David Cameron caves in over Leveson

The Tories accept Labour and Lib Dem demands for statutory underpinning of a Royal Charter to establish a new press regulator.

After talks that lasted until 2:30am in Ed Miliband's offiice, the three main parties are close to reaching an agreement on press regulation - and it is the Conservatives who have given way. A Labour source told The Staggers: "we are confident we have the basis of an agreement around our Royal Charter entrenched in statute". The Tories, represented by Oliver Letwin at the talks (Miliband, Clegg and Harriet Harman were also present), have accepted three of Labour and the Lib Dems' key demands: 

-That the Royal Charter will be underpinned by law, so that it can only be amended by a two-thirds majority in Parliament, rather than by ministers at will. 

-That the press will not be able to veto appointments to the board of the new industry regulator.

-That the independent regulator will have the power to "direct" how newspaper apologies are made, rather than merely "requiring" them to be made. Papers, for instance, will be ordered to publish front page corrections, rather than bury them elsewhere.  

Despite these concessions, the Tories are claiming success on the basis that they have avoided the wider version of statutory underpinning originally demanded by Miliband and Clegg. Earlier this year, Harman said of the Tories' proposal of a Royal Charter: "It's a bit like Dolly the sheep, it might look like a sheep, but we do not know if it will do all the thing that a sheep is supposed to do". But Labour and the Lib Dems have now accepted that a Royal Charter, rather than a formal press law, is the appropriate mechanism to establish the new regulator.

A Tory source told the Daily Mail: "We have not caved. It is a near as dammit our version of Royal Charter. The entrenchment clause has been rewritten". But "near as dammit" means Miliband and Clegg can still chalk this up as a major political victory. We'll get the full details when a statement is made in the House of Commons later today. 

Update: Speaking on Sky News, Harriet Harman has just confirmed that "agreement has been reached" and that there will no longer be a Commons vote held today. She later told the Today programme that there will be "a small piece of legislation" in the House of Lords "which will say you can't tamper with or water down this charter". However, she conceded that this was not the form of statutory underpinning originally demanded by Labour and the Lib Dems: "The framework is set up in a Royal Charter, not by statute". That will aid the Tories' attempts to argue that it is ultimately the pro-Leveson camp that has given most ground. 

Harman also said that the new regulator would have the power to order newspapers to publish front page corrections and that Hacked Off would be "very pleased by the outcome". The key question, however, isn't whether the Tories or Labour think they've "won" but what the press makes of it all. The credibility of the new regulator will depend on the participation of all papers. 

David Cameron during a press conference last week on press regulation. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.