Even the Today programme could not ignore the Labour donor row this morning.
The blogger who came to their editorial defence yesterday when I criticised them for playing down the biggest political sotry of the year had as little editorial judgement and news sense as the programme he was defending.
If even the “Today” programme has to give this story some attention, you have to conclude this is big news and is changing the political climate in an important way.
John Humphrys this morning showed little enthusiaism for the story but did ask some of the questions he needed to to stay in touch with where the political and media worlds are going.
He also revealed his insouciance towards free enterprise by misquoting the extent of the Stock market rise yesterday and by saying he could not understand why Stock markets went up when the economics news was bleak. The answer, John, is simple. Markets look ahead. They understand the current problems. Buyers believe the authorities on both sides of the Atlantic, led by the Fed, will cut interest rates substantially to get things moving in a positive direciton again. Cheaper money would be good for business. Sellers look to the remaining bad news to come out as the credit crunch unfolds.Sometimes the buyers win. Markets usually move off the bottom long before the bad news is all out of the way.
Month: November 2007
The Bank of England’s warning
The Bank is right to warn that inflation will go up again, but wrong if they think this means they need to keep interest rates up. They cannot stop inflation rising a bit this winter – they set that up by fixing interest rates that were too low during the boom times. Today they can decide how quickly we bring the credit crunch to an end,and how much damage it will do to jobs, property prices and activity over the next couple of years.
I find the dithering of the Chancellor and his Bank advisers pathetic. They have lost control of interest rates – rates in the inter bank market are well above the indicative rate the Bank of England is setting. They argue with each other, sometimes in public, about how tight or loose condtions are and whether the economy is slowing down. The MPC is as much use as an academic seminar at the moment. If they want to get back in charge the Bank has to start to lead rates down from the high real levels in the market. (4.5% above CPI inflation)
Let’s make it easier for the authorities – let’s keep it simple.
Commercial property prices are falling sharply.
House prices have started to fall.
Mortgage loans are sharply down.
Other loans are more difficult to obtain.
Credit is getting scarcer and dearer.
Banks are short of cash.
Whenever did you have a future inflation problem on the back of a credit squeeze?
How tough do they want it to get?
It has taken the Bank of England and this Chancellor a long time to undersatand the need to supply liquidity to a strapped banking system – and a run on an important bank. The US and the European authorities got the message much earlier and did not have runs on their banks. It was easy to forsee, as this blog did.
Now the UK authorities have grasped this point, can they not also understand why the US authorities have started to cut interest rates and are talking about cutting them some more?
The Chancellor talks about this credit crunch as if it were a US phenomenon. Let’s try again:
THIS IS A CREDIT CRUNCH MADE IN THREADNEEDLE STREET AS WELL AS ON WALL STREET.
SHORT TERM RISES IN INFLATION ARE INEVITABLE AND CANNOT BE STOPPED.
IF INTEREST RATES STAY HIGH TOO MUCH DAMAGE WILL BE DONE TO THE REAL ECONOMY.
Property decline – mortgage slow down
If more evidence is needed by the Bank of England and by some the bloggers to this site that things are slowing down rapidly, it has come tonight in figures showing mortgage approvals down by more than a third and house prices falling, on top of the evidence of larger falls in commercial property.
The Bank of England has let it be known it will make more money available to the money markets ahead of the year ends for the leading banks. That is welcome – better late than never. The Bank should also realise that conditions remain very tight, and interest rates remain too high for the conditions. Every bank is going to want to show a strong balance sheet with good liquidity over the year end, so there will be a scramble for cash and for smaller stronger balance sheets. That is not the background to higher inflation!
John Redwood Speaks in Opposition Day Debate on HMRC
Speaking in yesterday’s Opposition Day Debate on the loss of sensitive, personal data by Her Majesty’s Revenue and Customs, John Redwood highlighted the failure of Revenue and Customs to perform its basic duty of care to taxpayers, and called for a major change in the culture of responsibility and accountability in the public sector.
The full Hansard text of John’s speech is reproduced below:
<strong>Mr. John Redwood (Wokingham) (Con):</strong> I rise to support the wise words of my right hon. Friend the Member for Charnwood (Mr. Dorrell), and the words of my hon. Friend the shadow Chancellor. My right hon. Friend was right to say that, above all, we are debating a cultural issue. It is a matter of grave concern that HMRC does not regard looking after data as its fundamental duty, and that it does not consider that the customers or taxpayers whom it serves have every right to expect the highest possible standards when it comes to protecting the very important and extensive personal data that they are forced to give to the state, on pain of prison, so that taxes can be calculated and levied.
We are discussing accountability. We have held this debate because we think that the Chancellor of the Exchequer did not tell us enough when he first made a statement to the House? let alone today? and that he did not explain all the details that he knew at that time. The doctrine of ministerial accountability has moved on in recent years, and I welcome that. Twenty years ago, a Minister who had presided over such a major disaster would have offered to resign automatically. There would have been no question about that, but I do not think that it is fair or right for a Minister to resign if a junior official goes against the rules or makes an egregious error about which the Minister can know nothing and whose outcome he or she certainly does not seek. If we were looking in this debate at a single error made by a junior official about which the Chancellor knew nothing, there would be no question to answer under the new doctrine of accountability.
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However, the contention of my hon. Friend the shadow Chancellor is that we are looking not at one error but at a series of them. Some have said that there have been 2,000 errors of a similar kind, although not all on the scale of the most recent one, but my hon. Friend has contended that it is part of the culture, and therefore possibly a fault of the policy, that such things are happening at all.
That is why I asked the Chancellor of the Exchequer whether, in light of recent events, he had made changes to the procedure and policies that govern the handling of data. He answered that he had made one change. The hon. Member for Twickenham (Dr. Cable) and others did not think that that was sufficient, but the implication of the Chancellor’s reply is interesting, as it suggests that he felt that the existing system was not adequate and needed to be changed. In addition, the Chancellor has appointed a committee of inquiry to see whether the system as a whole needs changing and improving, which suggests that the problem did not arise through one official making a mistake but through a systemic failure inherent in the policy.
The most important error to have occurred has not received enough attention. In March, a similar volume of information was sent in a similar manner. Fortunately, the discs did not go missing, but that event should have alerted the previous Chancellor of the Exchequer to the seriousness of the possible problems that such sloppy data handling could cause. If anyone is culpable, therefore, it is the former Chancellor and his junior Minister responsible for these matters, as they did not respond when things went wrong. Could they have responded? Did they know? We now learn that a senior manager in HMRC was well aware of the error in March, and it does not speak well for the leadership provided by the then Chancellor and other Ministers that that official did not pass on the information to the Chancellor’s private office? or, if he did pass it on, that the former Chancellor and the responsible Minister did not understand its significance, and therefore did not take action.
That brings me back to the question of culture. No one on the Opposition Benches with experience of running Departments or big companies? I have had the privilege of doing both? believes that a single person can possibly know every decision, read every e-mail, or be copied into every transaction. That is why I accept that errors will occasionally be made that are not the wish of the person at the top. Since such errors are not inherent in the policy or culture laid down by that person, I believe that he or she should be forgiven. However, the culture at HMRC did come from the top and it seemed to say, We do not regard the sanctity of personal data as crucial. We do not think that should be your No. 1 duty.?
I suspect that if we could see more of the relevant e-mail traffic and memos we would discover that Ministers wanted the merger of Revenue and Customs to give rise to a more aggressive Inland Revenue that got more money out of more people, more quickly. Since the merger, I certainly have received many more complaints from constituents, very often to the effect that HMRC has extracted money on rather bogus arguments, or incorrectly. It has then had to return that money. I suspect that the cultural shift that the then Chancellor orchestrated and sent down the line was that he wanted the new merged organisation to be much better at
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collecting more money from people and companies. If that is the culture being promoted, it is not easily compatible with one that is customer friendly. In a customer-friendly culture, staff would be told, Your No. 1 priority should be to treat customers well, and that means that you must look after their data.?
Others have said that what has happened demonstrates that the Government cannot be trusted with the wider range of data collected for ID cards. Naturally, I agree: the public are now extremely suspicious of the Government’s ability to handle data and of their trustworthiness in dealing with that information. In the days ahead, Treasury Ministers who want to rescue their ailing position on data handling must demonstrate that they have learned the lessons and that they have put in place a system that will not allow such errors to happen again. However, the evidence from the Chancellor and other Ministers on the Treasury Bench today gives us no sign that we are about to reach that happy situation.
We have been told that one change has been made to the relevant procedure? something to do with the internal post at HMRC. We have heard nothing about encryption, or about reducing the amount of data that can be moved, either on a disc or in some other manner. We have heard nothing about introducing personal couriers to transport such sensitive data, or about reopening discussions with the NAO about how much data are needed and on what basis. My understanding of audit procedure is that it is done by sample, so why on earth were the records of 25 million people sent through the post? Could not a proper sample have been made? We have heard no explanation from Ministers as to why auditors cannot go to the data, rather than the other way around.
It is pathetic that so many days after the scandal was first reported we have not had a straightforward statement from someone on the Treasury Bench about how elementary protections and precautions for data handling and transmission have been put in place. Such defences would be expected in any medium-sized company, let alone a large one. We also need to know why the Chancellor has been so dilatory in coming to the House, and so reluctant to have information dragged out of him. It is apparently fine to share with the world, through the postal system, the unprotected records of 25 million people, but when it comes to data that this House needs? such as where the ??25 billion used for Northern Rock, and the asset protection that has been put in place? we are not allowed to have it. When it comes to information on what action the Chancellor plans to take to deal with the data-handling shambles, we are not allowed it even after a full debate and a statement.
The Chancellor’s Department at senior level knew about the problem on 8 November. We are told that it was two days before the Chancellor was told, so that shows that he had not told his staff that such things were important or mattered to him? otherwise they would have told him immediately and not taken the risk. It then took him another 10 days, until 20 November, to come to the House of Commons to tell us what had gone wrong. That does not speak well of a Government who believe in Parliament and think it central to our national life; nor does it speak well of a Government who claim to care about people’s data. If the Government knew 12 days beforehand that the data might have been
<strong>28 Nov 2007 : Column 332</strong>stolen, and had certainly gone walkabout, why were the public not told and warned then? Why were they not told and warned through the natural route? a full statement to this court of Parliament? That is what should have happened.
The Chancellor’s excuse is that he wanted time to talk to the Information Commissioner. He then tried to blame the banks, although they were told only on the Friday evening. The Chancellor now says that one or two banks wanted a bit more time, but it was hardly sporting of him to take up all the working days of the week, keeping the information to himself, telling the banks only on Friday evening when, no doubt, officials and Ministers wanted to go home and leave the banks with the problem over the weekend.
That reeks of a Government who are after our money but not out to give us service. It reeks of a Government who speak about the importance of democracy but do not treat the House of Commons seriously. It reeks of a Government who claim to value the people of this country but who cannot be bothered to tell them promptly when the Government make a mistake. It is a disgrace and it is high time that Ministers on the Treasury Bench came up with a better defence and some resolute action so that we can be reassured that in future they deserve to handle our data.
The dodgy funding crisis – what crisis?
This morning the "Today" programme asked what was new in the Labour funding story! Mr Humphrys ruminated on when they could call a halt to running items on it, implying his impatience with such a turn of events. What is remarkable about this story is how quickly it is changing and how it is snowballing. If Labour do not make a more definitive statement soon about who knew what when, the press will continue to pick away at the Labour version to show just how much was left out.
John Humphrys should try reading the newspapers – as he usually does. That would tell him what is new and what remains to be found out in the story:
1. Mr Brown’s personal fundraiser did know about the Abrahams donations – we were originally told only the Labour General Secretary knew. What was Mr Mendelsohn going to say to Mr Abrahams when they met? Why didn’t he tell the Prime Minister? How long did he sit on the knowledge? If he accepted the advice that Labour thought this was legal why did he want to change it?
2. The Daily Telegraph has posed questions on where Mr Abrahams got all the money from.
3.We need to know who Margaret Jay told about the nature of these donations, and whether Hilary Benn passed on his intelligence about it.
4. Did the Gordon Brown campaign turn down money from Mr Abrahams and if so why?
5. Which events did Mr Abrahams attend and why was he invited?
6. Who made the decisions and who put in submissions for any planning perimssion Mr Abrahams obtained?
Extradition to the US
Some of us spoke out against the lop-sided extradition agreement the UK government struck with the USA. Under it the US authorities have wide ranging powers to detain UK business people, whilst the Uk doesnot have the same claims on US suspects. I still think the arrangements are unfair and need revision.
It was not helpful that in the first high profile case, the Nat West 3, they have switched from protesting their innocence to entering a plea bargain, pleading guilty to a serious crime and accepting 3 years in prison if the Judge agrees.I understand that they might revert to arguing their innocence to charges if the Judge does not agree.
I was standing up to protect the innocent from the delays and difficulties of transatlantic justice where there was no case to answer in the home jurisdiction. My case is weakened by the any switch to pleas of guilty in the first high profile case to hit the headlines, but it does not undermine the principle. There will be entirely innocent people, who do not have to stand trial in the UK because the Uk authorities do not think they have committed an offence who may now be under threat of extradition. I do not think the government has put in enough safefgurards, and it is notable that the US does not accept for itself the regime it now imposes on us. It is still necessary to revise this inequity despite the setback of this case.
So is our data safe?
Today we held a debate in Opposition time on the missing data of 25 million people and their Child Benefit records.
Mr Darling told us little extra, repeating his original Statement of 20 November and claiming that he had been right to say the banks needed extra time before he went public with the news. He failed to tell the banks between the department first knowing on November 8th and contacting the banks on November 16th, implying his cocnern about leaving the banks enough time came to him late in day. He conceded that the "junior official" involved in the loss was in fact a junior "manager", and confirmed that in March when data had been sent in a similar way without mishap a senior manager was involved.
His junior Minister, Jane Kennedy, winding up the debate told us a bit more. Apparently the Treasury and HMRC are changing their arrangements for data transfer, limting the volume and frequency of transfer, encrypting more and improving the authorisation and postal arrangements. It was difficult to understand why Mr Darling did not tell us all this at the beginning of the debate. Maybe he did not because this implies it was a systems failure, and not an occasional mistake by juniors.
Will this make our data secure? It is difficult to be sure it will, given the lack of information coming from the top, and the apparent lack of purpose in putting these matters right at the top.
Stephen Dorrell and I pointed out that there is a cultural porblem in the department. If the senior Ministers stressed repeatedly that offering a good service to taxpayers was fundamental, and holding data securely was an important part of that, things might be better. As it was a senior manager in the Treasury, told on November 8th of the problem did not tell the Chancellor until November 10th, suggesting the Chancellor had not made his overriding interest in the quality of service clear. He in turn did not tell Parliament until November 20th, meaning 12 days elapsed before proper Parliamentary and public disclosure, leaving more people at risk of data abuse for longer.
We will need a further statement when the government receives an interim report from the reviewers looking at the whole problem of data security in HMRC. As so often this governemnt fails to take command, watches as things go wrong, and then brings in consultants to tell them what to do next. Why isn’t the Treasury and HMRC capable of sorting its own problems out, with all the staff they have? And why can’t this Chancellor offer some strong leadership, stressing the importance of better client relations and ensuring by chairing the relevant meetings that this wish will be reflected in practise.
Sleaze and the BBC
I remember when Labour started their nasty sleaze camapign in the 1990s against the Tories I thought they were fashioning a boomerang. It was over the top, and unnecessary – the Conservative party was going to lose the election anyway. It was bound to damage politics as a whole and to make the life of a future Labour government more difficult.
I also remember that the BBC was willing to glorify little known Tory backbenchers who had made a mistake or were the subject of allegations as "Top Tories" caught in a "sleaze row" or just in "sleaze". Experts were wheeled out to tell us it was a government in crisis. Tory interviewees were subject to endless interruption and innuendo, as the party was confused with the individuals.
How different it is today from the BBC. Labour’s Chief Whip Mr Hoon is allowed to tour BBC studios to make statements about how it will all be sorted out in an enquiry, and how the government is moving quickly to show it is a model of probity, without interruption or innuendo. The BBC does not line up experts to comment on the seriousness of the possible criminal charges, or the seniority of the Labour figures involved. Nick Robinson is an honourable exception, as he is doggedly trying to get to the truth.
When Labour came to office they changed the climate of journalists towards sleaze overnight. The fiat went out that in future husbands cheating wives – or wives cheating husbands – was not sleaze, but a personal matter that the BBC should ignore. Several of the cases of so-called sleaze for the Tories were stories of broken relationships. Under the new regime a succession of broken marriages and affairs received their lurid coverage in certain newspapers, but were not given the sleaze treatment by the BBC in genuflection to Labour’s new settlement.
The Ecclestone affair alerted Labour to the dangers of funding sources to their own reputations. It and other crises led them into legislation to tighten up the regime for reporting sources of funds. They introduced the double jeopardy system for MPs receiving money to help with their political campaigns – the need to report it to the Register of Members’ Interests in the House and in certain cases to the newly created Electoral Commisssion as well. Labour wanted belt and braces, and submitted MPs to their form filling compliance culture.
It is not without irony that it should be this very form filling culture that they have fallen foul of in these latest revelations. It was a failure to register the true donor of large sums of money that led the Prime Minsiter to admit that the party he leads had broken the rules. The first defence mounted was that the General Secretary – Labour’s own senior Compliance Officer – did not know the rules and was resigning because he and he alone had made the mistake. Many in the press doubt that only the General Secretary knew of the arrangement. The testimony of Hilary Benn, Margaret Jay and Harriet Harman – and their respective assistants – will be important in working out just how many people did know.
Today the position has been made worse for the PM by the revelation that his own fund raiser, Jon Mendelsohn, wrote a letter to the donor Mr Abrahams implying he too knew he was an important donor. This takes the whole issue that much closer to the doors of the PM’s study.
We should not lose sight of the reticence of the Communities Secretary Hazel Blears yesterday to answer questions how the decision was made to grant planning permission to Mr Abrahams. If the PM knew on Saturday of the problems, Hazel Blears and her department had some time to find answers to the obvious questions MPs and journalists were going to ask, but so far has not done so. The sooner she can give us an authoritative statement on how this was handled the better as far as the government is concerned.
There is also the question surrounding the gift of monies to intermediaries to pass it on to the Labour party. How have these transactions been accounted for? Are they all tax free transactions? Were there agreements in writing given the size of some of the sums involved? Why did the intermediaries agree to do it, as from their point of view it could prove to be all hassle and no reward if they received nothing in return for their deed?
John Redwood Questions Immigration, Skills Ministers
Speaking in the House of Commons yesterday, John Redwood first highlighted the failure of Britain’s border controls at keeping out illegal immigrants to the Immigration Minister. Later that day, he also questioned the Secretary of State for Innovation, Universities and Skills on whether the Government’s proposed welfare reforms will see benefits withdrawn from those who refuse a training place or job offer.
The full Hansard text of John’s questions follows:
<strong>Mr. John Redwood (Wokingham) (Con): </strong>These illegal immigrants are here only because our border control failed in the first case. Why does the Minister not strengthen the surveillance of passports and visas when people first apply for entry into the country, and ensure that people we do not wish to see here, or those who are a threat to this country, are not admitted in the first place?
<strong>Mr. Byrne:</strong> I hope that the right hon. Gentleman will forgive me for saying that that is a slightly 20th-century way of looking at border control. If we are to have adequate defences against illegal immigration in the future, we need to strengthen our checks abroad. That is why biometric visas are preventing would-be illegal immigrants from coming to this country before they get on a train, plane or boat for the UK. We have to secure our borders in the UK even further, which is why we are introducing a single border force.
I do not think that we will make real headway against illegal immigration until we stop the cause of it, which is illegal working. That is why we have to increase the penalties for businesses that break the rules. It is also why we have to make it easier for businesses to know whether a foreign national is who they say they are, and whether they have the right to work. That is where ID cards will help.
<strong>Mr. John Redwood (Wokingham) (Con): </strong>Are the Government going to withdraw benefit if someone refuses a training place or a job on offer?
<strong>Mr. Denham: </strong>We have said today? my right hon. Friend the Secretary of State for Work and Pensions has said it? that it has been agreed that there will be pilots for mandatory training. That will come in after six months if a personal adviser is, first, convinced that somebody should undertake a skills health check and, secondly, that it would be directly relevant to them to get training. Although the details have to be worked on, I suspect that it will also take place after somebody has refused to take up the offer of extended support, such as up to eight weeks of full-time training with a training allowance. Most people in the House would take the view that the system should operate to provide people with every possible bit of advice, encouragement and support to go back into training, but there is a point at which somebody has to say, If you haven’t taken the opportunities, you can’t expect not to do anything about it.?
How the PM could rekindle popularity
I suggest the following advice to the PM from a Labour source:
To: Prime Minister
From: Senior Politicial Adviser
The drop to 27 % in the polls is serious, and the lack of trust in politics is tangible. Your well judged campaign to restore faith in politics has been badly damaged by Northern Rock, the loss of HMRC data and the Abrahams donations. I know how upset you are by these developments, and feel they are not of your making. Unfortunately they have changed the political weather, and the Tories are now claiming that Northern Rock is related to your changes to the regulatory framnework in 1997, and the data loss to your merger of Revenue and Customs. No-one said politics was fair.
You have rightly decided to try to change the subject of discussion, and have decided to say that you are going to be making the long term decisions the country needs. I think that is the right approach.
However, you have highlighted three decisions which are at best contentious – nuclear power, genetically modified crops and a 3rd runway at Heathrow, and at worst will increase the antagonisms. Whilst nuclear does remove carbon emission when generating power, many greens dislike it and draw attention to the carbon footprint of the new build as well as to disposal issues for the waste. A 3 rd runway at Heathrow is much needed to reduce queues and delays but will be presented as a contradiction to your stance on cutting emissions. GM food remains very unpopular according to all surveys of opinion, even though the government’s scientific adviser sees it as a key technology. You may be right that these things may need doing, but to highlight them in your current positon is, as Sir Humphrey might say, "brave Prime Minister". Critics would say if you think they like data loss and the run on the bank, they will love GM food and nuclear power.
There are long term decisions the country needs that could portray you in the right light that are not as divisive as the ones you have started to highlight. The decision to make training or a job compulsory for those who would otherwise claim benefit is a bold step which could also prove popular with the large majority of people in work who are paying taxes. The decision to cut capital gains tax for all from 40% to 18% could be received favourably if a more generous treatment of those investing in their own businesses or through employer share schemes currently paying 10% was incorporated in the changes. If you reconsidered your position on a referendum on the treaty that could help to reduce the scepticism about politics.
Above all you need Ed Balls to come up with ways of raising the performance of state schools. The growing gap between the grammars/independents on the one hand and the comprehensives on the other is worrying. The large number of school leavers who cannot read and write to a reasonable standard lies behind the disappointing figures for the numbers of young people not in education, training or a job. You have always stressed the need to offer opportunity to all – we do need to raise our game here. If we could break through on jobs and training for all young people, the electorate would start to forget the noises off, and the costs of economic failure (which you waxed lyrical about in Opposition) would start to come down. This is one area where we are lucky that our Opposition is not as good as you used to be at blaming the government!