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Former leader of Tory MEPs Edward MacMillan-Scott defects to Lib Dems
Edward McMillan-Scott says he fears that on Europe David Cameron says one thing in opposition and will do another in government
The former leader of the Conservatives in the European parliament has defected to the Liberal Democrats, the party announced today.
Edward McMillan-Scott, MEP for Yorkshire and the Humber, clashed with David Cameron over his decision to leave the centre-right European People’s party and set up a new group, European Conservatives and Reformists. McMillan-Scott successfully stood against Michał Kamiński, the controversial Polish MEP chosen to lead the new group, for the post of vice-president of the European parliament, and as a result he lost the Tory whip.
The MEP said today: “I have been around the higher circles of the Conservative party for long enough to fear that on Europe Cameron says one thing in opposition and will do another in government.
“I have long fought against totalitarianism and the extremism and religious persecution it brings. It was wrong of Cameron to associate with MEPs who have extremist pasts in his new European alliance.”
He added: “My reasons for joining the Liberal Democrats are that in Nick Clegg they have a leader whom I like, admire and respect. They are internationalists, not nationalists. They are committed to politics based the values of fairness and change.”
Nick Clegg, the Lib Dem leader, paid tribute to his new MEP, saying: “For many years he has fought for human rights and democracy world wide and he is rightly a respected politician across Europe. As someone of principle he has refused to cosy up to rightwing extremists, despite pressure from the Tory machine.
“This flies in the face of David Cameron’s claims of change. It shows that people of principle, who believe in fairness and want real change for Britain are at home in the Liberal Democrats.”
The defection will be seen as a boost to the Lib Dems as they begin their spring conference in Birmingham.
A spokeswoman for the Tory party said McMillan-Scott had had the whip removed “months ago” and declined to comment.
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More money makes society miserable, warns report
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Economics experts argue that Britain’s thirst for status symbols harms our well-being
The national belt-tightening expected to follow next month’s budget could prove to be of more benefit to the nation’s sense of well-being than if wealth levels were to soar, according to a new study.
Complex economic formulas developed by two professors of economics, Curtis Eaton and Mukesh Eswaran, and published in the current edition of the Economic Journal, suggest that greater affluence can seriously damage a nation’s health. Based on their mathematical modelling, the economists advance the theory that once a country reaches a reasonable standard of living there is little further benefit to be had from increasing the wealth of its population. Indeed, it could make people feel worse off.
They believe their work shows that, as a nation becomes wealthier, consumption shifts increasingly to buying status symbols with no intrinsic value – such as lavish jewellery, designer clothes and luxury cars. But they warn: “These goods represent a ‘zero-sum game’ for society: they satisfy the owners, making them appear wealthy, but everyone else is left feeling worse off.”
Their work owes much to the economist Thorstein Veblen, who in 1899 coined the term “conspicuous consumption” in his book The Theory of the Leisure Class. Veblen argued that people seek status through conspicuous consumption, which derives its value not from the intrinsic worth of what is consumed but from the fact that it permits people to attempt to set themselves apart from others. As the economy grows, people increasingly choose status symbols or “Veblen goods” over other goods.
“Those with above-average wealth consume Veblen goods with a positive impact on their happiness,” the authors write. “But those with below-average wealth simply cannot afford these goods, so they have a negative impact on their happiness. This is known as ‘Veblen competition’. As average wealth rises, people grow richer but not happier.”
The pair believe their research helps to explain why empirical studies show that levels of happiness and feelings of community in affluent countries have stagnated, despite growth in real incomes.
There is another downside. As people yearn for more status symbols they have less time or inclination for helping others. This, the authors argue, damages “community and trust”, which are vital to an economy because they ensure the smooth running of society. They conclude: “Conspicuous consumption can have an impact not only on people’s well-being but also on the growth prospects of the economy.” The theory may go some way to explaining the public backlash against the louche lifestyles of the UK’s footballers, bankers and politicians.
It fits into a debate within economics about how to measure a nation’s true wealth. Many economists believe they need to focus more on measuring happiness. The belief that a focus on individual wealth creation can be divisive has spread around the worlds of politics, psychology and science. Clinical psychologist Oliver James has argued that there is an epidemic of “affluenza” throughout the developed world, with attempts “to keep up with the Joneses” triggering huge increases in depression and anxiety.
Last year a bestselling book by two epidemiologists, Richard Wilkinson and Kate Pickett, called The Spirit Level: Why More Equal Societies Almost Always Do Better, suggested that Britain and America were the countries with the widest gulfs between rich and poor in the developed world, and as a result had the most health and social problems.
Nevertheless, Eaton and Eswaran, from the universities of Calgary and British Columbia respectively, do not believe the developed world’s obsession with wealth shows any signs of abating. The pair predict that “it is likely that conspicuous consumption will become worse as time progresses”.
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Waitrose launches UK brand expansion and plans more foreign outlets
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Managing director Mark Price aims to keep fast-growing upmarket grocer ahead of rival M&S
Waitrose boss Mark Price is drawing up plans to transform the upmarket food chain into a consumer brand available in thousands of non-Waitrose shops in the UK and overseas. He believes the Waitrose label has the potential to be a big “fmcg” – fast moving consumer goods – name like Heinz or Kellogg’s, which he can sell to other retail businesses, rather than just direct to shoppers.
He has similar ambitions for the Duchy Originals brand, founded in 1990 by the Prince of Wales. Waitrose signed a licensing deal with the struggling royal label last autumn, which gives the John Lewis-owned grocer the right to manufacture, distribute and sell all Duchy goods in the UK. Price said there would be more than 300 Duchy products by the end of the year and there was potential for many more.
He said: “What we are trying to do is give access to the brand and it is not just about owning shops. It is about taking a creative approach and making products available to as many people as possible. We are looking to work with partners.”
The plan to sell Waitrose goods in other stores will be kickstarted this month when Price unveils details of a deal that could eventually see Waitrose food sold in more than 700 Boots outlets. Sections of Boots’ stores will be transformed into mini-Waitroses, with the grocer’s own fixtures, fittings and signage. In return, Waitrose will sell a range of Boots health and beauty goods in its own stores.
Last year Waitrose defied predictions it would be battered by the recession and emerged as the fastest-growing big grocer, chalking up a sales increase of more than 11% to in excess of £4.5bn, trouncing upmarket rival Marks & Spencer. “We expect to be the fastest growing again this year,” Price said.
Sales to overseas supermarkets are also to be ramped up. “Waitrose is seen as a really premium brand outside the UK,” said Price. The grocer has already more than doubled business-to-business overseas sales to more than £100m over the past two year, exporting to 25 countries including Thailand, the Bahamas, India and China. But Price said there was much more potential.
The grocer is also keen to open more franchised outlets overseas, especially in the Middle East. Two stores in Dubai are chalking up 60% annual sales growth and franchises have been awarded for Bahrain, Oman and Abu Dhabi. Price said there would soon be 20-23 Middle East outlets.
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Embarrassment for David Cameron over Tory hopefuls’ lobbying links
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Conservative drive to ‘clean up politics’ faces test over failure by several candidates to fully declare their work for lobby firms, says Nick Mathiason
David Cameron’s drive to clean up politics is facing an embarrassing public test after it emerged that a number of prospective Conservative MPs have failed fully to declare in their campaign literature that they work for lobby firms representing powerful business interests.
The revelation threatens to destabilise Tory hopefuls in the upcoming election as voters in constituencies where alleged “secret lobbyist candidates” are running will be the subject of a targeted online advertising blitz on Google and Facebook orchestrated by 38 Degrees, an innovative online campaign group.
Only last month, Cameron warned that lobbying “was the next big scandal waiting to happen”. But campaigners claim that while secret lobby links extend across all parties, the Conservatives are the worst offenders.
Last night, the Tories hit back saying they “are committed to shining the light of openness onto the lobbying world” and suggested Labour candidates’ links to lobby firms were far more extensive. But several Tory candidates seem to have kept back details of their work for lobbying firms, including:
■ Priti Patel, the Tory candidate for Witham, a new seat in Essex. On her website, Patel says she is a director of a company providing “business and communication strategy” advice but fails to clarify that she works for one of the world’s most powerful lobby firms, Weber Shandwick, personally advising Microsoft and bank lobby group, International Financial Services London.
■ Penny Mordaunt, the Conservative candidate for Labour-held Portsmouth North, who is a 15% shareholder in lobby firm Media Intelligence Partners, which boasts among its clients Sony, Orange, and DHL. Mordaunt is also listed as the firm’s director in Companies House. Mordaunt also worked for 10 months last year at leading public PR firm Hanover.
■ George Eustice, Cameron’s former press secretary, fighting the three-way marginal in Camborne and Redruth, Cornwall, has failed to disclose on his campaign site that he works for powerful Westminster lobby firm Portland, which acts for Google, Tesco and McDonald’s.
■ Prospective Labour MP Emma Reynolds on Friday hurriedly updated her biography on her campaign website to include details of her work for lobby outfit Cogitamus, which advises the biggest names in the construction industry on government relations.
The Observer is aware of a significant number of parliamentary candidates who will be unmasked in coming days as part of a co-ordinated campaign by Spinwatch and 38 Degrees aimed at introducing a statutory register of interests. This would force lobby firms and parliamentary candidates to clarify who they represent and work for.
David Babbs, 38 Degrees executive director, said: “The election is a chance to clean up parliament, which is why it’s time for all PPCs to come clean about their links to lobbying. 38 Degrees members are going to work together to make sure that those people who want to be our MPs promise to put their voters first, not their friends in big business. 38 Degrees is a 100,000-strong, people-powered movement, and during this election we plan to work together to cut through the spin and make sure politicians answer to us. We’ll be challenging PPCs on their lobbying links, and if they refuse to draw a line under their past business interests we’ll be raising money for ads in local papers to make sure local voters hear the facts.”
Tamasin Cave, from the Alliance for Lobbying Transparency, said: “The public is calling for – and deserves – a new type of politics, so it’s vital that prospective MPs are fully transparent about their links to lobbying. If they are helping powerful companies get privileged access to key politicians in the runup to the election, we have a right to know who they are lobbying for and which policies or contracts are being discussed. Covert lobbying harms public trust. Lobbying firms clearly hire these parliamentary hopefuls to both open the door to politics now and to secure a direct line to any future government. If you want to influence politics, it pays to employ political insiders.”
Eustice defended the lack of information about his work for Portland, saying his campaign website was intended to set out his beliefs. The one-time Cameron spin doctor also said there was a welter of publicity when he left Cameron to join Portland. In addition, he had been a tireless campaigner for more transparency in the public relations arena.
Mordaunt said her role at both Media Intelligence Partners and Hanover was centred on communications work rather than public affairs. She explicitly denied she was a lobbyist and said she supported the campaign for a statutory register of lobbying interests.
Patel did not comment on her links with Weber Shandwick. But the firm’s corporate communications and public affairs chairman, Jon McLeod, confirmed that Patel advised Microsoft and the International Financial Services London. He stated: “Weber Shandwick is clearly an agency with a political dimension. We would not be good at our job if we weren’t.” McLeod confirmed he was a vocal supporter of legislation to create a statutory register of lobby firms.
Last night, the Tories said they would introduce new rules to stop central government bodies using public money to hire lobbyists and “push for the lobbying industry to ensure greater transparency of their operations through self-regulation, and we would be prepared to legislate if this fails”.
Cave said: “As David Cameron said just last month, this isn’t a minor issue with minor consequences. It’s not just public policy that’s affected by lobbying – government contracts worth billions are potentially at stake. Cameron has spoken about the urgent need to shine the light of transparency on lobbying. But words alone won’t bring public scrutiny: we need new rules that force lobbyists to come clean about their activities.”
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Brown draws flak over role in handling military budget
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Cameron uses prime minister’s questions to challenge Brown over military funding claims made to the Chilcot inquiry
It was possibly the most supercharged prime minister’s questions of the year so far. At 12:09pm last Wednesday the ritual jousting turned toxic as David Cameron challenged Gordon Brown’s testimony at the Iraq inquiry days earlier.
Brown had told the Chilcot inquiry that he never refused urgent requests for more military funding. Cameron did not believe him, citing two former chiefs of the defence staff who had criticised the prime minister for offering the inquiry evidence that was “disingenuous” and “dissembling”.
Several Labour backbenchers could not hold their tongues. But, they roared, Lord Guthrie and Admiral Lord Boyce were “Tories”. The implication was damning; these men might once have been characters of honour whose duty was to serve the nation but now their criticism could be dismissed as readily as, well, Cameron’s.
It was a poisonous putdown. In their view, the opinions of two of the most powerful figures in modern military history had become corrupted to the extent they were no longer impartial.
Some blamed Sir Richard Dannatt, the former army chief, for politicising the military. After all, Dannatt’s consistent criticism of defence spending in Afghanistan had preceded reports that he would become a defence adviser to the Conservatives. Beyond the hullabaloo over political bias weighed against genuine concern over soldiers’ welfare, the debate boils down to whether Guthrie and Co have a point? Did Brown starve the military of funding when he was chancellor, leaving the forces short of vital equipment?
The answer may depend on whose side you are on. Guthrie and Boyd remain adamant that Brown mishandled the defence budget when chancellor and that his prudence meant, for instance, fewer troop-carrying helicopters in Afghanistan, one of the most vexing issues facing commanders in Helmand province. Their critique was bolstered by an inquest verdict hours before Wednesday’s Commons exchange. Four soldiers were unlawfully killed after troops were given “inadequate” training, according to Wiltshire coroner David Masters.
Brown, too, remains unmoved. He told Cameron that “every request” made by defence officials for “urgent operational requirements” was met. In fact, said the prime minister, £18bn had been invested in Afghanistan and Iraq on top of the military budget. In real terms, spending was up. The Tories, claimed the prime minister, cut it by 30% in the 1990s. But the truth, as so often, is somewhere in between.
Analysts point out that the MoD has a long-term core budget while the additional cost of fighting wars comes from the Treasury reserve. Many believe this dynamic fuelled disagreement between Brown and the military men.
However, the future for defence spending appears less ambiguous. Swingeing cuts are a certainty. Days before last week’s PMQ, the defence select committee bemoaned a £21bn funding gap for scheduled military projects. If they win the election, the Tories will have to preside over huge cuts in military spending. The question is, will Guthrie and Boyd sit quietly on the sidelines when that happens?
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Conservative defector condemns party’s ‘vile letter’ and hostility towards Europe
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MEP Edward McMillan-Scott accuses Tories of euro-scepticism and ‘double standards’ for expelling him while only suspending Lord Archer
The former leader of the Tories in Europe launches a scathing attack on David Cameron’s Conservatives today, accusing them of “visceral euroscepticism”, “twisted” thinking and bullying tactics that forced him out of the party.
Edward McMillan-Scott, who defected to the Liberal Democrats on Friday, has also accused the Tories of “extraordinary double standards” for expelling him permanently, having only suspended Lord Archer, who was sentenced to four years in prison for perjury in 2001.
Writing in today’s Observer, McMillan-Scott, who remains a vice-president of the European parliament, says the Tories unleashed a “campaign of vilification” against him after he claimed that Michal Kaminski, the Polish MEP who now leads their centre-right group in the EU, had an antisemitic, homophobic and racist track record.
A strong pro-European and member of the Tory party for 43 years, McMillan-Scott gives voice to years of frustration at the party’s hostile attitudes to the EU under present and past leaders, including William Hague.
In his outspoken attack on the party over its handling of his expulsion, McMillan-Scott says he has been smeared by Tory press officers who have tried to claim he is the one who holds antisemitic views.
He adds that they have distorted facts about his defection and claims that the party produced no documents to support its case when he appealed against expulsion. “I am not bitter, but they are twisted. It is not a nice party now,” he writes.
He accuses Cameron of tolerating eurosceptics who depart from the party line while persecuting him, a pro-European, for daring to express sincerely held doubts about the leadership credentials of a controversial fellow MEP.
“David Cameron shields his europhobes,” he writes. “No murmur was made when last weekend Lord Tebbit in effect encouraged Conservatives to vote Ukip in the general election against the Speaker, John Bercow. The dog whistle is really at a lower pitch: that Ukip supporters know that there is a real home for them, back in the Conservative party.”
Last night, speaking from the Liberal Democrat spring conference in Birmingham, McMillan-Scott said the party had shown “massive double standards” by expelling him while suspending Jeffrey Archer for five years.
When the Liberal Democrat leader, Nick Clegg, mentioned McMillan-Scott’s name at a rally on Friday night there was a huge roar from activists. Yesterday he was seated in the front row for a question-and-answer session, so Clegg could welcome him.
The row over McMillan-Scott blew up last year when he stood as vice-president of the European parliament against Kaminski, who was Hague’s choice. Following McMillan-Scott’s stand, Timothy Kirkhope, leader of the Conservative MEPs, withdrew the party whip.
On 15 September, without any prior notification, McMillan-Scott was expelled from the Conservative party after 25 years as an MEP, four years as leader of the MEPs and three years on the party’s board.
• Hague is also likely to come under fire if he declines an invitation to appear this Thursday before a parliamentary committee investigating the granting of a peerage to Lord Ashcroft .
The three Tory members of the public administration committee – David Burrowes, Ian Liddell-Grainger and Charles Walker – have already said that they will not attend the one-off meeting, at which confidential Cabinet Office records relating to the decision to grant Ashcroft a peerage in 2000 will be discussed.
But the event is now in danger of running into farce. Ashcroft, a “non-dom” who does not pay UK tax on his overseas earnings, is unlikely to appear in person and Hague, too, looks doubtful.
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Recovery yields Alistair Darling a £12bn budget windfall
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Chancellor will cite state investment in jobs as key to lower-than-expected unemployment
Alistair Darling will claim next week that government action to protect jobs has saved around £12bn, as Labour uses the pre-election budget to spell out key economic dividing lines with the Tories.
In what is expected to be the most political budget in decades, the chancellor will cite government investment in jobs programmes as a major reason why unemployment has turned out to be dramatically lower than economists predicted. Last year’s budget anticipated that the level of unemployment, based on National Audit Office assessments of independent forecasts, would be 2.09 million people in the fourth quarter of 2009 and 2.44 million in the fourth quarter of 2010. By December’s pre-budget report (PBR), however, the government had revised the forecasts to 1.72 million for 2009 and 1.91 million for 2010, saying that this would save up to £10bn over five years from lower unemployment benefits alone.
Since then, the Observer has established that Darling’s officials have cut the forecasts still further. The latest projections for unemployment are for it to hit 1.72 million in the final quarter of this year and 1.75 million in the fourth quarter of 2011 – a further 200,000 lower than in the PBR plans, potentially freeing up an extra £1bn-£2bn.
The work and pensions secretary, Yvette Cooper, said: “In the 80s and 90s unemployment continued to rise even after the recession ended, because the government failed to put the necessary support and training in place and keep it there as the economy returned to growth.” She claimed that the Conservatives would cut back investment in jobs programmes and “put the economy at risk, even though the clear evidence shows helping people back to work saves money for the future too”.
This week Cooper is expected to announce that the government will subsidise another 7,000 jobs for young people, bringing the total created under the Future Jobs Fund to 117,000. The funding will pay for work at the national minimum wage, targeted at under-25s and people living in unemployment hotspots.
Last night Treasury sources insisted that most of the windfall savings from lower-than-expected unemployment would be used to cut the deficit, rather than for pre-election giveaways.
Darling believes the budget could spark a sell-off in government markets unless he stands by his pledge to halve the deficit within four years. Ministers believe that they have a credible plan to put the public finances back in order, through targeted investment in the economy, which they say will speed progress towards sustained growth; the introduction of tax rises such as the 50p rate for top earners (from this April) and national insurance rises from next April; and efficiency savings across government. But Darling is not expected to spell out any more details of specific departmental spending cuts so close to polling day.
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Auditors face inquiry call after Lehman revelations
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MPs and financial experts demand regulators reform industry in effort to eliminate risky practices, writes Phillip Inman
Pressure was mounting this weekend for a root-and-branch review of the role played by auditors in the credit crunch, following the revelation that Lehman Brothers was able to hide $50bn (£32bn) of debts from regulators despite checks by accountancy firm Ernst & Young.
MPs and financial experts called on regulators to clean up the audit industry as part of a clampdown on reckless and risky practices in the financial sector.
Liberal Democrat treasury spokesman Lord Oakeshott urged the government to commission a fundamental review, while Tory MP Michael Fallon, who is deputy chairman of the influential treasury select committee, said: “Too much is being concealed. We need a fresh approach that gives a more realistic picture of bank finances and not one that disguises risky practices.”
Oakeshott said the treasury select committee’s investigation of Northern Rock’s collapse had already revealed that accountants should be banned from accepting additional consultancy work for the firms they audit; but, he added, “that is just a starting point to cleaning up the whole profession”.
Prem Sikka, a professor of accounting at Essex University and a leading critic of the accounting profession, warned that without deep-rooted reform the crisis could repeat itself. “The report into the collapse of Lehmans is indicative of a deeper malaise,” he said. “We rely on the discretion of eminent firms of auditors and lawyers that are paid millions of pounds for their efforts, but that discretion is too often abused.”
A damning 2,200-page report commissioned by the US bankruptcy courts into the collapse of Lehman said that Ernst & Young’s failure to act over off-balance sheet accounting practices which allowed the bank to hide $50bn of debts, and failing to investigate the concerns of a whistleblower, amounted to “professional negligence”.
Ernst & Young, which earned fees of $31m from auditing Lehman Brothers in 2007, has insisted that a thorough internal review showed it did nothing wrong.
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Can Katy Perry stop EMI going to America for a song?
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Billions of pounds of debt, the internet and piracy are crippling one of Britain’s most iconic firms
It is a tale of sex, debt and rock’n'roll that is unlikely to have a happy ending. When Guy Hands, a City financier with a penchant for fast food and an insatiable appetite for deal-making, came up with a plan to buy EMI, Britain’s flagship music company, using billions of pounds of borrowed money, many wondered how he could possibly make a decent return on his investment. As it has turned out, he couldn’t.
This weekend EMI’s new chairman Charles Allen, the former ITV chief executive hired by Hands last week to run the music arm of the company, is battling to ensure its independence, assembling a rescue plan for the company that signed the Beatles and became synonymous with the golden age of British pop.
Sources close to the company say Allen, a former accountant whose eclectic musical tastes encompass Lily Allen and Edith Piaf, is “rolling up his sleeves” and working to ensure the company does not breach the terms of its bank loans, but there is no doubt EMI is in peril. “It is a very, very big moment,” according to Claire Enders, founder of media consultancy Enders Analysis. “The next two or three months are critical for the future of EMI.”
Allen’s predecessor, Elio Leoni-Sceti, left suddenly last week just as the final touches were being put on a rescue package, prompting fears over the company’s future. The business is effectively being propped up by its past, surviving on the revenues generated by artists signed during a 30-year period when British music dominated the world.
The list of talent on EMI’s books reads like a roll call of rock royalty: David Bowie, Queen, Lennon and McCartney, the Sex Pistols and Pink Floyd. As an incubator of home-grown musical talent, the company is without equal and its position as one of the “big four” global record labels is a source of national pride; it exists to make money but EMI also safeguards the country’s status as a place where music that matters is made.
If EMI disappears or falls into foreign hands, many music industry figures worry that future generations of British acts may find it more difficult to find a worldwide audience. Jazz Summers, who manages former Verve vocalist Richard Ashcroft, who is signed to EMI, said: “If you look at their track record, they have broken more British acts in America than anyone else, and the same is true in other countries.”
EMI is in crisis because it is burdened with what sources close to the company describe as a “ludicrous” amount of debt, racked up after it was bought in 2007 by Hands’s private equity company Terra Firma. EMI Music currently has three artists in the top 15 of the album chart for the first time this century, including Blur vocalist Damon Albarn’s Gorillaz, and it is on course to make a profit of £200m this year, but a staggering three quarters of that will go on interest payments.
Hands borrowed heavily to fund the deal, using money provided by Terra Firma’s investors, and EMI’s valuable back catalogue, as collateral, but even then some questioned whether he was right to pay the amount he did for a business that was struggling to come to terms with downloads and a dramatic decline in physical music sales. The industry has lost between 30% and 50% of its revenues in the last five years, but the irony is that EMI is currently outperforming its peers, which include Sony BMG and Warner Music.
It had the biggest-selling album of 2008, Coldplay’s Viva La Vida, and reissued the Beatles digitally remastered back catalogue last year. Acts including Lily Allen and Katy Perry are selling well, but the way the company is structured means it cannot trade its way out of trouble.
Before the credit crunch, loans could be refinanced cheaply, but now EMI is struggling to meet its debt repayments in the wake of the severe economic downturn. It has been forced to cut costs dramatically, laying off close to 20% of its workforce. The company is now worth £450m, around a tenth of what Hands paid for it. Some big acts, including Radiohead, have already left, muttering that the money men simply didn’t understand the music business.
Last week one of EMI’s biggest-selling groups, Pink Floyd, won a court action preventing the company from making tracks from their 1970s album Dark Side of the Moon available to download individually. That was widely portrayed as a victory for artistic integrity – the group want their masterpiece to be consumed from start to finish, as they originally intended – but it also illustrates the challenges the music industry faces in an era of huge upheaval, when illegal downloading is costing it dear and making money from talent discovered and developed at huge cost is more difficult than ever.
If Allen cannot persuade Terra Firma’s investors to stump up another £120m, EMI will be in breach of its loan terms, and its main creditor – US bank Citigroup – could seize control of the company. If it does so, Citigroup is likely to sell it to Warner Music, an American rival which was outbid by Hands for EMI three years ago. The situation is complicated by Terra Firma’s decision to sue Citigroup in New York, accusing it of forcing EMI towards administration so it can take possession of the company and make a profit from a quick sale, allegations that the bank denies.
Hands is a larger-than-life tax exile, a hero in the Square Mile whose reputation has been badly tarnished by the EMI debacle. He now concedes he overpaid for EMI, but his miscalculation means he could be about to hand a much-loved cultural institution into the keeping of the Americans.
At the end of last year Cadbury’s city shareholders agreed to sell the nation’s favourite chocolate company to Illinois-based Kraft. The prospect of another household name passing into foreign ownership, particularly a national champion in one of the few industries in which Britain still excels, is an unsettling one.
One senior music industry executive explained: “For British music, the fact that there was a very successful British company to sign for was hugely significant.” However, others say the temptation to indulge in flag-waving should be resisted. Enders said: “Britain is one of the places people come looking for talent and that won’t change. There are a lot of players in the market and advances paid to acts such as Florence and The Machine have gone up.”
If EMI does fall into the hands of an American rival, she added, it might ultimately safeguard its future. “It would be better for EMI to have less indebtedness. It will have much more firepower.”
EMI could survive. It is still lining up the sale of some prized assets. It was reported last month that the Abbey Road studios in London could be sold off. The company later insisted the studios should stay under its ownership and was working with “third parties” about funding a “revitalisation project”.
Raising the possibility that a part of the nation’s cultural heritage could be sold provides a graphic reminder of how the company’s huge debt is forcing it to make unpopular decisions.
It may not matter if British acts are no longer championed by a UK company as long as the country continues to produce talent and A&R men from overseas arrive here in search of the next Lily Allen or Amy Winehouse. “In the end the music business is the same as it ever was,” Enders said. “It’s about hits.”
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How Lib Dems got where they are today
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The Liberal movement’s victories, setbacks and transformations from the turn of the last century to the present day
1906 The Liberal party wins a general election landslide built on a call for free trade and an anti-Conservative pact with the new Labour party.
1916 David Lloyd George heads a Conservative-Liberal coalition in the 1918 postwar election, with Labour becoming the official opposition over the Independent Liberals of Herbert Asquith.
1922 The Conservatives break away from Lloyd George’s wartime coalition, leaving the split Liberal and New Liberal parties floundering, with many Liberal MPs (including Winston Churchill) defecting to the new Conservative government or Labour opposition.
1945 The postwar election is a disaster for the Liberals, who take only 12 rural seats, wiping out the party leadership and its urban representation and leading to decades in the wilderness.
1976 Newly elected Liberal leader David Steel enters into an electoral pact with Jim Callaghan’s Labour government, giving Callaghan a much-needed parliamentary majority that had been lost in byelection defeats. The pact broke down before Labour’s defeat in the 1979 election.
1981 Moderate Labour MPs Roy Jenkins, David Owen, Shirley Williams and Bill Rodgers (the Gang of Four) break away to form the Social Democratic party (SDP), taking a ignificant number of Labour MPs with them. The SDP forms an alliance with the Liberal party, jointly winning nearly 25% of the vote (yet only 23 parliamentary seats) in the 1983 election.
1988 Following Margaret Thatcher’s victory in the 1987 election, the SDP and Liberals merge, despite loud opposition from members on both sides, becoming the Social and Liberal Democrats.
1997 Under the leadership of Royal Marine-turned-MP Paddy Ashdown, the Liberal Democrats record their best result since 1935 in the 1992 election, then more than double their number of MPs five years later by reacting to New Labour’s move to the centre with a campaign to raise income tax to fund education reforms.
2005 Charles Kennedy’s Lib Dems win 62 seats with 22% of the vote, benefiting from widespread anger over the Iraq war.
2010 Nick Clegg narrowly won the leadership in 2007 and is preparing for a general election, declaring that the his party will have four demands before lending any minority administration its support: reform of the tax system, more spending on education for poorer children, a switch to a greener economy and political reform in Westminster.
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It’s Nick Clegg’s chance to shine, so he’d better not fluff his lines | Andrew Rawnsley
about 5 months ago - No comments
The Lib Dems have a fabulous opportunity, but will need exceptional discipline during the campaign
In conversation with friends about the forthcoming televised election debates between the party leaders, Nick Clegg was heard to say: “I’d better not screw up.” That self-deprecation is an attractive side of his character. If Gordon Brown entertains for a moment the possibility that he might fall flat on his face before 10 million or more viewing voters, you can’t imagine him saying it out loud.
Nick Clegg is right to be nervous that he doesn’t fluff his chance to shine in the TV arc lights. This general election is a golden opportunity for him and his party. A whiskery government asks for a fourth term under a disliked prime minister who has presided over the deepest recession since 1945. An unconvincing Conservative party hasn’t persuaded the country that its air-brushed leader can be trusted with power. If not now for the Lib Dems, when?
The usual case made against them by their opponents is that they are a dilettante party. This time they can say that, when it came to two of the big calls of the last decade, they got it right and their larger rivals got it wrong. Labour and the Tories were united in supporting George Bush’s invasion of Iraq. The Lib Dems opposed the war. Iraq is in a better place today than it was five years ago, but there’s no escaping the epic amounts of blood and treasure squandered because the aftermath of the toppling of Saddam was so calamitously mishandled. The Lib Dems can contend that they also displayed superior foresight at home. Labour and the Tories were as one in encouraging the reckless gamblers of high finance during the bubble years. The Lib Dems were the lonely and now vindicated voice which warned that the debt-fuelled boom would ultimately implode in a ruinous bust.
They can also argue – though it would be best for them not to be too sanctimonious about it – that their parliamentarians came out of the expenses scandal looking less mucky than either Labour or the Tories. Not a single Lib Dem MP has been found guilty of “flipping” to bilk the taxpayer for mortgage payments and home refurbishment while avoiding capital gains tax.
Nick Clegg, Vince Cable and other members of the leadership team have also worked hard to enhance their credibility in straitened economic times. They’ve abandoned the party’s tiresome old habit of offering wish lists of goodies to the voters by ditching as unaffordable previous promises to give free care to the elderly and to scrap immediately student tuition fees.
Now to their handicaps. The first is that the Lib Dems can’t credibly claim that they have a chance of forming the next government. The second is that they can’t say who they would govern with in the event that the election produces a hung parliament – what they prefer to call, because it sounds less unstable, a “balanced parliament”.
That outcome could finally give the Lib Dems their long craved chance to shape government to their agenda. At the same time, the prospect of a hung parliament turns the election campaign into a minefield which they will have to safely traverse between here and polling day. Nick Clegg is enigmatic about precisely what he would do in the event that the election does not give a parliamentary majority to either David Cameron or Gordon Brown. I don’t blame the Lib Dem for his muteness on this subject. He is not Mystic Meg. A “photo finish” – in which Labour and the Tories have an equal claim on power – is just one of several possible scenarios. There is a variety of ways in which parliament could be hung and the Lib Dem leader has no more idea than anyone else what may confront him on 7 May.
His reluctance to spell out how he would jump is explicable for plenty of other reasons. To express a preference now would be to take a big risk that his party would split under him. Some of his most senior colleagues believe they would be crucified by much of the media and subsequently immolated by the voters if they try to sustain Gordon Brown in office after he had been rejected by the country. There is interest in the idea, first floated in this space some months ago, of sustaining a Labour government on condition that there was a new prime minister. Step forward, say, Alan Johnson with his long-term commitment to changing the voting system. But there are formidable obstacles in the way of such a deal – not least the likely reluctance of Gordon Brown to go gently into the night.
Many Lib Dems, a party instinctively on the centre-left, would be viscerally hostile to any sort of arrangement with the Conservatives. The Tories are flatly opposed to electoral reform, surely the sine qua non for the Lib Dems of doing a deal with anyone.
In the event of a hung parliament, an understanding which allowed orderly government – the passage of the budget and other key elements of business – looks a more likely outcome than a full-blown coalition. This is not least because the Lib Dems have cramped the ability of their leadership to deliver them quickly and smoothly into power with another party. Long ago, when his members became suspicious that Paddy Ashdown might do a deal over their heads with Tony Blair, the party imposed a complex “quadruple lock” which makes decisions dependent on bewildering permutations of votes by the party’s MPs, its federal executive, a special conference and a ballot of its members. How wonderfully Lib Dem to shackle their leader with more checks and balances than the constitution of the United States imposes on an American president.
Any hint from Nick Clegg that he has a preference between Gordon Brown and David Cameron would hand a massive gift to his opponents. Labour is already trying some elemental blackmail by telling voters that support for the Lib Dems could let in the Tories by the back door. The Tories are likewise trying to scare other voters with the idea that support for the Lib Dems could allow Gordon Brown to cling to office even if he has been clearly rejected by the country.
Nick Clegg’s current formula is to say that the party with the strongest support will have the “mandate” and the “moral right” to form a government “either on its own or with others”. What he has not spelt out is how he defines mandate. Does this mean the party with the greatest number of MPs or the party with the greatest share of the vote? That opacity is deliberate. If he says most votes, that will be taken as a wink that he leans towards the Tories. If he says most seats, that will be taken as a nudge that he is keener on Labour.
The Lib Dems will be intensely pressed during the campaign to jump off the fence, especially when opinion polls put us in hung parliament territory. It’s really not reasonable that the media treats this as a question to which only the Lib Dems owe an answer. It can equally well be asked of Gordon Brown or David Cameron what they will do to ensure stable government in the event that the country declines to give either of them a parliamentary majority. But there’s not much point Lib Dems moaning about that. They ought to be accustomed to life not being fair. They will need to demonstrate exceptional, not to say uncharacteristic, discipline if they are not to be impaled on this question. If his MPs start letting slip opposing preferences, Nick Clegg’s campaign will fall apart.
He has been trying to switch the emphasis to what he would demand in return for support in the hope of redirecting attention to his party’s policies. Today, in a speech to the Lib Dem spring conference, he will set “four tests” for Labour and the Conservatives: reforms to tax, schools, the City and parliament, including changes to the voting system. Some people, among them his own activists, will lament that global warming is not on his list of deal-breakers. Others, including his opponents, will ask why he has left off protecting the health service. This approach is not without its risks.
Most voters have a formed view about Gordon Brown and David Cameron. Their wives have also begun a toe-curling competition to win votes which is not much more edifying than had Sarah and Sam decided to settle it with a wet T-shirt contest.
By contrast, Nick Clegg has a very fuzzy profile with the public. If they’ve even heard of him, they don’t think they know him. If they know him, they don’t think they know him very well. The leaders’ debates will be his great opportunity to change that. He has won the same airtime as his opponents. The big two could have tried to insist that they got a larger share than the third man, but they feared that wouldn’t be tolerated by the broadcasters and wouldn’t be seen as fair by voters. So the Lib Dem leader has been given equal exposure and status with Gordon Brown and David Cameron which treats him as a candidate for prime minister even though he is not. This is a privilege neither Charles Kennedy nor Paddy Ashdown ever enjoyed. It is a fabulous opportunity for Nick Clegg. Yes, he really had better not screw up.
The End of the Party is the number one best-selling non-fiction hardback. To order signed copies of Andrew Rawnsley’s book for only £17, visit guardianbooks.co.uk or call 0845 606 4232.
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