ConservativeHome's ToryDiary

The Conservatives declare victory in the battle of the fiscal stimulus

I've said it before: The decision by Cameron-Osborne to oppose Labour's fiscal stimulus was their bravest and most important decision.  When they took it, they stood almost alone in the world but respectable opinion has gradually caught up with them.  The warning by Mervyn King, Bank of England Governor, earlier this week, that a further stimulus was unaffordable was the greatest vindication yet.

This PDF - just issued from CCHQ - records the ideological victory.

The big challenge for the Tory Treasury team is to follow Boris' lead and get control of the bloated state.  I don't see many signs that they are yet doing so... but that's a subject for another day.

Tim Montgomerie

David Cameron sets out the moral, economic and political case for fiscal responsibility

David Cameron has stated in this morning's Daily Telegraph that Bank of England's Governor Mervyn King's warning about the country's inability to afford another fiscal stimulus has "vindicated the argument of the Conservative Party that the priority must be tackling debt".

The Tory leader re-iterates that it was right of the party to oppose last autumn's VAT cut and goes on to outline the moral, economic and political cases for fiscal responsibility.

The moral case: "Fiscal responsibility is morally right because it's wrong to live like there's no tomorrow and burden future generations with our debts."

The economic case: "It is economically right too. The conventional wisdom is that in a recession governments have to step in to stimulate the economy. That might be right for countries that built up surpluses when times were good. But that argument gets turned on its head when the government is already living way beyond its means as in the UK. In these circumstances, a further fiscal stimulus will do the opposite of what Gordon Brown claims. Instead of making things better, it will make things worse – undermining confidence with the certainty of higher taxes and the risk of higher interest rates.

The political case: "Fiscal responsibility is right politically too because it's a vital part of our belief in personal and social responsibility. We're never going to build the kind of country where people save for their future if people see a Government that throws responsibility to the wind. The only way to restore confidence in our economy is to set out a credible strategy for living within our means."

Jonathan Isaby

Daniel Hannan MEP becomes a worldwide internet phenomenon

About 25 hours ago, Conservative MEP Daniel Hannan posted onto YouTube the video of speech he delivered yesterday afternoon in the chamber of the European Parliament in Strasbourg, during which, for want of a better phrase, he well and truly monstered Gordon Brown.

As soon as I saw it, I also posted the clip onto our PlayPolitical site and just a day later - with a little help from a Drudge Report link - nearly 80,000 over 260,000 (as at 10pm Wednesday) over 575,000 (as at 6.30am Thursday) people have watched it, making it the most viewed YouTube clip in the world today.

I have known Daniel for a decade and apart from being a robust eurosceptic who is fluent in a number of languages, he is an extremely articulate Conservative. His exposure on the web over the last 24 hours will have won him some new fans, and I imagine that they, like those of us who have known of his abilities for rather longer, would join me in hoping the party makes the best use of those talents in the months and years ahead.

You can relive yesterday's speech again below.

Jonathan Isaby

Edward Leigh elicits promise of Iraq War inquiry later this year from David Miliband

Gainsborough MP Edward Leigh was one of the few Conservative MPs who voted to oppose the Iraq War.

During a debate in the Commons on Iraq, he has just intervened on Foreign Secretary, David Miliband, seeking a promise that there would be a full inquiry into the Iraq War "as soon as practicable after 31st July".

Mr Miliband's reply was a simple "Yes".

According to PoliticsHome, he went on to say:

"The time to focus on an official inquiry is when the troops return to safety... we are talking about combat troops, not every troop."

---
4.30pm Update: Shadow Foreign Secretary William Hague has issued the following reaction:

“At last the Foreign Secretary has announced that the Government will set up a full Privy Council inquiry into the Iraq war when our troops come home at the end of July. This should have been done long ago. It is alarming that by setting a date of 31st July, when Parliament will have adjourned for the summer, the Government are now dragging out the setting up of an inquiry until the autumn.  This is unacceptable.
 
“We now call on the Government to ensure that the inquiry is announced before the summer recess, that its remit is set out in a statement to Parliament and that without any further delay the Leader of the Opposition and Privy Councillors in Opposition parties are consulted about establishing the Inquiry.”

Jonathan Isaby

Harriet Harman refuses to answer William Hague's questions on Mervyn King at PMQs

Jonathan Isaby's verdict: "Another incredibly pedestrian and repetitive performance by Harriet Harman deputising for Brown. William Hague asked her the crucial question of the day - would she agree with Mervyn King on fiscal stimulus - no fewer than three times and she utterly failed to give an adequate answer".

12.25 Is Gordon Brown trying to upstage Harriet Harman?! He is now live on the BBC News Channel addressing an audience in New York!

12.23 Philip Dunne asks why it is the armed forced do not know if they will be getting a pay rise next week. Harman says that the Defence Secretary will doubtless address the issue in a forthcoming Commons debate.

12.22 Tory MP Julian Brazier asks how many foreign terror suspects have been deported; 150, Harman says.

12.17 Cable asks for a tax cut for the lowest paid, but Harman fails to address that point in her answer.

12.16 Harman speaks about the need to work together internationally and decides to mention that Labour made the BoE independent.

12.15 Vince Cable also goes on the BoE governor and asks what freedom of manoeuvre the Government now has.

12.13 Harman again refuses to answer and talks about Brown meeting with world leaders as the Tories go to the fringes of European politics (a reference to the EPP withdrawal) and accuse the party of having a "millionaire's manifesto".

Theresa May insists that the recession has made the Conservatives even more committed to welfare reform

Answering questions from ConHome readers last month, shadow work and pensions secretary, Theresa May, promised to build on the radical approach to welfare reform set out by her predecessor in the role, Chris Grayling.

Since then, government adviser David Freud has defected to the Conservatives and he will be ennobled in order to bolster the party's shadow work and pensions team.

Today he will be joining Theresa May on a platform in London as she makes what I believe to be her first keynote speech on welfare reform.

In the speech she will insist that the recession has made radical welfare reform "even more vital" and will promise neither to neglect the long term unemployed, nor allow their number to increase significantly, whilst lambasting the Government for failing to dent the number of welfare dependants and those on incapacity benefit.

A report in this morning's FT concentrates on her plan to lengthen the timescale of the currently year-long contracts under which private providers seek to find work for the long-term unemployed.

She is also reportedly "considering plans to underwrite loans to private providers to help them invest in programmes".

Mrs May also identifies the three principles underpinning the party's approach to welfare reform:

Boris shows the way on spending cuts

Boris Johnson has cut 120 posts at City Hall today as part of restructuring plans.  The London Evening Standard reports that "The Mayor wants to save about £7.5million from an £80million budget by the cuts, many of them middle managers earning about £40,000."  That's 9.4%.  The Standard continues: "The main cuts are expected to be among administration staff. Short-term contracts will not be renewed."

I suspect that similar overstaffing exists across much of government.

The Standard also notes the new departments and their chiefs:

• "Resources, led by finance director Martin Clarke.
• External Affairs, headed by Guto Harri, director of communications.
• Communities and Intelligence which will receive policy advice from Kit Malthouse, deputy mayor for policing.
• Development and Environment, advised by Sir Simon Milton, deputy mayor for planning and policy."

Tim Montgomerie

George Osborne declares Mervyn King's opposition to a further fiscal stimulus as a "defining moment"

The Governor of the Bank of England, Mervyn King, appeared before the Treasury Select Committee today and made comments expressing his opposition to a further fiscal stimulus.

He said:

"There is no doubt that we are facing very large fiscal deficits over the next two to three years... I think it's right to accept that when the economy turns down and the automatic stabilisers kick in, so the increased benefit expenditures and lower tax revenues are bound to lead to higher fiscal deficits. And it doesn’t make sense to try and offset that.

"So we are going to have to accept, for the next two to three years, very large fiscal deficits. But given how big those deficits are, I think it would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits. That’s not to rule out targeted and selected measures that may find those areas, whether it’s in the labour market, whether its in corporate credit, that can do some good.

"But I think the fiscal position in the UK is not one where we could say, well, why don’t we just engage in another significant round of fiscal expansion. We could do more monetary easing if necessary, but monetary policy should bear the brunt of dealing with the ups and downs of the economy."

Shadow Chancellor George Osborne has responded as follows:

“This is a defining moment in the political argument on the recession. The big debate in British politics about the recession has been whether or not the country could afford a debt-funded fiscal stimulus... The Governor of the Bank of England no less has said Britain cannot afford a further fiscal stimulus. He goes on to say that monetary policy should be the main tool to tackle the recession.

”This is hugely significant, as it completely vindicates the big decision taken by David Cameron and myself on the economy, and it leaves Gordon Brown's political plans for the G20 and the Budget in tatters.”

George Osborne is right to highlight this: despite the Prime Minister's rhetoric, it is he who is increasingly isolated on this issue.

Jonathan Isaby

David Cameron say the Conservatives would bring "law and order" to the financial markets

David Cameron has spoken this morning at a conference at the London Stock Exchange on "the Regulation of Capitalism in the Post Bureaucratic Age".

The latest in a series of speeches on economic policy, it follows on from his significant speech in Birmingham ten days ago in which he admitted the Conservatives had been slow to criticise the burgeoning levels of debt.

In today's speech, he says that the Conservatives want to bring "law and order" to the financial markets and a sense of social responsibility to the City.

He said:

"People don't want to abandon markets, they want us to reform markets so they work properly.

"What they want is a sense of order and social responsibility brought to the operation of the financial markets. And that is a task for the modern Conservative Party.

"We are the party of law and order. So we are the party to bring law and order to the financial markets. We are the party of social responsibility. So we are the party to bring social responsibility to the financial markets.

"For too long, our market has been governed by the destructive idea that you can take what you get, however you can get it. We need to change the culture in the City so people understand they don't just have a responsibility to themselves - but to society too."

Mr Cameron emphasised his desire to restore the role of the Bank of England in regulating the level of debt in the economy, criticising the FSA for failing in its regulatory duties and attacking the Government for introducing the Tripartite system of regulation:

An open reply to Daniel Finkelstein

1pm postscript: Danny Finkelstein has now replied to my reply to his open letter.

I think enough has been said but I do think one issue needs to be clarified.  Danny writes:

"You did not support a reduction in public spending so that there would be money where now there is no money. You supported it in order that there would be tax cuts. You repeatedly argued (including in radio debates with me) that the party should announce tax cuts early. You said they needed to make the argument now. That was why you wanted the lower spending plans."

That's not a fair characterisation of my views.  The primary purpose of what I advocated at the start of 2008 was spending control.  I didn't launch a campaign for tax cuts but for reducing the growth of spending.  At the time I wrote that reduced spending "could be used to reduce borrowing. It could be used for economy-boosting tax relief."

I can't remember advocating any specific tax cuts to be announced NOW - only that we should argue NOW for the general benefits of low taxation, including their supply side benefits.

***

Yesterday Daniel Finkelstein sent me an open letter on the 45p tax issue.  I reply to the key parts of his letter below.  My penultimate paragraph is my key new observation (and worry).

"You expressed your opinion in uncharacteristically heated terms."

What I wrote was strong but "heated"? I don't know why George Osborne felt it necessary to change our position on 45p last Friday. On almost every other question of tax and spend we say 'wait and see'/ 'we are not going to write our budget now'. Having come close to saying what we will do on one tax policy it was inevitable that we would be faced with an avalanche of questions about our other intentions. See this morning's Daily Mail. See the weekend row on inheritance tax. I spoke to Iain Martin at The Telegraph on Friday evening and we both predicted exactly what has happened.  80% of Tory members said we should oppose 45p or adopt a 'wait and see' policy. I was in the 'wait and see' camp.  I thought George was too.

"I understand why you have a visceral reaction to the 45p rate. I share it. This is not a good policy. And if the Conservative Party was starting with a blank piece of paper, it neither should nor, I think, would, introduce it."

Because this tax rate doesn't come into force until after the next General Election we could choose to start with a blank piece of paper on this narrow issue. We don't have to actually cut this tax (unless Labour bring it forward).  We just don't have to impose it.  If it's not a "good policy" let's find a better one.  Taxes that will flatten the recovery by harming incentive structures should be the last form of tax to increase.

"I want to be forgotten as party chairman... The really successful party chairmen are the ones you don't really remember": Eric Pickles talks to ConservativeHome two months into his new role

It's a couple of months now since Eric Pickles took up the role of Conservative Party Chairman, and by all accounts he is loving the job - rather like the child who has finally been allowed to take the controls of the train set. Yet there is only one thing on which he is focusing - winning the general election - and when I met him in his office at CCHQ to talk about how he is settling into the new job, he refused to be distracted from that aim.

"What I'm trying to bring to this job and to the building is a focus on the election; if it ain't about the election, we've got to think about it in 18 months’ time," he asserts. "Nothing matters to me more than these elections in June and the one that will follow at some time. And that's what I'm here to do. There are some people placed as party chairman to be great reformers of the party. My job is to make sure this place is working happily, contentedly, but focused on those elections."

Party employees tell me that they have been impressed with his approach to the job, not least the little ways in which he shows his appreciation for what they do. Personalised notes arrive when someone is deemed to merit special praise and I gather that he also sends birthday cards to all CCHQ staff.

"Part of my job... is to encourage folk," he says. " I'm here to bring the best out of people, I'm not here to throw my weight around. You can either stand at this door and shout at people or you can wander up to their desk and just encourage. I want to ensure that everyone feels part of a big team. They're not doing it for the money, they're working as part of a cause they feel committed to. I think that has to be recognised."

He does a full tour of CCHQ once a week in order to get that chance to speak one-to-one with employees and one of his first decisions in the job was to reinstate a weekly staff meeting.

"It's about showing people what we're doing, why we're doing it and how we're going to be doing it.  I hope that's made a difference, and I'm told folks appreciate that."

Andrew Lansley issues five point plan to avoid another Mid Staffs

Shadow Health Secretary Andrew Lansley has issued a set of five proposals to ensure another healthcare crisis of the kind we saw at the Mid Staffordshire Hospital is avoided in future.  Click here for a full PDF of the five point plan and read below for a bullet point summary:

1. Tougher inspection: Additional scrutiny powers for the 'Local Involvement Networks' that represent patients and the local community.  'LINKs' will also be given independence from local authorities so that they cannot be swayed by politics.
2. Empowerment of patients: "Conservatives will establish a strong, independent, national consumer voice for patients: HealthWatch."  HealthWatch will help LINKs to hold local hospitals to account and will escalate concerns to national prominence, if necessary.
3. Empowerment of GPs: Rather than Primary Care Trusts holding budgets for buying treatment from local hospitals, the Conservatives would give the power to GPs.  GPs, say the Conservatives, are closest to patients and best-placed to keep an eye out for things going wrong.
4. Scrapping targets: Abolition of bureaucratic targets will ensure that "doctors and nurses should never be put in a position where they have to choose between meeting a target and doing what is best for their patients."
5. Greater transparency: The Mid Staffs catastrophe only became apparent after the hospital's mortality rates were published - not something that is routine.  A Conservative government will require more information on mortality and survival rates at each NHS trust.

Questions for you

It's that time of the month again...

Please use the thread below to suggest question topics for the monthly ConservativeHome survey.

In addition to the regular questions on the shadow cabinet's performance I'd be particularly grateful for suggestions for questions on tax policy.  Thanks!

Tim Montgomerie

Five principles that should guide the Tory response to Brown's debt hangover

As today's frontpage reveals the newspapers are delighting in coverage of Tory confusion on tax.

Looking forward I propose five principles which should guide our party's response to dealing with Gordoin Brown's debt crisis:

1. There should be a recognition that the debt crisis is largely one of excessive public spending and that Britain is NOT lightly taxed. Malcolm Offord has calculated that Total Managed Expenditure has risen - after inflation - by £219 billion over the last fifteen years. Only when we've addressed the wastefulness of public spending and unreformed public services should we be talking about tax increases.

2. Public spending cuts should be delivered by a programme of decentralisation to public servants. Although there are some obvious public sector economies - scrapping ID cards, abolishing Regional Development Agencies, reforming the ineffective New Deal - it is very difficult for the Conservative Party to identify robust savings from the opposition benches in the Commons.  We don't need another James Review although some of its recommendations remain valid.  In the spirit of decentralisation an incoming Conservative government must incentivise local public service staff to find economies in their budgets.  Every family and business in the land is having to do this - so can the state.  After all, its income rose faster than the average during Brown's boom years.  We need something like 1.5% annual cuts for at least the next three years.

3. The pain needs to be felt by the Tories and the political class.  Julian Glover uses his column in today's Guardian to urge 'Tory cuts for Tory causes'.  It's fair advice and repeats what ConHome first recommended four weeks ago and then two weeks ago.  The Conservatives must cut into things that are uncomfortable for us.  We must be seen to be making sacrifices too.  I am now persuaded that means at the very least delaying Trident (although Julian Lewis MP disagrees).  It also means sacrifice by the political class.  I suggest a 5% temporary cut in MPs' pay (learning from the 1930s) and elimination of ministerial perks.

4. Any tax rises mustn't hurt economic recovery. If, after devising a programme for public sector savings, there is still a need for tax rises the Conservatives must first avoid raising taxes that will flatten the recovery.  At the moment we have our policy on tax the wrong way round - seemingly protecting the inheritance tax cut but conceding on the 45p tax band.  The 45p tax band - the revenue benefits of which are highly questionable - has much more serious implications for incentive structures than inheritance tax.

5. Don't retreat on the social reform agenda. The costs of social failure were enormous in the good times.  They are unaffordable in these times.  For reasons I won't rehearse now - I set them out last week - David Cameron must become even bolder on social reform if he is to reduce the demands on the state.

Tim Montgomerie

Official line is that the inheritance tax cut will be delivered in first parliament of Tory government

Further to my earlier post (briefed by a member of the Leader's office) this statement has just been released by a spokesman for the Tory Treasury team:

"People should be clear that the promise we made on inheritance tax is a promise we will keep. It will be in the manifesto.  But for years George Osborne has said he will not write budgets - including the 2010 one - in advance. We are only able to help people who have saved to pass on something on to their children because we have identified those who will pay for it - non-domiciles."

CCHQ is saying that the IHT commitment is consistent with the party's overall commitment to social justice because it is funded by taxation of rich non-doms.

Tim Montgomerie

8.15pm: Ken Clarke has just issued this statement:

"So far as I am concerned, we are fully committed to raising the threshold for Inheritance Tax in the first parliament of a Conservative government, as George Osborne has promised. This measure will appear in the manifesto and I support it. We also all agree that George Osborne cannot write his first Budget until we have seen what we have inherited. I cannot see any significant difference between what I have said and what my colleagues have said."

"We are going to move heaven and earth to show that we are not the party of the rich"

That's what a Tory strategist just told me when I asked if Ken Clarke was "on message" when he told BBC1's Politics Show - a few minutes ago - that Labour was unlikely to leave Britain "in a position where we can do that."  "That" being the inheritance tax reform announced by George Osborne in October 2007.

PoliticsHome also records the Shadow Business Secretary's response to questions on the 45p tax band:

"We couldn't possibly expect people on ordinary incomes to understand why you would be easing that in a time of...enormous public debt... We have to make sure the rich pay their fare share alongside the generality."

He then gave the game away, admitting that this is largely a political move by the party: "It's a symbolic tax increase. It isn't going to raise much money."

The Tory strategist told me that the plan is for the Tories to take an "anti-rich" position on 45p, inheritance tax and regulation of the City in order to "buy room for acceptance of public spending cuts."  Only when the party has decontaminated itself as the party of the rich will we have the authority to attack the size of the state, I was told.

Tim Montgomerie

2.30pm: Should have said this earlier but my sister had prepared the Mother's Day Sunday lunch and I had to rush!  I think this is a sensible strategy in general terms.  I sympathise with delaying the IHT pledge (I floated the possibility a couple of weeks ago and Jonathan raised it at David Cameron's February press conference). A tough line on misbehaving bankers is also sensible.  I still think the party has too readily given up on the specific issue of 45p, however - for all the reasons now well rehearsed.

3.30pm: Watch the key segment of Ken Clarke's Politics Show interview.

Jonathan Aitken proposes that rehabilitation should be the centrepiece of the prison system in new CSJ report

Tomorrow see the publication of a comprehensive new report on prison reform by the Centre for Social Justice, Locked Up Potential, which has been written by an 11-strong working group chaired by former Cabinet minister (and ex-prisoner) Jonathan Aitken.

ConservativeHome covered his appointment to that role in November 2007 here and the work he has conducted over the last sixteen months has clearly been very fruitful, with the report running to no fewer than 273 pages.

The thrust of the report is that rehabilitation must be the centrepiece of the prison system. The headline proposal is that those working in the prison and probation services who cut reoffending rates should be rewarded, but also that some savings made from the cuts in reoffending should be invested in schemes to treat prisoners' drug and alcohol addictions and to help them into jobs.

The following feature among the recommendations in the report:

• Replacing the National Offender Management Service with a local network of Community Prison and Rehabilitation Trusts (CPRTs) modelled on local NHS Trusts;
• Giving financial incentives to prison and probation officers who deliver reduced reoffending rates in local CPRT areas;
• Compulsory testing of all prisoners on arrival for drug addiction and alcoholism, with stricter anti-smuggling measures being introduced;
• Continuous but lower cost rehabilitation in Community Supervised Homes for Offenders (CSHOs) for certain offenders, such as some elderly, disabled, mentally disturbed and women prisoners;
• Enlisting thousands of additional volunteers to mentor prisoners and released prisoners and help them with their literacy and preparation for finding employment, housing and jobs on release;
• The full introduction of restorative justice, making criminals come face-to-face with the after-effects of their crimes.

It is a thoughtful report from a thoughtful (ex-)politician, and shadow justice secretary Dominic Grieve has  indicated in The Observer that he recognises it as a "very interesting contribution"  to the debate on prison reform.

As Iain Duncan Smith writes in the Sunday Telegraph:

"It makes powerful reading and sets out a programme for change which I believe will help alter the lives of large numbers of offenders and, correspondingly, the lives of all of us."

The full report will be available to download at the Centre for Social Justice website.

Jonathan Isaby

Lord Tebbit adds his name to the tally of those opposing the 45p tax rate

As we noted yesterday morning, Boris Johnson was the first senior Tory to express public doubts about what appears to be the Conservative Party's acceptance of Labour's planned 45p top rate of tax.

And last night we highlighted the interventions of four leading centre right commentators, all of whom were equally sceptical about the move.

This morning, we can add Lord Tebbit's name to the tally of those criticising the position as currently articulated by George Osborne.

The former Conservative Party chairman has told the Mail on Sunday that talking about increasing income tax risks alienating Tory voters - and that the policy priority should be to cut public spending.

"The Tories have to ask themselves this question: who is going to be enthused to vote for them by promises of higher taxation?"

"Like any family that gets into debt, the only way to put things right is to get a firm grip on expenditure. The Conservatives and Labour seem to be saying that the easier option for them both is to put up taxes rather than risk upsetting some of the public-sector clients who live on the taxpayers’ back."

ConservativeHome's doubts about the party's position on the matter are already on the record.

Jonathan Isaby

All pollsters now pointing to 10% to 12% Tory lead

A new ComRes survey for the Independent on Sunday suggests the Tory lead is down to 11%.  All the main five pollsters have the Conservatives 10% to 12% ahead.

George Osborne hit by quadruple whammy

24 hours ago ConservativeHome expressed disappointment at George Osborne's change of position on the 45p tax band.  Four leading centre right commentators have now joined the chorus of concern...

> Fraser Nelson in the News of the World (not yet online but previewed at The Spectator)
THE 45p TAX HIKE MAY RAISE "NOTHING"
"Right now, the richest 1 per cent pay 23 per cent of all income tax collected. They pay their fair share – and the fair share of 22 other people. When the tax rate rises too much, the rich just bugger off. We saw this in the seventies. But as Tory peer told me: “Those too young to remember the seventies are destined to repeat its mistakes”. Yesterday George Osborne now said Brown’s proposed 45p tax on the rich is “difficult to avoid”. Difficult if you have no imagination. Experts say this proposed 45p tax will raise NOTHING. Because the super-rich will emigrate, or work less. Just like in the 70s."

> Iain Martin in The Sunday Telegraph
A 45p TAKE RATE WILL FRIGHTEN INVESTORS AND WEALTH CREATORS
" Mayor of London, Boris Johnson, said that a 45p band was "not economically sensible". He is dead right. It will raise little – £2 billion, in the Government's view, or nothing at all, according to others. But the message that it will send to potential overseas investors and to the wealth-creators whose efforts will be needed to power us to economic recovery is a profoundly damaging one."

> Iain Dale on his blog earlier today
GEORGE OSBORNE IS INVITING THE ARGUMENT FOR A 50p TAX BAND AND WORSE
"If you need to raise revenue from top earners why stop at a 5p rise? Hasn't the position significantly worsened since November? Using the logic of the argument, you could easily make the case for a 50p rate."

> Peter Hoskin on Coffee House (raising, for me, the most worrying aspect of all of this)
ALLOWING LABOUR TO SET THE TERMS OF DEBATE
"One of the more frustrating aspects of the Cameron leadership is how its strategy is sometimes (overly) determined by what Labour will do or say.  Take what was their long-standing commitment to match Labour's spending plans.  This was made in fear of the "Tory cuts" attack, and ensured that the New Labour orthodoxy - that "spending = investment" - remained in place long past its use-by date... Why mention this now?  Well, there's a similar air about George Osborne's statement on a 45p tax rate yesterday.  When this measure was announced in the PBR, it seemed little more than cyincal Brownite ploy to put the Tories in a spot.  Cameron 'n' Osborne should have steered well clear but, instead, they've dived straight into Brown's trap."

Tim Montgomerie

Boris Johnson on the 45p tax band

"It sends out a signal to people who create wealth, people who are energetic... can generate new industries or drive large enterprises of one kind or another... that we want to take more of their proceeds away than before. It is a deterrent to enterprise."

That was the Mayor of London on last night's Any Questions? programme on BBC Radio 4.  George Osborne has said Labour's tax rise will be "difficult to avoid".

Mr Johnson said that "clobbering the rich" would stifle the City's potential.

On this morning's Today Programme George Osborne confirmed that it is likely that he'll keep Labour's plan to introduce a 45p tax rate for those earning over £150,000 in 2011.

You can listen to the entire interview on the BBC website.

(This ToryDiary has been altered since going live at 9am to take account of Boris Johnson's intervention).

Iain Duncan Smith raises concerns about how council house sales created ghettoes

11.45am update: Aware that only selected quotes from his interview had been released, I asked Iain Duncan Smith if he could add some context to his remarks. He has now got back to me and says:

"What the full interview should show is that I pointed out I am a supporter of the sale of council houses but that when the allocation of council houses to replace those who moved out was restricted to a ‘needs’ based criteria the estates suffered. Only the neediest, ie: broken dysfunctional families, came on to the estates and this has ghettoised such families as the good working families left.

"I made the point that the next phase for Thatcher was social reform which she admits she never completed. It is in the Centre for Social Justice's housing report published a few months ago which shows conclusively that once upon a time social housing was about mixed tenure with two parent families and families in full time work. That is no longer the case and less than a third have full time work on estates and a very small number have two parents. This style of life for the children now ensures they are more likely to repeat the behaviour of their community and grow up out of work and dependent in their turn. Most children will not see a two parent family or someone who goes out to work.
 
"The sale of council housing was never enough on its own - that is why we need to complete the social reform agenda so that we can change all this. Our housing paper points out that future sales should be set in such a context of breaking down these monolithic estates and using social housing as a support to lift people out of dependency and into work."

The CSJ's full report on Housing Poverty can be downloaded here.

---

The sale of council houses during the 1980s has generally been hailed as a flagship policy of the Thatcher Government which sought to help create a property-owning democracy.

Yet the consequences of that policy appear to be being questioned by Iain Duncan Smith.

In a yet-to-be-published interview with the Left-wing Fabian Review, the former Conservative leader and founder of the Centre for Social Justice seems to suggest that as a stand-alone policy, the sale of council houses meant that many of the country's most vulnerable families got "left behind", since further social reforms were not forthcoming.

George Osborne needs to get a grip

George Osborne has confirmed today's Daily Telegraph front page splash and said that Labour's 45p tax hike will be "difficult to avoid".

It is far from clear that the 45p tax rate will produce much revenue.  It seemed like a politically-motivated tax rise when Alistair Darling announced it and it is disappointing to hear a Conservative willing to talk of tax rises when Britain's economy is already dangerously over-burdened with a complex and heavy burden of Labour taxation.

It may well be that an incoming Conservative government inherits such an awful borrowing requirement that tax rises cannot be avoided but it is very disappointing to hear the Shadow Chancellor close to surrender on the 45p tax band at the same time as being so cautious on public spending.  We are told by the Tory leadership that it's too early to say what a Conservative government will do on public spending but it's not - apparently - too early to say we'll accept increases in taxation.  That inconsistency betrays the party leadership's instinct to keep both public spending and taxes at Labour's relatively high levels - an instinct evident in the Tories' 2007 decision to match Labour on public spending increases.

Let's be clear: The big problem in Britain's public finances isn't that we are lightly taxed but that Labour has presided over the biggest ever peacetime increase in public spending. The expenditure has not been spent well. A Conservative government shouldn't be thinking of tax rises until it has exhausted the possibility for economies from Labour's bloated state.  Tax rises must be the last resort, not, as it appears, the first resort.

George Osborne wasted his early period as Shadow Chancellor by disarming economically.  Rather than devoting energy to finding ways of cutting waste and delivering much better value for taxpayers' money he largely accepted the Blair-Brown settlement on the size of the state.  That was always an undesirable position but it become impossible when recession struck.

This website has consistently given George Osborne the benefit of the doubt but today is worrying.  Mr Osborne needs to get a grip of the debt crisis but he must realise that it is fundamentally a crisis of excessive and wasteful public spending.

Tim Montgomerie

David Cameron to be first guest on The Sun's internet-based radio station

Press Gazette is reporting that David Cameron will be the first guest on The Sun's new internet-based radio station, launching on 20th April.  The Gazette writes:

"Sun Talk is being heralded by the paper as "The Home of Free Speech" and will be hosted five days a week from 10am to 1pm by columnist Jon Gaunt. Gaunt hosted a mid-morning radio show on TalkSport until November this year, when he was suspended and then fired for likening a councillor to a "Nazi" during a discussion on whether smokers should be banned from being foster parents. As an internet-based radio station, Sun Talk will not be subject to regulation by the Ofcom Broadcasting Code – which includes sections on "harm and offence" and "due impartiality"."

I wish this initiative well.  Britain needs a more gutsy broadcaster.  Sky News has more or less the same worldview as the BBC News Channel (and not at all like Fox News although both are owned by Rupert Murdoch).  The lack of regulation of the internet should allow 'Sun Talk' to be more partisan.  A right-leaning broadcast outlet was the goal of the short-lived and probably over-ambitious 18DoughtyStreet Talk TV (of which I was an early part).  I'm delighted that David Cameron is supporting The Sun's endeavour by being its first guest.  More here.

Tim Montgomerie

Will the Conservatives really go along with Labour's 45p tax rate?

5pm Update: George Osborne has given a response to today's Telegraph story about the Conservatives supporting the 45p tax band in a webchat he has just done with the Manchester Evening News. Here's what the shadow chancellor had to say:

"What's actually happened is that Labour announced last November that it was increasing the top tax rate for those earning over £150,000 to 45 percent. What we've said is that, given the desperate state of the public finances, that is a Labour tax rise we will find it difficult to avoid. What we will be doing is also bringing public spending under control so that Britain lives within its means. Let's be clear: we have to deal with the economic mess that Gordon Brown has created - and in doing that today's Conservatives are not going to punish the poorest in our society unfairly. Everyone, the rich included, have to bear their fair share of the burden. I wish the economic situation were different, but sadly it is as it is."

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There is much coverage in this morning's papers of the speech David Cameron made yesterday on public spending, which was covered here on ConservativeHome.

But as Peter Riddell points out in The Times today, there was a "big omission" in terms of any explicit statement form Mr Cameron as to whether he would increase taxes in order to cut debt.

However, the splash in the Daily Telegraph today would appear to give an unequivocal answer to that question, headlined as it is: "Tories will raise tax rates for top earners".

It continues:

"The Conservatives will go into the next election committed to raising the top level of tax to 45p for those earning more than £150,000. David Cameron signalled that the rich would have to pay “their fair share” to rescue the economy from the mounting crisis in the public finances. It was made clear that hundreds of thousands of top earners would face paying the new rate — which Labour will also introduce after the election if they hang on to power — if Mr Cameron enters Number 10."

"Senior Tory sources believe that the 45p tax rate is now necessary if the party is to fulfil its other pledges to reduce public debt and continue to maintain front-line public services such as health and education. One source said: “We do not like it but, given the current finances, we cannot pledge to avoid it.”