westminster blog

When Ed Miliband and Ed Balls met late on Wednesday evening at the former’s offices over cups of coffee they sought to “thrash out” economic differences and agree a joint strategy for the coming years. Both men are aware that the appointment could either be seen as a sign of Miliband’s weakness – did he feel there was no one else? - or his strength, in that he now feels able (rightly or wrongly) to contain the strong Balls ego.

Their task is to convince the world that they have not entered a shotgun wedding – given that some senior colleagues suggest they do not even like one another. (One shadow cabinet member suggests their relationship has the potential to be even worse than Miliband-Miliband, given that Balls used to treat his new boss as the ‘office boy’ back in the Treasury days).

Aides are describing how the two teams will work much more closely together, with Balls taking the office in the Norman Shaw building previously used by George Osborne but – as my colleagues recently revealed – rarely used by Alan Johnson. Working in close proximity, their aides will supposedly follow the same lines of authority to prevent rival power bases developing.

The two men have been working together for 16 years and known each other well. Even brothers squabble now and again, say Labour aides. So far, so good. But it is one thing to recognise the damage caused by the Brown-Blair poison of the past and to vow not to repeat it. It’s another to achieve that aim.

The Prime Minister said today:

“I am very sorry that Andy Coulson has decided to resign as my Director of Communications, although I understand that the continuing pressures on him and his family mean that he feels compelled to do so. Andy has told me that the focus on him was impeding his ability to do his job and was starting to prove a distraction for the Government.

“During his time working for me, Andy has carried out his role with complete professionalism. He has been a brilliant member of my team and has thrown himself at the job with skill and dedication. He can be extremely proud of the role he has played, including for the last eight months in Government.
I wish Andy all the very best for his future, which I am certain will be a successful one.”

Six immediate thoughts:

1] A great day to bury bad news, what with the Chilcot Inquiry, the resignation of Alan Johnson and it being a Friday. Except that this will still make the headlines of all Saturday newspapers I would imagine – short of an astonishing mea culpa by Tony Blair.

2] Coulson had become the story; that is usually fatal for press advisers, as Alastair Campbell discovered.

3] Tom Watson, Labour MP, predicted recently that Coulson would be gone by January 24. Clearly his contacts in the enemy camp are rather good.

4] Who will replace Coulson as head of press at Downing Street? Names in the frame could include George Pascoe-Watson, sartorially-focused former political editor at The Sun, or Ben Brogan, the smooth deputy editor of the Telegraph.

Also high on the list are Ian Birrell, former deputy editor of the Independent – and currently a speechwriter at Downing Street – who is a friend of David Cameron. Or else Guto Harri, currently spokesman for Boris Johnson.

5] What else will David Cameron say? He will make a statement in public at noon. As Alastair Campbell points out, the focus may now move from Coulson’s judgment to the prime minister’s judgment.

6] What does Coulson do now? In theory he could work in corporate PR or similar. But this seems unlikely until the wider furore over phone hacking at the News of the World* dies down or is resolved.

* Coulson resigned after one of his reporters and a detective were jailed, although he has always insisted that he had not known about these practices.

Sorry for the delay – I’ve been writing for tonight’s newspaper. Here is a distillation of the reasons given by Labour’s spokesman for the departure of Alan Johnson as shadow chancellor.

“We have been trying to persuade him to stay, we have been saying, ‘can you work this out, can we work it out, for the last few days.”

Apparently Johnson approached Miliband late last week to say that he had family issues which posed a problem. On Monday he returned to say that he wanted to quit. The final decision was made this morning ahead of a trip around the country by Miliband.

The spokesman insisted that the party had been happy with Johnson’s performance: “Whatever people may have thought, we were very happy with his performance as shadow chancellor, we were very happy with the way it was going, it is nothing to do with politics.”

In other words, at this point in time it is still not remotely clear why he has quit.

UPDATE: A source tells me that Balls was spotted last week buying an expensive bottle of champagne in Soho: of course this, if true, could merely be a co-incidence.

FURTHER UPDATE: Gordon Brown tells a Fabian event that Balls will be a “great shadow chancellor“. Surely Brown’s endorsement is not what he needs?

We asked in December whether Alan Johnson would stay long in the shadow chancellor role. The answer is not long: he’s resigning in 15 minutes time. This is apparently because of family reasons rather than the fact that he has been caught short on economic policy several times in recent weeks. Stay posted.

UPDATE: Ed Balls will be shadow chancellor, the job he has coveted. His wife Yvette Cooper replaces him as shadow home affairs secretary. Douglas Alexander will quit his DWP post to become shadow foreign secretary, which was Cooper’s role. Here is the Johnson statement:

Statement by Alan Johnson MP

“I have decided to resign from the Shadow Cabinet for personal reasons to do with my family. I have found it difficult to cope with these personal issues in my private life whilst carrying out an important front bench role.

“I am grateful to Ed Miliband for giving me the opportunity to serve as Shadow Chancellor of the Exchequer. He is proving to be a formidable Leader of the Labour Party and has shown me nothing but support and kindness. My time in Parliament will now be dedicated to serving my constituents and supporting the Labour Party.

“I will make no further comment about this matter”.

A senior Tory predicted to me in opposition that austerity would usher in a new era of decentralisation in government.

New Labour, he said, couldn’t resist micromanaging public services; they had to show results from a spending spree.

By contrast ministers tasked with slashing budgets would be desperate to pass down responsibility for the worst decisions. This is the kind of power politicians are keen to give away.

He was right. The coalition have embraced the agenda of localism with some gusto. Now heartwrenching case of Riven Vincent has come along to test David Cameron’s resolve.

In theory the shake-up of the NHS will cost over £1bn upfront but save more than £1bn annually thereafter, according go the coalition. But there are many inside and outside the health service who fear for the consequences of such a major management revolution, as I wrote a few days ago.

Sir Nick Macpherson, permanent secretary at the Treasury, appeared to issue a coded warning over the reforms when he addressed the public accounts committee on Wednesday afternoon.

“From time to time there have been problems in other departments….with the department of health several years ago where there was a problem with their finances, it often happens at a time where you’re reforming the system,” he said.

It doesn’t seem too far-fetched to wonder whether the highly-regarded mandarin had the coalition’s imminent NHS reform in mind. I’m aware that the upper echelons of the Treasury are keen to ensure that the imminent health reforms achieve their intended savings and do not result, conversely, in unforeseen financial problems.

Bonuses are a highly controversial issue right now but Sir Gus O’Donnell, head of the UK civil service, has no qualms in calling for top civil servants to be paid more – and to get higher one-off payments.

The mandarin told the public accounts committee today that departments were losing some of their best staff because of the competition from the private sector.

“It’s a cultural problem….you get attacked all the time if you put in an element of performance-related pay,” Sir Gus told MPs.

Later he said it was hard to recruit talented people from the private sector into the civil service. “The difference in salary, when you look outside…we’re talking about people in six figures, I’m offering them the wonderful opportunity, I can knock at least £800,000 off on pay to come and work for me.”

And then again: “We are a bit short of people coming in who have been very successful in the private sector because we are not very competitive on pay.”

Later: “Part of the problem is that these skills are quite scarce and very highly paid and we’re in a situation where we’re asking someone to stay, to stay in that one job for a long time, where they are dealing with their contractors and others who are paid materially more than they’re taking and they will get targeted (by private companies) away from there.”

Sir Nick Macpherson, permanent secretary at the Treasury, made the same point about how his ministery had appointed many highly-skilled financial experts to help firefight in the wake of the credit crunch: “The challenge now is to retain sufficient expertise for the future.”

Part of the problem, of course – not that either mandarin mentioned this – is that high pay in the public sector is always compared to the yardstick of the prime minister, despite his salary of £143,500 being rather low by private sector standards given the heavy demands on him. (As I wrote the other day, most PMs can make millions after leaving the post). Who is most guilty of this benchmarking? Politicians, usually.

You’ve already read the quote from the numerical filibustering Labour peer.

Today here is another quote, this time from Lady Ford, citing a famous historical cannibal, Sawney Bean (pictured). Her words were at 7.30am yesterday after an all-night session in the chamber. And Labour is still claiming that its peers aren’t deliberately time-wasting?

Hat-tip Paul Waugh

Baroness Ford:

I support my noble friend Lord Kennedy in his amendment, which is the crucial amendment. I am compelled to speak today because I have heard so many interesting contributions from former Members of the other place. However, I will not give the perspective of a former Member of Parliament. My life before I came to this House was not in politics but in business and the voluntary sector. I would like to speak from the perspective of a constituent. I have lived, and still live, in the constituency in which I was born. In those days it was called North Ayrshire, Arran and Bute. It adjoined the constituency of the noble Lord, Lord Foulkes, of which we heard much earlier. I now wonder if we ought to check the Register of Members’ Interests to see if he has some connection to Visit Scotland, such was his passion.

I must reveal to your Lordships’ House an important omission by the noble Lord, Lord Foulkes. He did not tell noble Lords that in his constituency was the last surviving cannibal in the United Kingdom-the family of Sawney Bean. Only in south Ayrshire could you celebrate the fact that the last cannibal in the United Kingdom lived there with a non-vegetarian restaurant. Such is the surreal humour of people in Ayrshire.

After last night’s 22-hour Lords sitting there was some relief for the exhausted peers today. They began their new stint after lunch and it ended at about 4.30pm.

I’m told the atmosphere was more co-operative than yesterday’s spiky and brittle exchanges. The peers smoothly worked through four batches of amendments during the afternoon  – but 130 amendments still have to be ploughed through by February 16. (That is because 10 weeks are needed before the May 5 referendum on the new voting system).

It is not impossible that peers may have to endure another all-nighter tomorrow with the session not starting until 3.30pm. (They still have to finish the committee stage and get through report stage and third reading).

There have been rumours in the Lords corridors that a compromise is in sight that could put an end to the interminable filibustering. With little else to do this evening, I’m told, the Labour and Tory teams – whose offices are in the same corridor – are likely to have a quiet chat about a way through the impasse.

Labour is still insisting that it wants to split the two halves of the bill (AV and boundary changes) and would then wave through the AV element. Ultimately though it seems likely to compromise if it is offered two things. 1] An independent and public system of arbitration over decisions on constituency boundaries and 2] Allowing MPs seats to vary in size by up to 10 per cent, instead of the 5 per cent proposed. Neither of these seem like the kind of issues over which Lord Strathclyde (pictured, Tory leader in the Lords) would die in the ditch over.

For now, at least, the government is playing hardball. A Downing St source tells me that the referendum will proceed on May 5 or Labour will take the blame for the extra £17m cost. (It’s cheaper to have it on the same day as local elections). “There is no appetite for striking up a deal,” he insists. But expect a more nuanced position, or even a deal, by the weekend.

It was political blogger Guido Fawkes who started the rumour earlier today that Lord Mandelson is set to do some advisory work for Lazard, the venerable investment bank.

It is a story that Lazard is making no effort to deny. Richard Creswell, the bank’s head of press, tells me: “We will decline to comment…I’ve got nothing else to say“.

UPDATE (5.45pm) I’ve heard from another source that Mandelson and Lazard have definitely been in talks about a contract.

If the rumour is correct it could prompt speculation as to whether there are any indirect connections between the former deputy prime minister and the bank. Here is one: Nat Rothschild, who is an old friend of Lord Mandelson – you may remember the famous Corfu story – used to work for Lazard in the mid-1990s before setting up his own hedge fund.

Incidentally Andrew Mitchell, now development minister, was an adviser to Lazard until June 2009, when several Tory frontbench MPs dropped their external jobs to concentrate on politics.

Lord Mandelson is chairman of a new partnership called Global Counsel, in which WPP holds a minority stake. It is a “global advisory partnership serving non-British companies or organisations and working with British companies or organisations outside the UK.”

He has to operate under these rules from the Advisory Committee on Business Appointments:

Having left office over six months ago, the Committee sees no reason why he should not set up Global Counsel LLP forthwith, subject to the condition that, for 12 months from his last day in office, he should not undertake any work which involves providing advice to any company or organisation on the terms of any bid or contract relating directly to the work of any UK Government Department or Agency, or draw on any privileged information which was available to him as a Minister for the benefit of WPP or any of his clients.  Also, for 2 years from the same date, he should not become personally involved in lobbying UK Government Ministers or Crown servants, including Special Advisers, on behalf of WPP or any of his clients