Battle brewing over train deal...

Labour’s business and transport teams are going on the full offensive over the Government’s decision to award the £1.4bn Thameslink train-building contract to German firm Siemens over British based Bombardier.

John Denham and Maria Eagle will tomorrow visit Bombardier’s Derby factory which would have made the trains had the contract been won.

I revealed the decision a fortnight ago and ever since Labour MPs from the area have been attacking the Government for letting the chance to boost UK manufacturing slip through its fingers.

Missing the opportunity to give the contract to Bombardier puts 3,000 jobs at risk in Derby and thousands more in the supply chain and, the MPs say, that all runs counter to the Coalition’s stated aim of promoting a private sector recovery.

There are a couple of things to remember however. One is that a few years back a Labour government also failed to give Bombardier the larger Intercity Express Programme (IEP) contract, worth £7.5bn at the time though it was later downgraded, which perpetuated the financial troubles the UK based manufacturer has experienced.

On that occasion Transport Secretary Geoff Hoon said his hands were tied by EU regulation which meant he could not favour UK based industry – the same reason that current Transport Secretary Philip Hammond gave when he confirmed that Siemens would win the Thameslink deal on June 16.

The question is how binding can these EU rules really be when both the French and German governments somehow manage to award almost all their train building contracts to home-based producers.

Labour MPs have suggested that the Government can, at the point of making a final decision, interpret the EU rules as they wish and therefore award the contract to who they wish.

Derby MP Margaret Beckett admitted to me that Labour made the wrong call on the IEP deal and should have given the work to Bombardier adding that the incident should also have diverted the new Government from 'making the same mistake again' with Thameslink.

But senior Government figures tell me the way to rig the tender a lá France is to fix the conditions to favour home-based manufacturers right at the very start of the process.

That of course would mean Bombardier’s loss of both IEP and Thameslink, the tender for which was set by Ruth Kelly back in 2007, were problems created by Labour.

With the Tories now ensconced in the DfT with access to the documents that tell the full story, or at least the part of it they want to tell, Labour may be walking a dangerous path by trying to pin the Thameslink decision on the current Government, then again they really have very little choice but to try.

Denham's double-speak...

A nifty piece of double-speak came out of Community Secretary John Denham's briefing just now.

He was rolled out to shoot-down stories flying around about council spending cuts. They were “confused”, Denham told us as we waited to be enlightened.

Public services would not be cut – they would be protected, even improved. But they would probably not get any more funding.

There would be less money around past 2010/11, but at the same time the "innovative" way services were managed would mean they were improved.


Two councils, for example, could share a chief executive (i.e. sack one), share backroom operations (i.e. sack lots of people) use the internet more instead of people (bet no-one’s thought of that yet) and streamline etc...

In other words – services would be protected through spending cuts. ‘Peace through war,’ said a little voice in the back of my head.

Denham then provided us with ten ways that councils could make savings. The irony of putting numbers 8 and 9 in sequence seemed to go unnoticed.

8 - Make managers leaders of innovation to improve services. (Translation: Encourage managers to think up ways to save money)

9 - Streamline management. (Translation: sack managers)

Could he at least tell us how much spending would have to be tightened next year. Nope – sending plans were worked out in blocks and they hadn’t done the figures yet.

In fact, he suggested, we won’t know what we’re spending next year until they work out what we might have to spend in 2014 too.

Hmm. Story successfully shot down then.

The Tories have their own problems in deciding how tough to sound about spending cuts, but the Denham episode encapsulated the difficulty of Labour’s current line.

You can’t claim you will protect services and attack the other party for wanting cuts soon, while suggesting you too will make spending cuts but refusing to say when.

Labour to attack Tory councils

Labour is planning a verbal assault on Tory councils in an attempt to land a blow on the national party.

The tactic – to be launched by John Denham tomorrow – was set in motion after David Cameron said that if the country wanted to know what a Tory Government would be like, they should look at Conservative councils.

“We’re taking them up on that,” said a Labour source to LD earlier.

The party hopes that by pointing to cuts made by Tories at a local level they can convince voters that the Conservatives are a party of meanies who want to throw people out of their council homes through blind ideology.

The dividing line, of course, is that Labour on the other hand is the party that wants to make the world a better place.

The assault on Tory authorities is something we are going to be hearing more and more of in coming weeks.

Labour MP accuses Government of being “Brezhnev-like”

Graham Allen was apparently once accused by party seniors of being “too independent minded” to climb the political ladder.

The Labour MP for Nottingham North has been outspoken on areas in which he thinks the Government needs to change and earlier this year he was involved in the plot to oust Brown.

So it’s not a huge surprise that his most recent criticism of Government policy comes in fairly explicit terms.

In a letter to Communities and Local Government Secretary John Denham, Allen argues:

“…the way the UK governs ourselves seems to be stuck, Brezhnev-like, in command politics. This is seen at its starkest and its most wasteful in central control of local government – a concept both alien and hilarious to most western democracies.”

To remedy the situation he suggests making councils independent, sovereign bodies and even enshrining their rights to independence in a Local Government Act.

“We need to put local independence beyond the reach of central government and to admit that the man in Whitehall does not know best, even if he is a Labour man and even if he talks the "localism" talk. Petty interference from the centre must be denied any legal or financial basis and local government given unchallengeable legitimacy.”

Along with that should come financial independence – revenue raising powers and a system in which all tax collected by a council goes to the council.

The recession is eating up all the column inches at the moment, but the ‘local powers’ issue is still an area where all parties are trying to seem like the good guy.

Allen actually claims the two are linked – councils, he wrote, are best placed to fight the recession in their areas.

His criticism won’t make Denham sweat, but it challenges the claim Labour is the party prepared to decentralise most and give greater powers to councils.

With his role on the committee reforming Parliament and the credibility drawn from challenging the leader, Allen has the potential to be a thorn in Brown’s side approaching the election.

Johns housing deal

The local government Johns – that is Denham and Healey (right) – announced proposals for the “biggest transfer of power to councils in a generation” today.

One part sounded particularly interesting – allowing councils to hold on to the housing rent they collect so they can spend it themselves.

Under the current system many have to simply hand over the cash they collect to central Government, meaning they have little power over spending on their own housing stock.

The change proposed by Labour would empower councils, but let’s not forget the system in its current form was honed by Labour in the first place.

They’ve had years to change it, so why come up with proposals now?

Maybe because there no chance a change will happen till after a Labour general election win – i.e. vote for us and keep your housing money.

Tracking Labour

In a single carriage of the train I took yesterday was Gordon Brown, Alistair Darling, David Miliband, Hazel Blears, Jacqui Smith, Ed Balls, James Purnell and John Denham.

Now, now bloggers. I know what you're thinking. But remember - I was on the train too.

Caroline Flint and Margaret Beckett joined the pack later.

A Labour spokesman admitted that it was an unusual display of politcal strength outside of a general election campaign.

The party leaders know that to escape a voting booth battering they need all the strength they have.

It was notable that they rolled the big guns into Derbyshire too - one of three Midlands counties that the Tories think they can take.

Executive event

"Don't they have a country to run?" asked a Labour MP, surprised at the number of top Government politicians at a signing ceremony last night.

The MP was being sardonic, but he had a point.

The Prime Minister, Lord Mandelson, Jack Straw, Hazel Blears (pictured) and John Denham, not to mention Angela Eagle and Phil Hope had all turned up.

The event was the signing of three Multi Area Agreements (MMAs) – documents that set-up another mini-tier of governance in between councils and regional assemblies.

The press people had been trying to convince us that it was all critically important.

But even if the MMAs have a huge effect on the ground a year from now, it still felt odd having half of the executive in one room for the signing.

Maybe they guessed that if the MMAs – which to read are about as gripping as their name suggests – didn’t draw a crowd, then the recognisable faces would.

Clarke wars

John Denham sought to twist the knife today by claiming the Tories had descended into civil war over the return of Ken Clarke.

Lord Tebbit also spoke out against the Rushcliffe MP's comeback, which is about as unexpected as the rising sun.

Meanwhile Stuart Wheeler, who has given £5m to the party, has threatened to withdraw funding.