008 recession, and riots in cities across Britain, politicians seem to have been caught off guard.

While David Cameron and Boris Johnson were criticised for not coming back to the UK early enough, Liam Fox also came in for some surprise criticism while on holiday. This criticism was not, however, for lack of appearance in the country in the face of the crisis, but instead for taking 5 staff with him on ‘jaunt to Spain’ at the taxpayer’s expense, according to The Sun.

This embarrassing news will only add to the pressures already weighing down on the shoulders of the Defence Secretary. On the return of Parliament proper in September, Fox will still have to face questions and calls for a re-opening of the SDSR from defence-minded Members on both sides of the House following last week’s criticism of the SDSR and NSS by the Defence Select Committee.

Couple this to little sign of an end or even real progress being made in Libya, and the continuing stream of news reports and publications from the press and think-tanks about Britain’s declining military standing, and Liam Fox will perhaps wish he could stay on holiday, although perhaps without his staff.

As MPs return to Westminster following the end of the summer recess, all eyes will be on the upcoming White Paper and Bernard Gray’s report on reform of DE&S. However, that leaves a lot of time in-between during which the Defence Secretary will be open to further criticism.

Liam Fox has always been considered a good political fighter, however, he will have to do even more of it unless some major good news stories start coming out of the MoD press office very soon.

But some in his Cabinet are starting to flounder with the list of colleagues getting the wrong sort of headlines growing each week.

Only the Chancellor has been surefooted, winning a reputation as a man with a plan.  Meanwhile Nick Clegg’s credibility has drained since the AV referendum and tuition fees debacles, and his ill thought out initiatives such as ‘alarm clock Britain’ and ‘muscular liberalism’ haven’t helped.

Experience tells us that political luck never lasts forever. While the PM basks in the glow of Obamamania he should consider, carefully, six key points to get the Coalition back on track:

- Stay focussed on the deficit. It’s why you were elected and it’s the only area the Coalition displays common purpose.

- Risk a reshuffle and give Nick Clegg a big spending department, perhaps Health. He is adrift with the constitutional affairs brief. His political vulnerability  is your political vulnerability.

- Don’t bend at the first sign of trouble; your Government is getting a reputation for u-turns from sentencing to coastguards to forestry.

- Prepare the ground for any difficult decisions – communicate a problem clearly and consistently and only then present the solution.

- Ditch the Big Society. It’s well intended but nebulous and reminds people that beyond the deficit they don’t really know what you stand for. Your Government needs a narrative.

- Finally, sort out No.10. The balance between political and policy advisers seems to oscillate between the extremes.

George McGregor is Managing Director of Interel Consulting

‘The wizardry of George Osborne?’

Last year’s emergency budget, which announced the deepest public spending cuts since World War II, was all about “frontloading the pain” and readying public opinion for the austerity to come. By contrast, the 2011 budget is the coalition’s first major attempt to move the agenda away from cuts and towards recovery. Yesterday George Osborne threw everything at making the case for this shift in narrative.

And, like all Chancellors before him, he pulled a rabbit from his straitened Treasury hat, cutting the price of petrol and endearing himself to millions of cash-strapped motorists. Already dubbed the “Ford Focus Budget”, Osborne’s rabbit cornered Ed Miliband leaving him little room to accuse the Government of ignoring “the squeezed middle” of hard-pressed Brits. Osborne flashed some of that wizardry that was previously on display when, in late 2007, he proposed an inheritance tax cut, and frightened Gordon Brown out of an early election.

This was a more overtly political budget than most, at times bordering on the glad confidence of a manifesto launch. With this Chancellor it is very difficult to dissect the politician from the policy-maker. Osborne’s speech and announcements were masterful in pre-emptively snuffing out opposition attacks. Fiscally neutral, and with few changes to public spending, Osborne relished the opportunity to paint on a relatively blank canvass, showcasing a proactive Government, intent on moving on from last summer’s forced, and therefore largely reactive spending review. He said, “That we are able now to set off on the route from rescue to reform, and reform to recovery, is because of difficult decisions we’ve already taken.”

Ed Miliband chided Osborne for apparently drawing inspiration from a heady mix of Nigel Lawson with Michael Heseltine. For Miliband and much of the country, these are figures from the darkest days of Tory economics. But needing aspects of both characters does point to the dilemma of a Conservative politician in Osborne’s shoes. He does not want to be remembered as the man who got a grip on spending but then put his feet up as ordinary people felt the consequences. He wants to combine Lawson’s supposed fiscal rectitude with a Heseltine-like passion for manufacturing, firing up industry in the regions and pushing British exports around the world. Whatever the policy substance, it is a vital political counter to Labour’s attacks on the “same old laissez faire Tories”.

The centrepiece of the entire coalition economic strategy is the elimination of the structural deficit by 2015-16. It is essential to the Government’s fortunes that the plan remains on course and retains economic credibility. In his speech Osborne drew heavily on the endorsement of the Government’s plans by independent domestic and international opinion. The down-graded growth expectations from the Office of Budget Responsibility (OBR), from 2.1% to 1.7% were not particularly helpful to Osborne’s cause. But neither are they sufficiently alarming that the Chancellor will feel under pressure to change course. Indeed the OBR still forecasts that the Government is on target to eliminate the structural deficit one year early.

The Chancellor clearly feels comfortable that the economic conditions are sufficiently benign that he can focus on supply-side measures above fiscal policy tools. Yesterday he fired up his growth strategy on “four economic ambitions”: the most competitive tax system in the G20; the best environment in Europe for business; a more balanced economy; and the most flexible, and better educated workforce in Europe. The big headline, which will no doubt calm fluttering hearts at the CBI is the reduction in corporation tax by 2% in 2011-12, falling eventually to 23%. According to the Chancellor, this will leave the UK with the lowest corporation tax in the G20. Osborne relished informing the Labour front-bench that this was not a tax cut for the banks, as the bank levy would be adjusted accordingly to off-set any impact on them.

Moving into Heseltine mode, Osborne put a heavy emphasis on rebalancing the economy away from financial services, announcing further investment in apprenticeships, support for SMEs in research and development and 21 new enterprise zones with local tax incentives and less burdensome regulation on planning. The Green Investment Bank will go ahead with 2012 with the ability to borrow from 2015-16. Owners of private jets will, for the first time, be caught by air passenger duties (even they are “in this together” with the rest of us). There will also be a fresh assault on regulation, particularly on planning rules, as well as a drive to streamline the tax code, rivalled only by India in length and complexity, according to the Chancellor.

Having set out the plan for growth, Osborne’s second objective was more overtly political, and with an eye firmly fixed on today’s headlines. His objective was to demonstrate that the coalition is in touch with Britain’s hard-pressed families and the high cost of living and uncertain economy they face. The pay uplift of £250 for public sector workers earning less than £21,000, combined with the rise in the tax-free income tax allowance will lessen the blow on those on low to mid incomes.

As is customary on budget day, the rabbit made its guest appearance at the end of the show. The Chancellor announced not only a cut in fuel duty, but also a new “fair fuel stabiliser”, which will link oil company profits to the price at the petrol pump. This was another neat signal, perhaps, that “we are all in this together”, even oil companies.

For Nick Clegg and the Liberal Democrats, they will be able to point to significant influence on this budget. The party’s flagship election policy of taking those who earn under £10,000 completely out of taxation is now at the core of the government’s approach. The setting up of the Green Investment Bank and the focus on rebalancing the economy away from financial services were also given due prominence. Given the sum of the coalition’s parts, this is arguably an ideologically coherent budget, reflecting for the most part a “small l” liberal approach to economic recovery, tempered by an activist ambition for manufacturing, skills and exports.

In truth, this was never going to be a difficult budget for the Government or for George Osborne. Given the economic circumstances, public expectations are extremely low and most still blame Labour for the state of the nation’s finances.  Yet Osborne has proved highly adept at delivering a very politically astute budget. As for the growth strategy itself, the big question remains the health of the economy. The plan is designed to bolster and support a level of growth that is, for now, no more than an assumption. If the economy grows as forecast, the growth plan and George Osborne will win plaudits and the coalition will have turned the corner on cuts. Without growth as forecast the attention will turn once more to the wisdom of the cuts, and therefore, to the wisdom rather than the wizardry of George Osborne.

In November 2010, British Prime Minister David Cameron and French President Nicolas Sarkozy announced plans for unprecedented military cooperation between the United Kingdom and France, based on a new Treaty on Defence and Security Cooperation. In the light of the global economic crisis, and coming days after the announcement of cuts to British defence spending, the agreement was immediately dubbed the ‘entente frugale’.

While defence cuts have been less severe in France, officials are apprehensive about the outlook after presidential elections in 2012.Yet it would be wrong to see Franco-British defence cooperation as driven purely by a short-term need to balance the books. A number of the projects announced in November were under consideration long before the economic crisis. Since the 1990s, France and the UK have been working ever more closely on defence matters. The treaty should be seen in the context of three long-term trends that challenge the coherence and sustainability of long-standing French and British assumptions.
Firstly, defence budgets have not been funded to compensate for the rising cost of military capability. Over time this has led to a steady paring back of equipment and personnel numbers. Broadly flat in real terms, most European countries’ defence budgets now struggle to deliver military capability to match their foreign policy aspirations.

Secondly, the relatively benign security situation in Europe leaves it all but impossible to make the political case for more defence spending. Defence, generally ranked low in issue salience polls, is often seen as an easy target for cuts. Finally, flat or lower spending combined with increasingly expensive technology undermines the viability of national, and even multinational, industries. This threatens long-standing preferences for indigenous technological and scientific capability, without which France and the UK fear that they will lose operational autonomy.

These trends have, however, emerged in parallel with a long-term convergence in the interests of France and the UK. Indeed it is this convergence that underpins the unprecedented levels of mutual dependence to which they are now prepared to commit. They have pledged to pool elements of their defence industrial bases, to seek to harmonise requirements and doctrines, to buy equipment together and deploy forces together. Their agreement may pave the way towards a new form of defence cooperation – one that is less opportunistic and more planned, providing deeper interoperability and greater savings.

Yet this is not a merger of the British and French armed forces. On the contrary, the motivation, at least for now, is to retain access to a full range of capabilities to pursue independent foreign policies. They want to remain militarily credible partners of the United States, both bilaterally and through NATO. In stark contrast to the St. Malo agreement, which was motivated by a desire to improve the European Union’s ability to act autonomously, the benefits to European military capability are in this case welcome, but not central. Whereas St. Malo was a new approach for a new goal, Franco-British defence cooperation is a new approach to the status quo, and the maintenance of national foreign and defence policies.

For this reason, the potential impact on wider European defence is not clear. Any agreement leading to the maintenance or improvement of military capabilities available to NATO and the EU is in itself advantageous. But there is no substantive policy linkage. Instead there is a pragmatic assumption that bilateralism between ‘natural partners’ ought to work more effectively than a multilateral approach. Indeed, the assumption in London and Paris is that no other European states can rival the breadth and depth of the relationship that France and the UK have established.

Yet the vital interests shared by the UK and France are not so very different from those shared by most European states. With the US increasingly turning its attention to the Asia-Pacific region, European states must rationalise their increasingly fragmented and inefficient military capabilities. Not only in order to act as credible partners of the US, as their foreign policies tend to dictate, but also to develop the crisis management role of the EU, particularly in the European neighbourhood.

It is therefore in the interests of Britain and France that they remain engaged leaders at the institutional and strategic levels of European defence cooperation. The impatience both countries feel, with some justification perhaps, regarding the lack of progress of the St. Malo era should not foreclose any opportunities to develop military capability through existing multilateral institutions, particularly those of the EU. Neither should it foreclose thinking about the institutional future of European security. It would be a mistake to oppose any particular method of working or institutional format on ideological grounds.

Indeed, what is striking about Franco-British defence cooperation is how successful both countries have been in discarding the ideological baggage of the past. The new pragmatism founded on developing military capabilities through close cooperation should be encouraged and emulated by partners in Europe. But there is a quid pro quo. If there is no credible reciprocation in response to these ambitious plans, then France and the UK can hardly be blamed for retreating into bilateral cooperation.

The gloomy economic news is a sharp reminder to the Coalition Government that the numbers won’t always drive the political agenda in their direction. Cameron and Clegg know that choppy waters lie ahead and are steeling their parties for things to get worse before they get better.In the months ahead George Osborne and Ed Balls will be involved in hand to hand combat not just over deficit reduction but over which party has the right mix of policies to promote economic growth and job creation.

The appointment of Ed Balls is a mixed blessing for the Coalition. It will be easy to paint him as a close confidant of Gordon Brown and as the architect of the UK’s economic woes. But the Treasury team will be acutely aware that Balls is economically literate and one of the few Labour politicians capable of taking scalps.Labour must also be careful. They still have much to do and with Ball’s now in the driving seat on the economy Ed Miliband will find it hard to apologise for Labour’s mistakes, which is what he must do before he can even think about winning back Labour’s own economic  reputation.All eyes will now be fixed on the Budget on 23 March and the next set of GDP figures in April. They will tell us whether the UK has double dipped into recession. Or whether December was just an economic aberration cause by one of the coldest months on record.

Hilton wants media and advertising agencies to donate millions of pounds worth of creativity and advertising space as a contribution to the Big Society as part of the drive to nudge people into different patterns of behaviour rather than legislate for change.

The Advertising Association has said that the idea  ‘could limit real collaboration between government and industry on the development of effective two way communication with the public’ which up until now has been  paid for by the Government, particuarly in DECC, DoH and DWP.

While Departmental spending on advertising has reduced by £100 million since the election last May the Government still remains one of  the advertising world’s most important customers. Applying behavioural economics to marketing is the holy grail for the industry and it will wonder why they should do some of their best thinking for Government for free.

A good barometer of whether or not the Coalition, and its economic strategy,  is succeeding will be the tendency amongst trending obsessive creatives to break ranks over and offer pro-bono work for Government offering offer wise counsel and insight and, by happy coincidence, positioning themselves for fewer but no less lucrative COI contracts in the future.

The perceived wisdom is  that people are no longer interested in politics, but audiences continue to love this kind of thing. In the 80s and early 90s Yes Minister/Prime Minister defined public perception of what went on behind the enigmatic facades of Whitehall. Politics was an eternal dual between Jim Hacker, the people’s politician with big ideas, and Sir Humphrey Appleby the civil service mandarin whose sole objective in life was to crush them. Sir Humphrey’s creed: “A career in politics is no preparation for government.”

Then came New Labour and Armando Iannucci’s The Thick of It shaped the zeitgeist for the blackberry generation.  Where the media played a bit-part role in Yes Minister, with Press officers barely poking their heads around the door,  Alistair Campbell’s caricature became the omnipotent “spin doctor” prowling around nervous Ministers with a handful of dodgy dossiers.  Blair’s sofa-government drove the change, and Iannucci’s Whitehall and Westminster became  hapless and media-driven where spin always counted for more than substance. A raised eyebrow and “that would be brave Minister” was drowned out by Malcolm Tucker screaming, “Come the f*** in or f*** the f*** off!”.

In retrospect, perhaps all this has done Sir Humphrey a very big favour. The foul-mouthed Tucker obscures Sir Humphrey’s machinations. Things are getting even better for Sir Humphrey now. It’s said that coalition government has empowered the civil service. The Cabinet Secretary’s office is the real power-base. When people have meetings, someone takes a note. Blair’s sofa is abandoned in the corner.

This government is crammed with politicians clutching their “brave ideas”.  The mandarins must relish the challenge. As Andy Coulson forlornly cleared his desk in Number 10 last week, you might just have spotted Sir Humphrey peering through the curtains, a wry smile on his face, back in business.

Ed Balls is feared  both by the Tories and by his own party for his ‘take no prisoners’ approach to politics and was fingered by Andrew Rawnsley in his book the End of the Party, to be behind elements of the briefing that proved so corrosive to Gordon Brown’s Premiership.

The worry for Miliband is whether or not Balls will settle for the Treasury brief or want the top job for himself.

The Achilles heel, of course, is the association with Brown; both the Eds will be painted as part of a failed regime which was responsible for  reckless borrowing and spending which is to blame for the draconian cuts which are about to be implemented. Tories will say that Miliband has lost control of his economic strategy and his ability to show any contrition for the Brown years.

Comparisons are already being drawn with the last pair of Labour politicians who used to share an office and went on to become Leader and Shadow Chancellor. This time with the added  frisson of fratricide which suggests they are probably as ruthless as each other.

Balls, however, is a clever politician. He’s not fighting an internal leadership election where positioning himself to the left of the Blairite favourite was to his advantage.

Instead the battleground is the hearts and minds of the electorate who still haven’t quite made up their minds about the coalition and who have yet to feel the full force of the ‘difficult decisions’ made by the coalition and the devestation which many will experience as a consequence. Balls will tack towards them and try and stay a little ahead with a trademark dividing line.

Polls may be showing that the coalition is unpopular but Cameron’s approval ratings are holding up and Labour is not trusting on the economy. Now at least they will have a cohesive economic strategy which will be hammered home repeatedly by a  man who looks and talks more like the electorate than the Government.

The Government is ‘playing all the right notes’ says the Time’s leader, but as Morcambe famously told Andre Previn, ‘not necessarily in the right order’.

What do you think of it so far ...

In keeping with this comic theme we would suggest that, should the PM need a double act in this time of need,  he might stick with Paul Burstow  the  hitherto anonymous Lib Dem Health Minister brought in to provide air cover at the PM’s speech yesterday and give Ricky Gervais a miss.