VZCZCXRO1765
PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHLO #0836/01 0971654
ZNR UUUUU ZZH
P 071654Z APR 09
FM AMEMBASSY LONDON
TO RUEHC/SECSTATE WASHDC PRIORITY 1930
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 02 LONDON 000836 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL UK
SUBJECT: UK POLITICAL SNAPSHOT: G-20 POLL BOUNCE FOR GORDON 
BROWN EVAPORATES; SCANDAL OVER MP EXPENSES HEATS UP; BAD 
BUDGET LOOMS 
 
REF: LONDON 821 
 
¶1.  (SBU) Key points: 
 
-- A small rise in the polls for PM Gordon Brown's Labour 
Party following the G-20 summit appears to have evaporated 
just four days later, although Brown's handling of the summit 
has boosted his personal ratings. 
 
-- Voter discontent is growing over MP abuse of second home 
allowances, engulfing some of the most prominent politicians 
in Britain, including Brown, Chancellor of the Exchequer 
Alistair Darling, and Home Secretary Jacqui Smith. 
 
-- Labour faces a difficult week when Parliament returns 
after Easter, when Chancellor Darling will deliver the 
budget.  The Chancellor has already predicted the worst 
contraction of the economy since World War II, as well as the 
possibility of tax increases. 
 
End key points. 
 
No Lasting Post-G-20 Poll Bounce for Brown 
------------------------------------------ 
 
¶2.  (SBU) A small rise in the polls for Gordon Brown 
following the G-20 summit appears to have evaporated less 
than a week later.  Brown received a post-G-20 "bounce," 
according to an April 5 YouGov poll for the Sunday Times, 
which put his Labour Party up three points to 34 per cent, 
with the opposition Conservative Party remaining at 41 per 
cent, and the third party Liberal Democrats down one point to 
16 per cent.  A second poll released just one day later, 
however, this time a Populus poll for the Times, shows the 
Conservatives at 43 percent to 30 percent for Labour, and the 
third party Liberal Democrats at 18 percent.  Although 
conducted by different polling agencies, the results suggest 
that Brown's bounce was short-lived. 
 
¶3.  (SBU) The G-20 was still a plus for Brown:  26 percent of 
respondents to the April 6 poll said they feel more 
positively towards the PM because of the way he chaired the 
meeting, while eleven percent feel less positively towards 
him and 62 percent are unchanged.  Business leaders have also 
been positive about Brown's performance and acknowledge that 
the PM personally deserves credit for the summit's success. 
Financial Times Political Editor George Parker noted that few 
other world leaders have sufficient grasp of the technical 
details or are as passionate about the issues as Brown, and 
that the G-20 summit will be an important part of Brown's 
legacy (reftel). 
 
¶4.  (SBU) Conservative Party leader David Cameron, meanwhile, 
stayed out of the limelight during the G-20, emerging only 
briefly to take part in a 30 minute meeting and photo op with 
President Obama.  Cameron and Shadow Chancellor George 
Osborne for the most part left commentary and criticism of 
the PM to the media, although they noted during parliamentary 
debate that the G-20 was far removed from the lives of 
ordinary Britons struggling to pay their bills and amounted 
to an attempt by Brown to divert attention away from domestic 
problems.  One Labour insider, who dismissed Cameron and 
Osborne as "feeble and carping," also admitted to us that 
their remarks were "not entirely invalid." 
 
MPs' Expenses Scandal Embroils Government Ministers 
--------------------------------------------- ------ 
 
¶5.  (SBU) Perhaps more worrying for Brown and Labour, the 
April 6 poll showed that two-thirds of respondents believe 
all or a majority of MPs are abusing their expenses and 
allowances, reflecting a news story which has dominated UK 
media for the last several days.  The controversy involves 
the Second Homes Allowance, which is designed to cover the 
costs that MPs incur by maintaining a home in their 
constituency as well as a residence in London.  In recent 
weeks, the media has highlighted attempts by prominent 
Government ministers to maximize their claims against this 
allowance in ways that, while not strictly illegal, amount to 
bilking the tax payer.  Among the most senior politicians in 
the UK snared in the public outrage over the practice, and 
whose political futures may be in jeopardy: 
 
-- Home Secretary Jacqui Smith:  Smith is under investigation 
by the Parliamentary Commissioner for Standards over her 
decision to designate her family home as her second home, 
despite the fact that her husband and children live there, 
claiming that her main residence is her sister's home in 
 
LONDON 00000836  002 OF 002 
 
 
London where she reportedly rents a room.  This has allowed 
her to claim GBP 116,000 since 1997.  (Smith was also forced 
to apologize last week for submitting a claim for 
reimbursement for two pornographic films that her husband 
ordered on cable television; the cable service at Smith's 
home is reimbursed as an acceptable expense, but Smith 
acknowledged she "made a grave error" in not catching that 
the reimbursement claim for her cable service included the 
two pay per view adult films in question.) 
 
-- Employment Secretary Tony McNulty:  McNulty is under 
investigation by the Parliamentary Commissioner for Standards 
for claiming up to GBP 14,000 a year for a second home in his 
constituency, which is just eleven miles outside of London 
and is actually his parents' home. 
 
-- Transport Secretary Geoff Hoon:  For three years while he 
was Defence Secretary, Hoon lived in a tax payer-funded 
official residence while renting out his London apartment, 
and claiming thousands in second home allowances for a home 
in his constituency. 
 
-- Former Foreign Secretary Margaret Beckett:  Beckett 
claimed thousands for a home outside London during the eight 
years she lived rent-free in an official residence, while 
renting out her London apartment to FCO Minister Gillian 
Merron. 
 
-- Chancellor Alistair Darling:  As Chancellor of the 
Exchequer, Darling has lived in the Chancellor's residence at 
Number 11 Downing Street since 2007.  At various times, 
Darling has switched his main property from Scotland, the 
seat of his constituency, to London, and back to Scotland in 
order to maximize his second home claims. 
 
-- PM Gordon Brown:  Brown has lived in rent-free government 
housing since 1997, but has claimed a total of GBP 116,234 in 
second home allowance since 2001. 
 
¶6.  (SBU) The spotlight has mainly fallen on Labour so far 
because, as the party in government, so many of its MPs have 
lived in rent-free housing while claiming allowances. 
Nonetheless, Conservative MPs have also been involved in the 
scandal, notably James Clappison, who has claimed nearly GBP 
100,000 in second home allowances while owning 23 properties. 
 As public ire mounts over what the electorate sees as 
out-and-out greed on the part of the political class, the 
leaders of all three parties are belatedly waking up to the 
severity of the issue, which has been percolating for years, 
announcing they will meet to discuss the issue.  They are 
looking forward to June, when all MPs' expenses are due to be 
published, undoubtedly adding further fuel to this fire.  For 
many UK commentators the outrage over the expenses -- all of 
which are legal -- echoes the recent public outcry over the 
AIG bonuses in the United States, but with the difference, as 
one Labour party contact commented to us, that in the UK "our 
voters know exactly whom to blame and vent their rage at." 
 
Rough Waters Ahead for Labour 
----------------------------- 
 
¶7.  (SBU) Parliament is now in recess for Easter.  Its return 
on Monday, April 20, will herald another difficult week for 
Labour:  Chancellor Alistair Darling is scheduled to deliver 
the budget on Wednesday, April 22, laying out the state of 
the British economy.  The forecast is gloomy and the 
Chancellor has been preparing the way for drastic revisions 
in his growth and borrowing forecasts, predicting a 
contraction in the economy of three per cent, the worst 
results since WW II.  There is also the possibility of tax 
rises; the Institute of Fiscal Studies warns that taxes will 
have to rise by more than GBP 20bn a year, and possibly far 
more, to fund the shortfall in the nation's finances. 
 
 
Visit London's Classified Website: 
http://www.intelink.sgov.gov/wiki/Portal:Unit ed_Kingdom 
 
LEBARON