Autumn Statement 2012: A lot of Balls and a bleak midwinter?

Nik Darlington 2.57pm

I was on BBC Radio Scotland earlier talking about the Autumn Statement and just before I was due on air with the Daily Record's political correspondent, the weather report told tales of snow drifts, icy condition and road closures - painting a generally bleak midwinter picture.

In isolation, that report could’ve been about the British economy. Those heady summer days of Olympian achievement and a return to growth seem ever-more distant. This is the backdrop to what the Chancellor had to say to Parliament today, and the inclement economic weather should never be forgotten.

Indeed, Mr Osborne is set to break his own fiscal rules. Yet Gordon Brown also did that, but in the boom years - a symptom of the budgetary misbehaviour that characterised the Treasury under the feckless oversight of Mr Brown and Ed Balls.

The former Prime Minister might have lost a stick insect, but his former lieutenant was not grieving. Cheeks puce and puffed out, he berated, bewailed, gloated and tore into the man who’s office he might have had if only Alistair Darling were a lesser man.

When Ed Balls is good, presentationally at least, he is very, very good. Yet George Osborne is rarely better than when sparring with his opposite number (one gets the impression they enjoy it). I’m as unconvinced about the ‘blame Labour for all the economy’s ills’ line as I was at the time of the 2011 Budget, however Mr Osborne continues to play the card strongly, persistently and - judging by the looks on the faces of Eds Miliband & Balls - effectively. How well it plays with the public is another matter.

Former Tory whip Michael Fabricant relayed to the Chancellor the instantaneous thumbs-up from the bond markets, stating “it is the markets that matter”. Apt, to the point and certainly good news - though what voters think cannot be taken lightly either. I know what someone as acutely political as Mr Osborne will be thinking about first thing he wakes up in the morning.

Conservative MPs will be pleased with the scrapping once again of a 3p rise in fuel duty. Harlow’s MP Rob Halfon has led backbenchers on a spirited and tireless campaign against the duty, though one has to question how much gas is left in that tank. Can fuel duty rises be fought forever?

The lower threshold for income tax continues its rise towards £10,000, as expected. The personal allowance shall be £9,440 come next April.

Also to be welcomed is the further cut in corporation tax to 21 per cent. Let us not forget that it was as high as 28 per cent when the Coalition took office. Businesses can invest a greater proportion of their profits into the likes of expansion and employment. This is very good news.

The hit on working-age benefits will not play well, of course. Shrieks of unfairness can already be heard around the tenured ranks of social policy think tanks, the opposition and the like. And indeed it doesn’t look good. However, there is also the moral argument that at a time when wages are struggling to keep up with inflation, if rising at all, should welfare handouts continue to outpace? It’s a tough call, but I think it is the right one. It shall save nearly £4 billion. We can slice and dice this, that and t’other bits of public expenditure but until welfare payments are properly addressed, that ruddy old deficit shan’t budge much.

Those are my two-pennies’ worth. Plenty of ink shall be spilt and trees felled elsewhere in pursuit of explaining today’s Autumn Statement. I shall just finish with a brief thought on shale gas. I’ve had my concerns in the past about fracking for shale gas. I’m still not convinced of the safety record but I’m open to being so; and if it is the energy panacea some claim it to be, then by all means it should be pursued. Though not at any environmental cost.

Follow Nik on Twitter @NikDarlington

'Winning with the Coalition': full text of Stephen Dorrell's speech to the TRG

Nik Darlington 7.19am

Full text of the Rt Hon Stephen Dorrell MP’s speech to the Tory Reform Group in Parliament yesterday evening.

WINNING WITH THE COALITION

The TRG has always had a soft spot for Disraeli. His most ardent admirer couldn’t describe Disraeli as an unbending man of principle. (He had a more obvious – though often no less flexible – competitor for that accolade). But he was a supreme practitioner of the art of politics – and he can lay a better claim than anyone else to be the founder of the modern Conservative Party.

One Nation

Indeed so attractive is Disraeli’s combination of humanity and purpose that Ed Miliband is the second Labour leader in 20 years to attempt to cloak himself in Disraeli’s clothes. Like Tony Blair before him, Miliband is attracted to the slogan “One Nation” but, also like Blair, he faces the problem that his party cannot reconcile Disraeli’s aspiration with its own inherited prejudices.

Does Miliband celebrate success, or does he envy it? Does he embrace excellence and challenge others to emulate it, or does he regard it as evidence of injustice? Does he want to empower the innovators, the people who get there first, or does he prefer to preserve the appearance of equality by moving at the pace of the slowest?

In short does he believe that human progress is powered by disruptive individuals who challenge the societies in which they live, or does he believe that progress is a collective endeavour?

Disraelians have clear answers to these questions. They draw on the traditions of Burke, Pitt, Canning and, ironically, Peel. They know that successful societies evolve and that inherited institutions provide continuity and stability; but they also know that they must be constantly changing in response to new challenges and that it is the interests of every citizen to ensure that individuals are responsible for their own actions and, critically, encouraged to test out new ideas.

As David Cameron puts it – “There is such a thing as society; it’s just not the same thing as the state”. When Ed Miliband can repeat those words to his party conference and receive a standing ovation he will have earned the right to speak of One Nation.

England does not love coalitions

But it isn’t that aspect of Disraeli’s legacy on which I want to focus this evening. Instead I want to address directly his famous dictum that “England does not love coalitions”. This observation is often quoted to challenge the present government – and to suggest that it is somehow abnormal for politicians with different personal and intellectual roots to work together to create a stable government.

Such people misunderstand both the historical context of Disraeli’s remark and, more importantly, the conclusions which he and his successors drew from it.

It is ironic to reflect that until Disraeli lost office to Gladstone in 1868, his only experience of stable single party government was the government of Robert Peel which he worked so hard to destroy during his first parliament as an MP.

Seen in this context, his observation about coalitions was less an observation on the normal state of mid-nineteenth century politics, and more a statement of a problem which is faced by all leaders in an open political system.

If a government is to achieve results which endure, it has to give itself the political space to achieve substantial change. It needs authority – what the Romans called auctoritas – and that cannot be achieved if the survival of the government itself is always subject to negotiation in the shifting sands of parliamentary politics.

It was his experience of those shifting sands in the 1850’s which encouraged Disraeli to build the foundations of the modern Conservative Party in order to provide himself with a stable Parliamentary majority – and with it the political authority he needed to carry through the social reforms for which his government of the 1870’s is remembered.

He understood that his generation would never form a stable Parliamentary majority solely on the basis of its traditional support from the landed interest. He therefore challenged his party to reach out beyond its comfort zone and win support in the fast growing cities of Victorian England.

He repeatedly declared it to be his central purpose to “improve the condition of the people” – and he went on to organize and mobilize them to give him the authority to deliver on that pledge.

Salisbury and Chamberlain

Furthermore, and perhaps even more surprisingly to his party, Disraeli’s successor, Lord Salisbury, a representative of the landed interest if ever there was one, continued Disraeli’s work by attracting into the Conservative Party the Chamberlain Liberals – who became the foundation of the “Birmingham” tradition which played such an important role in the Conservative Party during the first half of the twentieth century.

There are, therefore two key lessons for us in the story of Conservative politics in the second half of the nineteenth century.

First, the whole point of the Party organization which Disraeli created was to reach out beyond the party’s core constituency and create a basis of support for Conservative politics among people who would never previously have thought of themselves as Conservatives.

Second, Salisbury’s alliance with Chamberlain introduced into Conservative politics the radical, non-conformist spirit of Birmingham which ensured that the new party organization was able to express the ideas and aspirations of the new voters whose support it was seeking.

Cameron and Clegg

The fact that Disraeli adopted the name Conservative for his new organization was part of his political art. He would have understood the absurdity of Blairite rhetoric about Britain as a “young country” – and he would undoubtedly have been memorably sarcastic about it – but he also understood something which is ultimately more important.

If a political party is to secure sufficient authority to allow a government to govern it has to reach beyond its comfort zone. It must challenge itself to broaden its appeal. It must learn to articulate the ambitions and aspirations not just of its established supporters, but of those whose support it seeks.

Disraeli was not interested in creating an instrument for the complacent defence of self interest; he sought to maintain the trust of the traditionalists while reaching beyond them to embrace a changing world.

Our challenge is, as it always is, to do exactly the same.

That is why David Cameron was so right to lead the Conservative Party into coalition with the Liberal Democrats in 2010, and why the record and programme of the Coalition Government are so deserving of the support of all Conservatives.

It is worth reminding ourselves about the choice that Cameron faced.

He could have relied on the ideological certainties of the comfort zone. He led the largest party in Parliament so he could have formed a minority government drawn from a single party which had been supported by 36% of the electorate and set out to deal with the most serious economic recession since the 1930’s on the basis that every important vote in the House of Commons would have required him to negotiate a new coalition of support.

It would have been to re-create, almost precisely, the circumstances which led Disraeli to make his remark about coalitions – it was made at the end of the budget debate in 1852, just before a critical vote which brought the government down as a result of a parliamentary deal on the opposition benches.

The alternative course was to learn from the experience of Disraeli, Salisbury and Chamberlain. They demonstrated the importance of looking beyond parliamentary deals and creating a stable government based on a parliamentary majority which reflects popular support.

The Coalition Agreement of 2010 has provided the basis for a government which has a parliamentary majority of 78, drawn from parties which were supported by 59% of the electorate.

Coalition succeeding and retaining public support

Sceptics argued at the time that the Coalition Agreement would not hold and that the government’s authority would prove to be illusory. They said that ministers would be unable to work together. They were wrong about that. They said that the Government’s parliamentary majority would prove to be unstable. They were wrong about that. They said that party members would not support the Coalition. They were wrong about that too.

In fact the Coalition has so far confounded the sceptics on virtually every count. They expected it to be a weak government which was unable to confront the key issues facing our country. In the event it is proving to be an effective government which is carrying through necessary but uncomfortable changes across the full range of government activity – and retaining remarkable levels of public support as it does so.

Mid term opinion polls can usually be relied upon to produce lurid headlines for governing parties – and voter support for both the Conservatives and the Liberal Democrats has certainly fallen since the General Election. It is however worth noting that despite these mid-term doldrums, Labour has been unable to establish even a minimal lead in public opinion over the combined votes of the coalition parties.

Voters are well aware that our country faces major issues and they would rightly be unforgiving if they felt that their government was absorbed by the machinations of parliamentary politics. In fact, while they don’t like everything it does, they see a government which has secured and is using the political authority necessary to address the challenges we face.

Economic change

From the day it was formed, the most urgent challenge facing the Coalition has been the need to restructure our economy to allow us to compete successfully in the global market place. Meeting that challenge requires the Coalition to address two issues, both of which are work in progress.

First, it was essential from the beginning, and remains essential today, that the government has a credible plan to bring its own budget under control.

You don’t have to believe that the banking crisis was “made in Downing Street” (which it wasn’t) to recognize that the scale of our government deficit was the result of decisions made there – by, among others, Ed Balls and Ed Milliband. Despite their protestations of political virginity, the two Eds were in it up to their elbows. They spent when they should have saved; they ran deficits when they should have run surpluses.

The result was that the Coalition inherited a structural deficit in our public finances which qualified us for life membership of Club Med and threatened Britain with a crisis of confidence in financial markets.

The fact that Britain has retained its triple A rating and, more importantly, is able to borrow at roughly German interest rates despite running a government deficit comparable with Greece, is due to the fact that the Coalition has demonstrated that it is willing to take the steps necessary to put our public finances back on to a sustainable basis.

The broad basis of its support is key to its political success. Some elements in the Coalition would have preferred sharper spending reductions (for example on overseas aid spending, or possibly on health); others would have attached a lower priority to holding down the tax burden. But none of them would have been able to carry their policy either in the House of Commons or, more importantly, with the public because they did not command sufficient public support.

The Coalition exists because none of its members believe, like the two Eds, that the solution to excessive debt is more borrowing. The electorate took a decisive step away from that approach in 2010, and the Coalition has agreed a deficit reduction programme which commands the confidence of the financial markets in part because its broad political base enhances its credibility.

The two Eds continue to argue that we need to borrow more – indeed it is an interesting intellectual speculation to wonder in what circumstances they would acknowledge the need to borrow less – but the fact of the Coalition has made it impossible for them to win that argument.

Growth

But economic policy is not just about deficit reduction. When governments borrow too much they undermine the stability of an open economy which destroys the opportunity for growth. Having established a credible programme of deficit reduction, the Coalition has also recognized the need to ensure that the engine of growth is reignited.

Growth is not created in Whitehall. It is the result of businesses meeting demand for goods and services at prices which consumers can afford to pay. It is a process of continuous product, service and process enhancement driven by new insights about a changing world.

Furthermore it takes place in markets which are always changing, and where the pace of change is quickening all the time. Continuing technical advances, instant communications and the continuing process of globalization, represent unprecedented forces for economic change which are generating new growth opportunities, in particular in emerging economies, which, in turn lead to new challenges and opportunities for western economies.

For virtually every business this combination of circumstances creates a demand for radical change. The challenge for our society is to ensure that our political and social structures reflect the sense of urgency which this relentless process demands.

That is why the Coalition has introduced a wide range of measures to target investment funds at priority areas and reduce regulations which restrict the ability of businesses to respond to the demands of their customers. It is also why the House of Commons will tomorrow be considering further changes to the planning system to reduce its ability to constrain economic development.

Once again the Coalition is able to draw strength from the breadth of its base. Economic change is uncomfortable; it impacts on the daily lives of every one of us. It requires us to surrender the familiar and trust in our ability to conquer the unknown. It requires us to unlearn the old lesson about “holding on to nurse, for fear of finding something worse”.

That is why it is important to engage people in the process – to demonstrate that growth is not motivated by a desire to pour more concrete on green field sites in order to pay higher bonuses to bankers. Growth provides the means to deliver environmental objectives, housing improvements, as well as improved job prospects and improved public services. But growth can only happen if businesses are able to change in response to the demands of their customers.

Establish a Growth Commission

An idea was suggested to me recently which I believe the government should consider as a way of further reinforcing electoral and political support for this process of economic change. It is based on the experience of Sweden in the 1990’s, when they faced some familiar economic challenges – unsustainable public finances coupled with an uncompetitive private sector.

The Swedes established an Advisory Commission, independent of government, which performed the dual function of challenging government to make changes which were necessary to allow their economy function more effectively and – by making the case for such changes in public from outside the political world – help the government win public and political support to carry them through.

It is not unlike the system of independent advice, publicly given, which John Major’s government established after Black Wednesday to improve the quality of policy making on interest rates in the days when they were determined in Whitehall. No-one argues for a return to “political money”, but the Swedish precedent provides an interesting option for maintaining, and further reinforcing, the Coalition’s core commitment to build a more open and competitive economy.

Reforming public services

No political priority is more sensitive than the requirement that all public services, and in particular health and education, must deliver equitable access to services which meet high quality standards as well as high standards of efficiency.

This sensitivity arises because we are all involved both as funders through our taxes and as actual or potential service users. If the whole community feels itself to be affected by decisions taken about these services, it is inevitable that the  politicians will also take an interest in those decisions – indeed the politicians would be taken to task by voters if they did not.

For example the changes which are currently faced by health and care providers are as fundamental as the changes faced by any global trading business. Our hospital sites may now look relatively modern following the substantial investment of recent years, but the system in which they work is fundamentally ill-suited to the times. In healthcare, as in every other sector, consumer demands and developing technologies are driving a ferocious pace of change.

But the changes which are required – which will lead to a smaller hospital service and much greater emphasis on community-based services – will challenge public perceptions; people will be asked to transfer their trust from visible structures to largely invisible systems, which experience has so far taught them are often unreliable. They will be inclined to believe that service levels are being reduced – although all the evidence actually points to significant improvements in outcomes if the system is refocused towards early intervention and prevention.

Health and Wellbeing Boards will have the ability to prepare the way for these changes by looking beyond the silos created by history and re-imagining a care system built around the needs of the patient. Their roots in local communities will strengthen their ability to carry through radical change, but it is also – once again – the breadth of the political base of the Coalition which offers the opportunity to carry through fundamental change.

Public services need to be open to disruptive new ideas. Closed systems are too easily convinced of their own excellence; mediocrity goes unrecognized and shiboleths go unchallenged. We need to encourage challenge in a system which instinctively distrusts newcomers.

But if we are to maintain public confidence during this process we need to demonstrate both nationally and locally that changes are being implemented in order to improve the quality of service delivered – not simply to save money. It is a task to which the Coalition is singularly well-suited.

Europe

The final issue on which I want to touch this evening is another which, contrary to general perception, I believe the Coalition is well placed to address.

Most observers will tell you that they have been pleasantly surprised that Coalition minsters have been able to agree policies on deficit reduction, student fees, planning and civil nuclear power, to name but a few, but they go on to say that “they’ll never agree on Europe”.

In other words, we have been wrong every time so far, but we are right this time.

In fact the Coalition parties have a broad measure of agreement about Europe.

No-one favours joining the Euro; nor does anyone favour joining the economic union which it is increasingly clear that our continental partners intend to create.

Those are decisions made, but the debate in Britain continues to muse about the likelihood of the failure of the Euro and the “threat” of a developing superstate.

The real issues we need to face are quite different.

The developing economic union is our largest overseas market. It would be odd if it were not – it is the largest market in the world and it is on our doorstep.

It is sometimes argued that we run a trade deficit with the economic union and that it therefore has more at stake in its relationship with us than we do with it.

That is vainglorious nonsense on two counts. Firstly we are a significantly smaller share of their total trade than they are of ours; secondly, and much more importantly, it ignores completely the biggest shared economic interest of all between Britain and the economic union which lies in the City of London.

London is quite simply the world’s premier financial market. It is hugely in the interests of both Britain and our partners that Europe as a whole is able to benefit from the opportunities that London’s pre-eminence creates.

Financial services may not be the fashionable theme of the moment, but sometimes in life it helps to be uncool.

London’s financial services sector is part of our national competitive advantage. We should nurture it and promote it – and we should understand that to allow it to be separated from its natural economic hinterland is simply absurd.

Absurd from the UK point of view – but equally absurd from the point of view of an economic union which badly needs access to all the capital resources and trading opportunities it can create.

In other words I believe the European argument has changed fundamentally over the last decade. Our partners have decided to create an economic union and we have chosen not to be part of it. It is a decision made. On both sides. Job done.

It will be for our grandchildren to decide whether we were right; they will write the history, not us. Our job is to make our decision work.

And that is where the role of the Coalition is so important.

Different parts of the Coalition will express this analysis in different language, but there is a shared understanding of the importance of the endeavour. Just as the broad basis of the Coalition helps it to win authority to tackle difficult issues of economic and social change, so I believe it can be the ability of the Coalition to reach beyond the comfort zone of a single party which creates the opportunity achieve a real change for the better in our relationship with the rest of Europe.

Conclusion

And so we are back to Disraeli.

He built the Conservative Party as a permanent coalition between the landed interest and the Victorian cities. His coalition was further broadened when Chamberlain made Birmingham a Conservative slogan.

That coalition held office for two thirds of the twentieth century, but towards the end of the century it ignored Disraeli’s challenge and retreated into its comfort zone.

In 2010, David Cameron challenged both the Conservatives and the Liberal Democrats to leave their comfort zones and face the realities of office in a Coalition that has the right to speak for the majority its compatriots.
In doing so the Coalition has demonstrated both its ability and its willingness to face issues which other governments have regarded as too hot to handle.

The Coalition Agreement is David Cameron’s answer to Disraeli’s challenge.

The issue for the future is simple.

The Coalition Agreement comes to an end.

Disraeli’s challenge does not.


ENDS

PMQs review: David Cameron demonstrates the virtue of being oneself

Jack Blackburn 3.55pm

It was not the most inspiring session of PMQs. The Leader of the Opposition’s strategy was non-existent. Questions were a bit scatter-gun and he didn’t really make any points. Perhaps it was the impending Hillsborough statement that made the atmosphere a touch quieter than typical.

But if it was just for the day, Mr Cameron should consider keeping this style.

Edward was calling him “Mr Butch”, but today Dave was Mr Chillaxing. He was quiet, controlled, on top of his brief. He didn’t lose his cool at any point. He didn’t shout. He didn’t even tell a female Member to calm down.

He only changed tone to crack a few jokes (apparently the Labour party has hired a new guru called Mr J. Hacker, who has written a book called The Road to Nowhere, allowing DC to roll out some lines from his “Cheap but effective” line).

There was even some substance as well, as the Prime Minister enjoyed some positive employment figures. Indeed, with his chillax on, Mr Cameron seemed to make more sense. He was (as ever) accused of complacency by the Labour party leader, but he actually came across as thoughtful, and honest, at one point saying the Mr Miliband was “absolutely right, the long-term employment figured are disturbing”.

After a year when the Prime Minister’s fortunes have seemingly mirrored those of Glasgow Rangers FC, one of his smaller problems has been his performance at PMQs, as he became frequently and easily riled by Ed Balls, and seemed to be struggling with Mr Miliband’s improved act.

Today he seemed like a changed man and more prime ministerial than he has been for a while, an impression backed up by his well-judged statement on Hillsborough.

On Monday, Mr Cameron was Boris Johnson’s warm-up man at the end of the Team GB parade, the Mayor of London delivering a rip-roaring speech.

Mr Johnson’s challenges with public speaking are different from the Prime Minister’s, but the Mayor is effective because he is always himself. Mr Cameron could learn from this. He is a thoughtful and intelligent man. If he continues to take his time and bring these qualities to the fore, he may find that he engages better with the public.

Follow Jack on Twitter @BlackburnJA

George Osborne’s credit is running out

David Cowan 2.00pm

The Osborne brand has been heavily devalued since George Osborne’s politically disastrous budget. It initiated the ‘omnishambles’ of the past few months which was then followed by a ridiculously long set of U-turns over taxes on pasties, caravans, charities, heritage, and petrol. After weeks of government ministers loyally defending the budget these policies were swiftly and unceremoniously ditched with little or no notice. Often these announcements came within days of each other with the consequence that loyal ministers and MPs had been made to look incredibly foolish.

Just think of Chloe Smith on Newsnight after George Osborne announced that the autumn increase in fuel duty would not go ahead. Even the Secretary of State for Transport, Justine Greening – a loyal Osbornite by all accounts – was kept in the dark about the change of policy. The U-turn over fuel duty was perhaps the most misjudged as it still managed to backfire on George Osborne as that very same morning Ed Balls had called for such a change of direction in The Sun. As a result it looked more like a victory for Ed Balls and another wobble from George Osborne. Many in the Conservative party now see him as “too damaged” to be a credible successor to David Cameron.

Last week Osborne made his bid to regain some of his credibility as de facto Chief Strategist of the Conservative party with a provocative interview in The Spectator where he claimed that Labour aides were “clearly involved” in the Libor scandal, but without mentioning names. When it resulted in a clash in the House of Commons debate that very same day Ed Balls exclaimed “He has impugned my integrity in The Spectator!” It was a very partisan performance delivered in order to boost Conservative MPs’ confidence in him. George Osborne may appear to have done this by securing a parliamentary inquiry into the banking industry, instead of a judicial one, which will undoubtedly question Ed Balls and the other architects of the faulty regulatory system which helped precipitate the financial crisis in 2008.

But to many Conservatives the parliamentary exchange between George Osborne and Ed Balls looked like a sordid display of petty politics- not statesmanship. While it is of course important that Ed Balls et al are made accountable for their disastrous policies, there is still a feeling that George Osborne is far too focused on playing politics instead of doing his job. If this perception dominates how the electorate see him at a time when Britain has gone into a double-dip recession, the Eurozone crisis is engulfing the continent, 2.61 million people still unemployed, and the Bank of England printing money like there is no tomorrow, then the Osborne brand will continue to decline in value.

Within the wider context of the various deficiencies in George Osborne’s economic and financial policies, this run on his credibility is only going to continue. His plan for growth is far too heavily dependent on a policy of cheap credit from the Bank of England and fiscal stimulus from the Treasury (see my article on last year’s Autumn Statement) and clearly is not working. Another problem is that his deficit reduction plan has so far been implemented through tax rises while spending cuts will not actually start to bite until the eve of the next general election and will continue into the next parliament. It is now very likely that on polling day in 2015 the electorate will still be feeling the pinch of meagre growth, rising cost of living, and harsher spending cuts.

A wealth of radical policies for growth has come from across centre-right politics. Conservative MPs have set up groups like the Free Enterprise Group, 2020 Conservatives and The Growth Factory in order to formulate new policies to liberalise the economy. Numerous think tanks have delivered fascinating reports on boosting growth, like the Institute of Economic Affairs’ ‘Sharper Axes, Lower Taxes’, the Centre for Policy Studies’ ‘Small is Best’ publication and helpful infotoon, and the TaxPayers’ Alliance’s 2020 Tax Commission Report. They are all calling for the same spirit of Tory radicalism which has been advanced by Michael Gove and Iain Duncan-Smith, with a clear economic plan based on larger spending cuts, lower taxes, deregulation and sound money.

It is of course difficult for Osborne to recalibrate his economic and financial policies more firmly in this direction because of the Liberal Democrats. But this then begs the question of what happened to ‘Orange Book liberalism’ which was so superbly articulated by David Laws? The coalition seems to baulk at every opportunity of providing a more robust plan for growth. Instead we have seen streams of micro-initiatives put forward while radical policies, like the Beecroft Report’s proposal for making it easier for employers to hire and fire employees, get side-lined. Policy making has become a zero-sum game in which decisions are prevented from happening whilst civil servants are left to their own devices with disastrous consequences, like in this year’s budget. The coalition simply cannot function without an effective policy machine with both parties contributing to new economic radicalism.

George Osborne is undeniably a political animal. He has had numerous political coups like in 2007 when his inheritance tax cut pledge helped spook Brown into bottling the election, but there is a serious job to be done. If we are going to see an effective plan for growth based on spending cuts, lower taxes, deregulation and sound money which has the support of both coalition parties then George Osborne has to focus, otherwise the blood of electoral failure in 2015 will be on his hands.

Follow David on Twitter @david_cowan

House of Lords reform is a risible Lib Dem distraction from getting proper things done

Craig Barrett 10.16am

I wrote last week about how Ed Balls and Ed Miliband have correctly gauged the public mood on bankers and are setting the running on the way in which banks should be investigated.

The Labour party’s amnesia about its past behaviour appears to be contagious, at least as far as the public at large is concerned. That party’s poll ratings continue to soar, yet just one senior figure seems to be trying to take the fight to them.

George Osborne should be commended for his valiant attempts to paint Ed Balls as the villain of this piece, even if it now seems doomed to failure. On Sunday morning, Andrew Marr allowed Mr Balls virtually free rein to give a party political broadcast; more worryingly, Marr’s tendency to savage in the manner of a dead sheep allowed Balls to become almost credible. Perhaps he has digested the results of those opinion polls about why the public dislike him. Not even Mr Balls is financially illiterate enough to fail to understand the logistical nightmare but his simple idea of keeping one’s account number when shifting banks is a neat little soundbite. Gone is the man of “neo-classical endogenous growth theory”, and all credit to him for that. It is vote-winning stuff. But again, George Osborne aside, nobody seems willing to take Labour on..

There exists a worrying complacency in the Government. This is most evident in the unedifying spectacle of House of Lords reform.  After their failure to convince the population at large of the benefits of PR, the Lib Dems seem hell-bent on saving something from the wreckage of their failed flagship policy. Worse, they are attempting to blackmail their Tory colleagues by putting at risk the proper equalisation of parliamentary constituencies.

We are being told to dispose of a system which, despite many obvious faults, has proven time and again to work both in terms of its expertise but also its ability to restrain over-enthusiastic governments. All manner of articles are written about the amazing diversity of background and experience in the Lords but it is surely worth pointing out once again that at a time when there is a general complaint about lack of life-experience in our politicians, surely it is folly to remove from the political system those whose unique position means that their experience is the widest? From the academics to the businessmen, from the disability campaigners to the charity workers, from the “luvvies” to the (yes, indeed) retired politicians and civil servants - the House of Lords is a diversity co-ordinator’s dream.

Yet MPs are being asked to replace them with a majority of seasoned party workers, paid less than their lower house counterparts but elected for longer terms. Never mind that parts of our country already have up to eight layers of elected officials, the Lib Dems seem determined to create more.

Sadly, it is very obvious to all concerned that they are acting less out of a genuine desire to make lasting, sensible change but rather out of a determined self-interest to get PR by the back door. Alan Clark described the Lib Dems as “over-promoted local councillors” – if they get their way on Lords reform, that is what our historic House of Lords shall become.

Back to the economy and banking, the further danger is that at a time of genuine concern about the state of our country, to spend time on a policy that the Prime Minister has categorised “third term” risks perpetuating this image that the Tory party is out of touch with people’s desires.  It is a gift to Labour. I urge all Conservative MPs to do all they can to block this Bill.

Follow Craig on Twitter @mrsteeduk

Gordon Brown and the Labour party are the unashamed architects of this banking balls-up

Craig Barrett 10.08am

It comes as no surprise to me that Ed Miliband is calling for a full public inquiry into what has been going on at Barclays regarding LIBOR.  In the absence of any contrition for the devastating effect that his Labour party’s policies had on the British economy, and in the apparent absence of any serious policy for economic recovery, Mr Miliband and Mr Balls seem to think that a public flaying of hate-figures is the only way to get back to power.

Conveniently, they forget that the phone hacking scandal, for example, actually occurred under their watch; worse still, the Barclays / LIBOR issue arose under a regulatory model of which they were the architects.

The danger is, however, that they are onto something. With nothing but bad news about the economy, there is a pervasive and wider belief that the public seem intent on baying for the blood of anyone who can be deemed culpable of anything.  With journalists, this isn’t the case. Most people, assuming that such things as phone hacking have gone on for years anyway, are uninterested in Murdoch et al, the story being kept alive only by the non-Murdoch press and the increasingly blinkered BBC.

With bankers, on the other hand, the public are very interested. Logic goes out of the window and the Labour party has been able to manipulate matters to the extent that bankers are now deemed up there with paedophiles and sheep rapists in terms of human evil.

The fact is that 99 per cent of bankers aren’t evil and the remaining 1 per cent are probably, at worst, misguided.

Most bankers are simply getting on with their jobs. One-tenth of tax revenues come from banks, while bankers’ bonuses, because of the different rates of corporation tax and income tax, are actually a more efficient way of getting money into the hands of the government.

Yet we see that Stephen Hester has foregone his bonus this year, thanks to an IT glitch for which he cannot have been responsible, but which undoubtedly the Labour party would have demanded regardless. Despite having written his contract, those Labour party figures who remain are conveniently forgetting that an agreement was signed – just how much do they think Mr Hester should be paid? If you want a loss-making business turned around, it’s going to cost more to hire the best.

And now that Bob Diamond has resigned - one suspects for reasons of peace and quiet rather than any admission of guilt or otherwise - it does seem that the Labour party shall not stop until they have hounded out every competent manager in Britain.

This aside, calls for a banking inquiry show that the Labour party is driving the agenda and this Government is on the back foot.  An inquiry will only keep open the wounds and, given that the public associates the City with the Conservative party, will do us no favours at all. It’s doubtful whether it would even get to the bottom of the LIBOR scandal. The inquiry that is to be headed by the fiercely independent chairman of the Treasury Select Committee, Andrew Tyrie, must focus on the dramatic failings of the FSA and the tripartite regulatory system that Gordon Brown and Ed Balls created, because it is entirely clear to me that this is the root of the troubles.

When these issues were debated by the House of Commons in 1997, it was obvious to the Tory benches that Gordon Brown’s regime was not going to keep the City in check.  The new Chancellor’s motivations were less about regulation and more about his obsession with inflicting iconoclastic changes on fully functioning extant systems that he viewed as brimming with enemies.  Mr Brown hated the City and hated the Bank of England, so he sought to transfer powers to a new quango of his choosing.  A couple of choice lines from Peter Lilley, then Shadow Chancellor:

“We know that funding policy is an intrinsic part of monetary policy, and the Bill will leave the Bank as a one-club golfer without even a putter left in the bag. How will the Treasury, the Bank and the new board co-operate to handle monetary policy? If they need to get together, why is it necessary to separate them in the first place?

“The coverage of the FSA will be huge: its objectives will be many, and potentially in conflict with one another. The range of its activities will be so diverse that no one person in it will understand them all. Its structure will be as complex as those of the organisations that it replaces, if not more so.”

Like so much of what Mr Brown ‘achieved’, it was borne of the clunking hatred that drives him and his desire to complicate matters to such an extent that the Government becomes all powerful, even if it itself does not itself comprehend its own role.

The FSA, or ‘Fundamentally Supine Authority’ as Private Eye rightly called it, was destined to be a disaster - something foreseen by the Conservative party. The separation of roles was a creation of Gordon Brown’s loathing of an establishment that he perceived as Tory-leaning. The Labour party’s role in the LIBOR scandal becomes all too clear when you realise that it was their system of regulation that failed. It is that which should be the focus of an inquiry, not simply a digging around the files at Barclays bank.

The Labour party cannot be allowed to claim that this is somehow the Tories’ fault. For once, I am prepared to let Gordon Brown have the last words, after a fashion, from two Mansion House speeches, in 2007 and 2004:

I congratulate you on these remarkable achievements, an era that history will record as the beginning of a new golden age for the City of London … I believe it will be said of this age, the first decades of the 21st century, that out of the greatest restructuring of the global economy, perhaps even greater than the industrial revolution, a new world order was created.”

In Budget after Budget I want us to do even more to encourage the risk takers.”

As ever, re-reading his utterances, I find myself wondering what planet the man was on.

Follow Craig on Twitter at @mrsteeduk

Rhythm is a dancer at PMQs

Jack Blackburn 3.30pm

As Dave and Edward know (both being Oxonians) it is Commemoration Ball season: a time for dancing.

There was an element of that at PMQs today and, in the manner of the modern day ball, the participants were dancing without much discernible sense of rhythm. The music playing at the moment is much more to Edward’s taste than Dave’s, but everyone’s bringing out their own moves. Just don’t call it a U-turn. It’s a volte face.

These days, Edward Miliband has many dances he can trot out, but he chose the fuel duty “U-turn”: the latest contribution to the budgeting omnishambles, made all the more embarrassing by Chloe Smith’s unfortunate “Michael Howard moment” on Newsnight last night.

“U-turn? What U-turn?”, said Dave, claiming that it was a Labour tax they were getting rid of. “Ever since we came to office we have been defusing Labour’s tax bombshell.”

Dave’s major implication though was that the Leader of the Opposition was two-faced. He supports Lords Reform but is against the programme motion. He’s for stopping the increases in fuel duty, but against the Government’s “change of mind” to do so. The line Mr Cameron is trying to lay down by implication is that Mr Miliband is an opportunist.

Even though the Government has so far had an annus horribilis, there is no denying that Mr Miliband has looked more like a scavenger of their misery, than a viable alternative. This is despite a definite improvement in his personal style, most obviously marked in his weekly performances at PMQs. Nevertheless, he still cannot land a knockout blow, or even score open goals. The judges should be giving him nines and tens at present, but Edward’s twinkle-toes often leave himself at sixes and sevens.

Edward’s major problem is his lack of detail; his insistence on repeating debatable, rhetorical points as if they were indisputable facts. Things are going for him at the moment, but he just isn’t producing. What will happen when the fortunes turn, and the government starts getting the rub of the green?

Furthermore, the Government couldn’t be doing more to help Edward out. Today, while defending George Osborne’s alleged “cowardice” in not facing the press yesterday, the Prime Minister said that the Chancellor had faced the Commons, and in doing so had “wrong-footed” Ed Balls. That’s all well and good, but George Osborne’s adroit volte face wrong-footed everyone, to the point that Cabinet ministers were briefing for the increase all through yesterday morning, and poor Chloe Smith was sent up Newsnight creek, without a paddle, or a boat.

With all of this ammunition at his disposal, Edward still failed to score a clear win today. One wonders how he will dance when the music’s no longer to his liking.

Follow Jack on Twitter @BlackburnJA

For maximum advantage, combine an EU referendum with the next General Election

Nik Darlington 11.29am

A new poll out today from Channel 4 News suggests that 70 per cent of Tory members would vote to leave the EU, and 80 per cent want the party to pledge an in/out referendum at the next general election.

Those figures are not surprising. However, with Conservative party membership running into the mere tens of thousands, hardly a direct representation of general public opinion.

Nonetheless, sections of the media have crafted the impression that the mood of the country is more eurosceptic than not. Polls typically point in favour of holding a referendum. Even the most dogged europhiles have to accept that.

David Cameron earned some kudos from his own party by vetoing a new European treaty last year, but coalition constraints prevent stronger action, while he and his Chancellor have been putting their weight behind saving the euro and encouraging fiscal integration within the eurozone. (Contrary to what certain shysters will have you believe, the Prime Minister knows a total eurozone collapse is not in Britain’s interests.)

So whatever goodwill Mr Cameron briefly received, ordinary Tory members and MPs remain fractious and demanding of more. Not just about Europe, of course, as the Government’s economic policies are heavily in the spotlight too. And the crisis in the eurozone is, though not of our making, very much tied up with our own economic fortunes.

And I have been convinced for some time now that the fractious minority has a point. At least in terms of wanting a referendum, if not necessarily for its reasoning or goals. Irrespective of a rump poll of Tory voters, general sentiment is strong enough for the British public to deserve a referendum.

The Government - or more to the point the Conservative party - has to move quickly to offer one, because the Opposition, aided now by the shrewd John Cruddas (a Little Englander of the left, so to speak), is threatening to offer its own pledge.

So, in the words of one of that fractious minority, “if not now, when?”

The Conservative party has the advantage of incumbency, so it must not waste it. The typical suggestion is that backed by 8 out of 10 party members, namely to pledge a referendum in the 2015 manifesto. It would please four-fifths of the party (what is that roughly, just over 100,000 people?). Few Tories could decry it, at least publicly.

Yet there is another option, one that would satisfy Tory members, the general voting public, electrify political debate and - potentially rather importantly - render UKIP irrelevant.

Hold the referendum on the same day as the next general election. Here are a few reasons why.

  1. If the latest polling is a true demonstration of feeling among Tory troops, it would be a huge motivational boost. It would get canvassers out on to the streets, volunteers into constituency offices and, crucially, otherwise disaffected Tory voters into polling booths. We saw how the AV referendum boosted Tory turnout in the simultaneous local elections. Hold an EU referendum on the same day as a general election and it could have the same effect, only turned up to eleven.
  2. With the political weather vane pointing towards an uphill struggle in 2015, that momentum could make the difference between a Tory win or Labour’s return. Moreover, how would the Labour party campaign? At heart, it is not the blue-and-yellow flag-waving den of europhiles it is often made out to be. After all, Balls and Brown kept us out of the euro. And though I find the notion disingenuous, the huge attention given to a referendum could deflect from the economy, which might still be only barely on the mend. You’d be right to shift uneasily, but that’s the cold truth.
  3. It would go some way to solving the electoral coalition dilemma. Instead of a situation where former colleagues must separate and alternately trash or laud a shared record, the Conservative and Liberal Democrat parties could look forward and comfortably fight the next election on more separate, and less shaky, ground. Furthermore, weren’t the Lib Dems the only party to offer an in/out referendum in 2010? Nick Clegg et al could hardly complain.
  4. Why vote UKIP? Why indeed.
  5. Lastly, there is even something in it for europhiles. Citizens tend to vote more thoughtfully/traditionally/safely/sensibly/conservatively (delete as you will) at general election time. Mid-term ballots, such as local government elections, European elections, or by-elections, can throw up odd (even irrational) results. So if you want to stay in the EU, this should be the best time for you too.

The Prime Minister is apparently consulting senior members of the party about whether or not to offer the referendum. If one must be offered - and increasingly it seems as though it must, or indeed should - then it might as well be offered at a time of maximum advantage. That time, in my opinion, is 7th May 2015.

Follow Nik on Twitter @NikDarlington