91Èȱ¬

There was an extraordinary moment at Westminster this lunchtime when a woman went up to one of the House of Commons policemen and asked to borrow his poppy.

It wasn't for her, she quickly explained, but her boss Chancellor George Osborne.

A few minutes earlier there had been a big fuss on Twitter about the fact that Mr Osborne was sitting in the chamber for Prime Minister's Questions and not wearing a poppy - Quick, you must get him a poppy, the order went out to Mr Osborne's staff.

Only they couldn't find one in the chancellor's Commons office, which explains the request to the Commons policeman.

He kindly obliged.

The poppy was then carefully sealed in an envelope, and you could see the scene on TV as the envelope was slowly passed along the front bench.

A big smile erupted on Mr Osborne's face as he opened the envelope and saw what was inside.

Interestingly, he didn't put the poppy on. Perhaps he realised that to do so in the chamber on live TV would have made too much of a story.

Liberal Democrat adviser and donor Neil Sherlock has just dismissed the suggestion in my blog yesterday that he is about to be made a Lib Dem peer.

"I think that one peerage in our house is enough at present!" he tells me.

I see that the Manchester United manager Sir Alex Ferguson says of football agents: "the modern trend with agents is that they are never criticised by journalists because that is their feeding foundation... It is where they get all their stories and complete knowledge of what is happening with a lot of players."

Strange that. Six years ago my colleague and friend Alex Millar made a documentary for the 91Èȱ¬ called 'Fergie and Son'. It was about the relationship between Sir Alex and his son Jason, who was then a football agent.

Sir Alex was furious with the programme and its revelations. So angry, in fact, that he has boycotted the 91Èȱ¬ ever since.

There's much speculation at Westminster about the dozens of new lords that are about to be created. Whilst the Coalition is busily cutting the number of MPs from 650 down to 600, we are about to get another batch of about 55 new peers.

A normally astute and well-informed Lib Dem observer reckons the following people are in line to be among the expected 15 new Liberal Democrat peers:

* Brian Paddick (2008 London Mayoral candidate and former senior Metropolitan Police officer)
* Sal Brinton (Parliamentary candidate in Watford in 2005 and 2010)
* Dee Doocey (member of the London Assembly since 2004 but standing down in 2012)
* Judith Jolly (West Country party stalwart)
* Susan Kramer (ex-MP for Richmond Park)
* Jonathan Marks (legal expert)
* Monroe Palmer (chair of Liberal Democrat Friends of Israel)
* Julie Smith (Cambridge academic and chair of Liberal International British Group)
* Ben Stoneham (No.2 at Cowley Street, Clegg's operations director before the election)
* Neil Sherlock (speech writer to successive Lib Dem leaders - Kennedy, Campbell and Clegg, also a big donor to Clegg's office, and husband of recently ennobled Kate Parminter)
* Ian Wright (big donor to Clegg's office).

The latter two - Sherlock and Wright - have been donors to Clegg's office so their inclusion could prove to be controversial.

In the Coalition Agreement it was agreed to adjust representation in the Lords to reflect the distribution of votes at the last election. When I did the sums and observed on Newsnight that this would entail the creation of around 200 new peers, ministers suggested I was talking rubbish.

This coming batch, however, will bring the number of new peers since May to around 120.

So much, some will say, for cutting the cost of democracy. Indeed, so much for democracy, they might well add.

But I am told that these new peers won't last long in the upper house. The Lib Dems need so many new peers, I am assured, to ensure that the Lords doesn't block its own reform.

Of course.

Update:
I am also told that another name on the Liberal Democrat list is Qurban Hussain, who stood for Luton South at the election, a campaign we covered on Newsnight.

My previous list had no black or ethnic minority candidates, and so Hussain's elevation would remedy that.

Hussain was the nearest any Lib Dem ethnic minority candidate came in 2010 to getting elected. But his elevation to the Lords may make it even harder for the Lib Dems to ensure they get any ethnic minority MPs next time round.

As I have often reported here, this remains a big embarrassment for the party.

As I reported yesterday, in future the cost of the 91Èȱ¬ World Service - currently £272m a year - will have to come from the 91Èȱ¬ licence fee rather than the Foreign Office budget, and the licence fee has been frozen for six years.

Here is some background to how the story and the deal unfolded.

I'm sure he won't mind me saying so, but it Chris Bryant MP who first mentioned the possible wheeze to me.

It was late one night during the Labour conference, that the he suggested this government might try to make savings in the Foreign Office budget by transfering the £272m annual budget of the 91Èȱ¬ World Service directly to the 91Èȱ¬, to paid out of income from the licence fee.

When a Newsnight colleague tested this idea with a senior minister several days later - ie. less than two weeks ago - he was surprised to be told that the 91Èȱ¬ itself had actually proposed the idea, but it had subsequently been rejected.

Why should the 91Èȱ¬ suggest an idea which would only add a huge extra burden to 91Èȱ¬ budgets? Quite simple, 91Èȱ¬ managers realised they were in bad odour with many leading Conservatives, what with all the talk of high 91Èȱ¬ salaries, inefficiency, waste and so on.

Far better for the 91Èȱ¬ to come up with a way for the corporation to contribute its bit to the Spending Review process than have something far worse imposed from above.

Then suddenly, on Monday of last week, the World Service idea was back on the agenda, as negotiations started between the Culture, Media and Sport Department (DCMS) and 91Èȱ¬ big-wigs.

The idea was to agree the World Service budget transfer as part of a bigger deal which would freeze and secure the licence fee until 2017. The move also made logical sense in that World Service journalists will soon be housed in the same "West One" building as other 91Èȱ¬ journalists.

But the new urgency on the government's part seemed to stem from the realisation last week that cuts in both defence and the schools budget would not be as great as the Treasury had hoped. The hunt was on for more economies. (Indeed the Justice Department, having "settled" with the Treasury many weeks ago, was among a few departments asked to cough up more cuts.)

Then on Monday, as first reported on this blog, 91Èȱ¬ bosses were hit by the bombshell that the Treasury now instead planned something far more burdensome to the 91Èȱ¬ - transfering the £556m cost of providing free TV licences for over-75s from the books of the Department of Work and Pensions to the 91Èȱ¬.

Indeed, I'm told that for several hours on Monday 91Èȱ¬ bosses thought this decision had actually been made by the Treasury and was about to be imposed on them. As I reported here, they planned to fight it "tooth and nail".

Several government sources have said this was a genuine plan, though others suggest the free TV licence transfer idea was merely a negotiating ploy.

On Monday evening 91Èȱ¬ bosses suddenly sensed the free licences for the elderly option had gone away. Instead they were invited for more talks at the DCMS, and the 91Èȱ¬ Director-General Mark Thompson had to be summoned back from the train he was taking home to Oxford.

Talks went on late into the night and resumed early on Tuesday morning, with negotiators getting very little sleep. And the deal was struck - a complicated package which normally would have taken months to settle.

What's odd is that Downing Street was insisting on Monday afternoon that all the departmental settlements were "complete", and the CSR documents were about to go to the printers. And yet this huge saving to the Foreign Office budget from having lost responsibility for the World Service wasn't agreed for almost another 24 hours.
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Two senior sources - in Downing Street and the Foreign Office - have told me that a deal has now been done where in future the cost of the 91Èȱ¬ World Service - currently £272m a year - will have to come from the licence fee rather than the Foreign Office budget.

This will come into effect with the next licence fee settlement due in 2012.

This seems to replace previous plans - reported here yesterday - to make the 91Èȱ¬ pay the £556m cost of the paying for free TV licences for the over-75s.

I understand the new deal, brokered between the 91Èȱ¬ and the Department for Culture, Media and Sport is likely to involve a new figure for the licence fee.

A 91Èȱ¬ source tells me the corporation recognised they had to contribute to the Spending Review process, and bringing the World Service within the overall 91Èȱ¬ budget was a logical move given the fact that 91Èȱ¬ and World Service journalists will soon share the same building.

I am told today's deal was not linked to last night's story about free TV licences.

As a result of my blog last night there were furious hastily-arranged talks at the (DCMS) involving the 91Èȱ¬ Director-General Mark Thompson and DCMS ministers and officials.

These went on very late and were resumed this morning.

Two deals were on the table - the 91Èȱ¬ paying for the over-75s and paying for the World Service.

They concluded with a deal today which freezes the 91Èȱ¬ licence fee at £145.50 for the next six years.

Ken Livingstone has presented Ed Miliband with a major problem.

91Èȱ¬ London has caught him on camera campaigning for Lutfur Rahman, the independent candidate who is running for mayor of Tower Hamlets.

Mr Rahman was expelled from the Labour Party by the party's National Executive Committee last month over "serious allegations" against him, after he'd been picked by local Labour members as their mayoral nominee.

And Labour selected another official candidate, Helal Uddin Abbas.

Labour's rules on this are very clear and have been rigorously applied for many years now.

They state: "A member of the party who supports any candidate who stands against an official Labour candidate shall automatically be ineligible to be, or remain, a party member."

Labour has already suspended eight local Labour councillors for supporting Mr Rahman, so why not Mr Livingstone?

Indeed, one might even interpret that rule as meaning Mr Livingstone no longer belongs to the Labour Party already.

Surely the party won't apply one rule for famous big names, and another for obscurities?

If Mr Livingstone is allowed to remain a party member, and Labour's nominee for Mayor of London, shouldn't all those who've been expelled under this rule over the years now be reinstated?

They include the former Labour peer Chris Haskins who was expelled in 2005 for giving £2,500 to the parliamentary campaign of the Liberal Democrat MP (and now Chief Secretary) Danny Alexander.

With fewer than 48 hours to go, details of the Spending Review are far from settled and the 91Èȱ¬ could be a victim.

I understand from both government and 91Èȱ¬ sources that one decision still being actively considered by ministers is to transfer the £556m annual cost of providing free TV licences to pensioners over 75-years-old, from the government's books to the 91Èȱ¬.

This would take effect from the time of the next licence fee settlement, due in 2012.

The level of the TV licence would be increased as a result, but probably by no means enough to make up for the full £556m cost.

I understand that ministers have already rejected an earlier similar plan to transfer the cost of the 91Èȱ¬ World Service from the Foreign Office to the 91Èȱ¬.

This is potentially a very big story indeed, and could lead to a big bust-up between the 91Èȱ¬ and ministers over the 91Èȱ¬'s independence.

The cost of providing free TV licences is currently £556m a year, and with our ageing population that cost is rising rapidly. The bill is currently met by the Department of Work and Pensions (DWP), so taking more than half a billion pounds off the books will be a quite saving for them, and may mean they can avoid cutting some benefit or other.

The effects for the 91Èȱ¬ are quite serious. If the whole £556m cost is to be met by the current licence fee, which brought the 91Èȱ¬ £3.45bn in 2009-10, it would be the equivalent of a 16% cut in the 91Èȱ¬'s licence fee income.

I would be astonished if the 91Èȱ¬ Trust took this measure lying down. I would expect them to fight it tooth and nail. The 91Èȱ¬ will no doubt argue it's wrong for the licence fee to be used to pay for a welfare benefit, and a severe erosion of 91Èȱ¬ independence.

A 91Èȱ¬ Trust spokesman told me tonight:

"Anything at this stage is speculation as we have yet to see the detail of the comprehensive Spending Review. That said, it would be unacceptable for licence fee payers to pick up the bill for what is a DWP universal benefit."

This will be very awkward for the 91Èȱ¬ politically. What is more popular - high salaries for 91Èȱ¬ stars and senior execitives, or free TV licences for the elderly?

In his first big speech as shadow chancellor this morning, Alan Johnson tried to refute the Coalition's suggestion that Labour is responsible for the budget deficit.

Mr Johnson might like to read a passage in Jonathan Powell's excellent new book The New Machiavelli.

Mr Powell, who was chief-of-staff to Tony Blair, throughout his 10 years in Downing Street, explains that in the final year of the Blair government they tried to conduct a Fundamental Savings Review (FSR), to cut out some of the extra waste which he says had "inevitably built up in the years of increased public spending".

The failure to carry out the FSR, Mr Powell says, "was probably the most damaging example of the 'stand-off' between Blair and Brown".

"Gordon refused to allow it to happen while Tony was still Prime Minister," he says.

So the waste-cutting exercise never took place. "As a result," says Mr Powell, "we missed an opportunity to put the country into a better fiscal position going into the economic crash of 2008".

And I have just noticed that in his recent memoirs Tony Blair says:

"we should... accept that from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit. The failure to embrace the Fundamental Savings Review of 2005-6 was, in retrospect, a much bigger error than I ever thought at the time."

A Treasury source confirmed to Newsnight tonight that the Star Chamber, the Cabinet committee which adjudicates on public spending disputes, has now met at least once.

The Star Chamber was re-established by David Cameron this summer to decide on cases where government departments can't agree with the Treasury on what cuts they should make as part of next week's big Spending Review.

As departmental ministers have reached deals with the Treasury then their names have been added to membership of the Star Chamber.

A couple of ministers have told me that appealing to the Star Chamber is bound to be fatal to any departmental minister.

Just as with the notorious medieval Star Chamber, they would be assumed to be guilty, I was told, and their appeals would inevitably be rejected by Cabinet colleagues.

And the appeal process is pretty nerve-wracking as one has to appear before the committee without any departmental officials.

What's more ministers from departments who have already settled are hardly going to allow concessions to any colleague lest that lead to a decision to try and reopen their own settlements to find the extra funds.

To a meeting tonight where the former Labour MP Chris Mullin has been talking about the latest volume of his diaries.

He claims that "agents" of his in Downing Street have heard David Cameron and George Osborne referring to Tony Blair as "The Master".

So now we have it, from Vince Cable in the Commons this afternoon - election pledges may no longer apply - not just on tuition fees, but everything.

The Business Secretary told MPs:

"In the current financial climate - which is appalling - all commitments, all pledges, have to be re-examined from first principles."

Ed Miliband's new front bench team is remarkable not just in the number of new MPs who got jobs, but also because Ed Miliband spoke to each of the new appointments personally, right down to the lowest level.

In nearly every case he contacted them by phone between Friday and Sunday.

This was a surprisingly difficult exercise, one of his aides tells me, because a lot of MPs didn't answer their phones straight away, which held up the process.

It's very unusual for a prime minister or opposition leader to do this.

Normally, with the more junior appointments, the lucky person will be contacted by a senior whip, or a Cabinet level figure, to be given the good news.

In this case Ed Miliband managed to speak to every single one, though in some cases the conversation was pretty brief.

One shadow minister told me this means the team is very much Ed Miliband's, not the result of factional horse-trading, as used to happen in the Blair-Brown years.

I can't, however, imagine that the new Labour leader will be able to maintain this level of involvement.

Mind you, the announcement of the Shadow Cabinet results was all a bit of a cock-up.

The defeated contender Barry Gardiner had the results on his blog around 7pm, an hour or so before most of the candidates heard the news, and two hours before the official announcement, with the result that several contenders only heard how they had done from party activists and friends.

Denis McShane told the Parliamentary Labour Party meeting that Ed Miliband's was the shortest speech that he had ever heard from a Labour leader, whereupon the PLP chairman Tony Lloyd interjected and told the occasionally long-winded McShane:

"That's no reason for you to make up for it."

The party must show "unity" and "humility" Ed Miliband told Labour MPs, and acknowledge that Labour lost the election.

Further to my observation last night that eight Yorkshire MPs will be sitting in the shadow cabinet, we now learn that Jon Trickett, who was Gordon Brown's PPS, will also be sitting at the shadow cabinet table.

He is likely to play a big role in the Ed Miliband entourage. He sits as MP for yet another Yorkshire seat in the Leeds-Sheffield-Doncaster triangle, Hemsworth.

So the shadow cabinet is now dominated by a band of nine Yorkshire seats, all contiguous with each other, stretching from Leeds Central (Hilary Benn) in the north to Don Valley (Caroline Flint) in the south east.

Initial thoughts on the shadow cabinet election.

- It's an extremely inexperienced team. Only Tessa Jowell, John Denham and Angela Eagle of those elected today have Commons experience of the last time Labour was in Opposition, along with Harriet Harman and Tony Lloyd who both sit ex-officio.

- About ten Welsh MPs stood, but amazingly none was elected. That includes Peter Hain, who has lots of experience, and could have filled many different slots - Wales, NI, FCO, Justice, DWP etc, and was a leading member of Ed Miliband's campaign team.

- Eight members of the shadow cabinet come from within the south Yorkshire triangle between Sheffield, Doncaster and Leeds - Ed Miliband, Rosie Winterton, Ed Balls, Yvette Cooper, Mary Creagh, John Healey, Caroline Flint and Hilary Benn.

- With his huge vote, John Healey, a former Treasury minister, might be a good outside bet for shadow chancellor, though his background as a former TUC official may not help his chances.

Did David Cameron play a little too freely with one of his quotes in his conference speech?

In one of his most popular passages this afternoon, the prime minister denounced the former Schools Secretary Ed Balls, as having opposed the coalition government's new free schools on the grounds they would create "winners".

The precise passage from Mr Cameron's speech, which included much sarcasm, went as follows:

"Ed Balls, the man who used to be in charge of education in our country, he said one of the dangers of our schools policy was that it would create 'winners. (laughter)

"Winners? I mean we can't possibly have winners.

"I mean the danger that your child might go to school and turn out to be a winner.

"Anti-aspiration. Anti-success. Anti-parents who just want the best for their children.

"What an unbelievable attitude from this Labour generation, and we're gonna fight it all the way."

Mr Cameron's office confirmed this evening that the Balls quote he used came from Newsnight on 25 May this year, when Mr Balls took part in a discussion with the journalist Toby Young, a supporter of free schools.

Mr Balls precise words on Newsnight were:

"The danger is that there will be winners in this policy, but it is dishonest not to say that there will be losers as well."

Which is very different to how David Cameron quoted Mr Balls today.

In this week's - out on Friday - the academic and former journalist Ivor Gaber examines how Ed Miliband acquired the title "Red Ed".

He ends up fingering the former Business Secretary and backer of David Miliband, Lord Mandelson, and dates the title to September of last year.

A walk-on role in the story is played by my former Newsnight producer Allegra Stratton, now a political correspondent on The Guardian, .

As I reported here a couple of weeks ago, Stratton is now writing a biography of Ed Miliband.

Gaber's evidence against Mandelson is not conclusive, but strongly circumstantial:

'Red Ed' - it wasn't the Sun Wot Done it (it was 'friends of Tony') by Ivor Gaber

It was a bizarre experience looking at the papers in the days following the election of Ed Miliband as Labour leader, an almost 'Life on Mars' moment (one decade on) as I read about Labour "lurching to the left", "Labour tax bombshells" and, of course, "Red Ed".

But where did "Red Ed" come from? North London, I know, but from where, deep inside the journalistic swamp, did the term emerge?

I assumed that it could be instantly traced back to the door of our old Labour-hating friends, the Sun or the Mail - indeed in the five days following Miliband's election there were around 150 references to "Red Ed" in the British national press with the Sun leading the way with 49 mentions and the Daily Mail and Mail on Sunday with 23.

But the Mail wasn't in second place, strangely enough that 'honour' fell to the Guardian with 24 mentions.

But on closer inspection it wasn't so strange after all, for a little bit of investigation revealed that the first-ever mention of the term "Red Ed" could be found in the Guardian, more than a year ago.

On September 14, 2009 the paper's political correspondent Allegra Stratton wrote, " ...yesterday he (Ed Miliband) dismissed notions he was the union's "Red Ed"."

But what made her use that particular phrase? That was not too difficult to work out, for the phrase pops up at the end of a piece headlined "Mandelson sets out Labour's election line on spending cuts" and it is clear from reading the piece that Stratton has benefited from an eve of speech briefing either from the good Lord himself, or someone close to him.

The plot thickens (or does it clarify?) for the next media reference to "Red Ed" comes just ten days later in the magazine Prospect. Their diary reports that "The Copenhagen climate conference kicks off on 7th December, and the Brits are already limbering up. In August climate change minister and possible future Labour leader "Red Ed" Miliband launched eds-pledge.com, a website to 'campaign for a deal'."

Now where did that come from?

There's a great lull in "Red Ed" sightings for almost a year until the end of August this year when Fraser Nelson, writing in the News of the World, opines: "So he's become 'Red Ed', embracing every lefty cause going. Even pretending that he was against the Iraq war seven years ago." (Cerebral stuff, for an editor of The Spectator, eh?)

To save any further head-scratching about why this moniker suddenly reappeared, Nelson helpfully offers a clue, for later in the piece he reveals that he has been having off-the-record chats with supporters of David Miliband, he writes " As one of his supporters told me..."

Following Nelson, the floodgates open wide and a veritable tsunami of "Red Ed" mentions wash across the body politic. Even 'respectable' papers - and shamefully the broadcasters - join in; and not surprisingly virtually every hostile reference to "Red Ed" comes in an article in which it is clear that the journalist has been talking to supporters of David Miliband - though it is worth emphasising that there is absolutely no suggestion that these unfraternal whisperings had anything to do with the elder brother himself.

But none of this should be a surprise - we have been here before. In the 1980s the Tory press had a field day besmirching every Labour council with the tag "loony left". It was used with devastating effect by the Conservatives in the 1987 and 1992 elections, and they even tried it, without much conviction, in 1997.

But the real story of the tag "loony left" like "Red Ed" is that the Tories had a willing ally in the form of the Labour Party itself.

A few years ago, in a book that examined the relationship between the media and the Labour left, I revealed how it was New Labour that played a key role in sustaining the notion that anyone opposed to Blair was part of 'Old Labour' or worse, the "loony left".

And their reasoning was revealed by none other than Blair's polling guru Phillip Gould, who described how he argued that the 1989 Policy Review proposals which shifted Labour to the right, should not be introduced on a piecemeal basis, as was being mooted as a way of minimising opposition but to "...make one big-bang presentation... Dissent in these circumstances did not reduce our electoral appeal, but heightened it. It was evidence of change."

New Labour power-brokers were encouraging the media's perception that the "loony left" were still a potent threat, not because they believed it, but because they saw it as a useful tactic in order to achieve a Labour government.

It was a debateable, but nonetheless defensible stance to take. But 20 years later, to be suggesting that "Red Ed" and his supporters are about to take the party on a "lurch to the left" (another of those emotive phrases that is being bandied around), simply as a bitter reaction to defeat, is plain suicidal.

They should desist before further serious damage is done.

"Culture Wars: the Media and the British Left" by James Curran, Ivor Gaber and Julian Petley is published by Edinburgh University Press

It has been a busy 24 hours for the Defence Secretary Liam Fox.

After attending the Royal British Legion event in Birmingham last night - and answering some of my questions as he went in - he returned to London.

Dr Fox had a meeting with defence chiefs at the Defence Strategy Group this morning.

He then rushed back to a meeting for a fringe event in Birmingham this lunchtime.

I'm told the Ministry of Defence is now pretty certain they now know who leaked Dr Fox's letter to Prime Minister David Cameron last week.

It is amazing what you pick up at conferences; just take this story about crabs.

Many of the things you hear at conferences are utterly unprintable, but my source has given me permission on this one.

The former Conservative MP Jerry Hayes tells me that as an 18-year-old he picked up a bout of crabs.

His father advised him that the best cure for this ailment was petrol.

So, the young Jerry poured a good dose of petrol over his private parts, and, rather misunderstanding his father's advice, was about to light up with a match.

Fortunately, his future sex life was rescued when the phone suddenly rang.

Once he'd dealt with the call he realised that a match was not quite the answer.

And Jerry Hayes always was quite an inflammatory politician.

At a rally of 300 or so supporters on Saturday night the Mayor of London extolled the capital's achievements.

"Where was penicillin invented?" He asked.

"In Praed Street. And very useful penicillin after a good night out in Praed Street."

And later:

"I read somewhere the other day that we (Englishmen) are one inch taller than the average Frenchman, to say nothing of our other measurements."

The Times reported today that the Welfare Secretary Iain Duncan Smith has reached a deal with the Treasury over his budget, and secured a large pot of money (clawed back from bigger savings) to pursue his welfare reforms.

The story will look rather old hat to readers of this blog and viewers of Newsnight, though the Times has come up with more detail.

Relations between the DWP and the Treasury were terrible over the summer. IDS's problem, I'm told, wasn't so much George Osborne himself, as with Treasury officials.

IDS has told people he felt they showed an arrogance and a bullying manner which he felt they picked up during the decade working for Gordon Brown. At one point relations between the two departments got so bad that IDS banned his staff from talking to Treasury officials.

IDS was ultimately rescued by David Cameron. The prime minister could not afford prolonged fights with two prominent right-wingers who might prove dangerous on the backbenches. He could perhaps afford to see the Defence Secretary Liam Fox go, but not IDS as well.