Politics Summary: Tuesday, July 6th

The Daily Telegraph‘s front page focuses on Nick Clegg’s electoral reform proposals and cross-party concern with the intended date. The Deputy Prime Minister set out plans for the House of Commons to be reduced from 650 to 600 MPs after a review of boundaries and a referendum on replacing first-past-the-post Westminster elections with the Alternative Vote to be held on May 5 next year. The Guardian reports that, “The coalition government is facing the first serious challenge to its stability as Labour, nationalist parties and Tory backbenchers combined to oppose the choice of 5 May next year for the referendum.” Scotland’s deputy first minister, Nicola Sturgeon, said SNP ministers would try to block the “unacceptable” date: “There is a real danger of the Scottish parliamentary elections being overshadowed.” The May date means the referendum will take place on the same day as elections in Northern Ireland, English local elections, and ballots for Scottish parliament and Welsh assembly.

The Daily Mail details a “Left-Right plot to derail AV”. The paper quotes “leading Conservative rebel” Bernard Jenkin who accused Mr Clegg of “artificially inflating the turnout” to get a Yes vote and “leading Right-winger” David Davis who urged Mr Clegg to “think again on the timing of this referendum”. Fellow Tory Douglas Carswell will attempt to amend the bill so voters get the choice of up to four different voting systems, including full proportional representation. Jack Straw said Labour backed a referendum on AV, but would oppose the legislation because of the “outrageously partisan” boundary changes. As reported on Left Foot Forward yesterday, the Coalition also announced a u-turn on the controversial dissolution resolution.

The Guardian‘s front page reveals “Graduates warned of record 70 applicants for every job”. Competition in the jobs market is fiercer now than for the first “post-crunch” generation of students, last year, when there were 48 applications for each vacancy. The number of applicants chasing each job is so high that nearly 78 per cent of employers are insisting on a 2.1 degree, rendering a 2.2 marginal and effectively ruling out any graduates with a third. In 2008, when the economy was buoyant, just 57 per cent of employers insisted on a 2.1 or higher. The president of the National Union of Students and Left Foot Forward contributor, Aaron Porter, urged the government to invest in creating jobs and training: “We are concerned that the savage cuts to the public sector will create further unemployment, and will make the lives of graduates tougher in an already difficult jobs market.” The Independent‘s front page also covers the story and outlines that the average graduate starting salary has been frozen for the second year in succession at £25,000 – the first time in the history of collating statistics that this has happened.

The Guardian reports that a new survey shows a record drop in confidence among service sector firms in June following the emergency budget. The Markit/CIPS purchasing managers’ index (PMI) survey, a monthly snapshot of the services sector, recorded the largest-drop in business expectations in its 14-year history last month, although it still points to continued growth. The headline index dropped to 54.4 from 55.4, the lowest since last August. Any reading above 50 signals growth. The British Chambers of Commerce today highlights sluggish growth in services as a serious concern and warns that “underlying weaknesses in the economy remain, which cannot be ignored if we are to avoid a relapse into recession”. Reporting the same story, the Telegraph quotes Paul Smith, senior economist of Markit, who said the fall was in response to “the Government’s austere emergency Budget, with concern expressed that the fiscal tightening could push the country back into recession”.

The Telegraph reports that, “In a shock move the head of the Government’s spending watchdog Sir Alan Budd is to step down after barely three months in the job.” The paper calls the decision a “blow to the coalition”. The surprise decision will leave the Office for Budget Responsibility (OBR) without a chairman before it has been fully set up and enshrined in British law. It will also cause a headache for the Chancellor ahead of the Comprehensive Spending Review slated for this autumn, which the OBR will be charged with scrutinising. Although only on a three-month contract, most in the Treasury and the City had expected him to remain on board until the OBR became a permanent legal institution.

The Financial Times‘ front page reports that “Civil servants face regional pay threat”. Francis Maude, the Cabinet Office minister, is expected in a speech on Tuesday to indicate the government’s intention to push for a system allowing lower rates of pay outside London. The move is in addition to a two-year public sector pay freeze and big cuts to civil service severance terms. The paper reports that almost three-quarters of the government’s 520,000 civil servants – including large numbers at the big four departments of work and pensions, Revenue & Customs, and the ministries of defence and justice – work outside London and the south-east. The Public and Commercial Services union, said depressing pay through lower deals in the region “would have a terrible impact on our members”. At a time when the Office for Budget Responsibility is forecasting 600,000 public sector job losses, trying to pay less in the regions “can only depress local economies further”, the union said.