torystrategy

Saatchi vs Ashcroft

A story that has been bubbling away for a long time surfaced in this morning's Mail on Sunday.

The MoS reports:

"A feud has erupted between multi-millionaire Tory peers Lord Saatchi and Lord Ashcroft over claims that advertising guru Saatchi helped one of his firms earn £500,000 from Michael Howard's Election campaign... Ashcroft demanded the [Tory] accounts make clear Saatchi was linked to advertising firm Immediate Sales - paid £500,000 to run the campaign... The firm is 80% owned by M&C Saatchi, parent company of Saatchi's advertising empire. Ashcroft's intervention comes after Saatchi stepped down as co-chairman following the Election and disowned the party's campaign, claiming it treated voters as 'morons'. 'He had the brass neck to slag off a campaign devised by one of his own companies which was paid a fortune,' said one source."

Every recent Tory election campaign has become associated with financial controversy:

> John Major's Tories spent so much in 1997 that William Hague struggled to keep the Tories afloat from 1997-99. Energies that could have been invested in the Tory's political renewal had to be invested in fundraising.

> The media agency Yellow M was paid a fortune during the 2001 campaign but went bust shortly afterwards. Although Yellow M was paid by the party, it failed to pay many people who had contributed to the Tory campaign.

> And this time round we have the suggestion that the Tory campaign fattened a company owned by the Tory co-chairman. It may well be that Immediate Sales was the best company for the job but it might have been better for a complete separation of Lord Saatchi's political and commercial interests.

Part of reclaiming the overall Conservative reputation for economic competence is to put its own financial house in order.

The Conservative road to social justice

Iain Duncan Smith’s Centre for Social Justice held its first awards ceremony last night. The former Tory leader must have enjoyed the occasion. IDS’ social justice message was muted during Michael Howard’s leadership but all of the Tory leadership candidates – or their representatives – were in attendance at last night’s do. David Cameron presented the major award. Theresa May fronted a new video promoting the CSJ’s work. IDS announced that David Davis, Liam Fox and Malcolm Rifkind were all addressing the CSJ over the next few months. The ’one nation’ agenda is beginning to take a central place in Conservative strategy.

But the real stars of last night’s event were the award winners. Many of them are profiled on the CSJ’s new Effective Giving website. As David Cameron said in his short speech – they proved that the really open-hearted compassion is also the most hard-headed.

What last night’s award winners embodied was a ‘transformational’ – rather than a managerial – approach to poverty-fighting:

> ADAS in Stockport, for example, rejects ‘condom compassion’ and fights to get people off drugs. It rejects the prevailing wisdom that drug use is inevitable and merely needs to be managed.

> The Bristol Community Family Trust doesn’t accept that relationship breakdown is inevitable – it helps couples to build lasting and healthy marriages.

> The Shannon Trust tackles the root cause of much re-offending – the 48% illiteracy rate of the imprisoned.

> The socially-enterprising Emmaus communities take homeless people off benefits and give them a bed and meaningful work.

> Manchester’s Eden projects – Christian-run – prove that a long-term commitment to a disadvantaged community is the surest way to cut crime and build solidarity.

There is now a lot of rhetoric in Tory circles about ‘social justice’. The good causes highlighted on EffectiveGiving.org.uk show the Conservative Party how social justice can be delivered.

Only the "nasty party" would oust Michael Howard

Yesterday’s Telegraph suggested that Tory MPs are close to getting the thirty signed letters that they need to force a leadership contest.

I think another leadership contest would be disastrous for the Conservative Party and must be avoided.

If anything has given the Conservative Party a reputation for being “the nasty party” it is the way its MPs treat each other and their leader, in particular.

I am not the greatest fan of Michael Howard (some may have read my posting on the seven phases of his leadership but he has been a good servant of the Conservative Party and was a transformational Home Secretary (see point (5) of this briefing). He deserves better than to be no-confidenced by his colleagues.

I always remember a letter sent to Iain Duncan Smith after he had been no-confidenced by MPs. The member of the general public hated the way that Tory MPs had attacked IDS through his wife, Betsy. The letter read - ‘If this is how you treat your own I hope to God you never again get an opportunity to treat the rest of us in the same self-serving way’.

The 1990 assassination of Margaret Thatcher injected a terrible poison into the bloodstream of the Conservative Party. Ever since no Tory leader has been able to pursue a long-term strategy for fear of being ousted by the impatient parliamentary party that sits behind him. Even football clubs – once so guilty of managerial merry-go-rounds – now realize that a coach needs time to develop a winning team. The 1990 regicide also confirmed the Conservative Party’s reputation for ruthlessness and probably stretched the electoral cycle beyond breaking point.

Let’s stop complaining about the protracted nature of the leadership contest and use this time to debate the strategic direction of the Conservative Party.

What big injustice should Tories tackle?

There are many people who live on long past achievements. Sir Bob Worcester of MORI is my favourite example of this phenomenon. He still appears on countless news programmes even though his polling organisation has been ‘way out’ in recent elections. Lord Saatchi is in danger of becoming another prime example of this ‘past glories’ syndrome.

In 1979 the advertising agency (owned by him and his brother, Charles Saatchi) came up with the cut-through ‘Labour isn’t working’ poster. Saatchi & Saatchi have been loved by Tories ever since.

But is Saatchi such a useful force for today’s Tories? Last October he told the Conservative Party Conference that it was impossible for Labour to win if Tony Blair remained Prime Minister. His own media and marketing companies were paid handsome fees for resourcing the Tory campaign and we all know what happened… Tony Blair was re-elected for a record-breaking third Labour term. There are suggestions in this morning’s press that Lord Saatchi might be blaming Lynton Crosby for the scale of the Tory defeat but the Tory poll rating was in the doldrums before Australia’s campaigning guru arrived at CCO.

Any advice from Lord Saatchi needs seasoning with a lot of salt, therefore. But there is something very important in his slightly "weird" (The Telegraph's view) new pamphlet for the Centre for Policy Studies. He believes that Tory pragmatism has killed off Tory idealism and that has been fatal to the party’s electoral prospects.

Interviewed on this morning’s Today programme Lord Saatchi noted that the Tories will soon have their fifth leader in eight years. But, he notes, Tom Cruise couldn’t save the Tory Party if he used the same focus grouped clichés that have characterised recent Conservative campaigns. Saatchi thinks that elections are intellectual battles – not about who has the prettiest face.

Saatchi is famous for citing military analogies in conversation and in his CPS paper he notes that successful generals lead their troops to noble ends. People will give credit – leeway - the benefit of the doubt - to political parties who want the best thing for their country. Labour has a commitment to social justice hardwired into its identity and this gives it leeway with voters when it fails to get things right. The Conservative Party – which has often prided itself on its ruthless efficiency – has no room for manoeuvre when it becomes associated with ruthless inefficiency. ConservativeHome.com has called Labour’s leeway advantage a product of 'good intentions liberalism'.

Saatchi calls for Tories to recover idealism by opposing real injustices. Human trafficking might be one such evil. The tragedies in Sudan or the Congo would be two others. Further suggestions would be welcome…

Tory hypocrisy on CAP

In the aftermath of the Tsunami disaster Michael Howard gave a speech to the Centre for Social Justice on what we in the rich world can do to help the poor.

In one of the best passages, he said for us to lecture developing countries on free trade while we maintain our own trade barriers is “immoral and hypocritical”.

And yet when it came to the biggest trade barrier of them all – the Common Agricultural Policy, the Conservative Party decided to adopt a policy of the rankest immorality and hypocrisy.

Beyond the usual weasel words about the need for further reform (at some unspecified point in the future) we said nothing that would cause Greek tobacco farmers to lose any sleep. Not only were we outflanked by the Labour Party manifesto (which at least including a timetable for the removal of export subsidies), we were also outflanked by that arch-europhile Lord Radice who effectively called for the scrapping of the CAP and repatriation of agriculture policy to each member state.

Imagine if the Conservative Party had called for the scrapping of the CAP. It wouldn’t have won us the election, of course. But, now, as the EU budget goes into meltdown – we’d have been seen as the visionaries. Not only would scrapping the CAP solve the EU’s dodgy finances, it would also give African farmers a fairer deal and give EU nation states an opportunity to reshape farm support in a way that actually protected the countryside instead of destroying it.

Instead, we are left with nothing to say while Tony Blair swings the handbag. The really galling thing is that scrapping the CAP should be a completely obvious way forward for a freemarket, eurosceptic party. There are many other issues where a much harder rethink is needed, but this one should have been a no-brainer.

Until the party learns to think outside of the box, or even dares to lift the lid and has peak at the wider world, we will remain irrelevant – which is exactly what we have shown ourselves to be over the weekend.

Shame on all concerned.

Damian Green embraces right-wing policies for left-wing aims

"We need to sweep away the old divisions between left and right in the Conservative party, and the application of what were previously regarded as right-wing Conservative policies adapted to help the poor and disadvantaged is the way to do it. Through the fog of the current debate on the party’s future I can discern the outline of a new consensus. Free market, liberal Toryism used to promote One Nation goals.”

With these words Damian Green announced his support for David Davis. Mr Green, traditionally of the Tory left, has endorsed Mr Davis, traditionally seen as a man of the Tory right. The Green and Davis alliance – and the reasons for it, as cited by Mr Green – provide further illustrations of the ‘And theory of conservatism’.

In the quote above Mr Green twins what have traditionally been seen as left-wing aspirations with right-wing means. He believes that “free market, liberal” measures like targeted tax relief for the poor and inner city school choice provide better routes to the socially just Britain that he came into politics to build.

Mr Green's words are an echo of an inspirational speech that George W Bush made some years ago. In that speech he said that "The methods of the past may have been flawed, but the idealism of the past was not an illusion". A whole range of more controversial Conservative policies - on school choice, tax relief, family support and abstinence education - are most likely to help Britain's poorest people.

Honest policies on family and drugs do not need to be authoritarian. They, too, can be entirely consistent with liberal themes of diversity and localism. The problem of current government policy is not primarily its liberalism but its centralised authoritarianism. Welfare programmes owned or funded by this government invariably share the same biases against the family, against abstinence-based drug rehabilitation and against real school choice. Perhaps that is one of the reasons that Mr Green, in the TRG Macmillan Lecture of two weeks ago, said:

"The most important community is the family, and the family is the most important support network for children. So One Nation Conservatives should be entirely happy to support policies which help children grow up with two parents in a stable relationship, and using the tax system to help married couples with children is one obvious way to achieve that."

George Osborne hits all the right notes in first major economics article

George Osborne writes an excellent article for this morning's Telegraph - his first as the new Shadow Chancellor.

As this blog has noted - a broad economic policy is a essential if this party is going to become both economically competent and socially compassionate.

George Osborne says that Tory economic policy must be forged in the context of the intensity of the international economic environment. During Gordon Brown's tenure Britain has dropped from 4th to 11th place in the league table of competitive economies. Mr Osborne's prescription is...

> A modern, integrated transport infrastructure,
> A reduction of Gordon Brown's £40bn regulatory burden,
> A strong macroeconomic environment (Tories want to keep an independent Bank of England - Labour still plan to replace it with an interest rate regime designed in Frankfurt),
> Simplification of taxes.

It's good to see that lower taxation is on Mr Osborne's agenda but only as one plank of a broader economic policy.

Mr Osborne sees tax as an economy-boosting weapon and I hope he'll find and consistently use a ’Don’t Think Of An Elephant!’ term like 'economy-boosting tax relief' so that his words help with the advocacy work that is going to be necessary.

If room becomes available to cut personal taxation, the Shadow Chancellor said the "poorest in society" were most deserving. He correctly points out that the lowest-paid "face the highest tax burden".

The seven phases of Michael Howard's leadership

Michael Howard may have many qualities but he was a poor strategist. His leadership had at least seven zig-zagging phases:

(1) It began with that widely acclaimed commitment to govern for "all Britain and all Britons". We didn't hear much more of that commitment. Social justice concerns hardly featured during Michael Howard's leadership. The commitment lasted about as long as Mr Howard's streamlined, ‘super’ shadow cabinet of twelve (now up to 22).

(2) Months were then wasted with the negative 'Let Down By Labour' campaign - unnecessarily duplicating the Blair-hatred of newspapers like the Mail and Express.

(3) After the disappointing European election results the Howard team finally focused on positive policies with a £500,000 launch of the 'right-to-choose' announcements on health and education. These policies were quickly forgotten when focus groups gave them a big thumbs down.

(4) The 'if I knew then what I know now' opportunism on Iraq then followed as the Howard team became obsessed with the footnotes of the Hutton-Butler reports - rather than the big picture threat of terror.

(5) Through the summer months we had 101 unconnected announcements. This offensive - which left voters unmoved - was criticised by ICM's Nick Sparrow. Mr Sparrow questioned what he called the Tories’ “scatter-gun” approach. Individual policy announcements are quickly forgotten, he suggested, if “a glue” isn’t provided to bind the ideas together.

(6) The autumn saw the launch of The Timetable For Action. Although this was never shelved it was quickly relegated to second order status.

(7) Then came the reversion to an updated version of the 'core vote strategy'. Controlled immigration and worries about gypsies took centre stage. Some even argue that Michael Howard lost faith in this dog-whistle strategy during the campaign. The dog-whistle issues were motivating Old Labour as much as the Tory core vote and Michael Howard became sidetracked into spending valuable airtime discussing the Attorney General's legal advice on the Iraq war.

When he resigned Michael Howard said that he had achieved much in 18 months. Imagine, he asked, what might have been achieved if he'd had four years? Perhaps we would have had another seven relaunches?

Conservatives keep seeking 'silver bullets' with which to retake power. They become quickly bored with strategies that have focused on public service reform, the renewal of one nation or other vitally important long-term aims. When busy voters occasionally tune into political news they need to see a Conservative Party that is pursuing a consistent mission - not zig-zagging between focus-grouped wheezes.

Keeping faith with a strategy (this site proposes the 'good for me, good for my neighbour' strategy) and being loyal to a leader are two qualities that the party needs to relearn.

Good for me and good for my neighbour

Tony Blair won the last election because of his continuing ability to present New Labour as more economically competent AND more socially just than the Conservative Party.

Michael Howard did little to tackle Labour's supremacy on either of those battle fronts. Instead we got his lopsided, shallow emphasis on immigration and cleaner hospitals.

The Conservative party cannot fight the next election without (1) restoring its reputation for economic competence and (2) presenting itself as a party committed to the welfare of the whole nation.

IDS calls this a 'good for me and good for my neighbour' politics. He and Danny Kruger, in their recent paper for the Centre for Social Justice, explain it this way:

"Many Conservatives cannot understand why support for Labour outlasts its broken promises. They fail to comprehend Labour’s greatest strength – its perceived sense of moral purpose. The Labour Party, like the NHS and the United Nations, has a set of values that commands more loyalty than its actual performance merits. Its ideals inspire and reassure.

Traditionally, voters saw the Conservatives as the competent, practical party who were ‘good for me’. Labour were the compassionate, idealistic party who were ‘good for my neighbour’. Today, by adopting Conservative rhetoric – especially on the economy and crime – New Labour have successfully presented themselves as competent without losing the perception of being compassionate. Conservatives, meanwhile, have lost their reputation for competence and have still not acquired a reputation for compassion.

The task for the Conservative Party is not merely to demonstrate competence once again – it is to present a set of values which represent compassion. This will not be achieved by aping the Labour Party. It will be achieved by a sincere and sustained commitment to authentically Conservative principles which are ‘good for me and good for my neighbour’."

A broader and deeper conservatism

The And theory of conservatism argues that a whole range of policies are more attractive when they are presented together. For example:

+ A tough policy on immigration is more acceptable (politically and morally) when linked to a commitment to the world's poorest people (see here).

+ Putting more people into prison should happen alongside effective rehabilitation programmes (see here).

+ Euthanasia and an effective duty-to-die should be kept illegal but hospices should receive more generous funding (see here).

The 'And theory' - first articulated in an early form by the great Oliver Letwin in the spring of 2003 - should become an iron discipline on Conservative politicians. It requires Tory MPs and policymakers to maintain (1) core (and popular) policy positions on Europe, tax and crime but twin them with (2) a broader conservative interest in such issues as global poverty, tackling the arms trade and combating pollution.

The fundamental 'And' is good for me and good for my neighbour.

Tory economic policy must be about more than tax

Many of the Conservative Party’s electoral difficulties go back to Black Wednesday when Britain was thrown out of the EU’s Exchange Rate Mechanism. A reputation for economic competence that had provided much of the basis for the 1979, 1983, 1987 and 1992 victories was lost because of a politically-motivated commitment to do as Brussels dictated and to buck the foreign exchange markets.

Conservatives would be wrong to think that an economic downturn will automatically restore their advantage over Labour on economic issues. A recent YouGov poll for the Centre for Social Justice found that Gordon Brown was most trusted to lead Britain out of any economic recession. 39% of voters would like him in power "if the economy was in trouble". Only 5% wanted Michael Howard in power. The next election could imitate the 1992 contest. In 1992 Britain was in recession but John Major and the Tories were more trusted to get Britain going again than Neil Kinnock and the Labour Party.

As Tories think of re-establishing their reputation for economic competence they should focus on the whole range of economic issues - not just taxation. David Willetts has correctly pointed out that much of the economic success of the Thatcher years had little to do with tax cuts. Talking to the SMF he said:

“It is easy to give up on the serious work of reforming the supply side of the British economy and instead just to settle for tax cuts. The Conservative Party in the past eight years has put far more effort into arguments about which taxes should be cut and by how much than it has into supply-side reform to raise the performance of the British economy. But if you look at the Thatcher Government, it could not deliver tax cuts year after year Some years we even had to put up taxes, because of the state of the public finances. But what that Government did deliver year after year was more big measures to privatise industry, reform trade unions and extend the market. In our first six months in 1979 we abolished price controls, dividend controls, pay controls, and exchange controls. That was heroic economic reform. It clearly rolled back the state. But we also had to put up tax in the crucial Budget of 1981 which put Britain on the path to economic recovery. The public finances were in such a mess that there was indeed no alternative.”

This does not mean that tax should disappear from the Tory agenda. John Redwood has rightly warned that “If our businesses are to have any chance of rivalling the Chinese, we need lower taxes and fewer rules.” The overall tax burden doesn’t even have to be reduced to produce economic benefits. Simplification will bring important supply-side benefits. And we should also prioritise an end to the tax churning that sees money removed from one pocket of a minimum-waged worker, only to be put in the other by the benefits system. Such madness can only make sense to Sir Humphrey Appleby.

It's time to give Europe's "sickest society" some Conservative medicine

Only four years ago social justice was banned from the Tory lexicon. I’d drafted a speech for a member of the shadow cabinet but the one use of the term was struck out in red ink. “This is not a Conservative idea. Conservatives don’t believe in social justice” had been scrawled in the margin.

Fortunately we have moved beyond that. One nation commitments are now seen as one vital half of the ‘economic prosperity and social justice’ pairing.

Although Labour prides itself as the party of social justice, many of Britain’s social problems aren’t getting better, even though the economy has been strong. David Willetts has pointed to "fragile families", "some of the toughest estates", "the most drunken tourists" and "some of the worst problems of crime and drug abuse" as evidence of Britain being the “sick society of Europe”.

The persistence of these problems – despite Gordon Brown’s bloated welfare state – presents Conservatives with a practical challenge and a political opportunity.

The practical challenge is to find the policies that will secure social justice. Labour have tried pulling the old Whitehall levers but without much success. Social progress is going to depend upon different approaches. For example, Conservatives should embrace policies that…

> give young people escape routes from the conveyor belt to crime,
> cut taxes for low income workers,
> provide parents with school choice,
> promote stakeholder-directed funding of free, innovative and effective charities, and
> in a challenge to the Tories' Soho tendency we must nurture family networks.

A Tory social justice agenda must be aspirational – in that it helps people to help themselves – but, at times, it must be simply and unconditionally compassionate – helping those very vulnerable people who cannot help themselves.

The political opportunity was illustrated by a YouGov poll for the Centre for Social Justice. YouGov found that 70% of target voters were more likely to vote Conservative if the party embraced policies that were “fair to those in need of help and fair to those who provide help”. What are we waiting for?

Direct Democracy's agenda for choice and localism

Throughout last week The Daily Telegraph provided a daily platform for the authors of Direct Democracy: An Agenda for a New Model Party. ‘Direct Democracy’s ideas of localism and devolution are, says The Telegraph, “the most interesting to have come out of the British centre-Right in a long time”.

The authors of Direct Democracy believe that there is something very wrong with the British state. They believe that quangoes, activist judges and Brussels have assumed too much power at the expense of elected representatives.

Throughout the week The Telegraph profiled the Direct Democracy’s policy ideas. The voucherisation of schools and hospitals was one key idea. A local sales tax (replacing VAT) and democratically-elected police chiefs were two other principal suggestions.

I think this is all good stuff and agree with nearly all of it. I’m not sure that much of it is new, however. Most of the ideas were trailed in the last Tory manifesto. Direct Democracy adds to the Conservative Party's excellent record of finding good policies but the primary Tory problem is not a lack of policy. It’s a lack of vision – a lack of narrative – a lack of something to inspire. Theresa May has noted that Tory rhetoric on the public services has been about choice whilst Labour has stressed standards and quality. Localisation and choice may be the route to higher standards but it's the failure to talk about our goals that has sent the electorate into Tony Blair's arms.

And let's not forget the public services!

No clear theme has emerged from the aftermath of the Tories' 2005 defeat. This contrasts with the strong emphasis placed on the public services after the 2001 defeat.

As leader, IDS put public service renewal at the heart of his policy reform process. The emphasis of the policies that emerged from that process (on choice and private sector opt-outs) have attracted criticism in recent weeks. MPs Nick Gibb and Gary Streeter, writing for The Times, called for Conservatives to become comfortable with the fact that the public services will overwhelmingly continue to be delivered by the state:

"To begin with, the party has to come to terms with, and be comfortable with, the fact that health and education, just like the police and the Army, are in the state sector to stay. This is a political fact. Since 1997, terrified of our opponents’ accusations that we would privatise everything, our approach has been to develop a few headline-grabbing polices — bringing back matron or giving head teachers the power to exclude disruptive pupils — in order to “neutralise ” health and education as issues so that we could talk about more “natural” Tory issues such as law and order and immigration... The choice and competition approach has allowed us to develop policies that enable the middle class to escape public sector provision altogether. But it has also meant that the Tories have not been able to speak convincingly to the millions who have no choice but to wait impatiently on hospital waiting lists or see their children failing to reach their true potential in the local comprehensive."

John Redwood remains very supportive of the 'choice' agenda, however. In The Business the Shadow Deregulation Secretary wrote:

"In the UK, we need to reduce the waste of the public sector and introduce real choice in public provision. All schools should be made independent, with free places for all who need them. There should be proper choice of doctor and hospital in the NHS."

John Redwood is right to say that Tories must continue to emphasise choice and competition. When faced with the possibility of losing patients and pupils, public service providers are forced to raise their game. Even if only a very few patients and parents exercise rights to opt-out of state-provided public services, everyone benefits if the opt-out threat increases standards within the state sector. With schools and hospitals still near the top of voters' concerns these vital debates should not be neglected.

Clarke, Duncan, Lansley and Rifkind are wrong about the war on terror

Howard's opportunism over Iraq was the most unfortunate aspect of his leadership. Conservative commentators rightly launched strong attacks on Michael Howard's opportunism:

> Quoting Australian Prime Minister John Howard – who said that "This is no time to be an 80 per cent ally” – Mark Steyn wrote that the White House will have had serious doubts about the reliability of Michael Howard as an ally in the war on terror.

> Gerard Baker, US Editor of The Times, accused Michael Howard of trading on anti-Bush sentiment within Britain to “shore up his own party’s flagging prospects”. Mr Baker wrote: “The truth is the Tories have been opportunists over Iraq. They backed the war and lauded the efforts of British and American troops when it was going well, but since then have exploited every opportunity to undermine Bush’s and Blair’s defence of the war.”

> Accusing the Tory leader of “cheap shots”, Charles Moore wrote: “As with his wrong-footed reaction to the Hutton report, Mr Howard is being frivolous. He writes that the Government has been "making policy on the hoof". Perhaps, but one hears the weary clip-clop of his own party as it does the same”.

The war on terror remains the defining issue of our time. Some people choose to live in the world of 9/11 - others shut their eyes and pose behind institutions-of-convenience like the UN.

Unfortunately there are at least four opponents of the Iraq campaign standing for the Tory leadership - Ken Clarke, Alan Duncan, Andrew Lansley and Sir Malcolm Rifkind. They fail to understand that our enemy isn't just terrorist networks - but also the rogue nations that feed and harbour them. These four Tories may be excellent in many ways but their weak positions in the war on terror should disqualify them from leading the Conservative Party - the party of Churchill, Thatcher and the once-and-future party of homeland security.

Conservatives must force European leaders to face up to the continent's weaknesses

The defeats of Ken Clarke, in 1997 by William Hague and by Iain Duncan Smith in 2001, were essential to the building of the Euroscepticism of today’s Conservative Party. If it had been up to Ken Britain would have signed up to the euro and the kind of misery that it has caused millions of unemployed Europeans. We would also have been enthusiastic supporters of the Constitution and its centralising, undemocratic tendencies.

It is essential that the Tories do not forsake the high ground of European policy wrought over recent years - just as other European parties are realising the folly of the Chirac-Schroeder path. And, yes, that means that Ken Clarke cannot be the next Conservative leader.

Europe faces four big tests in the next few years:

(1) Can its member economies undertake the kind of Thatcherite reforms that will see the continent compete with the world's emerging economies? Ken Clarke, a good Chancellor of the Exchequer from '93 to' 97, does support market reforms but his enthusiasm for the euro straightjacket puts him on the wrong side of a fundamental economic question. Fixing the exchange rate between divergent economies is suicidal - as Italy is discovering.

(2) Will it fight the war on terror? Old Europe currently has its head in the sand on this one - wishing that the threat of Muslim terror would disappear if we are only nice enough to that Mr bin Laden. Rogue nations and terrorist networks are linked in deadly alliances. We may not (God forbid) succeed in breaking those alliances but Bush, Blair and Howard (John) are right to try to do so.

(3) Will it open its hearts and minds to the needs of the world's poorest nations? An EU cow currently receives twice as much subsidy as most Africans have to live on. Forgiving debt and increasing aid are both welcome signs of global responsibility but Europe (and America) will only have earnt 'good neighbour' status when they open their markets to the world's poorest people.

(4) Will it tackle its demographic timebomb? Although the number of people aged 65 and over as a proportion of those aged 20 to 64 will jump from 22% to 37% in the USA by 2050, it will double to 52% - from 26% - in the EU. The European Commission estimates that Germany will be particularly badly affected by these population trends. 10.3% of German national income already goes on pensions. By 2040 pensions will be consuming 15.4% of GDP. Europe needs to start breeding!

Europe's leaders aren't facing up to those four challenges at the moment. As Iain Duncan Smith has remarked:

"Faced with weak tax revenues, the European Union’s leaders duck the big decisions about labour market reform and complain about Britain’s budgetary rebate. Faced with the uncompetitiveness of their own economies, they duck the difficult issues of tax reform and complain about the flat tax dynamism of Central Europe’s economies. Faced with Africa’s poverty, European politicians conjure up some promises of extra aid but do nothing about the trade barriers that cripple third world producers."

It is essential that the Conservative Party - led by a Eurosceptic leadership - forces the EU to get real.