Cameron's Ctrl-Alt-Del on frozen party relations

A bunch of new appointments and a more aggressive tone indicate that the Tories' campaign for re-election has already started.

Are the Tories getting their act together? In my column for this week’s magazine I note that there is a strain of optimism surfacing in the Conservative parliamentary party. It has a number of elements. There is new solidarity forged in collective mourning for Margaret Thatcher. Labour look disoriented and increasingly divided. And, crucially, there are portions of red meat being doled out by Lynton Crosby, the pugnacious No 10 campaign chief, to keep backbench tummies from rumbling angrily.

David Cameron, it seems, has also finally taken to heart the accusation that he neglects his party, choosing to float presidentially above the fray, thinking a bit too much about statesmanlike preening and not enough about securing a Conservative victory. Tory rebellion this parliament has often had an ideological impetus but it has also been exacerbated and prolonged by personal animosity towards the Prime Minister. There are MPs who feel slighted, passed over, sneered at and generally unloved. Cameron can’t do much about the hard core of ultra-zealous dogmatists who pray for his defeat – the Tory Trots – but there aren’t enough of those to finish him. He can, meanwhile, launch a charm offensive with the rest of the party.

Much has been made of his collegiate behaviour in the weeks of Thatcher mourning – sending friendly notes to MPs, raising a glass in tribute in the Commons bars; taking tea with the troops. Tory parliamentary flesh is being systematically pressed by the leader for the first time many can remember.

There have also been notable appointments. Before the Easter break, John Hayes, a bumptious Tory traditionalist with a direct channel to some of the ruddier-cheeked corners of the parliamentary party, was moved from the Energy department (where his scepticism about climate change was causing mayhem) to become a “senior” Cameron aide.

Now Jo Johnson (Boris’s younger brother) has been named as the new head of the No 10 policy unit. Johnson is respected across Westminster for his moderation and intelligence. He doesn’t have the flamboyance of his elder brother but that doesn’t mean he is any less ambitious. One credential that has raised a few eyebrows is the widespread suspicion that Johnson is a bit of a Europhile. That, in the words of one (more explicitly “out”) pro-European Tory is “the love that dare not speak its name” in the party, so it is hardly surprising that Johnson’s pragmatic inclinations towards Brussels are not worn on his sleeve. His private views are described to me as “eminently sensible; he gets it” by someone in Westminster whose approval would be considered a mark of disgrace by serious Tory eurosceptics. That could cause problems down the line.

Separately, a new policy “advisory board” has also been created, with input from a diverse range of MPs including veterans and 2010 newbies: Peter Lilley, Nick Gibb, Jesse Norman, Margot James, Peter Uppal, George Eustice. There are reports that Steve Hilton, Cameron’s old head of strategy will be involved – although that makes the whole thing look as much like a ruse to get people talking about a grand gathering of the Tory tribe as a substantial new institution. Hilton is not one for sitting comfortably on committees of any kind; Cameron is not really one for listening to them.

Of the MPs brought in to advise the PM, perhaps Norman is the most remarkable. He co-ordinated last year’s rebellion against House of Lords reform, for which he was rewarded with a ferocious bollocking from the Prime Minister and exile to political Siberia (“the new honourable member for Vladivostok East,” as one of Norman’s friends joked at the time.) Norman had once been considered a rising star and a shoo-in for a government post. After the Lords reform episode a No 10 insider told me that “Jesse Norman will never get a job in government under David Cameron.” That the ban looks to have been lifted is evidence that what we are seeing is a very deliberate, thorough effort to reset the leader’s relations with his party.

Will it work? We have been here before, notably after Cameron’s big European speech, when the Tories looked gleefully united for all of a week before talk of a leadership coup emerged. Nonetheless, this feels slightly different. There is a clearer and more explicit recognition among MPs that party discipline, coupled with a hint of good economic news, would put more pressure on Labour at a time when the opposition’s unity looks more brittle than ever. Again, Crosby’s influence here is crucial. A perennial criticism of the Cameron operation has been that it is not party political enough; that it likes the trappings of power but lacks a ferocious appetite for blood.

George Osborne has a relentless political game-playing impulse but he has a day job trying to run the economy. What has been missing, say some Tories, is the feeling that there is someone inside No 10 who wakes up every morning thinking about nothing other than how to hurt Ed Miliband and deliver a Conservative majority. That person, they now say, is Lynton Crosby. What he has done, in effect, is set the party on a war footing with suitably aggressive messages, triggering a Tory loyalty reflex. More than one Conservative has said to me in recent weeks “the campaign has started already.” They don’t mean the vote for county council seats on 2 May. They mean the big one in May 2015.

David Cameron tweeted this picture earlier of his new policy board, including Conservative MPs Jo Johnson, Jesse Norman and Margot James.

Rafael Behr is political columnist at the Guardian and former political editor of the New Statesman

Photo: Getty
Show Hide image

George Osborne's mistakes are coming back to haunt him

George Osborne's next budget may be a zombie one, warns Chris Leslie.

Spending Reviews are supposed to set a strategic, stable course for at least a three year period. But just three months since the Chancellor claimed he no longer needed to cut as far or as fast this Parliament, his over-optimistic reliance on bullish forecasts looks misplaced.

There is a real risk that the Budget on March 16 will be a ‘zombie’ Budget, with the spectre of cuts everyone thought had been avoided rearing their ugly head again, unwelcome for both the public and for the Chancellor’s own ambitions.

In November George Osborne relied heavily on a surprise £27billion windfall from statistical reclassifications and forecasting optimism to bury expected police cuts and politically disastrous cuts to tax credits. We were assured these issues had been laid to rest.

But the Chancellor’s swagger may have been premature. Those higher income tax receipts he was banking on? It turns out wage growth may not be so buoyant, according to last week’s Bank of England Inflation Report. The Institute for Fiscal Studies suggest the outlook for earnings growth will be revised down taking £5billion from revenues.

Improved capital gains tax receipts? Falling equity markets and sluggish housing sales may depress CGT and stamp duties. And the oil price shock could hit revenues from North Sea production.

Back in November, the OBR revised up revenues by an astonishing £50billion+ over this Parliament. This now looks a little over-optimistic.

But never let it be said that George Osborne misses an opportunity to scramble out of political danger. He immediately cashed in those higher projected receipts, but in doing so he’s landed himself with very little wriggle room for the forthcoming Budget.

Borrowing is just not falling as fast as forecast. The £78billion deficit should have been cut by £20billion by now but it’s down by just £11billion. So what? Well this is a Chancellor who has given a cast iron guarantee to deliver a surplus by 2019-20. So he cannot afford to turn a blind eye.

All this points towards a Chancellor forced to revisit cuts he thought he wouldn’t need to make. A zombie Budget where unpopular reductions to public services are still very much alive, even though they were supposed to be history. More aggressive cuts, stealthy tax rises, pension changes designed to benefit the Treasury more than the public – all of these are on the cards. 

Is this the Chancellor’s misfortune or was he chancing his luck? As the IFS pointed out at the time, there was only really a 50/50 chance these revenue windfalls were built on solid ground. With growth and productivity still lagging, gloomier market expectations, exports sluggish and both construction and manufacturing barely contributing to additional expansion, it looks as though the Chancellor was just too optimistic, or perhaps too desperate for a short-term political solution. It wouldn’t be the first time that George Osborne has prioritised his own political interests.

There’s no short cut here. Productivity-enhancing public services and infrastructure could and should have been front and centre in that Spending Review. Rebalancing the economy should also have been a feature of new policy in that Autumn Statement, but instead the Chancellor banked on forecast revisions and growth too reliant on the service sector alone. Infrastructure decisions are delayed for short-term politicking. Uncertainty about our EU membership holds back business investment. And while we ought to have a consensus about eradicating the deficit, the excessive rigidity of the Chancellor’s fiscal charter bears down on much-needed capital investment.

So for those who thought that extreme cuts to services, a harsh approach to in-work benefits or punitive tax rises might be a thing of the past, beware the Chancellor whose hubris may force him to revive them after all. 

Chris Leslie is chair of Labour's backbench Treasury committee.