Plotters turn gaze to No 11

MORNING BRIEFING – By Benedict Brogan (Daily Telegraph).

It is now apparent that the Adam Afriyie operation is more advanced, far-reaching and substantial than many realise, and so poses a considerable threat to David Cameron. What will be particularly troubling to Number 10 is the realisation that the plotters on the whole don’t really believe Mr Afriyie has what it takes to be leader, but are willing to support his challenge as a way of dislodging Dave. The Prime Minister has been warned that summer 2014 is his deadline for improving the party’s poll standing. If he fails, the rebels believe that they have sufficient numbers to force a vote of confidence, the Guardian reports. The Afriyie warning shot has come early, but there are cooler marksmen biding their time. With today’s Sun poll still giving Labour a 12pt lead, their sights are unlikely to be lowered any time soon.

While Dave is winning voters over with his mastery of defence planning, the rebels have another scalp in mind. If the Mail‘s report that a letter calling for the Chancellor’s head if Q1 GDP also falls is quietly gathering signatures is accurate, then he could be in trouble. It takes only 46 votes to put a confidence issue before the ’22, and the threat is sack George or we will trigger a confidence vote on Dave. The calls for radicalism in the Budget have been getting louder since the latest GDP drop. If the Chancellor can’t deliver, then the backbench blood lust might be too great to contain.

ARMYSHAMBLES

Blower’s cartoon on our comment pages is the morning’s most succinct comment on the defence spending debacle. How do they get themselves into these situations? Dave’s decision to shoot from the lip and ask questions of the Treasury later looks dangerously inept at a time when, as we report, British troops have been told they can expect to be in Mali for at least a year. James Kirkup‘s analysis is important. The Autumn Statement cut £500m from defence in the 2014-15 financial year. That means that all subsequent years will be hit by a knock on effect, so even a real terms budget increase in 2015-16 could still see the budget lower than in 2013-14.

As the Treasury has made it clear to MoD officials that there is no escaping the axe in the current spending round, even real terms increases in the next parliament look unrealistic at present. Nicholas Watt and Patrick Wintour in the Guardian point that this will strain Dave’s unhappy relationship with service chiefs still more, while Fraser Nelson argues that you can’t just feed a fighting man fudge:

“Having lambasted Blair for fighting two wars on a peacetime budget, Cameron cannot very well fight three wars on an even lower budget. Even in opposition, he knew he would face a choice as Prime Minister: to shrink from the world stage, or operate the sort of military that is capable of sorting out problems from the Hindu Kush to the Sahara desert. To the surprise of many, perhaps even himself, David Cameron has taken the latter option. Now, he needs to pay for it.”

THE GHOSTS OF BUDGETS PAST

RBS should be nationalised completely, Nigel Lawson argues in an interview with the FT (£). The crown prince of privatisation argues that until it is fully under state control, RBS cannot get its bonus culture under control. The bank shouldn’t worry about losing star traders as “they’re all of them easily replaced”, and a nationalised RBS could be turned into a vehicle for lending to British business. Not content to stop there he added that Stephen Hester should never have been appointed CEO, George Osborne shouldn’t move away from inflation targeting, environment policy under the Coalition is “socialist” and that any renegotiated settlement with the EU would amount to “make believe”. Sitting on the fence as usual.

Meanwhile, the dead sheep who savaged Maggie has returned to nibble Dave over Europe. The Guardian reports that Lord Howe told peers yesterday that Parliament must have the last say on any decision to leave Europe, accusing Dave of being wrapped up in party management issues (you’d never know). Lord Howe is not alone in his opposition, the Mail claims that the US has been turning the screw diplomatically. The latest ploy is to send Joe Biden to meet the Prime Minister on Tuesday. If only the speech had shifted attitudes so much on this side of the Atlantic. Lord Ashcroft’s polling found it hasn’t shifted the British public’s attitude to the Tories. Good job it was a conviction call, not domestic positioning.

FAMILY VALUES SPECIAL

When he broached the subject of a married couple’s allowance, Dave was told that Nick Clegg did not get married for £3 a week and would order his troops to abstain from a vote, the Mail reports. Without the active opposition of the Lib Dems, the measure should still pass, if it ever makes it into the budget. The same cannot be said of the Coalition’s latest childcare plans. As we report, Lord Newby conceded yesterday that the idea of a tax break for working mothers may have to be reconsidered as it alienates stay-at-home parents. Back to the drawing board. Again.

The greatest family feuding is still reserved for gay marriage, of course. The Prime Minister’s kamikaze mission against his backbenchers has been joined today by Helen Grant, the equalities minister, who doesn’t support gay marriage in spite of being a Christian, but because she’s a Christian, she said yesterday. It isn’t ministers with whom the Tory problem lies, though. Our story that David Burrows has polled his colleagues and believes that 200 of the 303 Conservative MPs will vote against it suggests that the whips still haven’t digested the scale of the potential revolt – on Wednesday they put the figure at 100 to 120.

MINISTERS HUNT £10BN OF WELFARE SAVINGS

In a bid to protect budgets in their own departments, Conservative Cabinet ministers are pushing for the bulk of the Treasury’s £10bn savings drive to be taken from the welfare budget, the Independent reports. Philip Hammond, Theresa May and Michael Gove are all said to be calling for a further cuts to welfare over the 2015-18 period. They argue that welfare spend makes up one third of all government spending, and that with health, schools and aid all ring-fenced, other departments cannot bear the weight of the cuts alone. Still, it could have been worse. At least defence isn’t ring-fenced anymore.

MILIBAND: FARAGE WELCOME AT ELECTION DEBATE

When he finally settles on a policy, Ed Miliband can be shrewd. As we report, he has raised no objection to the inclusion of Ukip in the 2015 televised debates, trusting that he can do to Dave’s vote what Cleggmania did to Labour’s campaign at the last election. Ukip’s strategy this year will be heavily focused on Labour constituencies in the North, however. That the party is still only Mr Cameron’s problem when the debates roll around is apparently a risk Mr Miliband is willing to take.

CHEER UP KIDS, JEREMY HUNT’S ON

The decision by the Health Secretary to cut Lewisham Hospital’s emergency and maternity units to pay off debts at a neighbouring NHS trust was met with deep hostility by the opposition yesterday. The Mirror found the plan so dastardly that it feels moved to note that “even Tories were appalled”. Our sketchwriter Michael Deacon had a much more serious objection – he looks like a children’s TV presenter:

“Many children’s TV hosts have had puppet sidekicks… Jeremy Hunt would doubtless insist on one of his own. ‘Look who it is, Mr Speaker – it’s Norman the Lamb! Isn’t he lovely and woolly! Say hello to all the boys and girls on the Opposition benches, Norman!’

“Norman Lamb (coldly): ‘I’m not a puppet. I’m a 55-year-old man and I’m Minister of State for Care and Support.'”

ROMANIA RESPONDS

Romania has responded to British threats to target potential immigrants with an advertising campaign by launching one of its own. “Half of our women look like Kate. The other half like her sister,” Bucharest’s poster campaign confides. Another points out that “Charles bought a house here in 2005. And Harry hasn’t been photographed once.” The Independent reports that the posters will soon appear at airports and tourist attractions throughout the country. Not sure how “we may not like Britain, but you’ll love Romania” works as a tag-line, though.

TWEETS AND TWITS

Tom Harris, winning extra points for putting quotation marks around the word independent:

@TomHarrisMP: “The SNP are bitching about HS2 not reaching Scotland. So they expect Scotland to be ‘independent’ by then, but for UK Govt to finance it?”

TOP COMMENT

In the Telegraph

Fraser Nelson – Our Armed Forces can’t survive on a diet of fudge, Mr Cameron

Jeremy Warner – Try to see the opportunity in our difficulty

John Glen – Tuition fees cannot be the last reform of university funding

Telegraph View – The NHS debate is in appalling health

Best of the rest

Philip Collins in The Times (£) – For Cameron aid is not a badge. It’s a mission

Mary Dejevsky in The Independent- The EU has changed Britain – and mostly for the better

Phillip Stephens in the FT (£) – Gloomsters were wrong to bury the euro. Here’s why

Polly Toynbee in The Guardian – The Big Four are laughing all the way to the tax office

THE AGENDA

TODAY: Police Minister Damian Green to provide an update on the Police Crime Mapping website.

09:00 am: London mayor Boris Johnson opens The View from the Shard. Panoramic views can be seen from a viewing area on the 69th floor and from the 72nd floor (880ft) of the tallest building in the UK (1,016ft).

David Cameron: We must clean up ‘shoddy’ banks

The Prime Minister expressed his anger after the four biggest high street banks — Barclays, HSBC, Lloyds TSB and the Royal Bank of Scotland — admitted culpability in the selling of punitive financial products to thousands of small businesses.

Sir Mervyn King, the Governor of the Bank of England, condemned the “shoddy treatment of customers” and “deceitful manipulation” which he said characterised the culture at leading banks.

Stephen Hester, the chief executive of RBS, agreed to waive his bonus for this year after customers were prevented from accessing their accounts last week.

Last night, Bob Diamond, the chief executive of Barclays, defied calls for his resignation after Mr Cameron again failed to back him. A major investor in Barclays threatened legal action against the bank’s board if Mr Diamond did not return bonuses.

On Wednesday, Barclays was fined a record £290 million after it admitted conspiring to fix global interest rates. The manipulation of the Libor rate is thought to have cost consumers, businesses and investors up to £30  billion.

Read more….

RBS boss Stephen Hester says bonuses are ‘good value’

RBS said today it had reduced bonuses in its investment banking business to £390m, down 58pc from 2010, and across the bank as a whole, bonuses were £985m, down 21pc from 2010.

The bank has today reported a larger-than-expected loss for 2011 of £2bn, as it was hit by costs inlcuding an £850m provision against PPI mis-selling claims and writedowns on the value of its holding of Greek debt.

Mr Hester said this morning the bank’s bonuses were “pretty good value for the taxpayer” because they were needed to attract staff with the skills to return the bank to profitability.

“If you want an RBS that is mired in the past, a British Leyland, then we should be judged on a different basis,” he said.

The bank would not be able to recruit people with the message “come here, have a harder job and earn less”, he said. “We will not accomplish our goals if that is the message.”

Read more….

RBS chief Stephen Hester: I considered resigning

Mr Hester, who declined to accept the bonus after it caused a public outcry against excessive pay, admitted he faced some “deeply depressing moments” but concluded leaving the job would have been “indulgent”.

In an interview with BBC Radio 4’s Today programme, he said:

• accepting the bonus would have been “damaging” to RBS;

• bankers should be rewarded for defusing the “biggest time bomb in history”;

• hubris set in after years of expansion within the banking sector.

He was speaking after sending an email to RBS employees urging them to overcome attention of pay, which “makes the job harder”.

In it, he said: “We can’t control the outside world – whether the economic or the political one. That’s not unique to us. But if ever something has been proven over our last three years of history, it’s this – we can successfully overcome great obstacles.”

Read more….

Stephen Hester’s bonus is a sideshow; the real issue is what’s become of our £45bn

If we could depart, for the moment, from what in the greater scheme of things is the almost wholly irrelevant distraction of Stephen Hester’s bonus, a rather more important question continues to fester – when, if ever, is the taxpayer going to see some sort of a return on the £45bn of rescue capital sunk into Mr Hester’s charge, Royal Bank of Scotland?

To have so much public money tied up doing nothing at a time of growing fiscal austerity is a travesty bordering on the criminal. Think how many schools, hospitals, and even aircraft carriers, it could provide.

It had been hoped that by now the Government would be preparing the way for sale of at least a part of its 83pc stake, if not at a profit, certainly at no less than its effective buy-in price. With the shares still languishing at just 27p, against an average purchase price of 60p, that prospect remains a distant dream.

Read more….

Stephen Hester bonus: ‘payments are matter for individuals’, says Downing Street

The statement came after Stephen Hester, the Royal Bank of Scotland’s chief executive, bowed to mounting public and political pressure and agreed to waive his £1 million bonus.

But asked whether the Prime Minister was happy to see other RBS executives receive million-pound bonuses, a Downing Street spokeswoman said: “What we are not going to be doing is micro-managing.

“This Government has taken action to ensure that bonuses are responsible, they are much lower, there is a cap on cash bonuses of £2,000 and we are reforming the whole system.”

It was “a matter for individuals” whether they choose to accept any bonus they are offered, said the spokeswoman.

She added: “The Prime Minister’s view was that he wanted the bonuses to be lower. He always made it clear that it was a matter for Mr Hester whether he took that bonus or not, and that should remain the case.

Read more….

David Cameron is the prisoner of his own rhetoric about the banks

The Cameroons are great believers in “non-electoral milestones”: moments of resonant political symbolism that strengthen or weaken a party’s claim to office. One such milestone was David Cameron’s acute response, in May 2009, to the expenses scandal.

“Politicians have done things that are unethical and wrong,” the Conservative leader said. “I don’t care if they were within the rules. They were wrong.” Unlike Gordon Brown, he grasped immediately that this huge political event was not about the minutiae of parliamentary regulations, or the need to reform the “system”, but the public’s visceral sense of right and wrong.

Read more….