Weekly Round-up - 16-01-11

Westminster politics got underway again this week and provided us with plenty of action to kick-off 2011. The week’s most amusing story was the news that Tory MP Mark Pritchard, who is Deputy Chairman of the 1922 Committee, got into an altercation with John Bercow and ended up shouting ‘You are not fucking royalty’ at the Speaker before storming off. It’s another indication of just how much the Speaker has fallen out with his former party.

The big news of the week was, of course, the result of the Oldham East and Saddleworth by-election. Yet as exciting as it was, it didn’t really change anything. Labour, and particularly Ed Miliband, needed a comfortable win: they got it. The Lib Dems needed to show that their support had not totally collapsed and that they could still compete: they did that. The Tory high command just needed the Lib Dems to survive in order to ensure the stability of the coalition: which is exactly what happened. No party will be particularly unhappy with this result.

The story that dominated the first half of the week was bankers’ bonuses. This came to its head on Wednesday with a very competitive PMQs after Chancellor George Osborne had been called to the House for emergency questions on Tuesday. Ed Miliband – who has had a pretty good week for once – embarrassed the PM by pointing out that the Tories’ website still proudly displayed his election pledge to limit bankers’ bonuses to £2,000. Yet despite early hits, Miliband is still a PMQs’ amateur and, unwilling to depart from his prepared script, failed to kill off Cameron and let him back in to steal a draw.

The Government also managed to overcome some backbench resistance to defeat an amendment to its EU Sovereignty Bill, but left itself in an unhappy position by proposing a piece of legislation which is detested by the very people it was designed to appease. We also found out that the decision on Control Orders is to be delayed until next week because of ongoing cabinet disputes.

YouGov also released figures this week that placed The Conservatives on 36%, 7% behind Labour on 43%. While they may be an anomaly, these figures did reinforce recent ComRes figures that showed Labour with an 8% lead. Interestingly, while Labour support has risen since May it is steady around 42%, and these big leads are occurring because of a fall in Conservative support.

The big news for the economy this week came from the MPC, which decided to keep interest rates at 0.5%. It hopes that this will create the right environment for economic growth, and is choosing to focus on this rather than efforts to rein in inflation. There was also some good news from credit rating agency Moody’s, which said that the UK’s AAA rating was safe.

In Europe the EU’s High Representative for Foreign Affairs, Baroness Ashton, suggested that the arms embargo to China should be lifted for the good of the European economy. This came after a visit by Chinese Vice-Premier – and probable future PM – Li Keqiang to various European capitals. Given the shock that reverberated around Western defence circles after new stealth fighter technology was unveiled just before US Defense Secretary Robert Gates’ trip to China, it is highly unlikely that the US and UK would be keen on such a move.

YouGov Polling 13-01-11
Conservative  41%
Labour  41%
Liberal Democrat  8%
Government Approval  -17%  

'Progressive' argument obscures real threat from inflation

We are four days into 2011 and already I've heard the words 'progressive' and 'regressive' so many times my head is spinning and I'm starting to feel nauseous. Sadly, I can see this being a trend that continues throughout 2011 as Labour seeks to label everything the Coalition does as 'regressive'. 

What's even more upsetting is that the real issue here is being missed. Retailers are going to put up prices by as much as 5% or even 8%. This isn't to make profit, it's to readjust their costs to factor in inflation. These price rises were coming VAT rise or no VAT rise. 

So the real story here is not the tired old tale about the profligate Labour Government and the austere Coalition reducing its deficit, but about the huge risk the UK faces in 2011 from inflation which some economists at the Bank of England fear could see the CPI top 4%. 

4%! And that's just the CPI. The RPI was already at 4.7% in November. So despite recent support for their economic measures from a group of leading economists - who believe that the UK is in for a slow period of growth in 2011 rather than a double-dip recession - the threat of inflation still looms large. It is the most pressing economic problem facing the country, and the Government must start concentrating on finding some way to reduce inflation. 

p.s. If you want to look at whether the VAT rise is progressive or regressive then look no further than this well-researched article by the BBC's Business Reporter Laurence Knight.