Parliamentary Connections

The failure of John Greenway to win selection for the new Thirsk & Malton seat (for electoral enthusiasts it is actually a famous old seat recreated) seems to have taken alot of people by surprise, not least John himself and many in the Conservative Party.

So, what went wrong from his point of view?

From talking to John, reading the local press and listening to other MPs, it seems that he failed to get sufficient control over various factions in his local constituency party, some who had never been his biggest fans despite his apparent popularity as a constituency MP. When John won Ryedale in 1987 it was a Liberal held seat, Liz Shields having snatched it from the Conservatives in a by-election the previous year. This wasn't a flash in the pan for the Liberals in Ryedale as they had been picking off Tory Council seats for a few years previously. John was among those unimpressed by the old guard's attempts to keep the Liberals at bay and when the by-election was lost he seized his chance to oust the unsuccessful Tory candidate and was selected to fight the 1987 General Election.

The Liberal/SDP Alliance (as it was then) was widely predicted to hold the seat. John proved the pundits wrong, won by a substantial margin and has made it a safe Tory seat ever since. However, some old wounds never healed. The faction around the ousted canadidate from 20 years ago has never embraced John as one of their own and their manoeuvring, coupled with the expected influx of Anne McIntosh supporters from the Vale of York seems to have caught John out.

A few local issues are meant to have weighed in as well, such as John's "failure" to get a by-pass built, coupled with the suggestion that a shadow minister might have more clout (McInstosh was recently made a shadow eduction minister) also cost John some votes. Such thoughts are born out of a spectacular naivety about Westminster politics that can only be down to the remoteness of the Yorkshire Moors from the hustle and bustle of London politics. Junior shadow ministers rarely have any clout, and certainly no more than respected, well informed backbench MPs like John.

Still, it is all water under the bridge now. John lost. He is not going to look for another seat and so will stand dwon from parliament at the next election. In the meantime, he has made it clear that he will be throwing himself into Westminster life, including chairing the All Party Group, with renewed vigour.

Having said only last week that the Tories were mounting an increasingly impressive charm offensive in the City and wider business community, their leader, David Cameron goes and pulls the carpet from underneath his hardworking team by snubbing the CBI's prestigious annual conference today.

His decision to fly to Iraq for a few pictures with "our boys at the front" is an error of judgement. He has put short term headline grabbing before longer term bridge building. The Tories need big business to swing behind them in the run-up to the next General Election, having lost alot of ground with what should be a natural supporter base for them. Dropping out of the CBI conference at the last minute will not help their cause. After all, can you recall Tony Blair, pre- or post-1997, making the same mistake?

The news that Lord Hunt of Kings Heath – certainly not to be confused with Lord (David) Hunt of Wirral – has returned as a minister at the Department of Health is good news for all those with an interest in promoting rehabilitation in personal injury cases.
Before he resigned in protest at Tony Blair's decision to join the war aganist Iraq, he was the only government minister to show any interest in the insurance industry's drive to embrace rehabilitation, showing a ready understanding of the need to provide better linkage between the NHS and the private sector rehabilitation services. He was prepared to meet people from the industry, trying to understand their frustrations at the number of people who should receive prompt rehabilitation but didn't because of the poor information coming from the NHS and the lack of understanding of the likely availability of private funding for rehabilitation where the accident occurred at work or in a morot accident.
Hopefully, he can pick up the threads of this debate very quickly as many of the same issues remain to be addressed three and a half years after he resigned.

Lord Sheikh, best known as the boss of Camberford Law but now to be found on the Conservative benches in the House of Lords, is beginning to find his feet in his new surroundings.
He has been chipping in quite frequently since Parliament returned, making a plea for more cleaning shifts in government buildings during normal office hours (citing his experience as a broker to several cleaning businesses) and making a forceful case for the insurance industry during a debate on economic competiveness last Thursday.
He focussed on the barriers placed in the way of UK insurers wanting to expand overseas, citing restrictive ownership rules in India, the lack of transparency on the part of Chinese regulators and the continuing problems with reinsurance collateral in the United States. This latter issue has been taken up on several occasions by the All Party Parliamentary Group, both with the Treasury and US regulators.
He seems to have caught the minister, Lord Davies of Oldham, on the hop as he was obviously well briefed to reply on every point raised in the debate except those on the insurance industry: the minister promised to write to Lord Sheikh with answers on his concerns.
It is refreshing to see that someone who has such deep roots in the insurance market wants to develop those in the political arena. It doesn't always happen. Take Sandy Leitch, former boss of Zurich in the UK. He became a Tory peer in 2004 but has hardly uttered a word on the insurance industry since.

One of the refreshing features of the early years of the Blair governments was the determination to make Parliament operate abit more like the rest of us. This reforming zeal led to many changes, one of the most welcome of which was that key events such as the Budget and the Queen's Speech were announced months in advance so that everybody could plan for them.
I remember for years trying to plan issues of Post Magazine around the uncertainty of when the Budget would be. Frequently, the date was announced only a couple of weeks in advance, meaning that I often had to shift great chunks of editorial from one issue to another at short notice. There never seemed to be a good reason why the Treasury felt it had to play this game of cat and mouse so it was refreshing to find that you could come back after Christmas with the date of the Budget (sometime in March) already firmly in the diary.
All of that has gone out of the window and we are right back at square one. Here we are on 22 February and the Treasury still hasn't announced the date of the Budget. The top bets are on Wednesday 21 March, only because that is virtually the last day it could be if the Finance Bill is to be published before Easter. With 30-40 pages of the bill predicted to deal with specific measures relating to the taxation of insurance it will be a busy Easter for the industry's tax experts.
But why are they left guessing on how to plan their time to deal with that? It doesn't seem very professional.

Re-organising government departments is obviously flavour of the month.
No sooner have we had the rushed – and hopefully not botched – splitting of the Home Office than the Treasury is back in the sights of would be reformers. I say back in the sights because it never seems to be out of them for very long.
As the Labour leadership election gets underway in earnest the Whitehall rumour mill is speculating hard that Gordon Brown will want to slim down the Treasury so that he can have more power centred on Downing Street. After all, he knows better than almost anyone just how powerful the Treasury can be, having ensured that it asserted the major influence over domestic policy over the last ten years. The suggestion is that a new Department of Economic Affairs could be created, picking up a range of responsibilities from the Treasury and from the dismembered Department of Trade and Industry. This would leave the Treasury looking more like a constitutional style Ministry of Finance, still influential but not all powerful.
Recent newspaper reports have suggested that Lord Birt put a similar proposal to Tony Blair before the last election as a way of curbing Gordon Brown’s growing hold over domestic policy from his powerbase at the Treasury. Rather ironic really.
The big problem is that it has all been tried before and failed dismally.
When Labour snatched the 1964 General Election after 13 years out of office the new Prime Minister, Harold Wilson, was so concerned that the Treasury would block many of his sweeping economic reforms – laced with a generous helping of then fashionable socialist economic planning – that he immediately set up a new ministry and put George Brown in charge of it while Jim Callaghan went to the Treasury. The new ministry’s name – the Department of Economic Affairs. Brown was actually the more powerful figure at this time as he was deputy Prime Minister.
It was a disaster and the running battle between the DEA and the Treasury was one of the reasons why the early years of Wilson’s government were blighted by paralysis over economic policy. The DEA only really lasted two year’s as a serious entity, although it wasn’t finally would up until 1969.
It is a pity that some of the people who write policy papers for the current government don’t have a better grasp of political history: if they did, then the notion of recreating one of Labour’s biggest disasters would never see the light of day.

Private equity has burst on the national consciousness with a vengeance in the past couple of months. The sector has made an art form out of keeping its head down and when it was forced above the parapet it has been found sadly wanting.
Appearances before a hostile Treasury Select Committee were certainly not part of the plan and the leaders of the sector seem to have been ill-prepared for the political onslaught that has confronted them in recent weeks. The lack of political nous has already cost Peter Linthwaite the boss of the trade association – the British Venture Capital Association – his job and the sharp differences of opinion between the heads of the major private equity firms have played into the hands of those who believe that a harsher fiscal regime needs to be imposed on this sector.
Most of the rest of the financial services sector is quietly sitting on the sidelines thinking that this doesn’t have much to do with them and that the worse that can happen as the political debate heads towards its conclusion is that a few private equity fats cats get walloped with a big tax bill they can easily afford to pay. This could be a trifle naïve.
The nature of these political bandwagons is that they tend to roll; or, to mix metaphors and put it more starkly, once the Treasury Select Committee tastes blood it is not going to be inclined to let up the hunt. The question then becomes, what next?
The most immediate implication of any new tax regime will be that the complex market forces that surround the private equity sector will be realigned and the nature of such realignments is usually that there are some unexpected and unintended consequences. These will keep analysts and commentators very well employed over the next few months and will make high profile private equity deals just a little bit thinner on the ground – this could mean that inviting headlines about making the likes of Peter Cullum multi-billionaires won’t be top of the sector’s priorities. More interestingly for the rest of us is the thought of what next for those now reinvigorated in their hunt for “unjustified” tax breaks.
Where will their attention turn? Tax havens and tax exiles – whether corporate or individual – have never been popular with the left and many aspects of offshore domicile could easily come under harsh political scrutiny. This could have huge consequences for many insurance firms and fund management groups. It will certainly make it harder to argue for a generous approach to the problems caused by rapidly rising property prices and the need to review the scope of Inheritance Tax and Capital Gains Tax. The private equity row has decisively changed the political climate so that attempts to lift large numbers of people out of tax regimes they should never have been in will be closely scrutinised to see what extra advantages the so called super rich might also enjoy as a result.
So, as we watch the Treasury Select Committee's investigation unfold and smugly think that it has little to do with the rest of us, we might wan to think again.

In the interests of transparency I ought to point out that Incisive Media currently has private equity owners (Apax) and publishes for the private equity sector.