George Osborne's sly policy deals with the City of London

Without the shackles of the Liberal Democrats, George Osborne has been set free in his relationship with the City of London. In Mansion House speech to the City in June, he called for a “new settlement” with banks.
The new settlement effectively means less regulation, less supervision and less tax. And Osborne has made pretty good progress since May.
Firstly, he sacked tough-talking Financial Conduct Authority chief executive Martin Wheatley over the summer for being too harsh on banks. He is now on the hunt for someone who will be less aggressive and more agreeable to bank chiefs. This is a major, under-appreciated shift. Banks now know they can just call up Number 11, complain about the FCA and the chief regulator will be out on his ear.
Secondly, Osborne has shifted the burden of the bank levy from large banks with global balance sheets such as HSBC and Standard Chartered, who can easily get up and leave, and on to smaller banks and building societies, who can’t leave.
This is another huge deal. It flies on the face of getting new banks created and boosting competition in the sector - a key Treasury objective.
And thirdly, this week, Osborne has removed the key recommendation of the parliamentary commission on banking standards – the body set up in the wake of the Libor rigging scandal to fix banking culture.
Under the new senior managers' regime, senior bankers would have to prove their innocence to the regulator when there was major wrongdoing in the organisation.
Regulators normally have to prove someone is guilty before they act but due to the importance and complexity of banking, it was felt they should operate by a tougher rule.
This was a commission led by free market Tory MP Andrew Tyrie and had Nigel Lawson. No socialist firebrands in sight.
But after heavy lobbying from the industry and global banks, such as HSBC again, that has now been removed. The core of the banking commission on the panel reforms has been spiked.
Rumours are now swirling that a climb-down on the other main recommendation of the committee to ring-fence banks risky investment arms from their retail division, could also be watered down too.
Make no mistake: Osborne has caved in to demands from global banks that they will leave the UK if the regulatory and tax burden continues. So he has met all their demands.
The lobbying has been led by HSBC. This is a bank who is under investigation in Switzerland for aiding major tax evasion. It was fined for money laundering failure relating to drug cartels in Mexico. And yet Osborne is dancing to their tune over fear they might up sticks and move to Hong Kong.
There has been a culture shift at Number 11 on its attitude and it is feeding into the sector. Barclays, so humbled after its involvement in epic scandals, has taken up a humble tone in recent years with former chief executive Antony Jenkins launching on a strategic review of the bank. That is now gone. Barclays is about to hire hedge fund giant Jes Staley as Jenkin's replacement in a bid to ramp up the investment division.
Here’s another example of caving to City demands, this time for hedge fund managers.
Osborne’s launched a much-praised raid on non-doms in the summer budget, with distinct echoes of Ed Miliband’s plans during the election campaign.
He said anyone living in the UK for 15 of the last 20 years would become domiciled here. In his budget, Osborne said: “It is not fair that people live in this country for very long periods of their lives, benefit from our public services, and yet operate under different tax rules from everyone else.”
But last month, a technical consultation was published that significantly watered down the non-dom tax reforms. It said existing non-doms could keep their money untaxed in offshore trusts even after they become domiciled.
It’s complicated, it’s technical and it is a big deal. Osborne has not met the test he set himself in the budget on non-dom taxation. Very rich people will live in the UK for long periods under differ tax rules. He did it to stop an "exodus" of hedge fund managers, as one tax expert put it to me.
In the last few months, Osborne has overseen what is perhaps the biggest kowtow to the banking lobbying in this country since before the crisis.
So where is the opposition? We haven't heard a peep from Labour on anything when this should be their bread and butter. A Tory Chancellor caving into big banks and hedge funds.
After McDonnell’s shambles in the last two weeks, does anyone seriously believe he will be able to hold the Government account over complex banking policy changes?
Does anyone believe new shadow City minister Richard Burgon – who did not know the size of the deficit when asked on Channel 4 this week – can hold their feet to the fire?

We know Labour will not win the next election. We know Corbyn and McDonnell will never live in Downing Street. But can we at least try and have an effective opposition?

Jeremy Corbyn is a tribute act to a failed era

Jeremy Corbyn supporters pretend he is the candidate of a successful future but nearly all his policies hark back to the failed past.

During the leadership he has put forward many policies as though they are fresh ideas but they have long been discredited. 
He mimics Ukip in that he looks back to the past with rose-tinted spectacles and tries to recreate his distorted view in today's world. It is wrong when Ukip do it and it is wrong when Corbyn does it.

Firstly, renationalising the railways, utilities and other major industries is reversing polices enacted in the 1980s and 90s.

It is nothing new but a return to the 1970s when Britain was the sick man of Europe, on constant strike and taxpayers were on the hook for billions. Services were not better or cheaper, just public-owned. Nationalisation focuses purely on the means and not on outcomes.

Secondly, he wants to reopen coal mines. Set aside that this is a policy that would significantly increase Britain’s carbon emissions, it is hankering for a bygone age.

The terrible conditions and poverty associated with coal mining is not an era we should want to move back to. Just because you disagreed with the handling of miner's strike does not mean you have to charge headlong into madcap policies.

Thirdly, he wants to bring back Clause Four. Corbyn says he prefers the old clause four with its priority on managing industry for the common good.

The new one focused on the “many not the few” rather than the means of achieving social justice it is outcomes-based.

Corbyn says he would prefer to revert to the old one but with some added reference to equality and diversity. This is pure nostalgia.

Fourthly, he is flirting with EU exit. Corbyn is considering voting to leave the EU and reverse the 1975 referendum result, potentially aligning himself with Ukip and right-wing Tories.

Fifthly, Corbyn wants to end Bank of England independence. This is “People’s QE” or printing money to pay for infrastructure projects such as roads and houses.

Quantitative easing was an emergency measure between 2009 and 2012 when £375bn was electronically created by the Bank of England to buy Government bonds. The idea was that inflation was not a concern so printing money – which has to be repaid – was the best way to boost the economy.

The Bank of England was made independent in 1997 so Corbyn wants to hark back to the days when Governments had political control of monetary policy. 

It would take us back to when interest rates were rigged for political expediency rather than to maintain economic stability, growth and low inflation.

Sixthly, Corbyn wants to quit Nato and unilaterally scrap nuclear weapons. Unbelievably Corbyn wants to reverse the policies of Clement Attlee’s Government by quitting Nato.

It was Attlee who was so desperate to build the bomb in the 1940s and Nye Bevan who took on those supporting unilateral disarmament within Labour in the 1950s.

Jeremy Corbyn likes to pose as 21^st century with a big youth following but the policies he is promoting are old. Very old and very failed.

The ideas are nothing fresh or exciting but the tired old policies that have back into fashion in the Labour party like retro Adidas trainers.

In the last 50 years UK employment patterns, health, wealth, savings, culture, technology and education have changed beyond recognition. 

Labour needs policies that have similarly evolved to meet different conditions rather than getting sentimental about old solutions.

Labour stares into the abyss

The Labour party is in a state of emergency.

Today, Tony Blair stood up to fight for the party he clearly loves. He warned that Labour faces “annihilation” if it elects Jeremy Corbyn as leader.

He contrasted Corbyn as a minnow compared to ex-cabinet ministers Michael Foot and Tony Benn. And the defeat would be far worse in 2020 than 1983. Much worse.

Today, Yvette Cooper stood up to be counted. After a cautious, dull and insipid campaign, she took a gamble and confronted the problem head on.

She called out Corbyn’s faux radicalism, deconstructed his “people’s QE” madness for the sham that it is and positioned herself as the only possible alternative to madness.

Last week, Alistair Campbell stood up to be counted to rescue the party he has supported his entire life by outfling the chaos Corbyn would create.

John McTernan has been fighting almost single-handedly on the airwaves and online to stop the impending disaster.

These interventions are all massively welcome even at this late stage. They could make a difference, they may not but they have to at least try.

We need Gordon Brown fighting for the party he loves. Even Ed Miliband need to warn that Corbyn is not the answer to the questions his defeat posed. 

This is not any ordinary leadership election and this is no time for Labour to keep calm and carry on. This is an emergency. A life or death moment.

Here’s what happens if Corbyn wins.

The two fundamentals of winning elections are leadership and economic credibility. Corbyn is the worst leader on offer with the worst economic credibility.

If he leads us into the next election then we will lose and the Tories will be in Government. That’s 15 years of Tories minimum.

We won’t just lose badly like Ed Miliband did, we will be wiped out. We will lose dozens more seats. We will definitely slip below 200, possibly below 150 and maybe even under 100.

These seats will be snapped up by Ukip, the Lib Dems, Tories and maybe others while Labour will be a faded force that may never recover. The party could be reduced to a parliamentary rump.

This isn’t just a numbers game. This means the Tories will rule Britain for years and years shrinking the state drastically over the next decade.

Tax credits will be distant memory. The young will have no access to state benefits. Poor students will see their support pulled away. The Human Rights Act will be gone. Fox hunting will be back. Corporation tax will fall and fall. Millionaires will get tax cut after tax cut. Banks will be de-regulated.

The Tories will change the zeitgeist and the heart of the nation by shifting the centre towards their thinking with Budget after Budget, Bill after Bill, speech after speech, key appointment after key appointment.

That hits all the people the Labour party was set up to help: the poorest and most vulnerable in society. We can not do enough to help them as a protest party with no popular support.

But it’s not just blocking the Tories. Apparently it is negative to point out just what a disaster Corbyn would be and the Labour centrists and moderates need to set out a positive future. We do.

The vision is a Labour Government that can win popular support for radical change. A Government that can scrap the bedroom tax, bolster tax credits and rebuild the welfare state for those who desperately need it.

A Government that won’t describe migrants as a “swarm”, that will protect human rights for all and animal rights.

An internationalist Government at the heart of Europe with alliances across the planet that helps solve global problems rather than retreating from them.

A Government that won’t become a tax haven with a race to the bottom on corporation tax and bows before banker demands to de-regulate. A Government that taxes property properly and builds house for those who need it.

A Government that can protect and improve public services that serve the common good and are only safe under Labour.

A Government that can reform the House of Lords properly, devolve power and who actually cares about keeping the UK together.

And much more besides. You won’t agree with it all and it won’t be perfect. But it is better than the alternative of Tory rule and it means progress.

Corbyn can not deliver a single one of those things because he has no popular support in the country. He can not win Nuneaton. He will lose seats and make all these ideas less likely.

He will lead Labour into a dead end that leads only to Tory rule for a minimum of 15 years. His policies are almost irrelevant as not a single one will ever be put into practice.

There is one month to go and it has to be all hands on deck to save the party. This is an emergency.

Ukip breaks election promise on deficit reduction

In its 2015 general election manifesto Ukip promised to support Conservative plans to clear the deficit by 2018 as outlined in the March Budget. 

It promised that Ukip MPs would "hold the next Chancellor's feet to the fire" as they had drastically missed their deficit target in the last parliament. 

Ukip 2015 general election manifesto

Fast forward to July and George Osborne breaks his election promise by delaying plans to clear the deficit by 12 months to 2019. 

And Douglas Carswell, Ukip's only MP, cheerfully votes for the Finance Bill without proposing any amendments. Hardly holding Osborne's "feet to the fire", is it?

Five broken Govt promises that Labour should be attacking

Those within Labour who want to vote against the welfare bill because of changes to tax credits seem desperate for something to oppose. 

Anyone who believes supporting the reforms is a crucial step to rebuilding Labour credibility on welfare - and also the right thing to do - is branded a Tory.

But we are focusing our energies in the wrong place. The Government has been in power for less than three months and has already broken a string of promises with countless cock-ups.

Instead of opposing popular welfare reforms, let’s instead focus our fire on Government action and policy that is genuinely shambolic, hypocritical and wrong. That is what is credible opposition should be.

If we were not so wrapped up in a needlessly lengthy leadership battle then we could be attacking. As parliament moves into recess, let's not let them get away with it.

Here are just five flagship policy areas where the Tories have broken their pre-election promises and displayed monumental ineptitude in the last three months.

1. Borrowing more

The biggest macro-economic decision made at the Budget was to cut spending at a slower rate than previously promised. George Osborne said the deficit would be gone by 2019, not 2018. A timescale almost identical to the one proposed by Ed Balls and Ed Miliband just like the 2010-15 deficit reduction timescale was remarkably similar to Alistair Darling’s plan. It involves billions more borrowing than he told the British people he would in May. Labour has barely mentioned this huge shift that breaks a clear pre-election promise and the March Budget.

 2. Taxing more

In July 2013, George Osborne promised there would be no tax rises to cut the deficit. His July Budget raised taxes by £47bn across the parliament on landlords, non-doms, insurers, banks, car owners and more. Tax and spend Tories, who are also hypocrites. Where’s the opposition?

3. Social care U-turn

The Conservative party manifesto promised to introduce its changes to social care funding for the elderly. The £72,000 “cap” on care costs (that does not include accommodation costs and is riddled with many other holes but was at least something) was meant to come into force next April. It was intended to create the conditions for an insurance market in adult social care. Insurers were sceptical but the Act passed in 2013 and the promise was made. Last week, the Government delayed the cap introduction until April 2020. And the chances of any Government introducing such a complex, controversial system one month before the general election is close to zero. This was flagship coalition policy from a major commission led Andrew Dilnot that was debated through months of parliamentary debate. It’s also Liz Kendall’s shadow ministerial brief and Andy Burnham’s department. Where are they?

 4. Northern Powerhouse cock-up

The electrification of the Leeds to Manchester railway has been shelved despite forming a key plank of the Conservative pitch to the north before the election. The Government has predictably blamed Network Rail and its chairman has quit. It is the latest shambles from the Department of Transport after last parliament’s ludicrous handling of West Coast Mainline tender process. It cost taxpayers £38m. We’ve heard a few murmurings about a northern powercut from Labour MPs but this is major cock-up and we should be co-ordinating our responses better.

5. Pension freedom problems

A central feature of the Conservative pitch to pensioners was George Osborne’s radical reforms to end compulsory annuitisation for everyone from April. The move was announced as a bombshell in the April 2014 budget and pension providers had a rushed timetable to get ready with new rules being brought in as late as a few weeks before the April 2015 deadline. Now it turns out providers were not ready to offer freedoms from April and the Government has acted angrily. This is a clear case of the Treasury ramping up expectations to a ridiculous degree to the dismay of thousands of pensioners. There has not been a peep of opposition from the Labour party.

The welfare bill will pass no matter how Labour votes

The arguments over whether Labour should vote for, against or abstain on the welfare bill are pure gesture politics. It's going to pass anyway.

The tax credits cuts and new benefits cap will happen even if Labour, Len McClusky, the SNP and Caroline Lucas shake their fists at the nasty Tories all day long. It won't matter one jot. 

Here's why: the Tories won the election. Let me say this very clearly so everyone understands: The Conservatives. Won. The. Election.

We lost. The only way Labour can introduce the policies it wants to and support low income families through a higher living wage and targeted tax credits is to win again in 2020. Opposing everything a newly elected Government does will not help win over the voters who have just voted for their manifesto and agenda.

Everyone knew the £12bn welfare cuts were coming and voted Tory not in spite of the pledge but because of it. Britain wants them to happen and it can't be ignored.

The only way to win again is regain trust on the economy and welfare. Supporting certain cuts to tax credits to reduce the deficit and create a surplus is one essential step to doing so. 

There are many things to oppose but let's choose out battles carefully because "blanket opposition", as Harriet Harman calls it, is pointless.

.

Pensions: Forget the manifestos and look at the politicians

This month British voters took out their machines gun and fired at will. Ed Miliband – forced to resign. Nick Clegg – humiliated. Ed Balls – catastrophic defeat. Vince Cable – finished. Steve Webb – humbled. Gregg McClymont – destroyed.
On top of the heap of political career carcasses stands David Cameron. Master of all he surveys after delivering the first Conservative majority victory for 23 years.

The focus now turns to the Conservative manifesto and what personal finance goodies or nightmares it contains. But that’s wrong.

Sure, there are treats on inheritance tax for the family home and fiendishly complex proposals to cut pension tax relief. It also promises to increase the income tax personal allowance to £12,500 and the 40p threshold to £50,000 by 2020.

All important but a manifesto is nothing more than a dry set of ideas that a new Government will try to introduce. Some policies will happen, others will be quietly dropped. It gives us a flavour of the next five years but nowhere near the entire story.

What was the biggest political move on personal finance in the last parliament? Pension freedoms. Not in any manifesto.

Or what about the flat rate state pension, pensions charge cap or stamp duty reforms? Not one of them was in either the Conservative or Liberal Democrat manifestos in 2010. Nobody was even talking about it in 2010.

George Osborne didn’t even mention his shock pension reforms and stamp duty changes until the day he announced them.

That’s why it matters that Webb and McClymont have been gunned down by voters. For example, it was McClymont’s focus on charges that forced the Government into introducing a cap while Webb’s personal drive for pot follows member has ushered in an entirely new transfer system.

Anyone who says we should focus more on policy than personality in politics is wrong. Studying each parties’ manifestos before deciding how to vote is narrow-minded.

The personalities and preferences of ministers provide us with a much greater insight into how policy will shift and swerve in the next five years than pre-election policy pledges.

In personal finance, two individuals now matter more than anyone else - Chancellor George Osborne and pensions minister Ros Altmann.

In an era of super-low interest rates, Osborne has been driven to a radical savings policy and he has got a taste for it.

Reforms to Isas, pensions and savings taxes have won plaudits among middle earners and Osborne is likely to go further.

Get ready for more rabbits in hats in future Budgets. He could merge Isas and pensions to put his reforms on steroids. He could get the ball rolling on merging income tax and national insurance, echoing the major income tax reforms of his political hero, Nigel Lawson.

Meanwhile Altmann’s campaigning work has focused on failed workplace pension schemes and a broken annuity market.

Will she continue to champion them by pressuring the FCA in to annuity action or raising the Pension Protection Fund levy to help those hit by bankrupt company schemes? Or will she move on to new areas such as a drawdown charge cap?

Examining the characters of Osborne and Altmann - and the shadow pensions minister, if they are as engaged as McClymont - is the greatest insight into pensions policy for the next half-decade.

They can shape the national debate on pensions like no one else and will do. It is an enormous power and one that will change attitudes as well as laws.

Their whims and preferences; mistakes and triumphs will do more to shape financial planning in the next five years than almost anything else. Forget the manifestos and look at the politicians.