Margaret Thatcher's legacy should be a Conservatism For Bolton West

By Paul Goodman
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The Conservative Party is itself in poor health as it gathers to bury Margaret Thatcher.  It hasn't won an election in over 20 years.  The effects of vote distribution and out-of-date boundaries conspire against it breaking the habit next time.  It has lost Scotland altogether, and is the third party in much of the urban north.  It won 16% of the ethnic minority vote in 2010: by 2050, ethnic minority members will make up one in five of the total.  It has a serious political competitor on the right, UKIP, for the first time in living memory.

Labour's rout on welfare earlier this month, and its squabbles over leadership and policy last week, have cheered up some Tory MPs - unduly so, all considered.  A doctor's diagnosis of their party's condition would find serious illness, perhaps terminal decline.  And the structural obstacles to a Conservative majority would remain even were this not a Government of which the whole is much less than the sum of the parts.  So what can the Conservatives learn from the most potent election-winner in their history - the woman who they will honour today?

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George Osborne appoints Neil O'Brien as new adviser and opens door to a more blue collar, northern conservatism

By Tim Montgomerie
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Another sign this morning that Team Cameron is succeeding in recruiting the calibre of people that it needs to maximise its effectiveness. Less than a fortnight ago we learnt that Lynton Crosby would be joining the political side of the Cameron operation on a consultancy basis from the new year. In last Saturday's Times the Tory Chairman Grant Shapps confirmed that Crosby would be overseeing the general election campaign.

News is just breaking that Neil O'Brien, director of Policy Exchange, will be joining George Osborne's office as a Special Adviser*. This is a big loss to PX but a big boost to Number 11. O'Brien has been wooed for some time by the Tories and they've finally got their man. I've always thought highly of Neil and included him in my 2020 Cabinet as "Minister for Cabinet Office and Policy Development".

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We still don't have enough friends in the North

By Tim Montgomerie
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The Economist publishes an interesting essay in its latest edition, examining the continuing decline of the north of England relative to the south. It argues that austerity has a strong anti-northern bias. Cuts for northern local authorities are deeper, it argues, and because of the northern regions' weaker private sectors they are felt more acutely. This is partly due to the unwinding of Labour's investment in the North during its time in power. "According to a study by the Centre for Research on Socio-Cultural Change at the University of Manchester, the state accounted, directly and indirectly, for 64% of the jobs created in the north between 1998 and 2007, against just 38% in the south."

This all represents a big political problem for the Conservatives. The party needs to advance in the North, particularly the North-West, if it is to win a majority and recent Policy Exchange polling suggested Conservative values (on crime, tax, immigration, human rights) travel well across the North, if rooted within a pro-blue collar economic message. Unfortunately, however, the need for cuts is meaning that we are reminding many northern voters of the tough Thatcher years rather than using our time in office to challenge perceptions.

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Why regional public sector pay still won't happen

By Matthew Barrett
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I have previously written about why regional public sector pay will not happen. 

My reasoning then was fourfold: 

• The Liberal Democrats, including Nick Clegg, were opposed
• Conservative MPs in poorer areas, such as the North East, had spoken out against the idea
• Marginal Tory seats quite often had majorities far smaller than the number of public sector workers in their seats
• Public opinion was against it, including amongst Tory voters

However, that was mid-June. Since then, there has been some more activity suggesting a) the Government has some willingness to pursue the policy, and b) it is unlikely to succeed.

Matthew Hancock, an MP extremely supportive of the Treasury, appeared on the Today programme yesterday morning. He framed regional pay as giving public sector managers the ability to decide pay for their employees as they see fit. 

There has also been plenty of activity from those opposed to a move towards regional public sector pay, too. The UNISON union commissioned Income Data Services, an independent labour market research organisation, to investigate the Government's policy. IDS have now published their findings, "Crowding out: fact or fiction?" (pdf), and they found three things that undermine the Government's case for regional public sector pay.

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Tories should support more property taxes if proceeds are used to cut other, more harmful taxes

By Tim Montgomerie
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It's not unreasonable to see Nick Clegg's call for an emergency tax on Britain's wealthiest people as (i) another attempt by him to shore up his beleagured position within a very unhappy party and (ii) another sign that the Coalition will drift to the Left. Tory backbencher Bernard Jenkin certainly sees Clegg's intervention as a sign of the politics of envy. He told the Today programme that if we keep increasing taxes we will kill the goose that lays the golden eggs.

Regular readers will know that I support a shift in the nature of taxation, away from the taxation of wealth creation and towards the taxation of accumulated wealth. I think it's the policy position I hold which is most unpopular with readers! In particular I support extra council tax bands for larger properties and a special tax on the sale of large properties. Many people got wealthy during the boom years not because of great ingenuity on their part or through hard work but because they invested in Britain's highly state regulated property market. They benefited from state intervention and that benefit should now be taxed by state intervention. I don't want to confiscate all of their gain - or even most of it - but I think it's right that the propertied wealthy make a bigger contribution to the Exchequer.

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Are Tory MPs wrong to complain about Osborne's spending priorities?

By Tim Montgomerie
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Four weeks ago Matthew Parris asked: Why are Tory MPs so "unbelievably lily-livered and flaky"? He was thinking of their failure to back the Chancellor's austerity measures.

He returns to the theme today, hurling his keyboard at the "perfect idiots" on the Tory backbenchers who, he says, are "economic nimbys". "They are in favour of cuts," he writes, "but nothing that affects their own votes or pet causes." His Times column continues (£):

"The Conservative Research Department has long employed an officer to tot up the costs of Labour’s miscellaneous promises and the costs implied by their complaints. It should turn its hand to the Tory Right. Defence, local A&E, Tory-led town halls, council tax, rail fares, road improvements, pensioners’ benefits ... every backbencher has his list. The perfect idiots are on many levels only what our unwritten constitution encourages a constituency MP to be: counsel for the defence of Loamshire West. Fine. Carry on, Sir Bufton. But their barking for lower taxes, and higher spending should be met with an indulgent chuckle, not a sucking-of-the-teeth. They don’t merit elevation to the ranks of “the Chancellor’s critics”."

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Why regional public sector pay won't happen

By Matthew Barrett
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The Coalition's idea of making public sector pay relative to private sector wages within each region is one with which I agree. The latest word from the Treasury seems to be that such a proposal is still under review. It was announced as a proposal in the Budget, but the Lib Dem Chief Secretary to the Treasury, Danny Alexander, told a GMB union conference last week that no decision had been taken. He said: "There will be no change unless there is strong evidence and a rational case for proceeding."

However, I suspect that no such policy will come to pass, for four reasons. 

First, the Lib Dems are opposed - as the Independent reminds us today. The leader of the Lib Dems in Wales has vocally opposed it, and Nick Clegg has given the signal he will fight against regional pay. An Early Day Motion opposing the plans currently has eight signatures from Lib Dem MPs.

Second, Conservative MPs in low private sector salary regions (who would therefore see the biggest drop in public sector wages if such a policy came about) have spoken out against the idea. 

• Guy Opperman, the MP for Hexham is quoted by the Daily Telegraph as saying: "I see no economic argument for introducing regional pay. ... I am very concerned that regional pay would lead to a reduction in the pay packets of some public sector workers in the North East. I do not believe reducing public sector pay will help stimulate private economic growth."

• Rory Stewart, the MP for Penrith and the Border, opposed the plan, according to Carlisle's News & Star, who say he "worries that setting regions against each other would result in bitter local negotiations with unions and resentment."

• John Stevenson, the MP for Carlisle, appeared on an ITV Border programme, saying he has "concerns" about the idea of regional pay, and "would have to be convinced" of its merits before voting for it. 

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A firm prediction... HS2 will never happen

By Tim Montgomerie
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That's my firm prediction and I think Lord Adonis, the Labour Transport Secretary who pioneered the idea, knows it too. Earlier this week he accused the Government of dither and delay over what was once thought to be a flagship environmental and economic project.

Three things have changed the Government's view of HS2. The two most important factors are the rising cost of the project - partly because extra tunnelling has been promised to protect the countryside but also because costs of these projects nearly always run out of control - and secondly new doubts about the perceived benefits of the project. These doubts will be heightened by today's Sunday Telegraph story from Andrew Gilligan. He reports that a Department of Transport analysis into HS2's benefits was suppressed after it questioned whether the giant scheme would produce anything like benefits that had been claimed it would bring. The original claim was that HS2 would cost £17 billion but produce benefits of £23 billion. Estimated costs have already risen by 10% to 30% while the benefits may have been grossly overstated.

The third factor is the politics. The Tories were willing to swallow unhappiness amongst shire Tories if the project won support in target northern seats. Again both sides of this equation have changed. The party leadership had calculated that neither Labour nor the LibDems as supporters of HS2 would seek to capitalise on southern discontent. They hadn't anticipated the UKIP factor. Nigel Farage has instructed all UKIP candidates in the south to campaign strongly against the hi-speed rail link and its impact on England's green and pleasant land. On the other side of the equation the project is not so popular in the North. By 53% to 32% northern voters told pollsters for Policy Exchange that HS2 was poor value for money. The idea of immediate rail investment - as advanced in the Alternative Queen's Speech - might prove more compelling.

George Osborne - behind last week's scepticism on windfarms - is thought to be leading the change of heart. The Treasury has always been sceptical of 'grand projets'.

Osborne ready to abolish national pay bargaining

By Tim Montgomerie
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If you work in the public sector in Wales you are likely to earn an average 18% more than if you work in the private sector (and that's before pension privileges and job security is factored in). This makes it hard for private sector businesses in the principality to attract the most talented staff.

If you work in the public sector in the South East of England you often can't afford a decent home. This means schools and hospitals in the region can struggle to attract enough 'key workers'.

The reason for these tensions is national public sector pay scales. A doctor in Swansea gets paid the same money as a doctor in Swanage or Slough or Surbiton - even though the cost of living might be very different.

In last year's Autumn Statement George Osborne announced a review of national pay bargaining and it appears from this morning's press (see the FT (£)) that he plans to abolish national pay scales in Wednesday's Budgets. He'll introduce gradual change by freezing or curtailing public sector pay (perhaps only for new recruits) in less prosperous regions until some sort of public/private equilibrium is restored. The Government believes pay flexibility will produce more willingness among workers to move between Britain's regions but ther system could also become quite bureaucratic if pay scales are not properly devolved to local hospitals and public sector managers.

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We need competition between Britain's cities to get the economy growing again. Here's how...

By Matthew Barrett
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The Government's localism agenda so far has made positive, but limited progress. Directly-elected Police Commissioners are a good example of conservative reformism - handing the power over local policing to local people. But policing should be just one power handed back to local government. More powers, including powers of taxation and welfare spending, should be devolved to the largest British cities to help re-balance our economy and regenerate the regions outside the South East.

When our economy does well, our cities do well. This would seem to be an obvious statement, but it's not quite true. In reality, London and, to a lesser extent, Edinburgh, thrived over the last few years - because of the large financial services sectors in those two cities. But our reliance on London undermines our versatility as a global power.

Germany is a country we could learn a lot from in recognising the benefits of having a number of important cities, not just a very big capital city. Frankfurt is the biggest financial centre on the continent - despite being only Germany's fifth-largest city. Berlin, Germany's biggest city, is its centre of government, arts and culture. Hamburg is one of the busiest ports in the world. Munich is one of the wealthiest cities in Europe, with businesses like BMW and Siemens headquartered there. Stuttgart is well-known for its high-tech industry base with companies like Hewlett-Packard, IBM, Daimler, Porsche, and Bosch based there. There are a good number of other cities in Germany with specialised skills and industries. The same points can be made about the United States, where cities like New York, Washington, Los Angeles, and Chicago (and many more) can compete on a global scale and specialise in various industries.

With London as our centre of financial, business, cultural, creative and government activities, we allow ourselves to be disproportionately influenced by the needs and concerns of only one part of the country and economy. It would be healthier, and allow our economy to be much more robust, if we were able to fall back on industries and sectors in other parts of the country. If Britain was less reliant on the City, our economy might have bounced back more quickly than it is doing - as Germany's economy did.

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