Archive for February, 2018

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The uncertainty over Brexit and TMay are set to make this year’s locals more significant than usual

Monday, February 26th, 2018

One things for sure — TMay’s Tories will struggle to match last year

We are little over two months away from this year’s local elections which because of the febrile political situation could have wider consequences than just who runs the local council.

Generally the bookmakers don’t take much notice of these elections and it is not often that we see betting markets. So Ladbrokes move to open the first ones for this May suggests that something is in the wind. The Tories are odds on to hold Kensington & Chelsea, Labour to gain Wandsworth and the LDs Richmond upon Thames.

One of the big problems with the annual local elections is that it’s hard to find valid comparisons with previous years because different seats come up in each cycle.

In order to trying to provide a set of standard data for each years elections the BBC and Rawlings and Thrasher each produce their own assessment of the National equivalent vote share after the election.

The chart above shows the BBC’s projected national vote over the last 5 years for the main national parties.

    Last year’s locals were held in the hothouse atmosphere of the general election campaign and it will be recalled that Mrs May made her highly publicised visit to the Palace on the day before. This was when “strong and stable” was riding high and hadn’t become a term of derision.

This year’s elections are a much tougher prospect for the blue team. The bulk of the media focus will be on London where the borough elections are taking place and the signs are that the Tories are doing less well there than in the rest of the country. London is traditionally where Labour does particularly well and expectations are running high.

What’s perceived as a poor set of results could be the trigger for a leadership move against TMay.

Mike Smithson




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Alastair Meeks gives his thoughts on university pensions

Sunday, February 25th, 2018

My first boss was the source of many wise words, some of which I use to this day. “Alastair”, she would often say, “there is no problem in the world that cannot be made to go away with money”. It’s not strictly true, of course, but it is truer more often than is usually appreciated.

That was 25 years ago, at a time when pension schemes almost all had surpluses and the question I was most commonly asked was what the employer and trustees needed to do with it. Nowadays, most pension schemes have deficits and the pensions problems that I am asked to advise on often revolve around how best to deal with the funding hole. This is far more fraught: If you don’t have money, problems don’t go away anything like as easily.

University Pensions deficit

There aren’t many pension schemes bigger than the Universities Superannuation Scheme (USS). And the deficit of the USS is correspondingly gargantuan: It was most recently estimated at £6.1bn. That’s the sort of number that would make anyone blanch. To put this in context, the Scheme had assets of £60bn, giving the scheme a funding ratio of 91% on these assumptions. But, on the assumptions previously used, the deficit was estimated at £12.6bn. We are talking huge numbers here, and they are significantly influenced by what actuaries decide they feel comfortable with at any given moment.

Changes proposed

Against this background, the employers are proposing benefit changes for future service, bringing final salary benefits to a close for future service from 1 April 2019 (at the earliest), and introducing a money purchase benefit that would be considered generous by most standards.

These proposals have been agreed with member representatives. However, as the current strikes show, some member representatives seem to be out of step with large parts of the membership. For now, the pension scheme members seem to have the students firmly on their side in principle, with over 60% supporting their actions.

Dispelling the myths

It’s time to despatch a whole shoal of red herrings. First, the salaries of vice-chancellors are not going to plug this gap. Their combined annual remuneration represents a tiny rounding error compared with this deficit.

Next, the proposals for future service are not going to plug the existing deficit. The past and the future are two different things. The past service deficit cannot directly be used as a justification for these changes. That hole still needs plugging, regardless of what is done for the future.

Next, there is nothing inherently bad about money purchase. In fact, for some USS members, particularly younger members whose career trajectory is unlikely to be stellar, the changes might well represent an improvement for them in the short term at least. Defined benefit schemes give cross–subsidies all over the place, with the bulk of the cost of future service provision going towards providing the benefits of those close to retirement. Some of the younger employees on the picket line might reasonably ask themselves who they are striking for. It’s also worth noting that the oldest employees also have little to fear – they’ve already substantially completed their accrual of benefits. The group who really get clobbered are in their 40s and early 50s.

And finally, many bystanders, many of whom curiously do not have final salary pensions, have developed schadenfreude at the very definition of ivory tower elitists being confronted with this change. But USS’s own figures show that on average this is a big hit for employees. USS estimates the present cost of future final salary provision at 37.4% of payroll (of which the employees pay just 8%). The future service money purchase benefits are 17.25% or 21.25% of pay (of which employees would pay 4% or 8%). Treating pension as part of the pay package, this means that members are being asked to swallow a cut in their remuneration of, on average, over 12%. Anyone else care gladly to volunteer for that?

To date, the employers have not proposed any kind of transitional measures. Age discrimination laws make targeted assistance difficult, though not impossible. And the members might also focus more on the funding of the past service deficit. A pension promise is all well and good, but it needs the funds to back it up. Right now, the USS still has a substantial deficit. And there isn’t the money immediately available to make that problem go away.

Alastair Meeks




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Why I won’t be surprised to see a general election or Corbyn become Prime Minister this year

Sunday, February 25th, 2018

The Sunday Times report

Three cabinet ministers warned Theresa May during private talks on Brexit at her Chequers retreat last week that her government could collapse this year.

Julian Smith, the chief whip, told May there was a “very real threat” that Labour could unite with 15 to 20 Tory rebels to defeat the government on their decision to rule out membership of a customs union.

Senior ministers say there are discussions about whether the prime minister should turn the vote into a confidence issue, threatening a general election if Tory MPs vote with the opposition.

In the same discussion Karen Bradley, the Northern Ireland secretary, warned May that the Democratic Unionists propping up the government should not be relied upon to “turn up” and vote to save her. The Brexit war cabinet even discussed the prospect of Sinn Fein’s six MPs taking their seats, a move that could dramatically erode the Tory majority.

David Davis, the Brexit secretary, told May that the emergence of Jacob Rees-Mogg as leader of the hardline Eurosceptic group of backbenchers had led to MPs “militarising” against her. Downing Street officials fear they will submit letters demanding a leadership contest if she accepts a customs union.

A few weeks ago I said Mrs May had to reject a customs union or be toppled as Prime Minister, now she’s facing the opposite situation, with the added complication of her government falling as she faces up to a no win scenario.

Yesterday Dominic Grieve, like the true patriot he is, said he was going to put the country ahead of his party, even if it meant the government falling over a customs union, I expect he is not alone on the Tory benches.

From a betting perspective I’ve started to back 2018 as the date of the next election & laying 2022 as the date of the next general election.

The other betting position I’ve taken is to minimise my potential losses on Jeremy Corbyn as next Prime Minister. If the government falls over a customs union vote there’s a chance Corbyn becomes Prime Minister without a general election.

One thing that genuinely unites the Tory party is the belief that Jeremy Corbyn would be a disastrous Prime Minister who will ruin the country long term. However some Tories may decide that managing Brexit is just too damaging for the Tories and they might abstain in a Parliamentary vote and make Corbyn PM.

Mrs May isn’t the only Tory facing a no win scenario, no wonder Mrs May has delayed the vote on a potential customs union until May.

TSE

PS – I hope the Brexit war cabinet are willing to bet on whether Sinn Féin take up their seats in Parliament, I’ll be backing the No side of this bet.



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Corbyn wins his legal action against the man TMay appointed party vice chairman only seven weeks ago

Saturday, February 24th, 2018

The case raises more questions over the PM’s decision

It might be remembered that shortly after Bradley was appointed Conservative Party Vice Chairman last month a series of stories appeared about controversial things that he had written on the internet some of years earlier emerged. At the time they were passed off as simply youthful indiscretions.

The case with his Corbyn Tweet that he’s had to go through the humiliating process of publicly apologising to the LAB leader, paying his legal fees and making a donation to charity suggests that Bradley hasn’t learned. It also raises questions about the PM’s judgement.

If Bradley’s smart he’d resign from the national party post and adopt a low profile for a few months. His actions have made it much much harder for the Tories to make any future attacks on Corbyn by raising things for his past.

Mike Smithson




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Hurrah! Our sovereign parliament is taking back control!

Saturday, February 24th, 2018

May should balance one Brexit concession with another

This is what Brexit was about: the right of Britain’s democratically elected MPs to take their own decisions free from the interference of Brussels (or, indeed, anybody else). Or perhaps not. Understandably, some pro-Leave MPs are so incandescent at the prospect that the Trade Bill might be amended so as to require “an appropriate authority to take all necessary steps [to conclude a customs union with the EU by Brexit Day]” that they’re burning as filament-white as the light bulbs you once got before the EU banned them.

Whether that anger is justified is a moot point and turns on what obligations come along with such a Union. After all, the Phase One deal potentially committed to “full alignment with those rules of the Internal Market and the Customs Union” insofar as intra-Irish co-operation and trade is concerned (which is arguably virtually all of it). And the prize on leaving of new trade deals around the world is inevitably going to involve accepting some terms that strongly challenge currently-protected groups within the UK, or which go against public opinion (the chlorinated chicken has details).

On the other hand, Copper Brexit (it comes with CU*) could not only change the whole nature of the Brexit process and trigger further moves to pseudo-Remain but might, at the extremes, bring down the government.

I don’t think it will go that far. There is a reasonable (though odds-against, I’d suggest) chance that the government will still win. Alternatively, it might just accept the defeat and do its best to carry on. May as PM resembles Gordon Brown in no small way and her resilience in keeping going is one such measure. After all, it was parliament which inflicted the defeat – admittedly, made possible only because of her botched election campaign – rather than a government reversal, and what would Leavers do? The maths in the Commons are the same whoever leads the Tories, unless they upset the DUP or expel the saboteurs or something similarly silly.

    Perhaps what’s most remarkable about the quite probable success of the amendment is that it could well pass not only against the outright opposition of the government but with only an ambivalent opposition front bench, one which has only come round to backing the amendment against its instincts because of pressure from the backbenches.

    I can think of few parallels in British history where something potentially so significant was delivered with such little active support of either main party – the Sexual Offences Act (1967), might perhaps be the most recent one. Truly the nation’s sovereign parliament has taken back control.

Unfortunately for Theresa May, that would leave her in a crisis bigger even than that she faced on 9 June 2017; one that could only be overcome by grasping the initiative – not a natural instinct for the PM, it has to be said. How to do it? One thought comes to mind: that bus. It’s time to announce an increase in the NHS budget of £350m a week.

Cynical? A little. Audacious? That too. But it’s not like the Service doesn’t need the cash, it wouldn’t all have to be delivered up front (thank you, transition period), this week’s borrowing figures do leave genuine fiscal breathing space, and by addressing both a physical and political problem, it would also spike one of Labour’s most effective attack lines. Take back control: give in.

David Herdson

* Yes, technically it should be ‘Cu’ but that not only looks wrong but hints too readily at rudeness; go with how it sounds. ‘Carbon-Uranium’ would be even worse.



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Setting the scene for the May local elections –

Friday, February 23rd, 2018

Party gains and losses over 40 years

Thanks to David Cowling, former head of political research at the BBC, for compiling this table.

Mike Smithson




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Why TMay’s Tories can’t afford to alienate Remain voters

Friday, February 23rd, 2018

The blues won twice as many Remain seats as Leave ones

Mike Smithson




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If LAB shifts a notch on Brexit and backs a CON rebel Commons move TMay could be in trouble

Friday, February 23rd, 2018

Crunch time for the embattled PM?

Since her humiliating failure to retain the Conservative majority last June Theresa May has lived a charmed life. Who would have predicted on that weekend after the election that she could still be there in charge 9 months later. But she is though it’s starting to look as though the Brexit crunch is coming.

As the Guardian is reporting in the story linked to in the Tweet above Labour’s Jeremy Corbyn is planning a big speech after the weekend which could see a change in the opposition’s approach to Brexit.

Most specifically the Labour leader could pledge his party to support a Customs Union and we might even see Labour MPs whipped to vote for a rebel Conservative amendment on a trade bill.

The CON anti-Brexiter, Anna Soubry, is tabling one with the apparent intention of making it attractive to Labour.

However you look at it the numbers with the vote on either side a very tight There are probably enough Conservative rebels around though we have to offset the hard line Labour Brexiters who have consistently voted with the government.

Mike Smithson