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• The Libor rate-rigging scandal once more dominated the week’s news – with the question of what kind of inquiry would best investigate banking the main issue.
Though the government eventually won out, the chancellor suffered damage to his reputation, acting in a less than statesmanlike manner throughout.
Labour accused him of “demeaning his office” by “throwing around false allegations” – with even Tory MPs unnerved by his “disproportionate obsession” with the shadow chancellor. In Thursday’s debate, Osborne said Balls had “smeared his way through 13 years of Labour government”, having earlier used a Spectator interview to say he has “questions to answer”.
There was widespread public support for an independent judicial inquiry – support which is sure to grow in the wake of former Barclays chief Bob Diamond’s ‘easy ride’ at the hands of MPs before the Treasury select committee on Wednesday.
This week’s most read:
1. Toby Young attacks “ghastly” need for wheelchair ramps in schools Katie Stanton
3. Young and in love – but unable to settle due to draconian immigration clampdown Calynn Dowler, Migrant and Refugee Communities Forum
4. Do the SNP see England as a foreign country already? Ed Jacobs
• Yesterday, it was announced the director of the Serious Fraud Office, David Green QC, will investigate the Libor scandal.
The SFO has agreed to investigate the affair, having said on Monday it would decide within a month whether to press criminal charges, amid concerns banks understated their borrowing costs to make it appear they were in better financial health than they were.
However, as Left Foot Forward reported, considering the investigation will run alongside similar action in the US, the impact of recent SFO budget cuts could be brought into the spotlight: the SFO’s budget was slashed by 26 per cent to £39.5m in the year to 2010/11 after the coalition came to power, with another expected drop of 25% to £30.5m by 2014/15.
As the FT reported last year, the fraud watchdog is “under threat from falling budgets, staff losses and a planned government reorganisation”, with six prominent staff members – including the heads of policy and anti-corruption – all resigning.
Also on Left Foot Forward this week on the banking debate, read our report on the shady world the worst bankers inhabit here; watch Ed Miliband’s PMQs clash with David Cameron here; read about Cameron’s double-standards on rioters and bankers here; and read about deregulation-loving George Osborne’s hypocrisy here and here.
• Elsewhere, David Cameron was accused of breaking his pledge to increase spending on the NHS – following the news health spending fell by £25 million.
In total, the NHS in England saw a 0.02 per cent real term cut, the second spending decrease in as many years, with Labour accusing the prime minister of breaking his word after he promised to shield the NHS from spending cuts.
Only last year, he said:
“I want to make this clear, you know we are not cutting spending on the NHS, we are increasing spending on the NHS.”
Except he’s not – and he tried to bury the news on a Friday afternoon with political minds consumed by the banking crisis and most voters’ eyes on Wimbledon.
Earlier in the week, new analysis by the IFS revealed the Tory NHS budget squeeze is set to last “at least a decade”, undergoing “the tightest four-year period of funding for the NHS in the last fifty years”. See our report for more.
Progressive of the week:
Elton John, who used in concert in Kiev on the eve of the Euro 2012 final to speak out against Ukraine’s homophobes, calling on an end to violence against gay people in the country and attacking the proposed law, being debated in Parliament, that would outlaw all public discussion of LGBT rights.
See our report here for more.
Regressive of the week:
Once again, step forward Sun columnist Toby Young, who attacked the “ghastly” need for wheelchair ramps in schools, condemning the Equality Act for the sin of, er, enforcing equality. Which, unlike free schools and O-Levels, he doesn’t seem to like.
See here for more.
Evidence of the week:
Research by child welfare charity Kids Company that found the number of children relying on charities to feed them has risen 233% in the last year, with half of UK teachers reporting they have had to feed their students in the morning. Two children in every classroom go hungry.
According to Save the Children, there are 1.6 million children living in poverty in the UK, with 1 in 5 relying on food banks. In London, Kids Company are seeing 17,000 kids turning up alone for free meals; the price of food is increasing, it is difficult to budget and the situation is going to get worse when the benefit system changes.
See here for more.
The Week Outside Westminster by Ed Jacobs:
As Westminster was gripped by the debate over how best to hold the banks to account over Libor-gate, the Scottish Crown Office confirmed it has been investigating the activities of banks north of the border and that their inquiries would be extended.
In calling for the “guilty to be hung out to dry in court”, an editorial in the Daily Record said of the move:
“At long last, the ordinary laws of the land which ordinary people are obliged to follow may be applied to the self-proclaimed masters of the universe who brought the UK economy to its knees…
“Legal experts believe it may be easier to prosecute banks under Scottish law, where fraud is a common law offence, rather than down south, where fraud cases are notoriously complex and prone to collapse. If so, it’s a marvellous opportunity for the Scottish legal system to hold Goodwin and his ilk to account.”
Elsewhere, it was revealed Alex Salmond has come as close as he has so far in calling for a second option in the referendum on Scottish independence. Responding, shadow Scottish secretary Margaret Curran accused the SNP of “bottling” it over its ambitions for independence.
Writing for Left Foot Forward this week, Curran said:
“Instead of a clear choice between in or out of the UK, the SNP are moving the goalposts. ‘Independence’ for them now means keeping the currency, keeping the Queen, keeping the flag, staying British, asking a foreign country to regulate our banks, set our interest rates…
“For a party that has waited generations to be in a position to deliver on its founding principle, the only conclusion I can draw from this is that the SNP no longer believe they can convince the Scottish people of independence. They have simply given up.
“The first minister says it’s the only thing he’s campaigning for, but from his desperation for a third option, however woolly, to his lack of interest in opening up a discussion with the UK government on what happens the day after independence, I can only conclude he’s bottled it.”
It came as polling for Reform Scotland by Ipsos Mori found that 52% of Labour voters and 28% of SNP supporters would support the idea of Devo-Plus.
Customers at the RBS-owned Ulster Bank found themselves still facing difficulties – two weeks after computer glitches faced by its parent company – with a cross-party delegation of MPs from across Northern Ireland met with RBS chairman Sir Philip Hampton to discuss the problem.
In a somewhat disparaging comment piece, however, N R Greer wrote of the situation in The Newsletter this week:
“Perhaps if RBS paid their IT guys the same sort of money they pay the wrecking crew traders, then this problem might not have occurred. But fast casino bucks are much more interesting to the big banks than the tiresome activity of looking after long term customers.”
As the MLAs began their Summer recess, meanwhile, the Belfast Telegraph gave a less then complimentary summary of the work of the Assembly and Executive over the past term:
“As MLAs head off for their nine-week summer holidays – enough to raise the hackles of voters – it is time to reflect on what they have achieved to date and what they plan to do in the coming year.
“The verdict on past performance is hardly glowing; too little, too slowly. Over the next 12 months it is planned to introduce 26 new bills, but the total outweigh their significance, in spite of junior minister Jonathan Bell’s defence of the programme as quality not quantity.”
Elsewhere, it was announced yesterday a murder probe will be launched into Bloody Sunday – see our report here for more.
As both Martin McGuinness and Alex Salmond took the opportunity over the past few weeks to shake hands with the Queen, eyes turned to Plaid Cymru leader, Leanne Wood, and the pressure she is now under to follow her nationalist colleagues.
Outlining the difficulties she faces, David Williamson, political editor of Media Wales, observed:
“Who would have thought a politician’s loyalty to the crown would be an issue in 21st century politics? Newly-elected Plaid Cymru leader Leanne Wood’s radical convictions have won her the respect of many in her party but she now faces a political dilemma.
“At a time when the Queen’s popularity has hit new highs and even Sinn Fein’s Martin McGuinness has shaken her hand, should the AM who was expelled from the Assembly chamber for calling her Mrs Windsor and who chose not to attend a Jubilee service at which the Queen was present change tack?”
The Welsh Assembly’s cross-party finance committee, meanwhile, published a report calling for Cardiff Bay to be given borrowing powers to invest in capital projects and boost economic growth.
Providing her analysis of the report, BBC Wales’s political editor, Betsan Powys, wrote:
“Many Welsh politicians have long decried Wales’s inability to borrow money in order to invest in infrastructure projects with long-term benefits to the economy. Although talks between governments have been going on for months, the assembly’s finance committee is clear – it is time for ministers here to have borrowing powers.”
Finally this week, there was anger in Scotland and Wales at the UK government’s announcement of cuts to the British Army – see our report here for more.
The World Outside Westminster by Ben Phillips:
In upholding the legality of Barack Obama’s healthcare reforms, last week’s landmark Supreme Court ruling engaged in some constitutional gymnastics.
It found the reforms’ ‘individual mandate’ – which compels citizens to purchase health insurance or face a fine – could be considered a tax. For the Republicans, this was a silver lining, allowing them to accuse Obama of having raised taxes on the middle class – yet inexplicably, the Romney campaign spent much of the past week failing to do this.
Appearing on MSNBC on Monday, senior Romney adviser Eric Fehrnstrom admitted the Republican challenger, like Obama himself, saw the mandate not as a tax but as a ‘penalty’. Subsequently, on Wednesday, Romney backtracked, telling CBS News the mandate was indeed a tax.
The mixed messages, and sense of a missed opportunity, led to the Wall Street Journal delivering a furious reprimand to the Romney campaign later that day, concluding he “hasn’t been able to take advantage”, and “if anything he is losing ground”.
The court’s ruling wasn’t, in itself, a bad thing for Romney’s campaign.
He took in $4.3m in donations over the following days from Republicans suddenly aware their only hope of ending ‘Obamacare’ is to elect a president who’ll repeal it.
As the Guardian’s Ewen MacAskill reports, Republican state governors reluctant to implement the reforms are likewise counting on a Romney victory in November. Many have already issued highly equivocal statements in the aftermath of the court’s ruling, and some have outright refused to cooperate.
Nonetheless, writes MacAskill:
“Cash-strapped governors will find it difficult to resist the carrot of the millions of dollars on offer for the expansion plan.”
Pressure continues to build on Bashar al-Assad’s regime in Syria.
Following the shooting down by Syrian air defences of a Turkish warplane over the eastern Mediterranean, Turkey’s military confirmed on Wednesday it had found the bodies of both crewmembers. Although a serious military confrontation remains unlikely, the episode does nothing to calm ever-escalating tensions in the region.
Foreign secretary William Hague, meanwhile, used a live Twitter Q&A to tell the Syrian people they were “not forgotten”, saying “no option is ruled out”. He did, though, stress foreign military intervention would “require international agreement” and “a very large scale force”, adding “the best way to avoid more massacres is to do everything we can to support peaceful transition”.
As Left Foot Forward reported last week, the EU summit on the eurozone crisis ended with Italy and Spain securing concessions from Germany on bank recapitalisation and fiscal oversight.
Henceforth, the European Stability Mechanism will bail out failing banks directly and so, in effect, the eurozone will collectively shoulder the debt burden – something German chancellor Angela Merkel has strongly resisted.
Writing in Thursday’s Guardian, former German foreign minister Joschka Fischer stressed the summit’s broader political implications:
“[It] has shifted the balance of power within the eurozone: Germany is strong, but not strong enough to get away with isolating itself completely from Europe’s other major players. Decisions that go against Germany are possible.
“There was patent gloating about the German defeat everywhere, only thinly disguised behind strained expressions of solidarity.”
It raised €500m in a sale of three-month treasury bills with an average yield of 1.8%. Spain, by contrast, agreed to pay 2.4% at a similar auction last week.
The Irish government described the auction – widely regarded as a dry run to test the market’s reaction – as a success, with finance minister Michael Noonan noting the markets “have reacted positively to our strong programme implementation to date”.
As MarketWatch points out, Dublin “understands timing” – with Ireland’s bank rescue still a recent memory, investor confidence in the Irish economy will have benefited from last week’s eurozone summit and the newly agreed role for the European Stability Mechanism, even though Ireland wasn’t a key player in the negotiations.
And finally this week, back to the States, and further embarrassment for Romney’s team comes from the revelation they don’t know what a Venn diagram is.
A fundraising email sent out on Monday night uses the recognisable Venn format to illustrate what it calls Obama’s “middle class promise gap”, seizing upon his 2007 pledge to cut healthcare premiums for every American family by an average of $2,500 per annum (the mean cost has, in fact, increased nearly $2,400). One circle highlights Obama’s pre-election promise, and the other the reality since he took office: the overlap between them is the aforementioned ‘gap’.
Venn diagrams, of course, illustrate common properties of distinct sets – quite the opposite of the Romney campaign’s bastardisation. As the Huffington Post note, “it makes a political point, but not much visual sense”. Which is quite alright, since it elicited plentiful lulz across the interwebs – in particular, the New Statesman’s Alex Hern, who had plenty of fun with it.