Conservative Diary

Liberal Democrats

6 Aug 2012 12:13:37

Danny Alexander’s words suggest that George Osborne’s credit rating headache is getting worse

By Peter Hoskin
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Let's put Louise Mensch, Boris and Nigel Farage aside for a moment — the most significant political news of the day may have come from the mouth of a Lib Dem. Discussing the prospect of the UK losing its AAA rating on the Today Programme earlier, Danny Alexander said that “the credit rating is not the be-all and end-all”. He did add that the judgements of the rating agencies are “a reflection of the credibility” of the government’s economic policy, but, still, it’s that “not the be-all and end-all” line that stands out.

This is significant because it goes against the flow of the government’s message for the past couple of years. George Osborne, in particular, has placed great emphasis on us retaining our triple-A rating. It was only a week ago that he was saying, for the thousandth time, that our untarnished rating shows that “the world has confidence” in Britain. What’s more, even his fiscal rule to have national debt growing no faster than the economy by the end of this Parliament was shaped by the demands of the credit rating agencies. Standard & Poor’s warned Alistair Darling in 2010 that he would need to put debt on a similar trajectory if a new Labour government were to avoid a downgrade.

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1 Aug 2012 11:17:14

Memo to those one-in-five Conservative supporters who would prefer Vince Cable as Chancellor

By Peter Hoskin
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There’s one finding that really stands out from this ComRes poll today, which is probably why the Independent has focused on it in their report. Apparently, 22 per cent of those Conservative supporters who expressed a preference would like David Cameron to sack George Osborne and replace him with Vince Cable. So, just in case some of that 22 per cent is reading, I thought I’d quickly list the three main reasons why elevating Cable to the Chancellorship isn’t such a good idea:

  • It would upset the balance of the Quad and the Treasury. The most important decision-making body of Coalition is probably the Quad, that group-of-four consisting of David Cameron, Nick Clegg, George Osborne and Danny Alexander. At the moment, there’s a nice symmetry to it: the junior partner in government holds the junior Prime Minister and junior Chancellor roles. But if Cable were to be made Chancellor, this symmetry would be upset. Of course, Danny Alexander would be moved elsewhere, but that would also create problems. Much of the Treasury’s ministerial team would have to be shuffled on, which probably wouldn’t be perceived kindly by the markets, and all to accommodate Vince.

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16 Jul 2012 07:53:51

Any Liberal Democrat Minister who votes against the boundary review must be fired

By Paul Goodman
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David Cameron is reported to be considering not proceeding with the boundary review at all, rather than see it voted down by Liberal Democrat backbenchers and Ministers who - in the latter case - he would have to dismiss.

There are also complaints about Conservative backbenchers voting against the Lords Reform Bill and Liberal Democrat ones voting, in due course, against the boundary review.

It is thus important to grasp, amidst these controversies, exactly what obligations backbenchers and frontbenchers respectively have, from each Coalition partner alike, to commitments made in their manifestos and in the Coalition Agreement.

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12 Jul 2012 20:00:08

David Laws steps in as the coalition’s marriage counsellor

By Peter Hoskin
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House magazineWith impeccable timing, the House magazine has interviewed David Laws for its latest issue. You’d think that the man who almost came to personify the Coalition in its early days would have a few things to say about the state of things now — and it turns out he does. On Lords reform, for instance, he emphasises that this was a very uncontroversial part of the original negotiations between the two parties (“it’s something, by my recollection, that we agreed in a few minutes of discussion”). And he adds that, “If one party, be it the Lib Dems or the Conservatives, started not delivering pledges in the coalition agreement, then that will obviously be something that would be a de-stabilizing and a very negative development.”

But what comes across most of all, from the quotations I’ve seen, is Laws’ commitment to the coalition — and to keeping it going. And it’s not just his full-throated claim that ‘I’m obsessed about the coalition working’, either. He lambasts the idea of the Lib Dems withdrawing their ministers before the next election; he admits that he might have left his party had they not proved they were serious about governing; he warns against excessive differentiation, from both sides, before 2015; he praises the original Coalition Agreement as ‘fantastically ambitious’; and he emphasises the importance of spending cuts (alongside further Quantitative Easing and a bit more ‘investment spending’ where possible, which is more or less the government’s official position as well).

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24 Jun 2012 08:58:20

The Government needs David Laws back round the Cabinet table

By Paul Goodman
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Easy relations between the Coalition partners began to break down in earnest after the AV referendum.  But the man who made them look almost natural had left the Government well before it took place.  And he is back today in the Sunday Telegraph, making a case that David Cameron wouldn't dare to put, presuming that he accepts it in the first place.

David Laws says that the share of the economy accounted for by the public sector should be cut to 35%. As the paper points out, this now stands at almost 50%, and in recent history has been about 40%.  In other words, this Liberal Democrat MP wants this proportion to come in lower than Mrs Thatcher managed.  Even a 40% figure, he says -

“...would have shocked not only Adam Smith, William Gladstone, and John Stuart Mill, but also John Maynard Keynes and David Lloyd George. The implication of the state spending 40 per cent of national income is that there is likely to be too much resource misallocation and too much waste and inefficiency.”

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17 Jun 2012 08:56:51

Hammond finds funds for new generation of nuclear weapons to replace Trident (and annoy the Lib Dems)

By Matthew Barrett
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3.30pm Update: appearing on the Sunday Politics show, Andrew Neil asked Philip Hammond how spending money on a Trident replacement is fair, when the money could be spent on preventing cuts to Army regiment numbers. Hammond defended cuts to the Army, saying that the equipment element of the Defence budget had been improved so troops get the proper armour and equipment they need:

“The overall defence programme consists of a number of different parts: an equipment programme, the nuclear element and the manpower budget. The manpower budget is a very large proportion of the total military spending budget. If you look back a few years, the previous government was not spending enough on equipment for the Army in Afghanistan, for protective equipment, and the money was being spent on maintaining a larger force level.

"What we’ve done is looked at how we can have a sustainable force that meets Britain’s needs in the future, on the basis that we must equip our armed forces properly – so whatever level of force we ultimately decide to have, we’ve got to be able to provide the protective equipment and the proper fighting equipment that that army needs.”


HAMMOND PHILIPConservative MPs are keen for revenge after the decision by Nick Clegg and his MPs to abstain from what amounted to a vote of confidence in Jeremy Hunt earlier this week, the Sunday Telegraph says. While that newspaper says the main revenge will take the form of voting down Nick Clegg's Lords reforms, undoubtedly Tory MPs will look forward to voting for policies that make Lib Dems feel uncomfortable.

That is the background to the announcement today that Philip Hammond has found funding to start work on a new nuclear deterrent. The Defence Secretary will announce the ordering of nuclear reactors for a new class of submarines to replace the current Vanguard fleet, which carries Trident at present. The reactors will be built at a Rolls-Royce plant in Derby - a move that will create hundreds of jobs at the plant, and many more in the wider supply chain. 

The new contract will be worth £20bn - and is made possible by the fact that Mr Hammond's department has now sorted out its cuts programme and structural reforms. Mr Hammond said last month: "In the next few days we will be in a position to make the grand announcement that I’ve balanced the books". Similarly, the Sunday Telegraph quotes "a senior MoD source" as saying: "We have balanced the MoD’s books and can now get on with ordering major pieces of equipment for the armed forces to protect us against future threats".

Conservatives favour a like-for-like replacement of the Vanguard submarines, which will be in use until the late 2020s - and their missiles in use until 2042. While the Coalition Agreement states that the Government will "maintain Britain’s nuclear deterrent", Liberal Democrats are allowed to "continue to make the case for alternatives". Happily for annoyed Conservatives, the newspaper quotes a senior Lib Dem as saying Trident replacement is a "massive fault line" between the two parties, especially as the Lib Dem manifesto states that the party would oppose such a like-for-like replacement, and would instead argue for "alternatives".

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13 Jun 2012 07:45:21

Are Liberal Democrat MPs now free to abstain if Ed Miliband tables a no-confidence vote in the Government?

By Paul Goodman
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I was under the misapprehension that, since this is a Coalition Government, Conservatives and Liberal Democrats take the same whip.

This misunderstanding was buttressed by the Number 10 website, which lists Alistair Carmichael as a Deputy Chief Whip (and number three in the Whips' Office).

I should of course have grasped that, as the Daily Mail explains this morning in relation to the Commons vote later today on Jeremy Hunt -

"Senior Lib Dems said they are not bound by the usual conventions of collective responsibility since the motion has been proposed by the opposition rather than the government".

Do you see?  If the motion in question is an Opposition one, then Liberal Democrat MPs are free to vote for it, and never mind what their Coalition partners think.  It presumably follows that in the same circumstances Conservative MPs have the identical liberty.

Which means that Opposition Day debates, for example, can't be whipped.  The principle can be extended.  So if Chris Huhne's affairs become subject to a vote for some reason, Tory MPs can all be asked to abstain by David Cameron.

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9 May 2012 10:21:23

Cameron cannot gain a workable Conservative majority without the boundary review

By Paul Goodman
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David Cameron has told the Daily Mail that he wants a Tory majority at the next election and complained about the Liberal Democrats:

"Mr Cameron singled out human rights law, reform of workplace rights and support for marriage as areas where Tory principles are being held in check but urged senior MPs growing tired of coalition not to ‘waste’ the next three years.

‘There is a growing list of things that I want to do but can’t, which will form the basis of the Conservative manifesto that I will campaign for right up and down the country,’ the Prime Minister said. ‘Be in no doubt, I want a Tory-only government.' "

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4 May 2012 08:47:22

Six immediate reactions to the election results

By Tim Montgomerie
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No breakthrough for Labour: Radio 4's Today programme is insisting that Labour had a "very good" night. If they achieve 700 gains that will be true but it's not a transformational night. Far from it. If there was real enthusiasm for Labour and Ed Miliband it wouldn't be losing control of Glasgow (as seems likely) or failing to win the London Mayoralty (as most predict). Miliband is, after all, a triple loser in Labour's heartlands. Nick Robinson says the results have, nonetheless, secured Ed Miliband's leadership. The #SaveEd Tories won't be unhappy at that.

Johnson Boris Ruffling HairThe rise of Boris: The good news for Conservatives is that Boris does appear likely to win re-election. As Fraser Nelson writes in today's Telegraph his victory means there's now an alternative to David Cameron. Boris may not be an alternative leader (although in my Times column (£) I suggest that that idea is no longer fanciful) but he does represent an alternative vision of Conservatism. Fraser argues that "Boris' Conservatism" is more self-confident about traditional Tory beliefs than the Cameron brand. It certainly appears to be more potent. Boris is "the Heineken Tory" that reaches voters that other Conservatives cannot.

Yellow incumbents hold out against the Blues: Harry Phibbs is suggesting that there's not much evidence that the Conservatives are gaining from the Liberal Democrats. I'd like to see more results before drawing that conclusion but that's not a good omen for crucial Tory-Lib Dem General Election contests.


Unhappy Tories: Tory MPs are unhappy and not just the usual suspects. Number 10 should be worried that the normally ultra-loyal Gary Streeter MP went on to BBC TV last night to say that voters wanted more Conservatism from the Prime Minister and less Liberalism. He said that the Lib Dem tail needed to stop wagging the Tory dog. Alun Cairns MP had a similar message for the Conservative leader, tweeting: "Need to remember that David Cameron was most popular when he vetoed EU treaty. Lib Dems holding us back". Even one frontbencher has broken ranks. Gerald Howarth MP, defence minister, warned the PM to avoid distractions like gay marriage and Lords reform. He asked: "Do we need to do this at a time when the nation is preoccupied with restoring the public finances?"

The divided centre right: UKIP did well yesterday but without winning councils or many councillors. They are, as John Redwood blogs this morning, not a party of power but a party of protest. Their main function is to split the Eurosceptic and centre right vote and therefore they allow more pro-EU Labour and Liberal Democrat politicians to prosper. Harry writes about this on the Local government blog.

No to City mayors: The most disappointing result of all - as far as I am concerned - was the defeat of directly-elected Mayors in nearly every referendum. I've always seen this reform as one of the Coalition's most far-reaching. City mayors had the potential to attract big new talents to the leadership of Britain's great cities and deliver a decentralisation of economic and political power. Mayors would also be a way back into the northern cities for Conservatives and a great pool of tried-and-tested talent for an incoming new government at national office. I hope this reform that has been sabotaged by the vested interests of existing councillor establishements can still be salvaged. I'm not optimistic.

17 Apr 2012 07:19:07

The tycoon tax proves the power of the Curse of Clegg

By Paul Goodman
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Screen shot 2012-04-16 at 19.16.16

The row about tax and charity is a scene on a wider canvas.  Yesterday morning, David Gauke reminded Today's listeners that the move is part of "a general cap on reliefs": in other words, part of a "tycoon tax".  George Osborne seems to have become convinced of the need for one, and though he tends to avoid the phrase he briefed the Daily Telegraph to that end earlier this month.

The Chancellor must take responsibility for his Department's policy.  But he isn't the first member of the Government to suggest that everyone should pay a minimum proportion of their income in tax.  An even more senior Minister got there first.  Nick Clegg floated the tycoon tax in the same paper almost exactly a month before, using the same language that Osborne was later mocked for deploying:

  • "He asked his officials to look at the situation in Britain, and was shocked at what the inquiry revealed." (Clegg interview, 9/3/12)
  • “I was shocked to see that some of the very wealthiest people in the country have organised their tax affairs, and to be fair it’s within the tax laws, so that they were regularly paying virtually no income tax. And I don’t think that’s right. (Osborne quoted, 10/4/12)

I'm not among those that believe that the good things the Coalition is doing have no connection with the Liberal Democrats (for example, the push to get lower-paid workers out of tax has much to do with them).  Nor is Clegg more blameworthy than his fellow yellow Ministers for many of the bad ones (such as the "fair access" policy).

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