George osborne

Lib Dem conference this year brings with it the serialisation of Jasper Gerard’s biography of Nick Clegg. The focus will be on the claims that deputy Prime Minister has promised his wife he’ll only serve one term and that senior Lib Dems are interested in a soft electoral pact with the Tories. But, to my mind, the most interesting point is that the Lib Dems are keen on a new coalition agreement to cover the second half of the parliament. Coalition insiders have always admitted that the legislation mentioned in the agreement should have been mostly passed by 2012. But the Tories have been keen to spend the second half of the parliament concentrating on delivering on what’s already on the statue book rather than dealing with a whole new set of bills.

As the EU debt drama continues unspooling like a perversely watchable soap opera (the FT’s Neil Hume describes it as ‘eurozone crisis porn'), an intriguing sub-plot has emerged: Britain is suing the European Central Bank. The Treasury is unhappy with an ECB move to limit the kind of euro-denominated products that can pass through UK clearing houses, suspecting it’s a bid to shift financial activity from London to Paris/Berlin. So it’s taking legal action, the first of its kind by an EU member state. This is not the first UK-EU disagreement that has surfaced in recent months, underlining the tensions between Britain and the Continent as financial centres across Europe fight over a (shrinking) business pie.

Cameron and Miliband went six rounds on the economy at PMQs. Miliband tried to portray Cameron as just another Tory who thinks that "unemployment is a price worth paying". Cameron, for his part, wanted to paint the Labour leader as someone whose policies would send Britain tumbling into a sovereign debt crisis. At the end, it felt like a bit of a no-score draw. Interestingly, Cameron stressed that "every week and every month, we’ll be adding to that growth programme". We’ll have to see whether he’s talking about more small-bore measures, or something bigger on infrastructure investment. Labour had a new tactic today, trying to fact-check all of Cameron’s answers from last week.

George Osborne made a firm statement on the Vickers report this afternoon; if he felt uneasy about the proposed abolition of his seat or Natalie Rowe’s latest sally against him it didn’t show. As expected, he accepted Vickers’ proposals "in principle", giving himself and his coalition partners enough room to manoeuvre within an agreed timetable that is equitable to both parties. Osborne also said that the annual £7 billion burden of Vickers’ capital requirements “should fall on shareholders and the wholesale debt holders, not small depositors or taxpayers.” Politically, it’s imperative that he achieves that objective. There is yet uncertainty on the subject and Barclays sought a clarification earlier this afternoon.

If anyone had any doubts about how difficult the politics of banking reform and planning would be for the Conservatives, they’ll be dispelled by a glance at a couple of tomorrow’s front pages.  ‘Osborne to let banks off the hook—for now’ screams The Independent. This a reference to the Chancellor’s plans to consult with the banks on the conclusions of the Vickers report—which the government has seen but is officially published tomorrow morning. The political problem for Osborne is that anything other than the immediate implementation of Vickers’ recommendations will be seen as a favour to the banks. But pushing the reforms through now could undermine an already weak economy.

George Osborne and Eric Pickles’ joint op-ed in the Financial Times on planning reform is meant to send the message that the coalition won’t back down on the issue. They warn that "No one should underestimate our determination to win this battle". Allies of Pickles are pointing out that these planning proposals are different from the NHS reforms or forestry, both issues on which the government did u-turn, because they are crucial to the coalition’s growth strategy and fully supported by Numbers 10 and 11 Downing Street. One other thing that separates planning from the issues on which the government has u-turned is the confidence Numbers 10 and 11 have in the ministers charged with selling the plans.

Banking reform has always been one of those issues that was going to test the unity of the coalition. Indeed, it was the subject of the very first inter-coalition wrangle when back in May 2010 George Osborne and Vince Cable tussled over who would chair the Cabinet committee on banking reform.   To date, these differences have been held in check by the fact that the coalition is waiting for the recommendations of the John Vickers-led Independent Commission on Banking. But with the final draft of the Vickers Report being published on 12 September, these splits are starting to open up again.   Cable and the Liberal Democrats would like, at the very least, a strict ringfencing within banks of the investment and retails arms.