Osborne said to be considering introducing tolls on motorways

By Matthew Barrett
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The top story for a number of newspapers this morning is that reports suggest that George Osborne is considering introducing tolls on a number of existing major motorways in order to fund new road building.

"Aides to the chancellor" told the Financial Times (£) that the plan is "under consideration". However, the same newspaper reports that, whilst David Cameron is supportive of the idea, he will only want to implement it if he can neutralise the impact on motorists. The Guardian suggests "a cut in fuel duty and excise duty" for certain drivers could be the Government's remedy for any backlash against tolls.

The Daily Telegraph has more details of the proposals:

"Reforms that could give private investors control over Britain’s biggest roads will be included in the new policy agenda for the second half of the Coalition due next month... The private managers of the roads would then be allowed to levy tolls on any new capacity they provide, such as new lanes or bypasses. Existing roads that are “improved beyond recognition” by private managers could also be considered for charging, sources suggest."

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What will George Osborne do about fuel duty?

By Peter Hoskin
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In the end, last night’s vote on fuel duty did not yield the scare it might have: Tory backbenchers voted overwhelmingly in support of the government, and against Labour’s motion to postpone the 3p rise in duty that is currently planned for January next year. The government’s majority was 48.

But this victory may actually have been less easy than it looked — for, to stave off a rebellion, it appears George Osborne hinted that he will do something about fuel duty in the forthcoming Autumn Statement. As Robert Halfon put it yesterday, “the Government is in strong listening mode.”

This is not necessarily comfortable terrain for the Chancellor. He has already postponed the 3p rise on two occasions — and the fiscal conservative in him, eager to reduce the deficit, might balk at denying the Exchequer this money for another few months. This Osborne might want to draw a line in the sand before a third delay becomes a fourth, which becomes a fifth, and then a sixth, and so on.

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Cameron plays the “national leadership” card against Boris

By Peter Hoskin
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Boris having a dig, even just a friendly dig, at the Tory leadership? We’ve seen that a thousand times. But the Tory leadership having a dig at Boris? That’s a rarer species altogether, so it’s worth pasting into our collective scrapbook. Here, as recorded in today’s Times (£), is what David Cameron had to say yesterday about the Mayor of London’s opposition to a third runway at Heathrow:

“The Prime Minister said that the Mayor of London was wrong to rule out a third runway at Heathrow on the morning that the panel charged with studying the aviation needs of the capital was announced.

He also made clear that Mr Johnson would not have a veto over a once-in-a-generation decision that was critical for the country as a whole. ‘In the end the decision is a national decision that the Government has to lead,’ Mr Cameron told The Times. ‘What is not right is to say, I only want my options considered and not anyone else’s.’”

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Boris attacks the Government's "lamentable" airport plans, which could cause an "economic catastrophe"

By Matthew Barrett
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Boris Johnson has lobbed another grenade at the Government this afternoon, in a speech to aviation experts at City Hall. The Mayor criticised the Government's Heathrow plans (as if Patrick McLoughlin wasn't dealing with enough at the moment) as being "lamentable" and setting Britain on a course for "economic catastrophe". A section of the speech released to the press said:

"The Government programme to address the looming aviation capacity crunch in the UK is far too slow and I am hugely concerned that their intended timetable sets a course for economic catastrophe. This continued inertia is being fully exploited by our European rivals who already possess mega hub airports that they intend to use to erode our advantage. I will continue to work with the Government and the Davies Commission; but the urgency of the situation and the lamentable attention that the Government has paid to this pressing issue has forced me to accelerate the work that I will do to develop a credible solution.”

It's worth noting two things. The first is that this speech is unlikely to have been thought up over the last 48 hours, and so his comments are probably badly timed rather than calculated criticism to add to the Government's transport worries. The second thing to note is that instead of simply calling the Government's behaviour "lamentable", the BBC's Chris Mason tweeted that Boris actually used the words "lamentable, blind and complacent". That certainly would suggest a ramping up of the level of criticism.

The timing of it is all rather unhelpful. One can see Boris' point of view: on a basic level, the Heathrow runway is not the right road to go down (what happens when the "unashamedly pro-growth" crew demand a fourth runway?), and on a political level it would alienate plenty of the Tory voters Boris, or any Conservative in London or the country at large, needs to be re-elected). But did he have to say it all so close to the beginning of Conservative conference?

This could be the civil service's expenses-gate. Its Lehman moment. Its hacking crisis.

By Tim Montgomerie
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This morning's Times is estimating (£) that the rail franchise fiasco may end up costing £300 million. As Pete reported yesterday errors by civil servants forced the new Transport Secretary into a "calamitous" climb down. It seems that auditors from PriceWaterhouseCoopers were called in by Justine Greening one week before the reshuffle. Those auditors discovered that officials hadn't properly accounted for inflation in their decision to award the West Coast Mainline to FirstGroup rather than Sir Richard Branson's Virgin Trains. It sounds like an error as basic as it was enormous. Even Sue Cameron - the civil service's representative on Fleet Street - concedes this morning that mandarins have committed a massive blunder but her solution is to call for a declaration of peace between ministers and civil servants. Her sources in Whitehall clearly fear that reformers like Francis Maude will see this an opportunity for fundamental reorganisation of Whitehall.

The Government should certainly see this episode as a short-term embarrassment for transport ministers but, much more importantly, a great opportunity to get a much better Whitehall machine. Episode after episode is shouting the same message. We have a civil service not fit for purpose. It can't run IT projects. It can't keep costs under control. Whether it's Treasury officials versus IDS or the education blob against Michael Gove large parts of the civil service actively work with outside vested interest groups against ministers and declared policy. When civil servants mess up they don't get fired they get moved.

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The Government's calamitous climb-down over the West Coast Main Line deal

By Peter Hoskin
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The word “shambles”, particularly with the prefix “omni-” in front of it, has been overused recently. But it’s the word that most readily applies to today’s news that the government is to scrap the deal awarding the West Coast Main Line franchise to Firstgroup. And the reason why? In the words of Patrick McLoughlin, “completely unacceptable mistakes made by my department in the way it managed the process”. Apparently, as the Department for Transport press release puts it, “These flaws stem from the way the level of risk in the bids was evaluated.”

The fiscal cost to the DfT is, as these things go, quite small: £40 million will have to be reimbursed to the various parties in the deal. But the embarrassment is huge. It was only a few weeks ago that the then Transport Secretary, Justine Greening, was deflecting Richard Branson’s concerns with the words, “I suspect that, had [Virgin] won the bid, they would have been perfectly happy with the process.” Yet now the Virgin Boss has been broadly vindicated. Thanks to errors committed along Whitehall, Virgin is now back in with a shot at the contract. FirstGroup’s shares have plummeted in price.

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New Transport Secretary Patrick McLoughlin insists he is "open-minded" about third Heathrow runway

By Matthew Barrett
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Until the reshuffle, Patrick McLoughlin had been a whip for 15 years, serving six leaders, and two Prime Ministers - which explains why his media appearances have been few and far between. In his first big interview since being appointed Secretary of State for Transport, Mr McLoughlin has denied being appointed simply to see a third runway through, and insists he is "open-minded".

The first point of interest in Mr McLoughlin's interview with the Evening Standard is the news that Boris Johnson's omnipresence continues - he has seemingly extended his powers over transport in London:

"He has already had London’s Mayor lobbying him. “I was talking to him this morning and we agreed to set up a working party between the department and the Mayor to look at some of the transport issues he wants to develop. So, I look forward to having a good relationship with Boris.” Officials from City Hall and the Department of Transport will meet regularly under the plan, giving the Mayor a formal input into the Whitehall machine, though it is not the devolution that Mr Johnson really wants."

The second, and major, point of interest is his declaration of being open to different options for airport expansion:

"Mr McLoughlin insists he is open-minded and asks people to trust the independent commission headed by Sir Howard Davies, set up to review aviation policy. “I’m not going to say what it should do. But I hope people will see it as a very serious piece of work. It will look at all the options, be it Boris’s scheme, the Foster scheme, and others, and hopefully people will come to accept and respect it.”"

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68% of Tory members think Cameron is getting ready to U-turn on Heathrow third runway

By Tim Montgomerie
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The issue of a third runway at London Heathrow is not just an issue of growth policy, it's about the PM's honour and credibility. Opposition to a third runway wasn't buried in the small print of the Tory manifesto. It was very clear we wouldn't build one. Cameron himself was clearer. "No ifs, no buts, no third runway", he said. It seems pretty clear, however, that the Government is at least considering a new position but not until the next parliament. After moaning at Labour's tendency to appoint a new Transport Secretary once-every-year, on average, Mr Cameron has moved Justine Greening after less than 12 months in the post. By 68% to 14% Tory members in the latest ConHome poll agreed that “Justine Greening lost her job as Transport Secretary because the leadership is getting ready to U-turn on its policy towards a third runway at Heathrow.” I should imagine voters in the dozen or so seats where Heathrow is a decisive issue will have drawn similar conclusions.

In an article for this afternoon's Comment is free Zac Goldsmith puts another marker down. "If there is a pre-election U-turn," he writes, "my colleagues will struggle at the next election to persuade voters that their manifesto is worth the paper it's written on."

There won't, I suspect, be a "pre-election U-turn", My guess is that the Tory commitment in the next manifesto will be to honour the Howard Davies review into aviation policy, which reports AFTER the general election. I can't see Zac Goldsmith and other Tory MPs under the Heathrow flightpath thinking that's enough. I also can think of a charismatic mayor who won't be happy either.

The tentacles of the Octopus Chancellor are all over this reshuffle

By Paul Goodman
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George Osborne wanted to move Iain Duncan Smith from Work and Pensions, and failed.  Ken Clarke was moved to take up a roving economic brief, thus gaining a licence to meddle in the Chancellor's affairs.  The reshuffle even brought some distressing family news: Lord Howell, Mr Osborne's father in law, has been moved from his Foreign Office job to make way for Sayeeda Warsi.  The Chancellor must steel himself for some lengthy familial exchanges about how difficult the post will be for a tyro.  And David Cameron's transport gambit provoked a blast of the trumpet from Mr Osborne's leadership rival, Boris Johnson.

No wonder the Chancellor was written up as a loser from yesterday's events. But this broad assessment is undermined by the reshuffle's details.  Mr Osborne has been portrayed on this site and elsewhere as the Submarine Chancellor, surfacing only to make carefully controlled interventions before plunging back into the depths of the Treasury.  Something about him clearly attracts marine metaphors, since he can also be imagined as an octopus, with tentacles reaching out to manipulate even the more obscure parts of Westminster and Whitehall.  Yesterday's moves saw them extended even further. Consider:

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A warning for David Cameron - Tim Yeo dismisses him as a footling Old Etonian over Heathrow

By Paul Goodman
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Tim Yeo, Chairman of the Climate Change Select Committee, once a Heathrow third runway opponent but now a Heathrow third runway supporter, has written a piece in the Daily Telegraph today about his view.  In a sentence, it is that the new EU cap on emissions should end environmental objections to Heathrow expansion, since "airlines will fly their newest and quietest aircraft" there in consequence. "Indeed," he writes, "we could cover the whole of Surrey with runways and not increase emissions by a single kilogram".

I agree with Tim Montgomerie that manifesto commitments should be honoured in all but exceptional circumstances, and the Government is in any case bound by the wording of the Coalition Agreement (as well as, more practicably, by the objections of the Liberal Democrats).  I suspect that the Boris Island scheme is the best long-term option for Britain.  But whatever Ministers resolve, they must act fast.  A decision can't be postponed forever - not, at any rate, without damage to Ministers' reputations and, far worse, Britain's competitiveness.

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