PUBLIC AFFAIRS AND MEDIA RELATIONS BLOG - Veena Hudson

UK general election 2010: education

Incumbency has its pros and its cons; while the prime minister is able to cite real achievements in education over the past 13 years, he must also face up to real shortcomings. Indeed, the education agenda stands to be one of the election's most contentious: rivalled perhaps only by health.

Brown has pledged additional literacy and numeracy support for primary school pupils, with one-on-one help for those struggling the most. His school-building programme, if followed through, will see all secondary and half of primary schools rebuilt or refurbished. £400m will be invested to secure all pupils five A*-C GCSEs, including English and Maths, by 2011. Every school will acquire specialist, trust or academy status and be paired with a business or university partner. Young people will be guaranteed an apprenticeship, training or free study place until they reach 18. Grants will be awarded to two-thirds of university students, with 29 new campuses promised.

A 'pupil premium' - funding pegged to individuals to incentivise schools to admit those at most disadvantage – headlines Conservative Party leader David Cameron's compassionate agenda. A 'radical' extension of the academy programme would afford a huge range of sponsor bodies the capacity to operate unfettered by Local Authorities.

British history would be central to a reformed curriculum; 'academic' diplomas would be scrapped. A more rigorous Ofsted would laud school ties and head pupils as 'best practice' indicators (though quite how the diverse institutions in prospect will receive such prescription remains to be seen). 

One hundred thousand new apprenticeships will be created, alongside a training fund for NEETs. Ten thousand more university places would be created for students this year, with vocational pathways made clearer. A bonus awaits those who repay their loans early. While concurring with Cameron both on matters of funding and increased independence, the 'sponsor-managed' schools proposed by Nick Clegg, leader of the Liberal Democrats, would retain LA ties. Through an Educational Freedom Act and Independent Standards Authority - and in true Liberal spirit - the sector could stand up to ministers.

£2.5bn has been pledged to remedy large class sizes and fund catch-up sessions for those dropping behind. School pupils could mix academic and vocational studies towards a 'General' Diploma, studying at college if need be. Lib Dems would refocus the maligned Train to Gain, and remain the sole major party to commit to abolishing tuition fees - albeit over six years, and for first degrees only. 

Tensions between all three sets of ambitions and financial necessity are real, however; economic fragility exacts prudence, but without a skilled workforce, recovery will falter.  The choices to be made are unavoidable and tough; the electorate must decide who is best placed to make them.

Yvo de Boers resigns: where now for climate change?

So, Yvo de Boer, the outspoken top UN official who led the international climate change negotiations for over four years has resigned, frustrated and disappointed that the December meeting in Copenhagen failed to produce a legally binding agreement to reduce carbon emissions. He is leaving to join KPMG as global adviser on climate change and sustainability just months before the next UN meeting in Cancun, Mexico, where nations will try again to move towards an enforceable treaty to replace Kyoto.

Not to overlook the concrete achievements of the Copenhagen meeting - a statement by the parties that global temperatures should rise no more than 2 degrees Celsius above pre-industrial levels and pledges by nearly 100 nations to take steps to reduce greenhouse gas emissions by 2020 - it is understandable why Mr de Boers has become disillusioned and worn out by the negotiation process. Getting 192 governments to agree on something as complex and emotive as climate change is an incredibly difficult task, especially given the growing distrust between emerging and industrialised economies and the resurgence of large-scale climate change scepticism.

Mr de Boers' successor must be someone who can both keep climate change at the top of the global agenda, and tread the delicate path between rich and poor countries. A successor from a developing country might be a good place to start.

The stakes are high. This person will be responsible for guiding the world to a solution to climate change - or not.

UK general election 2010: public sector

Despite the UK economy recording positive growth in the last quarter of 2009 and emerging from 18 months of gloomy recession, the champagne remains firmly on ice in Westminster. Whatever the frontbench line-up come June, curbing unprecedented levels of public borrowing - around £178bn to date - will both dominate and constrain its agenda. Desperate times call for desperate measures; cuts will be felt wherever they fall, and whoever is wielding the axe.
 
While both Labour and the Conservatives have committed to halving the budget deficit by 2013/14, Gordon Brown has warned that the economy is too fragile to cease spending until next year: a view shared by Lib Dem sage Vince Cable. David Cameron, meanwhile, aims to get down to business as soon as he can, promising an emergency budget with corollary squeezes within his government's first 50 days. 
 
Under Cameron's plans, all but the lowest paid public sector workers would be subject not just to a salary freeze, but also to working longer for a likely capped pension. A streamlined Whitehall would have to reduce its running costs by one-third over the course of the next parliament; quangos would be pared down or scrapped altogether, with regional development agencies (RDAs) and strategic health authorities (SHAs) among the casualties, although frontline health spending will be protected.
 
The government has been no less strident in its defence of health and education budgets, albeit having postponed its comprehensive spending review until after the general election. A pledged increase of 0.8% in current spending is mitigated by a sharp planned decline in capital expenditure, making overall projections ambiguous. Labour's 1% public sector pay cap will effect under 10% of the £36bn savings required; scale-backs must reach 17% across all other departments.
 
The Lib Dems have been similarly light on specifics, though in many respects - culling quangos, RDAs, SHAs and pay - they concur with their Honourable Blue counterparts. Cable, however, warns that no area of spending - not even health - is beyond rationalisation and reduction. He proposes that a post-election public consultation be convened to ascertain budget priorities, and a management cadre established.
 
It is hardly surprising, in such exceptional circumstances, that party differences are matters of nuance. It is the inherently more palatable tax initiatives, moreover - tax credits, income tax, mansion tax - which have dominated discussion thus far. Cameron's cooperative vision may or may not be the answer; it could nonetheless fuel debate and innovation, before the Commission on 2020 Public Services reports in the summer its tactics for these harder times. 
 
It is encouraging to think that these last grim 18 months might yet prove a catalyst for change.

IFRS and the US: will it ever happen?

Over the past two years, there has been a lot of activity around implementing a single set of high quality, globally accepted accounting standards. In April 2008, for example, the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) renewed their commitment to converging US GAAP and IFRS.

As a result, they issued a timetable of milestones to be reached in 2011 in 11 accounting areas. This timescale is one supported by both the Financial Crisis Advisory Group (an international group of standard-setting bodies coordinating responses to the financial crisis) and the G20, which has set a mid-2011 deadline for convergence. The US is a member of the G20 and has in effect committed to meeting this deadline, putting pressure on the US Securities and Exchange Commission (SEC) to adopt IFRS.

However, in interviews during January’s World Economic Forum in Davos (where Sarkozy called for global accounting standards) top executives from three of the Big Four accounting firms warned that discussions over a roadmap to move US companies to international standards were reaching a crucial point.

They went on to voice concerns that the process may become subject to political influence and interference and that it may get severely delayed. Indeed, Bob Moritz, US chairman at PricewaterhouseCoopers, said that the original date of 2014 for one set of rules could be pushed back to 2020, partly due to the fact that many CEOs remain unconvinced about moving to one set of rules and partly due to their understandable focus on moving out of the financial crisis. 

Moving to one set of high quality standards is a long-time goal of multinational companies, which want to cut red tape. It would also make it easier for international investors to compare companies from different countries and would increase transparency in financial reporting.

However, even supporters of the process are concerned with the current roadmap, and especially about the lack of a firm decision on any date.

In the roadmap, the SEC stated that a final decision on whether to mandate IFRS would not be made until 2011, which is too vague for many large filers. The roadmap calls for large accelerated filers to adopt IFRS for the year ending 31 December 2014. Since these filers will have to present current year results plus two years of historical, comparative data, they will actually need to adopt IFRS in 2012 in order to comply.
 
But most companies will not commit funds or resources to adopting IFRS until the SEC tells them to. This would mean that conversion, if it goes ahead, would have to happen in a year, which seems over-optimistic in the extreme. 
 
The FASB and the IASB plan to hold monthly meetings in order to complete convergence by June 2011. In the end though, whatever the standard setters decide, it is SEC Chair, Mary Schapiro who will decide whether the US signs up for global accounting convergence and under what conditions. She has recently said that she remains committed to the goal of a global set of high-quality accounting standards.

Only time will tell.

UK general election 2010: economy

The economy or, more specifically, the recovery from the financial crisis is set to dominate the coming general election, especially in light of the UK's massive budget deficit – forecast by the Treasury to hit £178bn this year. This in spite of the fact that the country actually limped out of recession in the final quarter of 2009.

Labour's line is that a Conservative government would 'strangle the recovery at birth', referring to Cameron's pledge to slash spending as soon as the Conservatives come into office. Labour is not planning to start cutting the deficit seriously until 2011-12.

However, the Conservatives have now softened their position, saying that there would be no 'swingeing cuts' in the first year of an incoming Conservative government and instead proposing only limited cuts this year. This follows advice from economists, who broadly agree that public spending should not be cut while an economy is still in recession.

Although this move has blunted Labour's criticism of their policy, the shift in position on 'in-year' cuts has left their messaging on the economy a little confused, and some are calling for the party to set out clearly their timetable for debt reduction.

Further on the economy, ministers are worried that the withdrawal of the government's fiscal stimulus programme will mean that initial figures for the first quarter of this year, due out on 23 April (two weeks before the expected election date), may show that the economy has slipped back into negative growth. A 'double dip' of this nature, which many business managers predict the UK is heading for according to figures from PwC, would be a serious if not fatal blow to the government, especially so close to polling day, and may be a further nail in the coffin for its election chances.  

And what of the third party? With recent figures from both Ipsos MORI and YouGov showing that a hung Parliament is looking increasingly likely, the Liberal Democrats and their views on key issues may matter now more than ever before. Liberal Democrat shadow chancellor Vince Cable, one of the few people to come out of the financial crisis with his reputation intact, has warned against precipitate action and has set out five economic tests to determine when and how quickly the big budget correction should be attempted.
 
The truth though is that significant cuts are on the horizon whichever party wins the election. It may just be a matter of which party makes it sound the most palatable.

New European Commission, new priorities

José Manuel Barroso, president of the European Commission, announced his new team of Commissioners in November 2009.

Since then, the Commissioners have gone through their individual parliamentary hearings, and the Commission as a whole (following the withdrawal of Bulgaria's Commissioner designate, Rumiana Jeleva after pressure from MEPs), will be voted on by the European Parliament on 9 February during the plenary session in Strasbourg.
 
Several issues will be high on the agenda for the new Commission, not least of which will be economic policy and climate change.
 
Economic outlook predictions from both the Commission and the OECD remain gloomy for the duration of the new Commission in spite of the global recovery and improving economic sentiment indicators across the EU. Over-optimism may actually go further than stopping the recovery in its tracks - it could reignite the financial crisis, so the European Commission will need to ensure that it balances its approach and shows leadership in terms of coordinating withdrawal strategies from stimulus policies that are in place across much of the EU.
 
Large government deficits of course generate inflation and make it more expensive to borrow on international markets. But implementing a shift toward policy restraint too early will impact with considerable force on the fragile recovery. On top of this, spending will be cut and taxes raised in most countries. It will be for Barosso and Olli Rehn (Finland, economics and finance) to ensure that these policies are effectively coordinated, especially in the eurozone, to avoid serious damage to the currency as highlighted by Professor Nouriel Roubini, the New York University Professor who predicted the scale of the global financial crisis.
 
On climate change, the Copenhagen accord of course fell far short of the EU's ambitions and will have been a disappointment to many across the bloc. New European climate action commissioner, former Danish minister Connie Hedegaard, has identified the EU's lack of a coherent approach on climate change as being a serious problem, further pointing out that the US and China 'each spoke with one voice'. One of her priorities is likely to be for the EU to present a more coherent front at climate negotiations.
 
The next European Commission must be more than just competent. It needs to show leadership and to move the EU forward constructively on key issues such as these in order to show its true value.