Politics Summary: Tuesday, July 13th

City minister Mark Hoban has urged the banking sector to demonstrate the "pay restraint" being demanded of workers in the public and private sector and is considering a permanent tax on the pay and profits of banks.

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City minister Mark Hoban has urged the banking sector to demonstrate the “pay restraint” being demanded of workers in the public and private sector and is considering a permanent tax on the pay and profits of banks.

In an article in today’s Guardian, the minister writes: “A key way of regaining public trust will be reforming the system of remuneration as agreed by the G20. Banks globally have the opportunity to send a clear message to the public that the banking system now operates in a way that is fair and stable, and no longer rewards employees based on short-term performance while leaving investors and taxpayers exposed to the long-term risks… But there is a role for the government too. I can announce that we will consult on a remuneration disclosure regime in the financial services sector. We are actively looking at the introduction of a financial activities tax and will explore the costs and benefits of such a tax on profits and remuneration. We are also asking the Financial Services Authority to examine further options in the forthcoming review of its remuneration code.”

The Guardian adds that: “Consultation on the balance sheet levy would begin tomorrow, he said, and it would bring in £2.5bn each year from 2012. Adopting a change of tone from his predecessor Lord Myners, who had repeatedly used robust language to tell bankers they were overpaid, Hoban told the City it was ‘better for the industry’ to lead the changes needed to restrain bonuses… His remarks came as sterling was falling against the dollar because of a warning from the ratings agency Standard & Poor’s that the government may yet lose the AAA rating which keeps the price at which the government can borrow money on the markets as low as possible.”

The Independent reports on health secretary Andrew Lansley’s sweeping reforms unveiled yesterday, in a drive to make health outcomes “among the best in the world”. Lansley announced his vision of a slimmed down, smartened up and democratised NHS to deliver better quality care, with England’s 35,000 GPs taking charge of the bulk of the £105 billion budget. Medical organisations, however, warned the changes could “de-stabilise” the NHS, with the Nuffield Trust describing them as “risky”. The report explains that: “Groups of GPs organised into consortia are to be given freedom and responsibility for buying care from local hospitals and other providers, including private organisations, in a major switch of purchasing power from central management to the surgery. They will control upwards of 70 per cent of the NHS budget, which will be managed by staff whom they will hire… Patients will get more choice and control, including the freedom to register with any GP practice regardless of where they live, to choose any hospital to be treated in (as now) and any consultant, as private patients can. Unlike private patients, however, they may have to be content with seeing a member of the consultant’s team… The losers in the reform are management, which is to be cut by more than 45 per cent over the next four years. The 302 Primary Care Trusts in England will by abolished by 2013, to be replaced by several hundred GP consortia; the number is not yet known. Strategic Health Authorities will also go. Other jobs will be at risk as the NHS must find £20bn of efficiency savings at the same time as it is driving through the reforms.” Shadow health secretary Andy Burnham said: “It is a huge gamble with an NHS that is working well for patients.” This morning at 10.30, Left Foot Forward takes a closer look at Lansley’s reforms.

The head of NATO has warned that David Cameron’s timetable for withdrawal from Afghanistan puts British troops at risk. The Telegraph reports that Anders Fogh Rasmussen, the Nato secretary-general, believes the prime minister’s setting out of a five-year timetable risks encouraging the Taliban to step up their attacks on Coalition forces. Rasmussen, who met senior ministers in Downing Street yesterday, also warned that cuts in defence spending could harm the Transatlantic alliance and leave the UK lacking the cutting-edge military technology needed to work with US forces. Rasmussen, a former Danish prime minister, told the Telegraph: “The Taliban follow the political debate in troop-contributing countries closely. They do believe that if we set artificial timetables for our withdrawal, they can just sit down and wait us out and they will return when we have left… If they discover that through their attacks, they can weaken the support for our presence in Afghanistan, they will just be encouraged to step up their attacks on foreign troops.” Warning against withdrawing western troops, he added: “If we were to leave Afghanistan prematurely, the Taliban would return to Afghanistan and Afghanistan would once again become a safe have for terrorist groups who would use it as a launch pad for terrorist attacks on North America and Europe. There would also be a risk of destabilising a neighbouring country, Pakistan, a nuclear power. That would be very dangerous.”

The penal system is not working and is need of urgent reform, the prime minister has conceded. David Cameron made his remarks as it was disclosed that Ken Clarke is “sympathetic” to proposals for a shake-up of murder laws that could see some murderers serve less time in prison, reports the Standard. Cameron said: “The truth is you have to have some short sentences because they are absolutely necessary, but it (is) also true that sending someone to prison for a period of one month or two months is pretty meaningless in terms of actually being able to reform them… We have to face the fact that we have a criminal justice system that isn’t working at the moment. We’re banging people up at vast expense, half of them are on drugs, over 10% aren’t meant to be here at all because they’re foreigners, and the reoffending rate is dreadful.” On the justice secretary’s comments, the Telegraph reports: “A system of first and second degree murder could be introduced… It would mean an end to mandatory life terms for all murderers because courts would be allowed to set the length of prison sentences for those guilty of the lower tier murder. Under the proposals, drawn up by the Law Commission in 2006, young murderers, such as the Jamie Bulger killers, would also escape life sentences if their lawyers could argue they were immature for their age. However, some killers who would currently be convicted of manslaughter would be upgraded to second degree murder. Victim groups condemned any possible change, saying there was no ‘degree’ of dead for bereaved families who had a loved one murdered.”

And The Guardian reports on Fidel Castro’s first TV appearance for four years, in which he analysed the Middle East situation and said Iran would not be cowed by the US. The Middle East is on the verge of a nuclear war triggered by a US attack on Iran – in the name of preventing the country from developing its own weapons – warned the 82-year-old former president of Cuba. He said: “To do this on the basis of a calculation that the Iranians are going to come running out to ask the Yankees for forgiveness is absurd… They [the US] will encounter a terrible resistance that will spread the conflict that cannot end up any other way than turning nuclear.” He added: “The US is activating the machinery to destroy Iran – but the Iranians have been building up a defensive force little by little for years… When Bush attacked Iraq, Iraq was a divided country; Iran is not divided… The control that Israel has over the United States is enormous… US foreign policy is better described as the policy of total impunity… We have experiences of being close to it [nuclear war]. Now I believe the threat of war has greatly increased. They [the US] is playing with fire.” Residents of Havana were apparently delighted by his appearance, sugar ministry worker Paula Alonso saying: “We are so, so excited to see him. It is unbelievable. Especially for people from the same generation, we want to see our president.”

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