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Red Box

Friday, July 10

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Good morning,

Philip Webster reports as Greece submits its plan to stay in the eurozone.

Today:

  • Hopes flicker as Tsipras tables new proposals for bailout rescue
  • Osborne takes on the ‘nimbys’ with planning reforms
  • IFS challenges chancellor’s claim to help low-paid
  • Tories threaten trouble on hunting and English laws
  • Unwitting students fund Islamist projects

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Top News
Greece bailout
Tsipras meets the deadline and shifts - now Europe decides

Two hours before the midnight deadline Greece’s new bailout proposals that will decide whether it stays or leaves the eurozone landed in Brussels.

There appears to have been considerable movement, and Alexis Tsipras faces strong internal opposition, but the plan includes tax increases, pension changes, privatisation and spending cuts in return for a fresh deal, according to overnight leaks. Many of the proposals in the original creditor plan appear to have been stomached.

They will be pored over today by officials, discussed by finance ministers tomorrow, and go to the deciding emergency European Council summit in Brussels on Sunday. Asian markets have risen overnight on hopes of a deal. The Greek parliament will debate it today.

In The Times Bruno Waterfield says the package involved complex political negotiations that could bring down Tsipras.

But there was hope, as Athens appeared to accept that austerity measures were inevitable in return for loans to save the country from bankruptcy and expulsion from the euro.

Greek opposition politicians held secret talks in Brussels as the Greek government prepared to pass controversial legislation on pension cuts and tax increases.

Diplomatic sources told The Times that Tsipras appeared ready to pass measures without the support of his government coalition partners, the nationalist Independent Greeks, or left-wingers in his own Syriza party.

In its early morning live website coverage The Telegraph carried leaks of documents surfacing in Athens and suggested it looked like a “much harsher” deal for Greece - but in return for a new three year bailout deal and a restructuring of debt. Greece seems to have given a lot, but is asking for more than was on offer two weeks ago.

The documents suggested that VAT exemptions for Greek islands would be abolished, restaurants would be hit by the highest VAT rate, farmers would have fuel subsidies abolished and there are fallback proposals for rises in income tax and pensions.

The Telegraph also reports that Germany was at last bowing to pressure as a chorus of countries and key institutions demand debt relief for Greece, a shift that could break the five-month stalemate.In a highly significant move, the European Council has called on both sides to make major concessions.

In the words of The Guardian, the Greek government capitulated to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed.

Athens has put forward a 13-page document detailing reforms and public spending cuts worth €13bn with the aim of securing a third bailout from creditors that would raise €53.5bn and allow it to stay inside the currency union.

The Mail reports that the package met longstanding demands by creditors to impose wide-ranging sales-tax increases and cuts in state spending for pensions that the left-leaning Greek government had long resisted.

According to the FT Greek lenders face bankruptcy on Monday if the country fails to strike a deal with creditors over the weekend, according to senior bank executives.

The FT said the reform plan was approved by Tsipras’s cabinet just hours before the deadline but not before some far-left members of his governing Syriza party raised objections that the plan crossed “red lines”. Greek media reported that Tsipras told his cabinet: “We are ready to compromise.”

It will be a long weekend, in Brussels and in Athens, but at least there are new plans on the table. Whether they are tougher than the package already rejected by the Greek people last Sunday will be seen over the new few hours.

Budget 2015
Osborne proposes planning changes to face down ‘nimbys’

George Osborne took a kicking from the Institute for Fiscal Studies yesterday over the budget but, undaunted, he is back with the second half today.

He will announce what the FT calls sweeping planning reforms to speed up housebuilding in Britain, sidelining obstructive councils and setting up a potential clash with the Conservative shires.

The chancellor will put planning reform at the centre of a new “national productivity plan” as he attempts to remove obstacles to growth.

The FT says that after years of prodding local authorities to accelerate house building, Osborne has finally lost patience and will announce powers that could sideline them in the planning system.

It says that a “zonal” system will be set up to give automatic planning permission on designated brownfield sites, a move he hopes will see rapid development of empty land in towns and cities.

Osborne will also announce plans that could put him at odds with Tory councils adopting a “not in my backyard” approach to housing development in rural areas. A new law would allow ministers to impose a housing plan on a local authority if it had failed to produce one, as well as imposing penalties on councils that fail to process planning applications quickly.

The Mail reports that Osborne will try to fast-track the construction of more than 500,000 homes.

New laws will allow ministers to take over planning authorities in leafy areas that refuse to meet targets for house building.

Treasury sources emphasised that existing legal protections for the green belt will be retained. But ministers are braced for a fresh clash with the National Trust and other countryside groups, and are determined to face down “nimbys”, intransigent residents who oppose all development near their homes, the Mail reports.

Peter Brookes
Comment
Why Greece may give Cameron pause for thought
Philip Webster

The economic and political security of EU membership has always been the strongest card played by the pro-Europeans. It will be several months before we know whether the tribulations of Greece have weakened their case.

Read the piece.

Budget 2015
IFS challenges chancellor’s claim to help low-paid

As usual, day two coverage of the budget was not as pleasant for George Osborne as the first. Red Box highlighted yesterday how it was a tax raising, not tax cutting, budget.

And as The Times and others report, the IFS challenged Osborne’s central budget claim by revealing that families who lose £1,000 a year from tax credit cuts are unlikely to be compensated by the rise in the minimum wage.

Paul Johnson, the director, said that the comparatively small rise in take-home pay was “not even close” to the losses that will be experienced by low-income families. “A large majority of tax credit losers will not be compensated,” he said.

The government, he claimed, had deliberately chosen to hit those in work rather than other out-of-work groups, and the new rates for universal credit would act as a financial disincentive to finding a job.

The Guardian said that in its analysis of the chancellor’s budget, the IFS said the budget was regressive, taking “much more” from the poor than the rich. The IFS said there were bound to be more losers than winners, as higher wages from the increase in the minimum wage would amount to £4bn in income, while the welfare changes will save the government £12bn.

In another story The Times suggested that the rise in the minimum wage will encourage tens of thousands more Europeans to arrive in Britain, according to leading economists and migration experts.

A former chief economist at the Cabinet Office said the chancellor had delivered “a budget for hard-working Poles”.

Ministers fear that the budget will make the challenge of meeting the promise to reduce net migration to the tens of thousands much more difficult.

And even Osborne’s pledge to maintain the Nato defence spending target was questioned. The Sun reported it was hit by a Nato ruling on intelligence cash.

It says that as well as boosting the MoD’s cash every year, Osborne also plans to include a shared £1.5bn fund with spy chiefs in the total. But Nato bosses made clear that only the money spent on spying that helps the military can be counted.

Top News

Friday Comment


1. Face it, Labour: he’s taken you to the cleaners
- Philip Collins, The Times

2. Thunderer: Osborne, not Cameron, is now running the show
- Polly Mackenzie, The Times

3. The Living Wage sounds like a good idea – but tax cuts are better
- Fraser Nelson, The Telegraph

4. George Osborne’s budget was more New Labour than Thatcherite
- Martin Kettle, The Guardian

5. Thank God Osborne is finally making young people pay for the crash. They caused it after all
- Mark Steel, The Independent
Tory policy
Tory MPs threaten trouble on hunting and English votes

Ministers are getting early confirmation of the limitations that a small Commons majority places on them.

In a climbdown after fears of a Commons defeat, the government said it would redraft and retable its plans to force through English votes for English laws next week.

The vote had been due to take place next Wednesday, but Tory backbenchers raised the threat of a rebellion on Tuesday after speaking out in an emergency Commons debate.

Given the government’s slim majority of 12, a handful of Tory rebels could have inflicted the government’s first major defeat of the parliament.

And the plan to relax the Hunting Act looks to be in jeopardy as well. The Mail reports that a minister has accused David Cameron of trying to bring back foxhunting “via the back door”.

Tracey Crouch, the sports minister, said she would vote against plans to change the rules on killing foxes.

The prime minister will grant a free vote on the controversial move next Wednesday, and dozens of Conservatives are set to refuse to support their leader.

MPs will debate bringing existing practice in England and Wales “into line” with that in Scotland. If passed, it will allow more dogs to be used to flush out foxes to be shot.

Crouch tweeted: “While pro-hunt lobby are very happy with plans for vote to relax foxhunting legislation via the backdoor, I will be voting against.”

Other senior Tories opposed to any changes in the law include the justice minister, Dominic Raab, and the equalities minister, Caroline Dinenage.

UK security
Unwitting students fund Islamist projects

Rent payments of university students are being funnelled through a charity with close ties to the Muslim Brotherhood to fund Islamist projects across Europe, an investigation by The Times has found.

Europe Trust, which is backed by Gulf donors and has been controlled in recent years by the leaders of aid agencies outlawed for alleged links to al-Qaeda and Hamas, has quietly invested millions of pounds in a property portfolio that includes student flats in Leeds.

Andrew Norfolk, our chief investigative reporter, reveals that the tenants of at least 47 flats, near the University of Leeds, are unaware that the money they pay for their accommodation fuels the global ambitions of a movement whose founder declared that it was the “nature of Islam to impose its law on all nations and to extend its power to the entire planet”.

The Muslim Brotherhood is banned as a terrorist organisation in Egypt, Saudi Arabia and the United Arab Emirates, but not in Britain. David Cameron ordered an inquiry last year into its role and influence in the UK but the findings have still to be published.

What The Papers Said

The Times

“Critics of the government’s radical and imaginative budget are missing the key question of how to boost Britain’s flagging productivity,” The Times says in its leader this morning. “Mr Osborne’s budget imposes costs but it accurately identifies where Britain’s weaknesses need to be remedied. Its ambition should be applauded.”


The Independent

The paper says the chancellor is brave to take on Tories who “stand in the way” of building houses. “Mr Osborne is right to identify our restrictive planning rules as one of the principal obstacles to solving a housing crisis,” it says.


The Guardian

The paper has dubbed the chancellor’s economic method ‘Osbornomics’. He is “savvy and shameless, it says, but warns, “don’t waste time looking for cohesion in a budget that was as intellectually scrappy as it was cunning”.

Red Box was edited today by Danielle Sheridan

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