Some lessons from Eastleigh for the Tory party

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Giles Marshall 7.37am

That the Liberal Democrats won at all is a minor triumph and let no-one tell you otherwise.

This is a party mired in a truly demeaning scandal, whose media operation looked utterly out of shape and whose leader was subject to the sort of scrutiny usually reserved for pariahs and criminals.

Add to this the fact that Nick Clegg and the Lib Dems enjoy the support of not a single major media outlet, but can count on the active hostility of all of them, and this really does start to look like an extraordinary triumph.

No leader since John Major has received quite such a pasting from the right-wing press, and even then some papers maintained a veneer of regard for the party Major was leading.

No such exceptionalism exists for Nick Clegg. Any triumph he gains, any achievement he chalks up, is and always shall be done in the face of an extraordinary hostility from the media.

So how did the Liberal Democrats win in Eastleigh?  I can offer two reasons.  Number one – their organisation on the ground is excellent.  They have a large number of councillors and activists in Eastleigh and they used feet on the ground to considerable effect.  In the age of big media and social network politics, localism still counts and a motivated ground force can still make the difference.  This is what can rescue the Lib Dems from oblivion in any general election.

Number two – they faced the split opposition of the right, and herein lies a serious problem for the Tories. Eastleigh was a Conservative seat not so very long ago, held by a middle-ground Tory of cautiously pro-European opinions who tragically was subject to personal demons.

In this by-election, conscious of the UKIP threat, the local party fielded Maria Hutchings, who has forthright views on immigration, is a determined Eurosceptic and would have been no Cameron patsy if elected to Parliament. She is the dream candidate for the Tory right.

And she lost. Not marginally. She lost substantially, coming in third behind the party whose image she tried to emulate and whose implicit endorsement she tried to achieve.  

The Tory party will try to garner all sorts of lessons from this defeat and most of them will be wrong. The one thing that should stand out is the reality that the right-wing vote in this country is too small to permit of two competing parties. It is arguably too small to permit of even one successful party.

The Tory party’s split identity is becoming ever more harmful, but that is nothing to the rump it will become if the lesson drawn from Eastleigh is voters desire a more unvarnished brand of Tory rightism.

It seems the party will never be right-wing and Eurosceptic enough to appease UKIP supporters without alienating the crucial centrist vote that all parties need to sustain themselves in government. This is a simple matter of electoral arithmetic.

As for UKIP, they should enjoy their triumph. They didn’t win, but they scored their best by-election result to date.

However, it isn’t quite as great a triumph as Nigel Farage is trumpeting. At a time when both governing parties are massively unpopular, this party of protest failed to wrest a seat from them.

In their heyday, the Social Democratic Party – a party of protest that sought to extract voters from the Labour Party in much the same way as UKIP does from the Tories – managed to pull off extraordinary by-election victories in both Conservative and Labour seats. They did it when the governing Tories were pursuing unpopular economic measures. And they never managed to translate their extraordinary by-election success into general election success, descending into third party misery each time.  

UKIP’s achievement is weaker than the old SDP’s. If Farage’s lot can’t win a seat like Eastleigh in a by-election, with protest votes aplenty, then they shan’t win anything in a general election.

Eastleigh has produced a victor, whatever the gloom that the national pundits may be pronouncing for all parties. That victor, to the dismay of Conservatives, is their coalition partner. It will keep the coalition going, but it offers no hope to the dominant party.

Follow Giles on Twitter @gilesmarshall

'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

Tory ex-minister Stephen Dorrell tells sceptics that the Coalition remains uniquely placed to face Britain’s challenges

Nik Darlington 9.59am

This evening in Parliament, Stephen Dorrell, chairman of the Health Select Committee and TRG patron, will give a speech billed as a robust case for the Coalition.

Mr Dorrell will invoke the memory of Benjamin Disraeli, the great nineteenth century Tory prime minister and novelist, as he argues that the Coalition is treading a similar ‘One Nation’ path. Ed Miliband’s ‘One Nation Labour’, on the other hand, which we covered on these pages, cannot achieve the same breadth. Moreover, he isn’t the first Labour party leader to try.

“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.

“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”.

Mr Dorrell will remind Tories that Disraeli had a vision for a broad-based Conservative party, not narrowly defined nor narrowly represented.

“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 on economic policy that the Coalition is strongest and most pertinent. The economy is the reason for its creation and will be the benchmark of its success.

“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 ….  but the fact of the Coalition has made it impossible for them to win that argument”.

The Coalition also offers a prime opportunity for radical and broad public services reform of the sort that one party alone might struggle to achieve. Tony Blair struggled to enact necessary public sector reforms at a time of boom; it is something of a miracle that the Coalition is managing to reform the likes of health, welfare, education and justice (including the police) at a time of bust and recovery.

“Public services need to be open to disruptive new ideas. Closed systems are too easily convinced of their own excellence; mediocrity goes unrecognised and shibboleths 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”.

Moreover, contrary to general perception and media speculation, Europe is a subject that the Coalition is uniquely “well placed to address” - a passage that ConservativeHome not-very-shockingly omitted from their own preview of the speech.

“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”.

Stephen Dorrell will conclude by saying that the Coalition between David Cameron’s Conservative party and Nick Clegg’s Liberal Democrats has managed to tackle tough political issues that other governments ducked, fudged or got wrong. What is more, the spirit in which the Coalition was formed should outlive it.

“[Disraeli] 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.”

Previewing the speech, Tim Crockford, chairman of the Tory Reform Group, had this to say:

“In the days after the 2010 election, the TRG was the first Conservative group to call for a Coalition with the Liberal Democrats. As a Party, we must continue to support the Coalition as it carries out these essential reforms.

"The Coalition with the Liberal Democrats has evolved into a stable government enabling it to carry out its One Nation programme. David Cameron has moved the Conservative Party out of its comfort zone. Our One Nation values hold wide public appeal. We must continue to occupy the centre ground of British politics: that is where we win elections.”

Tories and Lib Dems should reaffirm their commitment to coalition, not drift increasingly apart

Nik Darlington 1.48pm

Well that was a pretty petty, squabbly piece of PMQs earlier. So instead of talking about it here, this is a heads-up for a speech being given next week by the chairman of the Health Select Committee, Stephen Dorrell.

Mr Dorrell, a former Cabinet minister and a patron of the TRG, will be making a concerted and forthright case for the Conservative and Liberal Democrat coalition.

First we were told that the coalition would fall apart within weeks; then we were told that the Lib Dems would not support strong policies to reduce the deficit; now the sirens are saying the Lib Dems will topple the coalition prior to polling day.

There has certainly been a growing apart. Cabinet ministers of the two parties have certainly taken on a renewed air of partisanship. Today, Nick Clegg makes a speech in the City of London claiming that his party has been reining in the Tories’ anti-business policies on immigration, energy and Europe (there’s undoubtedly truth in the first point, quite a bit in the second, and possibly so on the third). It is only the latest in a series of efforts at ‘differentiation’.

Like the fog sitting over central London of late, there is also something of a fog over the memories of many Tories (including MPs). The Conservative party did not win the 2010 General Election. Gordon Brown’s Labour party most definitely lost it. The Liberal Democrats most definitely did not win it. Yet nor did anyone else.

The Coalition, to give it a grand capital ‘C’, was the best solution to the muddled outcome given the dire straits the country was - and to some extent still is - in.

It still is the best solution. Not only that, it is the only solution. Remarkably too, it has been a historically stable solution. The most significant rebellions of this Parliament so far have been within the Conservative party itself, not the governing parties as a whole.

Is Obama a One Nation Tory? Everyone else seems to be these days…….

Alexander Pannett 12.10pm

The US election has been heating up and pundits have been evaluating the various merits and failings of the incumbent President. The election is really an evaluation of Obama’s first term rather than an appraisal of Romney’s credentials, despite his impressive performance in last night’s debate. If the American public approve of Obama’s track record then he will secure a second term. If not, then he will become a footnote of history.

But how can one evaluate Obama’s record? What has he achieved and what has he tried to achieve? Which part of the political spectrum defines Obama’s presidency?

Weighing up these questions has led to various commentators speculating as to what ideology Obama subscribes to. It is a difficult question as he reaches out to a wide variety, from doe-eyed idealists to committed third way Clintonites.

Interestingly several analysts have looked outside the US, and drawn parallels between Obama and the tradition of One Nation Conservatism in the United Kingdom. A tradition that emphasises compassion entwined with pragmatic efficiency. His pragmatic reforms have aimed to improve social mobility and reduce the gap between rich and poor and have been favourably compared to Disraeli’s attempts to unite the two nations of Victorian Britain.

Pragmatism mixed with compassion certainly appears to underpin Obama’s healthcare reforms and attempts to bring down the deficit. He has largely protected Wall Street from extreme elements such as the Occupy movement, extended the use of drone warfare against foreign adversaries and has provided government support to those polities, such as Detroit, that have suffered the worst from the Great Recession.

At heart, Obama’s policies have sought to conserve a unified American society whilst, in an Oakshottian sense, trying to re-discover the lost values of the American Dream that promoted social mobility, responsibility, freedom and a sense of society that was prosperous, unified and liberal.

Considering the current state of the revolutionary and ideological Right in America, Obama is the only true conservative candidate. It is the Republican Party that is in denial about the true state of the deficit, the only party that seeks to reduce revenue as a way of tackling the hole in the Government’s finances.

It is the Right that has deliberately courted a theo-political stance on values that divide rather than unite America. From abortion, health care to taxation, the Right have firmly targeted their policies towards certain minorities of America, infamously disavowing the remaining 47% of the population.

However, despite the similarity of Obama’s policies to a One Nation Tory credence, much of his pragmatic stance comes from the structure of the American political system. The Founding Fathers formed their system on checks and balances. No President can pass through radical legislation without severe concessions to Congress. This system, coupled with the current bi-partisan political atmosphere, has forced Obama into a pragmatic stance more than any ideological preference for One Nation politics.

Despite the forced nature of Obama’s One Nation stance, it does not detract from the fact that this brand of politics represents the central political ground for the modern post-industrial state. And it is the centre that wins elections for parties by appealing to the largest spectrum of the electorate. It is why Ed Miliband laid claim to the One Nation mantle on Tuesday, as Nick Clegg did earlier this year and Tony Blair did before him in his 1997 manifesto. It seems that everyone at the moment is clamoring to be adorned in One Nation TRG colours.

Obama may win the next Presidential election and, if so, it will be because he has claimed the centre ground through his One Nation policies of pragmatic and compassionate change. Ed Miliband will hope to emulate this success and he is right to try, despite the partisan constraints imposed by his union backers.

For the Conservative Party, they should learn from the political mistakes of the divisive Republicans and understand that it is only at the centre that the Conservative Party is at its best.

One Nation principles may be adopted by many parties but it is a natural position for the Tories. They should not squander this by veering to extremes that will impress none other than their core support.

As Obama knows, no party can win without appealing across electoral divides.

Follow Alexander on Twitter @alpannett

Robbing the retirement fund to house the young - are you mad?

Sara Benwell 1.43pm

Another day, another bonkers financial plan from Nick Clegg.

At the Lib Dem conference in Brighton, Mr Clegg announced his nascent “pensions for property” scheme.

How would it work?

The scheme aims to enable first-time buyers to tap into their parents’ or grandparents’ retirement savings and allow them to take out a deposit.

It is as yet hazy on details, but it seems that parents would be allowed to sign an agreement with their child’s mortgage lender promising that a lump sum will be allocated towards the child’s home financing costs.

Essentially, a retired (or nearly retired) parent with a £60,000 pension pot could promise that a chunk of this (around £15,000) would be used as a deposit on a child’s first home.

The scheme will be targeted at parents who have built up a pension fund worth around £40,000 and are nearing retirement. Lib Dem officials have estimated that as many as 250,000 households could fit these criteria, including public sector workers such as teachers and nurses. Those with more valuable pensions would be able to use the scheme, but ministers have argued that they are likely to have other financial assets that they can use to help their children.

Why is it bonkers?

There are two reasons that this scheme doesn’t make sense. The first is that it won’t solve the problem that it sets out to solve; the second is that it may cause further problems in a pensions industry that is already riddled with them.

Why it won’t solve the problem

We have an alarming lack of affordable housing for young people. It is nigh on impossible for most of us in their twenties and many in their thirties to buy their first home. Particularly in London. I’m a twenty-something and it’s depressing to consider the amount that I throw away on rent and that at this rate I’m unlikely to be able to save enough for a deposit and get a mortgage until I’m about 55 years old. Nevertheless, Mr Clegg is mad if he thinks that stealing from pensions will save the young.

This scheme will only make a difference to a relatively small group of people with a pension pot of a certain size.  Furthermore, it seems likely that a lot of people who will be able to swap part of their pension for their child’s property may have other methods of helping their children out. Those whose pensions sit below this threshold will not be able to join in the fun, and those with a pension pot of significantly higher than the 40k mark are unlikely to take this route anyway. Also remember that at 55, most people will be able to access this tax free sum anyway and do with it what they wish – be that go on a cruise or help their children to buy a house.

If you believe (how could you not?) that we have problem with unaffordable housing for the young, how can you possibly think that a scheme which will change the fortunes of so few will solve the problem? If the problem is that houses are too expensive, allowing the vast minority of the populace a potential solution won’t make an iota of a difference to the fact that houses are too expensive for the majority.

What we need is more affordable housing, which would allow people to buy property that is within their means. If anything, this scheme is likely only to make houses more expensive, as it pushes more people into putting up deposits for houses they can’t afford.

Why it might make the pensions crisis worse

Firstly, one has to question how a scheme like this would actually work. Would it apply to all pensions schemes? How can lenders assess the risks involved if a pension scheme were to go bust? It seems likely that lenders would be very cautious when it came to lending to occupational pensions schemes, for instance.

One must also ask how well this policy would sit with other pensions policy and regulation. If changes are made to the access that people have to their pensions or to the tax-free lump sum entitlement, where will this leave the scheme? It seems that if this is even to get off the ground it needs to be more fully integrated with wider pensions policy.

The biggest problem is that this could leave retired people short of funds when they eventually come to giving up work. Already, the country is faced with a problem where not enough people are saving adequately for retirement and various schemes such as NEST are being implemented to try to change this. Guaranteeing this money as a deposit for a child’s home could mean that when it comes to retirement people are left with insufficient funds. What we don’t need is a system where people aren’t left with enough money to retire on.

Otto Thoresen, director general of the Association of British Insurers, told the Independent: ”Pensions are designed to mature into a decent retirement income, not for other purposes. Any scheme which uses pensions as a guarantee must ensure that it does not inadvertently make the saver worse off when they retire.”

One also wonders how this scheme will work amidst a move towards defined contribution pension schemes, when annuity rates are falling as a result of QE and falling stock markets.  How can you guarantee a lump sum of your pension when you don’t know how much it will eventually be worth, and if the downward annuity rate trend continues you’re likely to have a much lower retirement income than expected?

It’s all very well saying that we’ll help parents to help their children get on the property ladder, but this is all for nothing if it comes at the expense of increasing the problem of Britain’s underfunded retirement system. It seems bizarre that when we already have a pensions crisis caused by people not saving enough for retirement, Mr Clegg seems to think that we can use people’s pensions to try and solve the problems of unaffordable housing for the young.

Let’s only hope that this idea gets shelved in that cupboard of bizarre Lib Dem economic policies before we worsen the pensions crisis without helping the mortgage finance problem at all.

If by some miracle it does go ahead, I’m looking forward to the look on my mother’s face when I tell her she has to give up part of her retirement fund so that I can buy a house…

Follow Sara on Twitter @sarabenwell

Has Nick Clegg completely lost his mind?

Sara Benwell 9.49am

Last week, in an interview with the Guardian, Nick Clegg called for an emergency wealth tax – arguing that “people of very considerable personal wealth have got to make a bit of an extra contribution”, in what he calls a “national effort” to fight a recession that is deeper than previously thought.

Has Nick Clegg taken leave of his senses?

There are a million reasons why an emergency wealth tax is a terrible idea, but I aim to convince you with just three.

#1: IT WILL STIFLE ECONOMIC GROWTH

It will. The net result of having a time-limited wealth tax will be to stifle economic growth, which this country really doesn’t need at the moment. It will also mean less job creation, when the last thing we need to do is allow our unemployment problem to worsen (though it has improved of late).  How on earth Nick Clegg can think that a policy that will crush economic growth is the solution to a recession is beyond me, but what I suspect is that this is just a nod to his party and Mr Clegg’s way of saying ‘we shall not tow the Tory line’.

Why will it stifle economic growth?  A wealth tax makes being wealthy less desirable. It implies that to work your way to wealth is something to be punished.  It fundamentally undermines the principles that drive people to create wealth.  But there is a more important reason…

#2: IT WILL DRIVE WEALTH ABROAD

The kinds of people who have enough wealth to be impacted by this kind of tax tend to have very fluid assets, and when the wealthy are hit with unreasonable taxes they tend to move that wealth abroad.  Driving this country’s wealth creators to Ireland, or Switzerland or Luxemburg really isn’t the answer to our woes. Firstly, if the wealth creators move abroad then we will have less high-level tax payers than before, so we’ll actually be losing money. Secondly, they’ll move their businesses offshore, so we’ll have fewer jobs. And thirdly, the first thing to go will be financial institutions. When you consider that the finance and business services sector contributes over 30 per cent of national output, this would be catastrophic for the British economy.

Maybe you think I’m being inflammatory. I’ve no doubt that some of you will say ‘come on, not everyone’s going to run away to Singapore’, but before you do, please have a quick glance at France.

President Hollande promised to increase the top income tax rate in France to 75 per cent, and since then the New York Times has reported that a number of high profile law firms have been inundated with calls from the wealthiest in France aiming to find out how - and when - to move.  The world has changed, there are a lot of attractive jurisdictions with sensible tax rates designed to attract the super-wealthy. Look at Singapore. Look at Dubai. If we make it expensive to be wealthy in Britain, the wealthiest people will leave.

I know we’re in a recession, and people are being hit hard by it, but sending our wealth creators abroad is utterly bonkers.

#3: WE SHOULD BE TARGETING PEOPLE WHO AVOID PAYING TAX, NOT THOSE WHO DO

The problem that this country has when it comes to wealthy people and tax is creative accounting and a tax system that is riddled with loopholes. The trick is to get the people that are avoiding paying taxes to start paying them, not to increase the tax on those who already do.  All the wealth tax is going to do, is convince more wealthy people to exploit the loopholes  in the system, as they feel that they are increasingly being unfairly targeted.

What we should be doing instead is simplifying the tax system, making taxes lower, but making sure that everybody pays them. That is, I promise you, the answer. Lower and fewer taxes paid by absolutely everyone is the path to economic recovery. And while Nick Clegg may be trying to convince everyone that he’s not just David Cameron’s stooge, if he pushes for a wealth tax he’ll only be convincing people that the Lib Dems can’t do credible economic policy.

Follow Sara on Twitter @sarabenwell

Some of us still believe in this Coalition - sadly, its members no longer do

Nik Darlington 1.12pm

I was on BBC Radio Scotland’s Good Morning Scotland show this morning (listen here, approx 1hr30 in), talking House of Lords reform and the coalition with the affable Mark Thompson, a Liberal Democrat blogger.

Politics has nudged itself into the newspapers today amid all the Olympics wonderment because the Deputy Prime Minister, Nick Clegg, made a speech yesterday declaring House of Lords reform dead in the water - with the vengeful quid pro quo that the Tories don’t get their prized constituency boundary review.

Where does this leave the coalition? Nowhere farther nor closer. Nor anything, really. As the Corby by-election in November shall presumably demonstrate, neither party is in a position to split up and go to the country. It will muddle on, though as Mark Thompson said on the radio this morning, government will become more transactional.

Any sensible person knows that Tory MPs have not broken the Coalition Agreement by opposing the House of Lords Reform Bill. Many items in that agreement contain promises to legislate - the bit about House of Lords reform does not.

"We will establish a committee to bring forward proposals for a wholly or mainly elected upper chamber on the basis of proportional representation. The committee will come forward with a draft motion by December 2010. It is likely that this will advocate single long terms in office. It is also likely that there will be a grandfathering system for current Peers."

A committee was formed, a Draft Bill was presented, and it advocated a number of things, including PR and 15-year terms, not to everyone’s tastes (including some senior Liberals). These reforms’ becoming law was only a presumption. It was not explicit.

So the Coalition Agreement has indeed been broken in spirit. But it takes some political naivety not to have seen it coming, nor to accept that these things happen in politics. Clauses couched in language such as “it is likely that…” are hardly copper-bottomed guarantees either.

This is, of course, disappointing. It all could have been done differently, more politely perhaps, such as Lib Dem quarrels behind the scenes about the NHS or planning reforms.

Yet coalition has become a colder environment. I still believe in it - in theory and practice. The two governing parties, however, seem now just to be going through the motions.

Follow Nik on Twitter @NikDarlington