Cracks in the coalition on immigration

Cable comes out swinging against Cameron’s cap.

Given that the Lib Dems went into the election promising an amnesty for illegal immigrants and ended up supporting the Tories' unworkable cap, it's hardly surprising that Vince Cable feels the need to reassert his liberal credentials.

Cable's declaration that he wants to see as "liberal an immigration policy as it's possible to have" has succeeded in bringing the cabinet's internal divisions out into the open. Pushing the principle of collective ministerial responsiblity to the limit, he revealed that he was "arguing within government" for "the most flexible regime possible".

But as the Spectator's Fraser Nelson points out, the fact that David Cameron's pledge to reduce net migration to "tens of thousands" a year was not included in the coalition agreement means that the policy is up for negotiation -- and rightly so.

Immigration fell significantly during the recession, but net migration of 142,000 in 2009 indicates that Cameron would need to cut immigration by at least 30 per cent to bring the total to less than 100,000. Privately, Tories speak of an even more unrealistic target of 50,000.

Cameron's promise remains unfeasible for several reasons. For a start, the government cannot limit immigration from within the EU without restricting the free movement of labour and throwing the UK's continued membership into doubt. The policy also ignores the 39,000 people who come to the UK on spousal visas after marrying British citizens abroad.

In the case of his India trip, Cameron's declaration that "Britain is open for business" sits uneasily with his belief that the door must be closed to some. Cable may be aware of this, but his call for a "flexible cap" -- a contradiction in terms -- reveals the tangle the government has got itself into.

The most practical and liberal policy would be to abandon the cap altogether but, for now, it looks like the coalition will try to muddle through.

George Eaton is political editor of the New Statesman.

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.