LONDON (Reuters) – Prime Minister David Cameron relaunched his “Big Society” vision of devolved power on Monday, hoping to convince doubters that there is more to his coalition government than deep spending cuts.

Cameron’s vision of engaged citizens, less state control and more philanthropy has been panned by critics as a vague and poorly-constructed idea which may turn out to be little more than a fluffy smokescreen for the government’s cuts agenda.

Britain, like many other developed economies, is having to repair its public finances after the global financial crisis while trying to avoid too many cuts to vital public services.

Cameron says it is his duty to cut a record budget deficit running at close to 10 percent of national output, but sees it as his passion to create a ‘Big Society’ where citizens have more control over their own destiny.

So far, the centre-right Conservative leader has failed to dazzle the public with an idea floated at last May’s election.

It appears to be at risk of backfiring on his Conservative-Liberal Democrat coalition. Rather than encouraging volunteers to step in to provide services, his cost-cutting has spawned grassroots protests over local issues like the threatened closure of libraries.

“We need a social recovery to mend the broken society — to me, that’s what the Big Society is all about,” Cameron told a gathering of charities, volunteer groups and policymakers in London.

LONDON (Reuters) – Britain finalised a tortuous deal with banks on Wednesday to curb bonuses and boost lending to business, but critics said the agreement would be hard to enforce describing it as “political theatre”.

Chancellor George Osborne said the deal, known as “Project Merlin”, would see Britain’s top banks lend about 190 billion pounds gross to business this year, up from about 179 billion previously.

The major banks also agreed to cut their bonuses for UK staff this year and to link the remuneration of their chief executives to how much money their companies lend to small and medium-sized enterprises (SMEs).

The Conservative/Liberal Democrat coalition government has a tough balancing act as it seeks to assuage anger over the use of public funds to rescue the banking system during the credit crisis, without damaging London as a global financial capital.

“Project Merlin” had stalled several times, with the banks arguing that an excessive clampdown on them would harm the UK’s role at the helm of world finance.

“If … the banks fail to live up to their promises, then the government reserves the right to return to the issue and take further measures,” Osborne told parliament.

News of the deal came as research by The Bureau of Investigative Journalism revealed a leap in the amount of funding the main governing Conservative Party receives from London’s financial institutions and as opposition politicians accused the government of shying away from penalising bankers.

LONDON, Feb 9 (Reuters) – Britain finalised a tortuous deal with banks on Wednesday to curb bonuses and boost lending to business, but critics said the agreement would be hard to enforce and mere “political theatre”.

Finance Minister George Osborne said the deal, known as “Project Merlin”, would see Britain’s top banks lend about 190 billion pounds ($305.3 billion) gross to business this year, up from about 179 billion previously. [ID:nOSBORNE]

The major banks also agreed to cut their bonuses for UK staff this year and to link the remuneration of their chief executives to how much money their companies had lent out to small and medium-sized enterprises (SMEs).

The Conservative/Liberal Democrat coalition government has a tough balancing act on its hands as it seeks to assuage anger over the use of public funds to rescue the banking system at the height of the financial crisis without damaging London’s competitiveness as a major financial centre.

“Project Merlin” had stalled several times, with the banks arguing that an excessive clampdown on them would harm the UK’s role at the helm of world finance.

“If … the banks fail to live up to their promises, then the Government reserves the right to return to the issue and take further measures,” Osborne told parliament.

News of the deal came as research by The Bureau of Investigative Journalism revealed a leap in the amount of funding the main governing Conservative Party receives from London’s financial institutions and as opposition politicians accused the government of shying away from penalising bankers.

LONDON (Reuters) – State multiculturalism has failed and left young Muslims vulnerable to radicalization, Prime Minister David Cameron will say on Saturday, arguing for a more active policy to heal divisions and promote Western values.

Cameron, in a speech to a security conference in Munich, will argue that Britain and other European nations need to “wake up to what is happening in our countries” as well as tackling terrorism through military operations overseas.

“It is time to turn the page on the failed policies of the past,” he will say, according to extracts from his speech released by his office.

“So first, instead of ignoring this extremist ideology, we — as governments and societies — have got to confront it, in all its forms.”

His comments echo those made by German leader Angela Merkel last year and reflect a push by European governments to better integrate immigrants, given persistent domestic tensions between different cultures.

Conservative leader Cameron will also deny that cuts to defence spending as part of efforts to tackle a record budget deficit mean that Britain was retreating from an “activist” global role.

“That is the complete reversal of the truth,” he will say. “Yes, we are dealing with the deficit, but we are also making sure our defences are strong.”

LONDON (Reuters) – A surprise contraction in the economy challenges the viability of the government’s severe austerity plan and leaves ministers at the mercy of a central bank under mounting pressure to act against inflation.

What the Bank of England does next — and when it does it — could decide the future of both the economy and the Conservative-Liberal Democrat government, which is gambling on securing economic recovery by swiftly slashing a record budget deficit.

The coalition insists its austerity programme will not be derailed by one bad number, blaming Tuesday’s data — which showed GDP unexpectedly shrank by 0.5 percent in the last quarter of 2010 — on freak winter weather, though even without the snow the economy would probably have stagnated.

While a policy reversal is highly unlikely for now, analysts say the government could use March’s budget to offer some small support to vulnerable areas. But they warn that any sustained deterioration in the economy could prove a game-changer.

“If we had an actual recession — two quarters of successive negative growth — then you’d have a serious problem,” said Wyn Grant, a politics professor at the University of Warwick.

“The problem is that if you start to backtrack then the risk is sterling falls. If you abandon the austerity plan you are in danger of losing your credit rating.”

The pound fell as much as 1.4 percent against the dollar after the data was released.

LONDON (Reuters) – A surprise contraction in the British economy challenges the viability of the government’s severe austerity plan and leaves ministers at the mercy of a central bank under mounting pressure to act against inflation.

What the Bank of England does next — and when it does it — could decide the future of both the economy and the Conservative-Liberal Democrat government, which is gambling on securing economic recovery by swiftly slashing a record budget deficit.

The coalition insists its austerity program will not be derailed by one bad number, blaming Tuesday’s data — which showed GDP unexpectedly shrank by 0.5 percent in the last quarter of 2010 — on freak winter weather, though even without the snow the economy would probably have stagnated.

While a policy reversal is highly unlikely for now, analysts say the government could use March’s budget to offer some small support to vulnerable areas. But they warn that any sustained deterioration in the economy could prove a game-changer.

“If we had an actual recession — two quarters of successive negative growth — then you’d have a serious problem,” said Wyn Grant, a politics professor at the University of Warwick.

“The problem is that if you start to backtrack then the risk is sterling falls. If you abandon the austerity plan you are in danger of losing your credit rating.”

The pound fell as much as 1.4 percent against the dollar after the data was released.

LONDON, Jan 25 (Reuters) – The British government said it was still seeking an agreement with banks to curb bonuses and boost lending, despite stalled talks and signs that many bankers are set to go ahead and pocket bumper pay deals.

A senior source from the Liberal Democrat party — the junior member of the Conservative/LibDem coalition — said the planned deal, dubbed “Project Merlin,” had stalled on concerns that the conditions were not stringent enough for banks.

“The announcement wasn’t ready. The government is determined to get this right. Until the government is happy collectively, an announcement will not be ready,” said the source.

The government has consistently told the banks to lend more money to small businesses. The fragile state of the UK economy was thrown into sharp relief on Tuesday by data showing a 0.5 percent contraction in gross domestic product at the end of 2010. [ID:nLDE70O0VC]

Public anger towards bankers remains fierce, with many blaming the sector for causing the financial crisis which resulted in Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and Lloyds (LLOY.L: Quote, Profile, Research, Stock Buzz) having to be part-nationalised after large taxpayer bailouts.

British Finance Minister George Osborne said he hoped an agreement could be reached and that the banks were well aware of what the government wanted to achieve.

“We are having those conversations (with the banks) and I hope we can reach a settlement but we’ve set out the terms of that settlement very clearly,” he told BBC TV.

LONDON (Reuters) – Prime Minister David Cameron lost his media chief Andy Coulson on Friday after the former tabloid editor resigned as police stepped up an investigation into illegal phone hacking at his old newspaper.

The resignation raises questions over Cameron’s judgment and will be a blow for the Conservative leader, who is trying to sell big austerity cuts to voters and is eager to keep a once-friendly UK media on side.

However, with the next election perhaps four years away, the storm is likely to inflict lasting damage on the coalition government only if Coulson remains in the headlines.

* Cameron will face strong criticism for giving Coulson a “second chance” despite his resignation in 2007 as editor of the top-selling News of The World newspaper over phone hacking.

His second resignation puts a big question mark over the premier’s judgement and is bound to damage his image, staining a relatively successful first year in power and giving the Labour opposition ammunition to attack him.

* As the man in charge of Cameron’s media strategy, the loss of Coulson leaves a big hole at a crucial time.

Coulson has been credited with giving the Conservatives a common touch, providing the leadership with insight on how ordinary people would react to its policies.

LONDON (Reuters) – Prime Minister David Cameron lost his media chief Andy Coulson on Friday after the former tabloid editor resigned as police stepped up an investigation into illegal phone hacking at his old newspaper.

The resignation raises questions over Cameron’s judgement and will be a blow for the Conservative leader, who is trying to sell big austerity cuts to voters and is eager to keep a once-friendly media on side.

However, with the next election perhaps four years away, the storm is likely to inflict lasting damage on the coalition government only if Coulson remains in the headlines.

* Cameron will face strong criticism for giving Coulson a “second chance” despite his resignation in 2007 as editor of the top-selling News of The World newspaper over phone hacking.

His second resignation puts a big question mark over the premier’s judgement and is bound to damage his image, staining a relatively successful first year in power and giving the Labour opposition ammunition to attack him.

* As the man in charge of Cameron’s media strategy, the loss of Coulson leaves a big hole at a crucial time.

Coulson has been credited with giving the Conservatives a common touch, providing the leadership with insight on how ordinary people would react to its policies.