Iain Dale has had a pop at the Barnett Formula (the agreement forged when Lord Joel Barnett was Chief Secretary to the Treasury more than thirty years ago that residents in Scotland, Wales and Northern Ireland should automatically and in perpetuity get a larger slice of public spending per head than people living in England) and Tom Harris has then had a go at Iain Dale for saying that the Formula is outmoded because of devolution. 

Tom Harris is right in saying that the devolution argument is irrelevant to the case against the Formula, but that doesn’t alter the fact that the Barnett Formula does need to be replaced by something that genuinely reflects the needs of the population in the different parts of the country. 

Of course, Tom Harris spoils his argument with a gratuitous side-swipe at London.  London has Boroughs that consistently have the greatest levels of deprivation and needs in the UK, but London and Londoners have to subsidise the rest of the UK year in and year out to the tune of more than £20 billion.

Yes, of course, the Barnett Formula needs to go and the rest of the UK that relies on London for its prosperity should stop knocking the Capital.

On this morning’s Radio 4′s “Today” programme, George Osborne, the Shadow Chancellor, made it clear that the Conservatives would not repeal the proposed 50% income tax rate on top earners.  His reason: they had to think of the “many not the few”. 

Those who remember the mid-1990s will remember that the “many not the few” was one of the campaign mantras used by Tony Blair and the Labour Party in the run-up to the 1997 General Election to highlight the difference between Labour and the Conservatives.  It is nice to hear that the political consensus has now shifted so much that George Osborne can repeat it with approval and with what was presumably (as you know you cannot see on the radio) a straight face.

But the point he seems to miss is that the whole Budget, which he was of course trying to rubbish comprehensively, was for the “many not the few”.  Still one step at a time.

What will be really interesting is how the rest of the Conservative Party interprets it – will they be so happy with the “many not the few” line?  Will Mayor Boris Johnson, for example, who was distinctly unchuffed with the idea of having to pay 45% tax on his newspaper earnings be happy with a Conservative Shadow Chancellor going along with the 50% top rate?  We will see.

Bismarck said if “You like laws or sausages, never watch either of  them being made.”  It is 8.45pm and Labour Peers have been told to hang on for a possible vote on an amendment to the Local Democracy, Economic Development and Construction Bill.  

The amendment moved by the LibDems apparently raises an important point of principle.  Or at least that’s what the LibDems say.

So what is the amendment?  In Clause 67 of the Bill (which creates a requirement for there to be a regional economic strategy for each region) the LibDems want the Bill to say “The regional strategy for a region is to set out policies in relation to sustainable development and regeneration in the region” rather than “The regional strategy for a region is to set out policies in relation to sustainable growth in the region” .

Is someone taking the p*ss?

And after all that they didn’t press it to a vote!

Hopi Sen’s perceptive analysis on the Royal Mail is well worth reading. 

There is no question that the Royal Mail urgently needs to modernise.Ideally this debate should have happened ten years ago – the changing nature of communications means that the existing business will die unless the Royal Mail evolves and develops to reflect a modern world in which most communication takes place on-line. 

We all want to see a continuing public service, in which for a (reasonable) flat-rate fee posted material can be delivered fast and reliably to anyone in the UK, but this is not sustainable – even with enormous levels of public subsidy – unless the Royal Mail itself changes.  The risk is that by not proceeding and not having this debate now the universal service will collapse completely and disappear.  That would do nothing for those who currently work for the Royal Mail or for the pensioner waiting for a letter from his or her grand-children.

A friend sent me something that gets to the essence of the present economic situation in a way that even George Osborne should be able to understand.
‘There’s a group of us – parents with young children. We decided to
start up a babysitting club, whereby each couple would babysit for the other. To ensure the system was fair, we used a system of IOU paper slips to encourage each couple to take their turn.
The system worked well to begin with each couple doing their turn and trading IOU slips instead of cash for babysitting services. The system was designed so that over time, each couple would automatically do as much baby-sitting as they received in return.

What could go wrong?

During periods when they had few occasions to go out, couples tried to build up reserves-then run that reserve down when occasions arose.

There should have been an averaging out of these demands. One couple would be going out whilst others were staying at home.

But since most of us would be holding onto reserves of IOU slips at any given time, we needed to have a fairly large amount of slips in circulation. Our naturally cautious tendency to build up reserves meant that the number of IOUs in circulation became quite low.

As a result, most couples were anxious to add to their reserves by baby-sitting, reluctant to run them down by going out. But one couple’s decision to go out was another’s chance to baby-sit; so it became difficult to earn IOU slips. Knowing this, we all became even more reluctant to use our reserves except on special occasions, reducing baby-sitting opportunities still further.

In short, our baby-sitting club had fallen into a recession.

We tried to legislate for a recovery-passing a rule requiring each couple to go out at least twice a month. But eventually, more IOU slips were issued, couples became more willing to go out,
opportunities to baby-sit multiplied, and everyone was happy.’

So what was Ken Clarke MP doing coming away from Lord Peter Mandelson’s office in the House of Lords yesterday evening with a big smile on his face?

The weather problems have made it difficult for many members of the House of Lords to get in today – those travelling long distances have not been able to find trains or – even if there were trains – get to their stations in some rural areas.  As a result, attendance is sparse and we are at a critical stage in consideration of the Banking Bill:  the Bill is in Report – the stage when traditionally most of the key votes on amendments take place.

The Bill provides a statutory framework for Government intervention in failing banks and changes the objectives of the Bank of England so as to place an obligation on it to promote financial stability.   it is clearly a vital piece of his year’s legistative programme for the Government.

There have been two votes so far today: the first was won by the Government with a margin of twenty; and the second has just resulted in a tied vote (84 content; 84 not content) so the Tory amendment was not passed and in effect the Government won.  So as the temperature drops below freezing outside, the Whips are rushing round trying to make sure that no Labour Peer who has made it in tries to go home early.

Meanwhile, the pathway in front of the House of Lords entrance is an ice-rink because of – I am told – a dispute between Westminster City Council and Parliamentary authorities as to who is responsible for gritting it.

Last night was the annual dinner presided over by the Lord Mayor of London for the Governing Bodies of London.  The Lord Mayor is not, of course, Boris Johnson, who is the elected Mayor for all of London (not just the square mile administered by the Corporation of London).  This dinner packed several hundred of the capital’s politicians and administrators into an intimate dining room in the Mansion House, the Lord Mayor’s official residence.

The occasion importantly provides a platform for the elected Mayor to set out his views on the state of London and there was a bravura performance by Mayor Johnson, responding to a sober speech from the Lord Mayor on what is needed for London to survive the economic situation.  Essential the message was “times are tough” but “we are going to get through it”.  The package humorously presented (I suspect the audience would have been disappointed if Mayor Johnson’s style had been as straitlaced as the Lord Mayor’s) essentially boiled down to avoiding the over-regulation of bankers, some apprenticeships in tunnelling (building a “cloaca maxima” under the Thames), the new Routemaster (restoring every Londoner’s inalienable right to injure themselves jumping on and off a moving bus), the rent-a-cycle scheme (even if it’s wrong, we’re still going to do it), and a freeze on the Mayor’s precept on London Council Tax.

It was entertaining stuff, but on the day when the Bank of England had cut interest rates to their lowest level since the Bank was established in 1694 it all felt a bit light on substance.

Mayor Johnson was in many ways upstaged by Merrick Cockell, the Chair of London Councils (the umbrella body for the London Boroughs, which was known as the Association of London Government when I chaired it).  His speech set out what the Boroughs are and will do to help Londoners ride out the economic downturn and set out how the Boroughs, the Greater London Authority and central government should work together to deliver the most effective policies to enable London – the economic driver of the UK economy – to emerge stronger at the end of the current period and so best deliver a kick-start to the rest of the UK.

Merrick Cockell also got the best laugh of the evening, comparing the  GLA and London Councils with (among other things) Rod Hull and Emu with Mayor Johnson cast in the role of Emu. 

Strangely, Mayor Johnson referred to a couple of London Assembly members by name in his speech.  He highlighted the referral by Len Duvall of remarks made by the Mayor to the Standards Board (if the Conservatives are so confident that the issue is now going to go away following the decision to set up a “timely and proportionate” inquiry why mention it?) and he also made some remarks about how nice the Mansion House was and the sort of building appropriate for the style and status of an Assembly Member like Caroline Pidgeon – now what did he mean by singling her out?

The most shocking thing about Mayor Johnson’s performance was, however, his attitude to London itself.  He rightly said that 200 years ago London was the greatest city in the world.  Apparently, now, however, it is only “one of the greatest cities in the world” – can’t we expect a more upbeat attitude from our elected Mayor?

Those who know me will be aware that I am not exactly a fitness fanatic (My exercise philosophy is “no pain, no pain”.), but I do like to go for a swim every so often.  For the last few years, however, I have always avoided going in January so as to avoid the crush of those who have bought gym memberships as part of a New Year’s resolution drive for fitness – by February or March most have stopped using their memberships (but the business model of the fitness club’s, of course, requires a year’s subscription …).  Today, because an appointment had been unexpectedly cancelled, I thought I would risk it.  The place I go to was virtually deserted with only one person there whom I had not seen before.   Clearly, the economic situation has focussed people’s New Year’s resolutions in a different direction this year, unless, of course, I was just lucky and everybody else had decided it was too cold …

In his New Year interview with The Observer today, Gordon Brown talks about creating 100,000 jobs by a programme of public works, focused on school repairs, new rail links, hospital projects, investment in eco-friendly projects and the broadband infrastructure.

This is all eminently sensible, but should really be on a much greater scale. The 100,000 jobs presumably equates to the £3 billion of public investment included in last month’s PBR statement. I argued then that the balance was wrong with too great an emphasis on boosting consumer spending by cutting VAT.
Nothing that has happened since alters my view.
Yes, there has been a splurge of High Street buying – mainly of imported goods (this will no doubt help maintain world employment levels, but won’t do a lot in the UK and will further push down the value of the £ against the € and the $). Interestingly, elsewhere in The Observer, the excellent Bill Keegan (delightfully appointed a CBE in the New Year honours) points out that much of this High Street spending may have been overseas visitors capitalising on the low exchange rate.
Instead, we should be treating the economic situation as an opportunity to invest in the UK’s long-term future. The Government should set a series of infrastructure objectives to be achieved over the next four or five years and put in place the resources and mechanisms for these objectives to be met. For example, local councils could be tasked to achieve better insulation and energy efficiency in the housing stock in their areas, a major programme to further improve school buildings and health care facilities should be instituted, every home, every school and every NHS facility should be cabled and enabled to have high speed broadband access with public wi-fi access in every town centre etc..
The opportunity should be taken to improve skills and equip young people (and indeed any adult) with the training needed to achieve their aspirations in the modern world.
No doubt this is ambitious, but – as Barack Obama has preached about ‘The Audacity of Hope’ – perhaps in the UK a Labour Government should dare to put that hope into practice.