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John Street’s January 27

John Street — Fri, 27 Jan 2012 15:40:00 +0000

Tony Blair’s fondness for US presidential style politics is well-documented. But it seems, on face value at least, that there is one area where he can teach one White House hopeful a thing or two – tax efficiency. Mitt Romney, up until now at least, a front runner for the Republican nomination, famously allowed people just a peek at his considerable personal wealth when he published his two most recent tax returns, almost 550 pages in all. The independently wealthy former governor of Massachusetts earned $21.7 million in 2010 and $20.9 million last year, all from profits and dividends on canny investments – none from wages or salary – although he continues to make capital gains profit from the private equity company, Bain, that he set up in 1984 and left in 1999. In 2010 he paid $3 million in income tax – effectively 13.9 per cent – and his tax bill for last year will be about $3.2 million, effectively 15.4 per cent. All legal and legitimate, he pays tax on income from his Swiss bank account and other tax havens including Ireland. But far less than any of his opponents or the average US taxpayer. Mr Blair succeeded in paying just £315,000 tax on earnings by Blair, Inc (more formally known as Windrush Ventures) of more than £12 million – a 42 per cent increase on the previous year. Almost £11 million of this income was written off as “administrative expenses” and, therefore, tax allowable, and bringing total profits for the company down to just over £1 million on which corporation tax was levied at 28 per cent. The result was a bill of just £315,000. Mr Blair paid £2.3 million in wages to 26 staff, some of whom accompanied him on 61 overseas trips totalling 224,000 miles of travel. He spent a further £300,000 on office equipment, and £550,000 on rent for his Mayfair offices. Details of almost £8 million of deductible expenses for “administration” have not been publicly disclosed. There is absolutely no suggestion in either Mr Romney’s or

Mr Blair’s cases that their low tax bills are anything other than utterly, legally bona fide – if a bit hard for some to stomach. Mr Blair’s tax-allowable expenses include premises costs, stock costs, travel expenses, repairs, staffing costs and his salary. Business profits are subject to corporation tax, charged at 20 per cent for profits under £300,000 with a rising marginal rate imposed on profits between £300,000 and £1.5 million. It is 26 per cent (25 per cent from this year) on profits over £1.5 million – after all deductions for expenses.

Of course, it could be argued that Mr Blair represents precisely that same, wider can-do entrepreneurial spirit exemplified by the surge in the numbers of self-employed and hailed by Prime Minister David Cameron in mitigation of this month’s seriously disheartening jobless figures of 2.69 million (expected to hit 2.8 million). Self-employment rose by 101,000 to 4.12 million accounting for 14.1 per cent of total employment, according to the Office of National Statistics. It has jumped 8 per cent since the recession started in 2008, even though the number of employees has fallen 3 per cent, or 109,000. But, says the Chartered Institute of Personnel and Development, this jump has less to do with an enterprise culture and more to do with “desperation”. In other words, the vast majority of these new businesses will be ordinary people working part-time and freelance rather than higher income earners like Mr Blair – and his protégée David Miliband – who can make the most of corporation tax. According to the CIPD, women account for more than half the increase (see hair dressers for a daily example) and nearly 90 per cent work fewer than 30 hours a week. The CIPD’s John Philpott said the figures suggest an army of sole trading odd jobbers desperate to avoid unemployment.

The Government has run out of things to do in the House of Commons. Understandable, given the coalition’s engagement outside Westminster in the biggest social engineering project this side of the Second World War. The long and short of it is that there is not enough Government business to occupy MPs. Official Opposition “supply day” debates, when Labour and the other minor opposition parties have a chance to choose the topic for debate, have already been used up as the Government seeks to pad out empty time in the Chamber. Now even more days are being thrown at Labour, “unlisted” supply days, as Speaker John Bercow announces in lip-curled emphasis at the coalition’s blank agenda. Instead of leaving the Government embarrassed by having nothing for the Commons chamber to debate, Labour business managers feel obliged to fill in the gaps in case people feel they have nothing to say about Government policy. So that’s working well, then.

Former sports minister Gerry Sutcliffe was quizzing his coalition successors during hearings of the DCMS select committee on the Olympics. He wanted to know why more ministerial applications had been made for the beach volleyball than all the other events put together – around 4,000, give or take a roll in the sand. Red faces on the ministerial table were followed by a civil service explanation that, of course, the volleyball competition is taking place on Horse Guards Parade in the middle of Whitehall. So, the explanation went, ministers would be able to participate while taking the minimal time off duty. Yes, minister.

John Street’s Diary December 9

John Street — Sat, 10 Dec 2011 13:49:33 +0000

It has long been a source of frustration and amazement to many Europeans how British media – not just popular tabloids but dramatists and comedians and even MPs – filter their understanding of the rest of the continent through the prism of the Second World War. Many who come to live and work here – especially those from Germany, but not exclusively so – are surprised by just how defining a moment WW2 was for some, even if the reality is that much of those popular memories heavily rely on 1960s Hollywood war movies made here because the strong American dollar went a lot further. Not least because Britain was still paying the United States back. But last week the Second World War rhetoric was ramped up at no less a venue than by the Brandenburg Gatee in Berlin by Poland’s foreign minister Radoslaw Sikorski. In a scene reminiscent to some of Basil Fawlty’s “Don’t mention the war” episode, Mr Sikorski chastised German reticence to respond decisively to the eurozone crisis and said, to some sharp intakes of breath, that: “I will probably be the first Polish foreign minister in history to say so but here it is: I fear German power less than I am beginning to fear German inactivity”. But then again, the eminently able and ambitious Mr Sikorski – whose views on social welfare cuts make David Cameron look left-wing – did study Philosophy, Politics and Economics at Oxford where he was a member of the infamous Bullingdon Club. In the midst of the travails of the European single currency, a number of British newspapers last week carried interviews with the former President of the European Commission and putative “father” of the single currency, Jacques Delors. Subsequent synopses and paraphrasing of some of his interviews tried to suggest he had in some way admitted the venture was misguided or even impossible. In fact, the 86-year old Frenchman, Catholic, intellectual and socialist – author of the “social dimension” of Europe that has meant so much to ordinary workers in the workplace – not only said nothing of the sort but offered a rallying cry of sorts to even the most jaded supporters of the post-war European “project”. Mr Delors did say that British economists who argued the independent European Central Bank created for the euro required a single state had a point. But, in truth, he never once pretended otherwise. That was to be achieved virtually through the close co-operation of member states on the harmonisation of most taxes, tackling youth and long-term unemployment, and the “social dimension”. “It is not just a question of money. I said all these things, but I was not heard. I was beaten”, he told the Daily Telegraph’s Charles Moore, whose own critique of distorted market capitalism made such compelling reading this summer. Among all the 17 member states of the eurozone, the reaction to problems from 2008 to today has been “too little, too late” he said. He compared the current dilatory response of European and Western leaders to the decisiveness shown by an earlier generation of their predecessors at the fall of the Berlin Wall. Helmut Kohl, François Mitterrand, George Bush senior and Mikhail Gorbachev “could all have spoken and acted too little, too late”. Instead: “They reacted quickly to this revolution, thanks to the intelligence of these men. There was an aspect of sangfroid and political vision.” He went on to sum up the current crisis thus: “Whether we like it or not, we are part of the West, and the West could possibly lose its leadership, and it is important that we preserve the values that matter not only to Europe, but to Britain and the United States – the values that are Judeo-Christian in origin – Greek philosophy and Greek democracy and Roman law, and the Age of Enlightenment and the French Revolution.” An altogether different class of political dialogue from an altogether different class of politician. It’s been a bad week for spin-doctors. In Ireland, just as Taoiseach Enda Kenny addressed the nation to appeal to national pride and urge people to recover their economic sovereignty by acquiescing to a German budget, it emerged that he – not for the first time – waived a salary cap for government advisers to allow one of the Fine Gael-Labour coalition’s inner circle of advisors on the state payroll a 38,000 euro pay rise. Meanwhile, over here we learned that top-drawer lobbyists Bell Pottinger will tinker with your Wikipedia entry – for the right price. As professional troublemaker Paul Staines (Guido Fawkes) was quick to suggest, isn’t that just the kind of thing that got Johann Hari into so much trouble? As John Bercow quipped, to much amusement, “the Swiss Family Benn” were heavily represented at Speaker’s House to listen to a lecture on the life of veteran socialist Tony Benn by historian – and now Labour MP – Tristram Hunt. Sitting right in the front row was the great man himself, with nearly 20 members of the family including his four children, seven grandchildren and brother David. The audience of MPs, peers and guests roared with laughter when Tony humbly declared: “I feel I have been privileged to attend my own obituary.” Mr Hunt said: “The vital difference between Tony Blair and Tony Benn is that the former is a Catholic and the latter a Puritan.”

John Street’s Diary November 25

John Street — Fri, 25 Nov 2011 11:21:31 +0000

Shadow Chancellor Ed Balls usually plays a blinder when he is allowed to perform to his strengths – economics – but he could not resist the invitation by Total Politics to say what moves him to tears. “I cry at the Antiques Roadshow. You know, when someone comes in with some family heirloom and the expert says: ‘Do you know how much this is worth? It’s valued at X thousand pounds’. And they say: ‘I’m amazed it’s worth that much, but it means more to me than money.’ Incredibly emotional.” Of course, he’s a big boy and may well have meant it “tongue in cheek”. But it is surely a matter of time before some bright spark extends the Antiques Roadshow image to work in Gordon Brown’s sell-off of half Britain’s gold reserves in 17 auctions between 1999 and 2002 at the then 20-year low of between $256 and $296 dollars an ounce. The 400 tons of precious metal brought a then much needed £2.3 billion into the Exchequer’s coffers but it was a fraction of the prices gold has commanded ever since and has perplexed many of Mr Brown’s friends and foes. The person usually credited with advising Mr Brown to sell off of the non-performing gold assets is… Mr Balls.

Leading light of The Guardian Allegra Stratton was this week confirmed as the new political editor of BBC2’s Newsnight, succeeding the redoubtable veteran Michael Crick who is now on Channel 4 News. The impeccably well-connected Ms Stratton was at one point tipped for the Ed Miliband consigliere role eventually taken by Tom Baldwin. Possessor of one of the better contacts books in Westminster politics, she started as a producer on Newsnight.

Tony Blair has oft looked wistfully towards the European Union in search of a new, hands-on political role . But now his name has been tentatively mentioned as a possible President of the Party of European Socialists in the European Parliament following the announcement this week by the incumbent, former Danish PM Poul Nyrup Rasmussen, that he is standing down. Rasmussen, who has held the post since 2004, has had something of an inauspicious watch in that time as left-wing governments have lost power across the EU, most recently in Spain and Greece. Mr Rasmussen was most recently a lone voice in support of Greek PM Papandreou’s last minute call for a referendum on the bailout. But if the prospect of Mr Blair taking the helm of a body with the word “Socialist” in its title is possibly too fanciful, his would-be successor David Miliband – who recently lectured on the electoral deficiencies of European socialism – is also being touted in Brussels as a possible candidate, conjuring up images for some, of a “prince across the water”.

John Street’s Diary November 11

John Street — Fri, 11 Nov 2011 16:28:50 +0000

As eurozone finance ministers and the European Central Bank dither over the full extent of the debt crisis, a somewhat smug China has taken to lecturing old Europe about its supposed culture of entitlement. Holding out the prospect of a “Great Leap Backward” if Europe is to get any of China’s own undervalued currency or even its vast US dollar reserves the man responsible for managing the country’s wealth hit out at the welfare state. Jin Liqun, chairman of China’s sovereign wealth fund, says the social and employment protections that exist must be rolled back. “If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack,” he told al Jazeera. “Why should, for instance, within the eurozone, some members’ people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard”, he said. Proof, as if it were really needed any more, that China’s conversion from communism to authoritarian Confucianism is surely complete.

The father of New Labour’s fixation with focus groups – criticised by some and hailed by others as the man who made the party electable – Lord Philip Gould, passed away this week, aged 61, after a very dignified struggle with cancer that also saw him rally others to defend the National Health Service. He is survived by his widow, publisher Gail Rebuck, and daughters Georgia and Grace, who were at his side when he died. Among the tributes, and kind reminiscences, which poured in from across the Labour Party and further afield was a testimonial from former Prime Minister Tony Blair who said the pioneering pollster – who entered the House of Lords in 2004 – was instrumental to the party’s three general election victories. Some decried the culture of focus groups which he helped foster in the Labour Party but no one who knew or worked with him had anything but kind words to say about him. Alastair Campbell said: “His focus groups, far from being an exercise in PR, were a way of making sure that the kind of people he felt Labour forgot in the wilderness years had a direct voice to the top of politics.” Perhaps the most poignant aspect of his battle with cancer, and particularly sad for his family and friends, was his observation in an interview as he cheerfully awaited death that he had been mistaken to heed advice to go to the United States for private treatment and that his treatment on the NHS was immeasurably superior and, in hindsight, he really should have gone to it first. With that in mind, despite his debilitating illness, he continued to campaign in the Lords to save the NHS from the government’s plans for the US style marketisation once favoured by the more ardent followers of the New Labour Project.

John Street’s Diary November 4

John Street — Fri, 04 Nov 2011 09:44:29 +0000

Bosses of FTSE companies may have seen their pay jump 48 per cent in a year, while others fared considerably more modestly, but new research suggests that there is nothing new in this and that it is merely continuing a well-established trend. Those in the financial sector especially may see themselves as wealth-creators whose rewards and recompense are only in proportion to the riches they have generated but the financial sector has been helping itself to a disproportionate share of economic growth, according to the National Institute for Economic and Social Research. In fact, from the late 1970s to the turn of the century the very highest earners saw the fastest growth in their remuneration. Pay for the top one per cent grew 68 percent faster than that of the median earner – the person slap bang in the middle, as opposed to the average – from 1977 to 2002, said the NIESR. The higher the earnings the greater the trend or acceleration in increases, as the top 0.5 per cent grew 84 per cent faster than the median over the same period. And the calculations and data did not even include bonuses. “The prospect of income inequality is likely to rise again, driven both by structural change and governmental policies”, said NIESR director Jonathan Portes. “[Our] research shows that if you want to do something about rebalancing inequality you have to take on the financial sector, and that what we’re seeing in the [St. Paul’s Cathedral] protests. “The financial sector has taken a disproportionate share of economic growth, and it is not surprising that we are seeing such popular discontent.”

And now an insight into tax man’s league table of who is really rich, just rich or even merely affluent but not quite rich enough to do a one-to-one handshake deal with HMRC boss Dave Hartnett like Vodafone or Goldman Sachs. HMRC, like all the banks, has its own so-called “black card” or “platinum card” customers in its own High Net Worth unit – believed to be about 5,000 people with income, assets and other wealth in excess of £20 million. But this week, in an effort to justify the extra billion pounds or thereabouts given to it last year by Chancellor George Osborne (to recruit 2,250 tax inspectors), it set about targeting those people it hopes can, collectively, help it bring in an extra £7 billion a year by 2015. But that does not mean that nice Mr. Hartnett spreading himself thin by turning up on the doorsteps of those 350,000 people earning more than £150,000 a year and whom HMRC thinks might have more to give. The newly-formed “affluence” unit of 200 inspectors has been established to see if such people have overseas properties, or income from those properties, which they may overlooked in their tax returns.But to get the really personal service from Mr Hartnett you really do need to owe a lot more.

Jon Moulton, one of the pioneers of private equity in this country and a man greatly admired within the financial industry, is no stranger to pithy quotes. About five years ago, he ruminated in a Financial Times interview how it was not right that he paid less tax than his cleaning lady, a sentiment echoed more recently by Berkshire Hathaway’s Warren Buffett. He also thinks Britain should be more like Estonia in cutting public expenditure (it applied across-the-board cuts of 20 per cent and saw unemployment soar before the jobs growth of its current recovery) and that the deficit – in which Britain allegedly “spends £5 for every £4 it earns” – is “immoral”. Speaking on BBC’s Newsnight this week, Mr Moulton spoke ruefully of the £35,000 donation to Defence Secretary Liam Fox’s self-styled advisor Adam Werrity that had been solicited from him after one of his investment vehicles had acquired an interest in a company that does business with the MoD. There is absolutely no suggestion of impropriety by Mr Moulton or any of his companies and the investor made his clear his irritation at having been talked into making the donation – especially given subsequent disclosures about its “charity” work. “The definition of ‘foxed’ is ‘discoloured with yellowish brown staining’ and I fear it might be reasonably appropriate. I can definitely say that I was mugged,” he said.

John Street’s Diary October 28

John Street — Fri, 28 Oct 2011 13:41:08 +0000

November seems set to be a trying month indeed for News International’s James Murdoch – and one week in particular. James is the boss of Rupert Murdoch’s British operation and, until the dreadful Millie Dowler hacking scandal, was even as a possible heir apparent to the media mogul’s empire. The company has been systematically doing all it can to reverse the damage to its public image in recent months ranging from removing from the earth all physical traces of the News of the World to paying compensation to the Dowler family and supporting their favourite charities. On November 10 James will be back in the Palace of Westminster, to take questions from the Culture, Media and Sport Selrct Committee once again and will presumably be even much better briefed on both facts and self-presentation than last time. But before that a court in France is expected to rake over the traces of the News of the World one more time when it delivers its verdict on the breach of privacy action taken by ex-Formula One boss Max Mosley on November 8 against the newspaper and its former news editor and chief reporter Neville Thurlbeck. Mr Thurlbeck is himself waiting to hear the outcome of a criminal investigation and is elsewhere claiming unfair dismissal by his former employers and that he was victimised for whistle-blowing. The Mosley verdict in the French courts has been put back from the originally scheduled date this week. The single-minded Mr Mosley, a talented lawyer credited with revolutionisng safety standards in Formula One for the better, took his quest to hold Wapping to account to the French courts after an unsuccessful privacy action before the European Court of Human Rights in Strasbourg. The pictures the News of the World published of him cavorting at a spanking party with five prostitutes were unequivocally no one’s business but his own, maintains the defiantly unapologetic Mr Mosley who insists there is a broader principle that tabloid media bosses have become over-mighty. It may well turn out to be a canny decision that chimes with official French attitudes to privacy and restrictions on what the press may and may not report. Soon after the original publication of the photographs and article, Mr Mosley won £60,000 in damages and £450,000 pounds in costs at the High Court for breach of privacy.

Lloyds TSB, the bank part-owned by the taxpayer, told us a little while ago that an increasing number (69 per cent) of its higher net-worth clients have had enough of this country and want to move overseas. Now, presumably drawing from much of the same research, the Bank tells us it is seeing an increasing number of British ex-patriates calling off their plans to return home. Indeed, as many as 15 per cent of British expats have scrapped their homecoming plans, says the bank which surveyed its UK customers resident in Australia, Spain, US, Canada, France, New Zealand, South Africa, Germany, UAE and Hong Kong. Some 74 per cent of them believe their quality of life is better, 64 per cent believe their finances are healthier than they would be here, 52 per cent are confident the cost of living is lower and 51 per cent (this includes people living in South Africa, remember) even believe their neighbourhoods are safer. Given all this, why wouldn’t they stay away, says Tony Wilcox, managing director of Lloyds TSB Expatriate Banking – or words to that effect.

John Street’s Diary October 21

John Street — Fri, 21 Oct 2011 14:08:32 +0000

Another year passes and another UN International Day for the Eradication of Poverty (October 17) comes by with what seems to be, but can’t be, ever greater frequency. The UN mandated day – it’s not a holiday or anything – was conceived in 1993 by UN General Assembly Resolution 47/196 with what – until the Millennium summit – were laudable if somewhat fuzzy goals. But world leaders pledged at that summit to cut by half the number of people in extreme poverty – living on less than $1 a day – by 2015. This week the UN Development Programme administrator Helen Clark said that goal looks like being achieved, on target and on time. This is despite Ms Clark’s admissio at the G20 in Paris last week that the global economic situation is “grave”. That’s the “good” news. “It’s all because of China’s efforts”, said Ms Clark who said the runaway economy there had lifted millions and millions out of poverty. “We are seeking ways of linking China’s experience with the world,” she said. But before you go out looking for signs of a new Foxconn compound to give a quick fix, if brutal, solution to the jobs and housing shortage Ms Clark thinks the solution might lie in greater agricultural production.

Voltaire was said to have rejected the last rites – and renouncing Satan – on his death bed because, as he told the priest, he thought it was no time to be start making enemies. There has been much robust coment about the former Defence Secretary Liam Fox, and rightly so, you might say. But we here are a fair minded bunch and – at a certain stage in life – you take your friends where you find them. Blogger and publisher Iain Dale’s website, Dale & Co submitted an FoI request to find out what newspapers and periodicals are purchased for ministers. Among Mr Fox’s regular reading is Tribune, fine man that he is. His erstwhile Cabinet colleague Ken Clarke, somewhat less surprisingly, also gets a regular copy. Gentlemen you are valued readers. As Marx (Groucho) said: “I have my principles and if you don’t like them I have others.”

The judge leading the inquiry into media standards and practices, Lord Leveson, this week held firm to his belief that he does not need the counsel of any tabloid editors or executives – or indeed any bloggers or digital media types – to work out how the mass media in this country goes about its work. The hand-picked panel of experts and great and good should be able to call witnesses as required, he decided, and are sufficiently in touch with the real world. To that end, according to their letters of appointment published on the Inquiry’s website, the assessors will be paid £565 a day for their trouble. The inquiry’s assessors are Sir David Bell, former chairman of the Financial Times, Liberty director Shami Chakrabarti, former Ofcom chairman (Lord) David Currie, former Channel 4 political editor Elinor Goodman, former Daily Telegraph political editor George Jones, and former West Midlands Chief Constable Sir Paul Scott-Lee. All undoubtedly distinguished in their respective fields – and day – but perhaps a little lacking in the robust, rough and ready red top experiences acquired at the more popular end of the market.

The immensely wealthy Justice Minister Jonathan Djanogly was this week finally stripped of his power to regulate claims farms, or so-called ambulance chasers, after Cabinet Secretary Sir Gus O’Donnell was compelled to explore the minister’s family connections to at least two such companies, Going Legal and Legal Link Introductory Services. The anomaly had been allowed to persist for some time with Mr Djanogly stonewalling any inquiries from MPs about the likely perceptions of conflict of interest. Responsibility for the industry now lies with Justice Secretary Ken Clarke. A reasonable victory for a diligent opposition, one might think, and goes some way to explaining the sense of grievance displayed by Mr Djanogly over Labour’s own “nice little earner” in which visitors to its website are directed to a section that appear to be its own legal services and invited to pursue personal injury claims. They are linked to a Derby firm of solicitors which then pays the party £250 plus VAT for every live lead, or referral. For conveyancing it is a more modest £100.

John Street’s Diary October 14

John Street — Fri, 14 Oct 2011 10:59:51 +0000

Prime Minister David Cameron has turned to The Guardian and hired the paper’s former chief leader writer Julian Glover, a Conservative, to be his chief speechwriter. The move is a better, and more predictable, fit than it might seem to some. Some – such as Ian Aitken elsewhere in this week’s issue even ask what took so long? Mr Glover, a liberal Tory who supports David Cameron’s attempts to “modernise” his party, has been with The Guardian since 2001, during which time he hired the then MEP Nick Clegg as a columnist for the newspaper’s website. The continuation of his friendship with the Liberal Democrat leader was thought to have been detected by some in the paper’s stance during last year’s general election. Although Mr Glover ceased to be chief leader writer in 2009 to become an opinion columnist the newspaper infamously urged its readers, in a leader article, not to vote Labour but to vote for the Lib Dems. Before becoming a journalist, he is credited with editing the manuscript of John Major’s memoirs and with cutting out the former premier’s admission of an extra-marital affair – during his days as a party whip – with colleague Edwina Currie because he thought it wasn’t relevant or important. When Ms Currie saw that she was not mentioned in the book, she took it as a slight, when none was intended, and went public, generating far greater publicity – and embarrassment for the Majors – than might otherwise have been the case. Since 2006, Mr Glover has been the civil partner of Times essayist and Radio 4 presenter Matthew Parris, a former Tory MP who once served as Margaret Thatcher’s PPS. Mr Glover once worked for Parris as a researcher. Guardian editor Alan Rusbridger said: “Julian Glover is a lovely writer and a clear analyst. It’s a loss for The Guardian, but we can quite understand the Prime Minister wanting to poach such a sharp thinker.”

In the film Iron Man 2, billionaire arms dealer Tony Stark (played by Robert Downey Jr) – in a deliberately tongue-in-cheek line – hails the fact that American big business has finally “privatised peace keeping”. As so often, the truth outstrips the fiction. The Ministry of Defence is expected to announce imminently which outsourcing provider it has chosen to take over British Army recruitment, concluding a tendering process started by the last Labour Government in 2008. The contract – to recruit 9,000 new soldiers a year – is widely expected to go to either Capita or the Serco-led Prospector Group, one of whom will be fully in place by November of next year. The successful bidder will be responsible not just for recruiting but also for training those recruits as the MoD makes plans to shed 10,000 jobs between now and the end of this Parliament, eventually bringing overall numbers down to 82,000 by 2020 to save £250 million. Serco already services the UK Atomic Weapons Establishment, RAF Lyneham, and the combined forces in Iraq while private contractors already earn billions providing back-office services to the MoD and believe there is scope for an even greater share. In the US Serco, a major Department of Defence contractor, has built a prominent business placing service veterans into civilian jobs, an area in which the Ministry of Defence in this country has, to be fair, yet to distinguish itself.

How do you choose a suitably grandiose title when your nickname is already “GOD”? Or so some people will ask following the news that the country’s most powerful – and dedicated – public servant, the Cabinet Secretary and Head of Civil Service Sir Gus O’Donnell is to retire and be installed in the House of Lords. Still a youthful 58, the future Lord O’Donnell will end a 32-year civil service career – much of it at the Treasury – and which included being then Prime Minister John Major’s official spokesman at Number 10. For the past six years he has been Head of the Civil Service, during which time he reportedly advised the then Prime Minister Gordon Brown to be more civil to his civil servants – Sarah Brown blamed him for reports of “bullying” and hurled Nokias – before successfully guiding last year’s coalition negotiations. It may be no small pleasure to him that he will be succeeded by no fewer than three mandarins, perhaps posing a minor presentational difficulty for the Government’s claims it is cutting Whitehall posts. Sir Gus, who earns £240,000 a year, is not just the Cabinet Secretary, but also the Permanent Secretary at the Cabinet Office – a department of 2,000 civil servants. He will be replaced by Sir Jeremy Heywood, current perm sec to Number 10, as Cabinet Secretary and principal policy advisor to David Cameron and Nick Clegg. Ian Watmore, the head of the efficiency and reform group at the Cabinet Office will become Cabinet Office perm sec, replacing Sir Jeremy. The job of Head of the Civil Service will be an open competition between Whitehall’s permanent secretaries. Meanwhile Sir Gus – who rescued Norman Lamont during the Black Wednesday debacle over the Exchange Rate Mechanism and who could, arguably, at any stage in the past two decades have parlayed his experience and contacts into a hugely profitable City career – will not feel the pinch too badly as his pension pot is valued at £2.3 million and he can immediately draw down £315,000 and make do with at least £105,000 a year for the rest of his life. But before he goes, Sir Gus will have the last word on the conduct of Defence Secretary Liam Fox.

Tottenham Labour MP David Lammy wants the Cabinet (23 out of 29 them are millionaires) to do their Christmas shopping in his constituency to help boost trade after the riots. He shouldn’t pin too many hopes on any of them playing Santa. l

John Street’s Diary October 7

John Street — Fri, 07 Oct 2011 14:41:45 +0000

As the Ministry of Defence continues to cut jobs across the services some eye-catching statistics from former military intelligence officer Frank Ledwidge in his recently published book Losing Small Wars. Mr Ledwidge, who saw active service in Bosnia, Kosovo and Iraq and has civilian experience of Afghanistan, says the British Army now has more generals than it has operational tanks – pro rata many times more than other military nations. The author and expert, who is damning about British policy failure in Basra – in which, he says, control was handed over to “a savage militia” of religious zealots masquerading as the “police” – points out that the British Army has 350 Challenger ll tanks, a large proportion of which are in storage, and 256 generals. He compares it to the Marine Corpsin the United States – a comparable size to the British defence force – which is statutorily limited to 86 generals. Further, the British Army has,pro-rata, four times the number of generals as the US Army. The Israeli Army, a formidable force similar in size to this country’s, has 48 generals in total.

Meanwhile, irony of ironies: it has been reported that the Russian Army’s decision to stop buying AK-47s – because it already has more than enough, thank you very much – has caused such a stir that the news is reportedly being kept from its 92-year old inventor, Mikhail Kalashnikov, for fear it would kill him. The iconic instrument of death went into production in 1947 to become the Red Army’s standard field rifle. Today there are an estimated 100 million of the rifles in circulation. Russian President Dimitri Medvedev, in all seriousness calls the weapon “a national brand which evokes pride in each citizen”. The brutally simple, and effective, Kalashnikov, is famed for its ability to withstand theworst of conditions and for being idiot-proof – its inventor said soldiers didn’t have university degrees or time to calculate marksmanship under fire.

Chancellor George Osborne temporarily left his party conference in Manchester for a bit of lightning shuttle diplomacy with fellow EU finance ministers in Luxembourg to resist the planned Robin Hood tax on financial transactions. In yet another example of economics and politics as we know it being turned upside down, the tax – bitterly and fiercely resisted in the City of London as anti-competitive – is supported by not just billionaire investor Warren Buffett but also his younger poker-partner and admirer, Microsoft founder Bill Gates. Both men think the tax could be an unequivocal public good with the estimated $50 billion in revenues from it a “game changing” resource for good causes worldwide.

Every working reporter knows that it’s not just Blue Peter that can turn to one it made a little earlier. Print and broadcast deadlines can often be such that it is established practice to have two versions of a particular story depending on the verdict. This is even more so now that news outlets have various on-line versions of their main titles or programmes in which it is so often more important to be first, rather than right, with a story.

Hence, it was not only the Daily Mail On-Line that rushed to “print” with its incorrect story that Amanda Knox’s appeal against her conviction for the murder of Meredith Kercher had been rejected (the reporters monitoring it on news channels confused the initial ruling that her three-year sentence for her slander conviction was upheld). But where it really went pear-shaped for the Mail news juggernaut was when it published detailed quotes and reaction from both sides – none of which happened or could have. Not really what the Mail, or the industry, needs as the Levesoninquiry breathes down necks. Isn’t life grand?

John Street’s Diary – conference special

Tribune web editor — Wed, 28 Sep 2011 12:07:23 +0000

Many will have seen pictures of Shadow Chancellor Ed Balls hurtling his not inconsiderable frame around the soccer pitch. Although unlikely to attract any sportswear sponsorship offers (unless like Abercrombie and Fitch and the Jersey Shore cast, they are to ask him to refrain from wearing their brands), they do speak to his love of the game. Just as his politics – and keen understanding of Marxist theory – seem to have been nurtured by, if not acquired from, his father the distinguished zoologist Professor Michael Balls so, too, does his passion for soccer. Professor Balls, an Oxford graduate like his son, started his academic career at the University of East Anglia in the 1960s – then a hotbed of radical leftist thinking (think Malcolm Bradbury et al) and was a fervent Norwich supporter. In 1967, his team was in a crucial cup-tie with the legendary Manchester United side that included George Best, Denis Law, Bobby Charlton and others. But young Professor Balls was about to become a dad at the same time. While not quite a Sophie’s Choice dilemma, he had to choose between the game and being there for Ed’s entry into this world. After much deliberation he opted for the game. Giant killers Norwich beat Man U… and three days later Professor and Mrs Balls became proud parents to a bouncing baby Ed. With thanks to the Eastern Daily Press’s estimable political editor – and fount of knowledge on all things Norwich, Chris Fisher.

Still on the subject of a “bouncing” Ed, the Shadow Chancellor who had a very good conference indeed, citing many of his favourite thinkers and forecasters ranging from Santayana, Hegel, Marx, Keynes – and himself – shared the Tribune platform with Tom Watson. Self-deprecatingly referring to himself as Tom Watson’s warm-up man, the immaculate-tailored Mr Balls commented on the scourge of News International’s recent weight loss and his own gain. Both men might be described as “comfortably proportioned” but Mr Balls, reflecting on their girths, wondered if that was what Ed Miliband had in mind when he spoke of the “squeezed middle”.

Shadow Culture Secretary Ivan Lewis – who was so unfortunately overshadowed by just about everybody during the summer’s phone hacking scandal – played up to conference urging licenses for journalists. Blogger Hopi Sen, who has a black belt in pricking pomposity, immediately tweeted that Mr Lewis had brought the conference to its feet and was a future Prime Minister. But Mr Lewis, dubbed a text pest by the media for earlier unrequited advances to a colleague had no sooner sat down to enjoy his crowd-pleasing moment than rumours circulated that he is facing the ignominy of losing his current portfolio in the reshuffle.

There is good capitalism and bad predatory capitalism, Ed Miliband told his conference this week. The bad, he suggested was characterised by former RBS boss Sir Fred Goodwin (Fred the Shred, awarded his knighthood by Gordon Brown for “services to banking” –and, no, he hasn’t sent it back even though Ed tried to disown it). The good is typified by ex-Rolls Royce boss Sir John Rose who was chief executive there for 15 years. What Ed perhaps didn’t have quite enough time in his speech to explain is that 58-year-old Sir John, having stepped down from Rolls Royce, has just joined the board of bankers Rothschild’s. He will be deputy to Baron David de Rothschild, who was appointed chairman in 2003. The baron is the great-great-great grandson of Mayer Amschel Rothschild, the founder of the Rothschild dynasty, and is descended from Baron James de Rothschild, who established a bank in Paris in 1812 but traces its roots to 1798, when 21-year-old Nathan Mayer Rothschild arrived in England from Germany to start a textile business. With a Channel blockade making exports difficult, Nathan turned to London’s financial markets to make his fortune. Sir John has a distinguished record as a champion of British manufacturing, so rather than see it as him going over to the dark side it is best to think of him as a missionary for enlightened business thinking and employment which has been so lacking in the wider banking industry these past few years.

Labour’s conference slogan, “Fulfilling the Promise of Britain”, might be a bit pants, but it is slightly better than the Tories’ “Leadership for a Better Future”. The question raised by both these is: when? Still, neither slogan scrapes the bottom of the barrel in quite the same way as the Liberal Democrats’ “In Government, on your side”. As opposed to what? “In Government, knowing where you live and coming to get you”, which is presumably what the Lib Dems are trying to imply the Conservatives are all about. “In Government, but not for very long and then probably never again” might sum it up more accurately for Nick Clegg and his rotten party .