George Osborne and David Cameron speak to business leaders at the AQL centre on February 5, 2015 in Leeds. Photograph: Getty Images.
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Osborne's courting of the silver vote shows the Tories' limited ambition

The Conservatives are more focused on winning back traditional supporters than attracting new ones. 

Like his predecessor but one, Gordon Brown, George Osborne is an intensely political Chancellor. Wherever possible, economic policies are designed to advance electoral aims. That is the case with today's announcement that the government's pensioner bonds scheme will be extended by three months. The bonds, which pay an interest rate of 2.8 per cent for one year and 4 per cent for three years, have been purchased by 610,000 over-65s since they were launched last year, making them "the most successful saving product this country had ever seen" (as Osborne told Andrew Marr this morning). 

There is a simple explanation for the largesse showered on the elderly: they vote. In 2010, 76 per cent of over-65s turned out, more than any other age group, with the Conservatives polling 44 per cent among them - a 13-point lead over Labour. But the surge in support for Ukip among pensioners (nearly 60 per cent of the party's supporters are over-55) means the Tories need to work to win them back. In addition to Osborne's gifts, they have pledged to triple-lock the state pension (so that it increases by the rate of inflation, average earnings or 2.5 per cent, whichever is highest), and will almost certainly continue to protect universal benefits such as Winter Fuel Payments, free bus passes and free TV licences.

There is anger among the libertarian right at this preferential treatement. The IEA's head of public policy Ryan Bourne wrote of the pensioner bonds: "This comes at a time when the government could borrow by issuing three-year bonds with yields of around 0.6 per cent. In other words, the government is deliberately borrowing more expensively than it needs to, guaranteeing a healthy return for pensioners who are wealthy enough to be able to purchase up to the £10,000 limit. No wonder the registration website keeps crashing.

"This bond issuance is not just misguided because it crowds out other investment activity. Borrowing more expensively than the government needs to is effectively a direct subsidy to wealthier pensioners from the working-age population. Though in the grand scheme of things this will only be a subsidy to the tune of hundreds of millions, rather than billions, the likely cost of this policy will be as high as several of the controversial welfare eligibility changes which the government claimed were absolutely necessary to help improve the public finances."

But as well as the morality of this approach, the Tories should consider the politics, too. Courting the silver vote may make short-term sense but if they are to ever win a majority again, the Conservative need to do far more to appeal to the young, a group among whom they currently struggle. The Tories are fond of deriding Labour’s alleged "35 per cent strategy", under which a coalition of the party’s core supporters and Lib Dem defectors allow it to crawl over the electoral finish line – yet today's announcement is a reminder of their own limited ambitions. The grey vote might enable the Tories to cling on as the single largest party but it offers no route to a majority. 

George Eaton is political editor of the New Statesman.

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Will Euroscepticism prove an unbeatable advantage in the Conservative leadership race?

Conservative members who are eager for Brexit are still searching for a heavyweight champion - and they could yet inherit the earth.

Put your money on Liam Fox? The former Defence Secretary has been given a boost by the news that ConservativeHome’s rolling survey of party members preferences for the next Conservative leader. Jeremy Wilson at BusinessInsider and James Millar at the Sunday Post have both tipped Fox for the top job.

Are they right? The expectation among Conservative MPs is that there will be several candidates from the Tory right: Dominic Raab, Priti Patel and potentially Owen Paterson could all be candidates, while Boris Johnson, in the words of one: “rides both horses – is he the candidate of the left, of the right, or both?”

MPs will whittle down the field of candidates to a top two, who will then be voted on by the membership.  (As Graham Brady, chair of the 1922 Committee, notes in his interview with my colleague George Eaton, Conservative MPs could choose to offer a wider field if they so desired, but would be unlikely to surrender more power to party activists.)

The extreme likelihood is that that contest will be between two candidates: George Osborne and not-George Osborne.  “We know that the Chancellor has a bye to the final,” one minister observes, “But once you’re in the final – well, then it’s anyone’s game.”

Could “not-George Osborne” be Liam Fox? Well, the difficulty, as one MP observes, is we don’t really know what the Conservative leadership election is about:

“We don’t even know what the questions are to which the candidates will attempt to present themselves as the answer. Usually, that question would be: who can win us the election? But now that Labour have Corbyn, that question is taken care of.”

So what’s the question that MPs will be asking? We simply don’t know – and it may be that they come to a very different conclusion to their members, just as in 2001, when Ken Clarke won among MPs – before being defeated in a landslide by Conservative activists.

Much depends not only on the outcome of the European referendum, but also on its conduct. If the contest is particularly bruising, it may be that MPs are looking for a candidate who will “heal and settle”, in the words of one. That would disadvantage Fox, who will likely be a combative presence in the European referendum, and could benefit Boris Johnson, who, as one MP put it, “rides both horses” and will be less intimately linked with the referendum and its outcome than Osborne.

But equally, it could be that Euroscepticism proves to be a less powerful card than we currently expect. Ignoring the not inconsiderable organisational hurdles that have to be cleared to beat Theresa May, Boris Johnson, and potentially any or all of the “next generation” of Sajid Javid, Nicky Morgan or Stephen Crabb, we simply don’t know what the reaction of Conservative members to the In-Out referendum will be.

Firstly, there’s a non-trivial possibility that Leave could still win, despite its difficulties at centre-forward. The incentive to “reward” an Outer will be smaller. But if Britain votes to Remain – and if that vote is seen by Conservative members as the result of “dirty tricks” by the Conservative leadership – it could be that many members, far from sticking around for another three to four years to vote in the election, simply decide to leave. The last time that Cameron went against the dearest instincts of many of his party grassroots, the result was victory for the Prime Minister – and an activist base that, as the result of defections to Ukip and cancelled membership fees, is more socially liberal and more sympathetic to Cameron than it was before. Don’t forget that, for all the worry about “entryism” in the Labour leadership, it was “exitism” – of Labour members who supported David Miliband and liked the New Labour years  - that shifted that party towards Jeremy Corbyn.

It could be that if – as Brady predicts in this week’s New Statesman – the final two is an Inner and an Outer, the Eurosceptic candidate finds that the members who might have backed them are simply no longer around.

It comes back to the biggest known unknown in the race to succeed Cameron: Conservative members. For the first time in British political history, a Prime Minister will be chosen, not by MPs with an electoral mandate of their own or by voters at a general election but by an entirelyself-selecting group: party members. And we simply don't know enough about what they feel - yet. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog. He usually writes about politics.