Hats may be hurled into the ring at the last moment, but as I write it looks as though Graham Brady, the right-wing Chairman, will be re-elected unopposed – as will most of the officers.  However, there will be a slate of candidates for a minority of positions backed by the 301 Group, whose main spokesman is the left-of-Tory-centre Conservative MP for Keighley, Kris Hopkins.

This will challenge Christopher Chope, the very much right-of-party-centre ‘22 Secretary, and I understand that another slate will back Mr Chope and field its own candidates.  The contest is thus likely to be written up as an internal left v right contest.  Number 10 will certainly claim the credit if the 301 ticket wins.

But in such an event, I think some of the spin from Downing Street should be discounted.  Why? Because while Mr Chope’s re-election would be a clear triumph for the right – and a rebuff for David Cameron – his defeat, and/or the victory of the 301 ticket elsewhere, would be more difficult to read.

This is because the ’22 elections are more than a battle between the party’s left-and-right.  They are also, in their way, a culture war – between an older generation of Tory MPs and the new one, elected only two years ago, that constitutes almost half of the Conservative Parliamentary Party.

The plethora of new backbench groups that has sprung up since 2010 - the 40, the 2020, the 301 itself – are in some ways a reaction to the ’22.  The 2010 intake come from a world of work where, by and large, management structures are flatter than they were and business structures more informal.

To many new MPs, the ’22 is an anachronism.  With its antique customs (some backbenchers address visiting Ministerial speakers indirectly through the Chairman), they view the committee as being from another age.  ’22 Executive members respond by claiming that their work is open to all – citing the committee’s five policy groups.

This bewilderment is felt especially strongly by some new Tory women MPs, who resent the way in which Mr Chope and other ’22 Executive members, such as Peter Bone, are willing to keep the Commons sitting late in order to challenge the Government.  They will try to take their revenge next week.

The Conservative left isn’t strong enough on its own to defeat the right in committee elections.  (The right swept the board after 2010: Graham Brady defeated the left’s candidate, Philip Oppenheim, and Nicholas Soames was left as the only left-of-party-centre representative on the Executive.)

However, it may be strong enough, in combination with other Tory MPs who want to transform the ’22 into more of a campaigning body, to win next week’s elections.  The 301-backed ticket is certainly a mixed one: Priti Patel, one of the three MPs who heads it up, is very much a woman of the right.

Perhaps it will win, and perhaps it won’t: we will see. But if it does, the result will be as much a vote of no confidence in the ’22 as it stands as a vote of confidence in the Prime Minister.

By Paul Goodman

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Lord Risby: A single phone call from Moscow to Damascus could topple Assad.   “Given therefore that we want to halt the current bloodshed and intimidation in Syria, we ought then to consider whether the handling of Russia has been correct. Russia has suffered intense international criticism, yet has held to its stance thus far. The reason is simple. Particularly after Libya, Russia has no real friends in the Arab world, and the relationship it has with Syria’s military intelligence is regarded by them as crucial and invaluable. If, therefore, Russia could be given some clear assurances about some sort of continuing relationship with Syrian intelligence post-Assad, would this persuade them to abandon the regime? Some believe that a simple blunt telephone call to Assad from President Putin – telling him that his regime was over – would actually bring terminal reality to the ruling Syrian cabal. Read more: http://is.gd/wKT518

Roger Scruton: The Conservative Party is failing to define and promote its vision.  “The new establishment represents not England or Britain but abstract ideas, such as multiculturalism, social inclusion and equality – all of which, on examination, are names for the State. Yet the Conservative Party takes no opportunity to begin the long, slow but necessary task of replacing that establishment with something more in keeping with the national spirit. The fact is that the Tory Party has lost touch with its constituency, through ignoring the long-term standpoint that they share. I don’t doubt David Cameron’s sincerity or his underlying conservative instincts. But there is a case to answer, and he must answer it. How is it that a government dominated by the Conservative Party and with a Conservative Prime Minister devotes its energies to issues that are calculated to alienate its supporters, while failing to address the real matters that concern them?” Read more: http://is.gd/KtfskM

Lord Ashcroft: To keep core supporters and attract others, we need a sense of direction, not a change of direction.  “Last summer, when the Conservative vote share remained around the 37% the party achieved at the general election, I found a swing to Labour in the forty one Tory-held marginals that threatened most of them. Last week’s results continue the pattern that rather than expanding, the Conservative-voting coalition is eroding. Achieving a majority in 2015 is by no means impossible, but two years into the Coalition government the prospect undeniably looks more distant. I will be doing a good deal more work on this question in the weeks and months to come. Meanwhile, the local election results confirm my view that in order to keep existing supporters and attract others, what the Tories need is not so much a change of direction as a sense of direction.” Read more: http://is.gd/JEfq6H

Stephan Shakespeare: Boris didn’t win because he’s a true Conservative or because he’s a clown. He won because he’s competent.   “Boris is a very different person from the way he is generally taken; it’s an ironic phenomenon: so often our most ‘authentic’ politicians are those with the biggest gap between their public persona and their private natures. Boris is not bumbling but highly calculating, with a strong strategic sense behind all his moves; and he’s focused and bold in pursuit of his clear ambition. Don’t forget, going for Mayor was high-risk – not many believed he could succeed. But it was an essential move for him. And his mind has genuine curiosity and originality, capable of surprises. When I last had lunch with him, he was preparing to learn Arabic.” Read more: http://is.gd/Ssz4fB

Tim Montgomerie: The Alternative Queen’s Speech offers popular, pro-poor and broadly-based legislation.  What would the Queen’s Speech have looked like if a majority Conservative government had been elected two years ago? That’s the question we attempt to answer in the Alternative Queen’s Speech that ConservativeHome publishes today…The Alternative Queen’s Speech has no single author or group of authors. I’m grateful to MPs like David Davis and John Redwood for contributing individual ideas to it. You may have heard David on yesterday’s The World This Weekend talking about it and John was on this morning’s Today programme… We will be publishing its fifteen component bills, one-at-a-time, on our Comment pages today and tomorrow. Read more: http://is.gd/5235m4

Nadine Dorries MP: Jettison Lords reform; Jettison gay marriage; and focus on jobs, crime and household bills.   “We need to jettison both the policy of gay marriage and Lords reform. Lords reform hasn’t really sunk into the public consciousness. They have heard the words but don’t know or understand what they mean and what’s more, they don’t care. It has absolutely zero relevance to the daily life of anyone, other than the Liberal Democrat party and the peers who sit in the House of Lords and, of course, our entire constitution. The net result of making Lords Reform a central plank of the Queens speech would make the Conservative party appear out of touch, inward looking and self interested. It needs to be scrapped first thing Tuesday morning.” Read more: http://is.gd/0UKKdt

Bruce Anderson: What should Cameron learn from so many lost Tory seats? Nothing.    “There is a lesson which all politicians should learn. Fewer than one third of the voters could be bothered to turn out. Much of the sovereign people is in a mood of angry apathy. But it would be most unwise of the Tories to be seen to appease it. That would give the impression of panic, which is why Mr Cameron should learn no lessons from Thursday’s results, except the ones which he ought to have learned already. What the public want from him is strong leadership and good government, reinforced by the sense that he is on their side: that his priorities are their priorities; his values, their values; his Britain, their Britain.” Read more: http://is.gd/FoaJ9Z

The first was nervous about the matter and simply didn’t want to be drawn.  The second was very open, and speculated about whether Mr Smith had either gone well beyond his brief or, alternatively, taken a bullet for his boss by quitting.  What interested me most was a third, who I phoned about a different matter but raised Mr Smith’s case himself.  He exuded a palpable sense of “there but for the grace of God go I – and all SPADS”.

The Leveson enquiry will examine e-mails and texts that haven’t been made public so far, and it or further revelations or both will keep the Hunt story running – to whatever end.  But Mr Smith’s role in the Culture Secretary’s troubles is a reminder both of the role that SPADs play in Britain’s political system, and that their position is a very difficult one, as they well know.

“Most advisers were employed to sell their man to the press, to extol his virtues and guard his back.  Some worked solely to these ends.  Others – Peter Barnes, David Ruffley, Maurice Fraser and myself for example – also worked on the details of high policy.”  Those are the words of Hywel Williams, John Redwood’s former SPAD in the days of John Major’s Government, describing what SPADs do.  Little has changed since.

However, SPADS – political appointees brought temporarily into the civil service from outside – have certainly grown more controversial since Jack Straw served as one of the earliest, for Barbara Castle during the 1970s when she had charge of pensions, or Mr Williams worked for Mr Redwood when the latter was Welsh Secretary.  Why?  Mostly because of what happened under New Labour.

Alastair Campbell was essentially a SPAD, even though his role as head of media for Tony Blair was an infinitely more elevated one than Mr Smith’s (who, by the way, didn’t deal with the media at all).  To write that Mr Campbell was and remains controversial is a statement of the obvious.  So was Jo Moore, famously and inaccurately quoted as saying that September 11 was “a good day to bury bad news”.

So, too, was Damian McBride (though, unusually, he was originally a civil servant).  But problems with SPADS have not been confined to Labour, New or otherwise.  Andy Coulson, like Campbell, was a political appointee.  So was Christopher Myers, who was forced to resign as William Hague’s SPAD earlier in the Parliament.  And now Mr Smith has bitten the dust.

I am unashamedly pro-SPAD.  Civil servants cannot be expected to fulfill the roles that Mr Williams describes – let alone the more important one of helping to drive Government policy through the civil service.  Enoch Powell once took offence at suggesting that this institution could be compared to “a resistant material”, but so many Ministers are apparently finding it to be.

James Forsyth, the Spectator’s Political Correspondent, recently reported a meeting of Conservative Cabinet Ministers that bristled with complaints about the civil service.  It is striking that according to his account one of the Minister who joined in was Ken Clarke – no new hothead, but the most experienced member of the Cabinet and one whose Parliamentary experience reaches back to the 1970s.

These complaints didn’t arise by accident.  Three factors have strengthened the civil service at the expense of the SPADS.  (The first are not always hostile to the second, but ultimately always want the final say, and to be sure that the SPADS are kept in their place.)

• The chequered history of SPADS under New Labour.
• The reaction against it of David Cameron in opposition.  The Prime Minister – himself an ex-SPAD, like the Chancellor – wanted to see in government a return to the more orderly, traditional, formal style of doing business that had marked earlier administrations: “No Sofa Government” was the cry.  The consequence has been deeply damaging to the Government: a shortage of SPADs not so much in individual departments – the overall number of political appointees has risen, if anything – but at the centre, in Downing Street.  It would be an exaggeration for me to write that it’s impossible to speak to a Minister or SPAD without hearing the same complaint about Number 10 – that it has no effective political operation – but not much of one.  Above all, it is sometimes argued that Jeremy Heywood, the Cabinet Secretary, has become the real force behind this Government of two parts – especially since the departure from Downing Street of Cameron’s brilliant and unorthodox adviser, Steve Hilton.
• The present trend towards a more assertive legislature.  MPs are beginning to ask why Ministers should be able to appoint anyone they like to political positions.  Neither Campbell nor Coulson, they argue, would have survived a rigorous vetting process – and such a procedure would probably have barred Christopher Myers, thus sparing the Foreign Secretary and Government some embarrassment.  It is significant that Bernard Jenkin, the increasingly assertive Chairman of the Public Administration Committee, has announced a short inquiry by his committee into SPADs.  One recommendation option available to it is that all SPADs should require Parliamentary approval before appointment.



By Paul Goodman

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Paul Goodman: Louise Mensch’s debate on local papers encapsulated what’s gone wrong with the Commons.    “But a heap of interventions is no more a debate than a mass of interruptions is a conversation.  Debates such as Mrs Mensch’s are the Commons equivalent of fast food – they may meet the need of the moment, but they don’t provide a nutritious diet.

Rather, they are feeding legislative obesity – more interventions, more speeches, more debates, more legislation, more Early Day Motions.  But is Parliament really any more fit as a result?  The elections that record a decline in the vote of the Big Three, the surveys that show record disillusion, and the rise of the protest parties show that voters don’t think so.” Read more: http://is.gd/tkXpLj

Councillor Peter Golds: This is a particular Tower Hamlets phenomena that needs to be investigated and the police and returning officer made to act in accordance with the existing law and rules.         “There are three polling stations in this ward. From early morning they were surrounded by groups of (mainly) men who became increasingly intimidating as the day wore on. By mid afternoon the number at St Anne’s Catholic Primary School, Underwood Road, reached 34 and by the evening it was never less than 35. It was absolutely impossible to remain on the pavement and walk to the polling station without forcing a way through this mob.” Read more: http://is.gd/5GCETy

Andrew Lilico: Some quick reactions on the return to recession.    I continue to believe that there is every reason to hope that once spending cuts actually get going the economy will gradually start to improve.  I attribute the difficulties so far to five factors: The underlying capacity for the economy to grow is much lower than most people comprehend…The banks were bailed out rather than going bust (by which I mean having debt-equity swaps imposed on them so they fell into the hands of their creditors)…Our trading partners in the Eurozone are having terrible problems associated with the euro and their own domestic challenges…The government chose to front-load the tax rises and rear-load the spending cuts in its deficit reduction programme…I always – always – urged that the deficit reduction programme should immediately, and from the off in 2010, be accompanied by additional quantitative easing (money printing). ” Read more: http://is.gd/wVm7mz

Mark Reckless MP: Prime Minister – Yes, you can legally deport Qatada.  “The Home Secretary, one can only assume on the basis of advice from the Attorney-General Dominic Grieve, wants us to accept that inter-governmental custom in the Council of Europe, or the provisions of the Ministerial Code, are somehow higher authority than law as passed by the UK Parliament and interpreted by the UK’s highest court… Parliament has never given such primacy to the ECHR, or provided for judgments of the European Court of Human Rights (ECtHR) to have direct effect in UK law, in the way that it has for the EU and ECJ.” Read more: http://is.gd/IIehxb

Sunder Katwala: It’s time for an English national anthem from England’s rugby team.   “It would best to begin quickly with important symbolic steps to show that the English voice will count too. More public recognition of St George’s Day later this month would help. 2012 is a good year to remember that the date marks Shakespeare’s birthday too.

And isn’t it now time for the Six Nations rugby anthems of Land of My Fathers or Flower of Scotland to be answered by the English anthem, Jerusalem? That would not just represent fair play for England, but moving away from the English appropriation of the British anthem could also help to protect the Union and the Monarchy in the post-devolution UK.” Read more: http://is.gd/EAyiMf

Tim Montgomerie: Not Woodwind Conservatism. Not Brass Conservatism. But Full Orchestra Conservatism.    “The Coalition is playing fast and loose with the Conservative Party’s law and order credentials. It isn’t about lurching to the Right but offering a balanced conservatism that occupies the whole political stage and is focused on the blue collar Britons who John Major rallied in 1992. In other words, we don’t want to just play the trumpet. We don’t just want to play the drums. We don’t just want to play the violin. A great political party is an orchestra, capable of many tunes and determined to occupy the whole stage. We need to walk and chew gum at the same time.” Read more: http://is.gd/Qj2eeo

Nadine Dorries MP: Cameron will not lead the Conservative Party into the next election if he charges on with Lords reform. “Cameron and Osborne have two very simple choices going forward. I say both because it is impossible to imagine Cameron taking any major policy decision without Osborne. If they make the wrong one, it could very well be the beginning of Cameron’s own personal downfall.  He needs to listen to the message he was given at the 1922 loud and clear and support the Conservative Party and his own MPs. If he chooses not to, if he decides to support the Liberal Democrats in their own desperate pursuit of power and prominence. If he places his own desire to remain in No10 for a few more years over the long term future of the party, it is almost certain Cameron will not lead the Conservative Party into the next election. Osborne is already toast. Conversation in the tea rooms has already moved onto who will be next? The answer is no longer, ever, Osborne.” Read more: http://is.gd/BZJLAV

By Paul Goodman

They may or may not, but the degree to which the legislature and the media combine to hold the executive to account is underestimated.  When the Commons sits, Ministers can be questioned, motions debated and votes held.  The Opposition can take the controversy of the day and make a drama of it in the House; the media can throw a spotlight on the action – close votes, big clashes, backbench revolts, possible resignations.

In other words, a sitting Commons is essential if the screw is to be turned on any Government.  It hasn’t sat this week during the continuing row about the budget, particularly over its effects on charities.  Labour have thus been denied the chance to use the Chamber to ramp up pressure on Ministers - above all, by Ed Miliband grilling David Cameron about the issue at Prime Minister’s Questions.

Instead, the Prime Minister has been able to fly off to the Far East, free to exploit the photo-opportunities involved.  How he must smile, then, as he contemplates the Commons timetable for the next few months.  Not until over another week has passed does the House sit again after this continuing Easter recess: it will so on April 23.  By that time, the election for the London Mayoralty, other London elections and other local elections will be in full swing.

So will the Opposition and the media be able to get stuck into the Government after these end?  No, because the House will be prorogued until May 9, when the Queen’s speech is delivered.  After that?  Scarcely, because the Commons will sit only until May 24 – barely two weeks – before a break of almost three weeks to mark the Queen’s Diamond Jubilee.  After that, then?  Not really, unless you think that just over a month – the period from June 11 until July 24 – will do the trick.

The Daily Mail claimed after the Easter Recess had begun claimed that the Commons will be sitting for only 17 days in the next two months.  It labeled the coming period the Great Westminster Shutdown.  It is certainly the great Westminster Stop-Start – and will be deeply frustrating for the Labour Party.  Miliband will find it very hard to develop any real sense of momentum when the drama he is constantly seeking to stir is stop-started by all these recesses – during the run-up to what should be another great Government photo-op: the Olympics.

By Paul Goodman

TEN HIGHLIGHTS FROM CONSERVATIVEHOME FROM THE EASTER FORTNIGHT

1. George Osborne says he has no regrets about the Budget and we get an insight into his fightback strategy – http://conho.me/HSv1w5
2. A profile of the 2020 Conservatives – one of the new influential groupings of Tory MPs – http://conho.me/HjN1Nc
3. Are the Tories looking for another Thatcher? A ConHome survey finds that four women Conservative MPs (Andrea Leadsom, Priti Patel, Anna Soubry and Liz Truss) feature prominently in expectations of a future leader – http://conho.me/IFmmzV
4. Mark Field MP argues against plain packaging of cigarettes, suggesting it would be fundamentally “unconservative” – http://conho.me/HCP9oF
5. Tory MP Chris White MP breaks ranks to criticise the Chancellor’s charity cap – http://conho.me/IDiRZG
6. Jill Kirby warns that the Green Deal could be the next mis-selling scandal – http://conho.me/HFPN3K
7. Only a referendum can limit leakage of Tory voters to UKIP, says Tim Montgomerie – http://conho.me/HPmiKY
8. Alun Cairns MP sees Labour’s record on the NHS in Wales as an Achilles heel for Ed Miliband – http://conho.me/H3tEJU
9. Fraud costs local government £10 billion every year – http://conho.me/HCOjZx
10. In one of a number of pieces reflecting on the 20th anniversary of John Major’s 1992 victory Bruce Anderson reflects on the period that followed and what he sees as the Conservative Party’s most shameful ever period – http://conho.me/HqR9vF



By Tim Montgomerie

Truth may be found in all these wildly different snap observations or none: since the Westminster Village consensus failed to predict Galloway’s victory, it is too early to jump to conclusions.  But when one places it alongside the long-term political trends – lower turnout, a falling vote share for the three main parties,  declining political party membership, the transformation of MPs from elected spokesmen for labour or capital to professional politicians financed by the taxpayer – the result is extremely suggestive.  This is not so much because of Galloway’s party, Respect, which to date has squeezed Labour less effectively than UKIP is squeezing the Conservatives.  Rather, it is a very clear example of the power of the charismatic independent.

We may hear more of the breed during the coming Mayoral and Police Commissioner elections this year.  It is possible that strong single-issue candidates may pop up during the by-elections that will precede those polls: Labour has the most to lose here, because it is Labour MPs – most recently Colin Byrne, a central figure in Labour’s national operation as their head of policy – who are ready to stand down if elected as commissioners or Mayors, such as Gisela Stuart and Alun Michael.  It’s worth remembering that a group of doctors recently threatened to stand at the next election in relation to the recent health bill.  Voters may be less willing to take a chance on independents or the smaller parties at general elections: after all, Galloway came third in Limehouse in 2010.

But with the Liberal Democrats, those traditional repositories of by election protest, now in Government the baton of protest has been passed elsewhere.  Galloway is the outsider of outsiders – a loner by temperament and character – and the Bradford West result indicates that new forces are taking it up and running with it.

By Paul Goodman

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Peter Young: The HMRC’s report into the former 50p rate provides the evidence for substantial tax cuts
“The political objective must now be to secure properly competitive tax rates, and that means not just the abolition of the 45% top rate (actually 47% including NI) but also substantial reductions in the 40% rate, which will soon be paid by an amazing 5 million people. All the international evidence shows that cutting high tax rates boosts both revenue and growth.  We should thank HM Customs and Excise for their excellent report which provides further evidence that this is indeed the case.” Read more: http://is.gd/ASNNwF

Paul Goodman: Cameron and Osborne execute a V-turn on their opposition to a third Heathrow runway
“The paper also quotes Cameron as saying that “Gatwick is emerging as a business airport for London under a new owner, competing with Heathrow. No construction work could start at Gatwick until 2019 but this would not stop officials drawing up plans to establish a framework.” The blue majorities in the Gatwick area tend to be larger than those in West London.  I suspect that Gatwick it will be.  Victoria Borwick has suggested a Heathrow-Gatwick rail link on this site.  I would be curious to see a list of the seats that it would run through.” Read more: http://is.gd/KGxa9C

Matthew Barrett: Where’s the Party Chairman?
“It would be far better to have a full-time attack dog to take the lead on difficult issues for the Conservative Party. That attack dog should be the Chairman of the Party, currently Sayeeda Warsi. Baroness Warsi was nowhere to be seen yesterday. David Cameron needs to appoint a good media handler as Chairman so we can have a very clear message the next time the Party needs some help managing a bad news story. He could appoint Michael Fallon to the full position, or he could, as Tim Montgomerie has suggested, appoint someone with a view to recreating the role in the style of Norman Tebbit or Cecil Parkinson, to help plot victory in 2015.” Read more: http://is.gd/Ugpk4g

Stephan Shakespeare: The logic of the electoral map suggests that Cameron will prioritise a renewed coalition, not a Tory majority
“An overall majority demands as a precondition – by simple maths – that the LibDems be virtually destroyed. The strategy that gets you there also makes future coalition much less likely. Ergo, Conservatives will not attempt a bold-but-risky majority-winning strategy, but will prioritise some kind of continued partnership. This brings its own new issues, which Miliband may yet be able to exploit. And if he should gain a little more credibility – if a few people start to believe he may become PM – might that create its own momentum?” Read more: http://is.gd/JQA8jv

Jill Kirby: George Osborne’s crazy cap on big donors to charities must be reversed
“David Cameron is scheduled to speak at a Giving Summit taking place at the Natural History Museum in May. That leaves him about six weeks in which to persuade George Osborne to reinstate unlimited tax breaks for gifts to charity. If he fails to do so, the boycott of that event, already threatened by some charity leaders, could sink his hopes of a flourishing voluntary sector taking the strain off the state. It is surely better to back down now. Capping donations to the Tory party might force economies but it won’t be a tragedy. Capping tax-free donations to the voluntary sector, however, will have serious and damaging long term consequences.” Read more: http://is.gd/snwy5M

Mark Field MP: The cost of keeping the Liberal Democrats inside the Coalition may undermine Tory candidates’ election prospects
“As the General Election approaches, if such an arrangement were to come to pass, those hapless Tory candidates fighting such Liberal Democrat rebels may find themselves in the bizarre position of defending the government’s record against an incumbent opponent who has licence to distance himself from a coalition of which he is a part, having had licence to ‘vote with my conscience’. When the penny drops that this would undermine Conservative chances in key target seats, and thus the possibility of a Tory majority, coalition tensions will intensify.” Read more: http://is.gd/bKoxN9

Tim Montgomerie: Cameron needs Growth, Grit and Grip
“We chose austerity as our main economic message when we should have chosen growth. William Hague needs to give a landmark, scene-setting speech on the global economic challenges. We need big reports and conferences on the state of the nation and our readiness to compete in the world. If people understand the extent of the economic challenge they’ll buy the party with the remedy. We then need to administer the remedy. The moves on 50p, localised pay bargaining and airport capacity are all welcome but they are happening dangerously late in the political cycle. Too much Government energy has been devoted to what should have been second term projects like NHS and Lords reform.” Read more: http://is.gd/gUb0pQ

I was wrong about that specific prediction because I was right about the budget as a whole.  By mid-morning on Wednesday, there was no good news of substance left unleaked.  That this was so casts a fascinating light on the workings of “The Quad” – or, as you might call it, the Real Cabinet – and thus on the future relationship between the Conservatives and Liberal Democrats.  Once upon a time, the Cabinet was a real forum for strategic political discussion.  It can still be so when Governments have small majorities – the Cabinet was important under John Major – but the trend over the last 25 years has been for strong, long-serving Prime Ministers to by-pass it: think Thatcher and Blair.

To borrow a phrase from the latter, Coalition means that “the rules of the game have changed”.  David Cameron and Osborne were always likely to work as closely together in government as in opposition, and to take key decisions together with a tight group of trusted advisers.  Going in with the Liberal Democrats meant giving the same status to Nick Clegg.  That the second Liberal Democrat member of the quad is a relatively lowly figure in the party – Danny Alexander, rather than Vince Cable, who as an iconic figure for the party’s liberal left would have provided internal balance for Clegg, or (before his resignation) Chris Huhne – vividly illustrates the power and reach of the department in which the former serves alongside Osborne, the Treasury.

The post-Government diaries of any one of the four will be fascinating, and there are doubtless books to be written about the Quad.  But for the time being I will offer a single paradoxical observation in the wake of the budget.  On policy, relations between the Quad’s members can seldom have been better and on politics they can seldom have been worse.  Let me explain.  First, policy.  The disagreements within the Quad over the budget seem to have as much within the parties as between them – or, to be specific, between Cameron and Osborne.  For example, it’s evident that the Prime Minister had reservations about the Chancellor’s long-standing child benefit plan, and vetoed an Osborne-supported deal that would have seen the 50p rate cut further in exchange for a fully-fledged mansion tax.

By contrast, Clegg and Alexander seem to have been relatively relaxed about cutting the rate as long as taxes for top earners were hiked elsewhere.  This happened, and the rise in tax thresholds and the cut in the 50p rate will be part-funded by those taxes – the promised crackdown on avoidance and the introduction in effect of a “tycoon tax”.  As I wrote in the Financial Times earlier this week, it is now possible to glimpse the emergence of a Coalition tax philosophy to join the approach to Government borrowing (the structural deficit should be eliminated speedily) and quantitative easing (there should be a lot of it) – namely, further downwards pressure on income tax rates at the top while more poorer people are taken out of tax at the bottom, funded by welfare savings as well as wealth taxes.

The politics of the workings of the Quad, however, are as disharmonious as policy discussion is (mostly) happy.  Conservative Ministers were complaining yesterday that Clegg and Alexander were responsible for the leaking that left the Chancellor white rabbit-less.  Osborne, of course, is not above a little judicious pre-briefing himself, and those apparently angry Tory Ministers may have been playing a blame game.  None the less, the Chancellor would not have wanted to leave himself without a new announcement to help lead Thursday morning’s papers, and it is claimed that he was particularly exasperated by the appearance in the media of details about his stamp duty and “tycoon tax” measures.

Whoever was responsible, one conclusion is inescapable.  Since AV went down in last year’s referendum, the relationship between the two parties has changed.  The sunny days of the Cameron/Clegg rose garden have given way to a long winter of distrust.  It is significant the row over the NHS accelerated after the AV proposals went down.  But as well as a relationship of suspicion there is a race for ownership.  Authorship of the policy of taking more people out of tax is now fought over by the two parties, as that of the idea of council house sales was once claimed by different Tory politicians.  The Deputy Prime Minister has been making a big point of stressing its desirability since January, when we made a major speech on the subject, accompanied by a series of interviews.

The rush to brief out the budget’s implementation of the policy – like its hike in stamp duty and its anti-evasion measures – is thus part of this battle for ownership.  Clegg and this party want to prove to voters that they’re not the seven-stone weaklings of British politics, endlessly being bossed and bullied around by the Conservatives, but muscle-bound wonderkids, who are winning the battle to implement Liberal Democrat policies, rein in those troublesome Tories and civilise the Coalition.  Whether the Quad remains in its current form as 2015 approaches, we can expect the rush of leaks to turn into a torrent, as the two Coalition partners jostle for position.  No wonder the Chancellor was left with a weasel to pull out his budget hat rather than a rabbit – that tax hike on pensioners.

by Paul Goodman

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Robert Halfon MP: It’s time for Conservatives to make friends with mainstream trade unionists.
Conservatives need to re-engage: they should not be afraid to praise the union movement or even encourage people to join unions. In fact, I think we should make joining the Conservative Party a little more like joining a union, charging 50p a month for them to join, for example. We need to show them we share similar values, and we value them. I want Conservatives to campaign in the union movement again, standing for election as officials, just like they did under Thatcher. This way we could oppose subsidies, funds to the Labour party and tougher strike laws, but do it standing shoulder-to-shoulder with millions of union members that agree. Read more: http://is.gd/jOqcyq

George Trefgarne: How did a Conservative Chancellor deliver 7% growth after the 1930s Depression?
“Perhaps the biggest prejudice one has to discard is that the architect of this recovery was a politician who has since become reviled for his role in appeasement: the then Chancellor, Neville Chamberlain. He bestrode the era like a colossus and his successful political and economic strategy led to two of the biggest ever Conservative landslides, in 1931 and 1935…Whatever his subsequent failings as a Prime Minister, Chamberlain was for six years a great reforming chancellor, perhaps as great as Gladstone or Nigel Lawson. He was also a skilful politician, who invented the Budget broadcast on radio and in the cinema, reduced the length of Budget speeches and even featured on the front page of Time magazine in America.” Read more: http://is.gd/TU1NVv

Louise Mensch MP: Cutting aid means fewer vaccines, more mothers giving birth in appalling conditions and risking progress in conflict-affected states
” When I listen to people online complaining about just 0.7% in aid, all I hear is “Am I my brother’s keeper?” It wasn’t an attractive slogan first time around.New analysis published today by ONE, shows just what an impact our aid will have on the poorest people in the world between now and 2015. Amazingly our decisions mean that 80 million children will be vaccinated over the next four years, saving 1.4 million lives. That’s 1.4 million mothers who won’t have to see their children die from a preventable disease, knowing that if she lived in a different village or earned just a bit more money from the produce she sold at market, her child could still be alive..” Read more: http://is.gd/dKhpKp

Tim Montgomerie: A fresh statement of ConservativeHome’s purpose
“Over the last few weeks you may have noticed that ConservativeHome has gone through a bit of an evolution? Positions I have taken on the NHS Bill, the taxation of wealth, devolution for England and working class candidates haven’t appealed to every reader. Some think this site only exists to represent the grassroots. Some think it should only ever be the authentic voice of true Conservatism (whatever that is). My focus has shifted somewhat. ConHome will continue to be the things I set out below but I see plotting a road to a majority at the next election as a central mission. On the Majority section of this website, from now until polling day, we’ll be looking at the kind of manifesto, machine and message that will help deliver a Conservative majority.” Read more: http://is.gd/OH0FAH

Tim Montgomerie: George Osborne is still eating far too much of the pie
“Strategically I can only agree with Paul Goodman. There has been far too little focus on the size of Britain’s bloated state. Cuts have been too timid. Two weeks ago ConservativeHome ran a five part series which identified tens of billions of pounds of extra cuts. Some of the cuts were much more politically realistic than others but if a fraction of them had been pursued the Chancellor would not have had to introduce so many job-threatening revenue measures over the last two years. The reality is that Britain was over-taxed when the Coalition came to office and is more heavily-taxed now. 38% of deficit reduction in this coming year comes from higher taxes but Britain doesn’t have a tax problem but a spending problem.” Read more: http://is.gd/fiUDR9

Andrew Lilico: Five things that mattered from the Budget
“This Budget embeds the most radical tax reforming aspect of the Coalition – the huge rise in the personal allowance and thus removal of millions from income tax…Connected with the rise in the personal allowance is the large rise in the numbers of higher-rate taxpayers…Planned spending cuts are getting deeper all the time…The OBR downgraded its estimate of the sustainable growth rate of the economy again…Oil prices are forecast to be much higher than the OBR previously thought…If I’m right and it happens slightly slower and then anything else goes wrong, unless there is very high inflation households will default on their mortgages, the banks will go bust, and the UK sovereign will go bust.” Read more: http://is.gd/JKiycn

Lord Ashcroft: Anti-NHS Bill candidates would boost the Conservative Party
“Interviewees were then told: “Some doctors opposed to the coalition government’s policies on the NHS have suggested they may put up candidates at the next election on a non-party, independent ticket of defending the NHS.” When we asked how they would vote in such a scenario, the NHS candidates came third, with 18%. This included 4% of those who would otherwise have voted Tory – but 15% of Liberal Democrats and fully one fifth of Labour voters. Labour’s five-point margin became a Conservative lead, of 33% to 30%. The Liberal Democrats fell to 7%. According to UK Polling Report’s ‘Swingometer’, (which should be taken with a considerable pinch of salt in this case, since we do not know how the NHS candidates’ votes would be distributed), the effect of Dr Peedell’s intervention would be to transform a comfortable outright Labour victory into a hung parliament with the Conservatives just four seats short of a majority.” Read more: http://is.gd/NfvJge

This week has seen a sudden change, and a reminder of a group in between.  If George Osborne is to act on thresholds or the 50p rate, he must either find the money by cutting the rise in spending further or raising the revenue from other taxes (borrowing is out, for obvious reasons).

Hence the floating of ideas about a mansion tax or new council tax bands for more expensive properties or – especially over the last few days – reducing the amount that can be paid into pension funds which gains tax relief.  The Chancellor already proposes to pay child benefit to standard rate taxpayers only.

That commitment, announced during the 2010 Conservative conference, created a furore.  The Daily Telegraph and Daily Mail expostulated.  Conservative MPs protested.    Osborne may now raise the threshold at which child benefit is cut, although such a move would not correct the anomalies contained in his scheme.

As the budget has come nearer, the campaigning against the Chancellor’s original plan has been revived, with Tory MPs staging Commons debates and the Mail/Telegraph stable weighing in again.  It has also done so this week over property taxes, with supporting fire from the Times and Daily Express.

What is going in?  In very crude terms, money to pay for raising thresholds or reducing the 50p rate can be found by raiding the incomes of another group – what could be called 40p Britain.  It is 40p Britain that stands to lose its child benefit, may see its pension savings squeezed, and would be hit by an extensive revenue-raising property tax.

40p Britain is not, repeat not, the fabled “squeezed middle”.  John Healey, the Labour politician who has propagated the phrase, uses it to describe the middle fifth of the population – namely, those who earn between £18,000 and £30,000 a year.  This is too low an income level to be caught by the 40p rate.

40p Britain is, rather, the well-off – not the relatively small number of very high earners caught by the 50p rate, but the well-remunerated who are in the highest percentages of earners (though they are sometimes surprised when this information is vouchsafed to them).

40p Britain does not usually include the IT workers, HGV drivers, joiners, and shop staff who are part of the squeezed middle.  But among it are to be found doctors, head and senior teachers, accountants, army officers, some nurses: the people often described as “middle Britain” (however inaccurate this label may be in purely monetary terms).

The Telegraph and especially the Mail prize this group as readers – or potential ones.  It is a growing demographic.  The Institute for Fiscal Studies has predicted that by the time of the next election one in four people could be paying tax at 40p – some 7.5 million people.

The ISF’s Paul Johnson has pointed out that “it’s not so long ago that only about one in 20 taxpayers were paying he higher rate”.  What’s happening?  To find an answer one has to go all the way back to Nigel Lawson, the Conservative Chancellor who first introduced the 40p rate.

Lawson inherited a top rate of 60p.  He cut it to 40p believing that the move would make Britain more attractive to wealth creators and thus, paradoxically, raise revenue rather than lose it.  Much later, Gordon Brown introduced a new 50p top rate and the Liberal Democrats begun their interest in taking poorer people out of tax.

In the meantime, Lawson’s successors – in search of easy revenue for one reason or another – raised the threshold at which the 40p rate is paid relatively slowly, thus dragging more people into that tax band: “bracket creep”, as it is known.  750,000 people will become 40p rate taxpayers in April.

In essence, the papers that claim to speak for 40p Britain are fighting back.  This leaves Osborne facing an awkward question: who is the Coalition for?  Is it for the richest taxpayers – the 50p rate payers – such as those ever-popular bankers?  Is it for the poorest ones and it therefore, in effect, have a tax policy that is led by the Liberal Democrats?

Or is it for the 40p rate payers who are the Conservative Party’s traditional constituency?  But if so, where is extra money to come from to fund scrapping the 50 rate and raising thresholds?  The Chancellor may have been hoping that 40p Britain could quietly be tapped up to help those at either extremity of the income tax scale.

This week’s wave of newspaper protests has been a reminder that this won’t happen.  And as the number of 40p payers rises the pressure on the Government to relieve them will grow. If it is not to be found from other taxpayers, that relief can only be obtained by measures that Osborne is unwilling to consider – namely, a further reduction in the rate of public spending.

by Paul Goodman

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Tim Montgomerie: Tory strategists want voters to think of two words when they think of David Cameron: Strong and Fair.  “Voters already think Cameron is making the tough decisions. I don’t have the exact figures to hand but a recent YouGov survey found that more than FIVE times as many voters think the Conservatives and Cameron are capable of tough decisions than think the same of Labour and Ed Miliband. That’s a huge advantage. Where more work needs to be done is in persuading people that the Conservatives are building a fairer Britain.” Read more: http://is.gd/J6ZLK9

Nadine Dorries MP: I’d rather have a Labour government than give a Lords, elected by PR, to the Liberal Democrats.  “A deal between Cameron and Clegg which will result in the destruction of the House of Lords in order to keep Cameron and Osborne in Downing Street for just a little longer and the Lib Dems in power forever forces us to think the unthinkable. I and others would rather call the Liberal Democrats bluff. We would prefer to lose the boundary changes and have a term of Labour Government before we would watch the House of Lords, with all its wondrous ability, traditions, expertise and standards wiped out on the back of a shoddy, short term, self-interested deal.” Read more: http://is.gd/0uD1NZ

Andrew Lilico: Half a dozen thoughts in advance of the Budget.  “The key ways the Government could raise the sustainable growth rate are as follows: Cut Government spending relative to GDP.  The Government is already committed to cutting spending below 40% of GDP.  If it succeeds, that could add 0.5% to annual GDP growth. Raise the efficiency of government spending.  If public sector productivity grew as fast as private sector productivity, that could add 0.5% to annual GDP growth.  Matching private sector productivity growth should be a modest target, since there is considerable scope for catch-up, with public sector productivity growth having dropped one third behind over the decade to 2007.” Read more: http://is.gd/Cfrv9f

Paul Goodman: David Cameron is 16 points more popular than his party. “Seeming born to rule hasn’t done Cameron much harm to date.  Ruling is what he does: less sparkily but more naturally than Tony Blair and therefore, perhaps, more durably too.  The voters appear, at some deep level, to accept this – or to have done so far. Essentially, the wisdom of crowds gets Cameron.  It reads him correctly as a bright, tough, smart, traditional member of Britain’s governing class – with a splinter of ice at the heart.  The Conservative Party might be better off with someone else.  But the polling evidence doesn’t suggest so.  Very much the reverse.” Read more: http://is.gd/6ltuzX

Jill Kirby: The Treasury’s child benefit game with couples: heads we win, tails you lose.  “The only possible circumstances in which it would be “fair” for the Treasury to tax a husband on his wife’s child benefit would be if it also permitted her to transfer her unused tax allowance to him. But the Chancellor has slapped down suggestions that transferable allowances will be introduced any time soon. By ending the universality of child benefit in this fashion, the Treasury wants to have it both ways: treating couples as a single unit when taking money from them, but deny them that option where it would increase their tax-free income” Read more: http://is.gd/P7cKuf

Councillor Philippa Roe, the new leader of Westminster City Council: Managing a city at a time of Jubilee and Olympics.  “The fundamental challenge facing all councils is how they can encourage enterprise and support job creation. We will also work with business to create the conditions where they grow. Next week we will unveil our 2012 employment pledge with businesses to offer over 2,000 job and training opportunities to young people across Westminster. Employers doing their bit for the good of the city, creating ladders of opportunity. Times are difficult, but I am taking on the leadership of a Conservative Council because I think that our party is best placed to support business, devolve power and make the best use of public money. And in doing so we will change lives for the better.” Read more: http://is.gd/YrpbVg

Neil O’Brien: If we want smaller government, we will have to think big. “Public spending in Britain rocketed from consuming just over a third of our national income in 2000 to just under half in 2010 – from 36% to 48%. In other words, we are right back to where we were before Mrs Thatcher. The coalition aims to get the state share of spending back down to 40% by 2016. But that means it will still be higher after the cuts than it was during most of the Blair years (1997-2004). So we are not heading for some small-state paradise once this is over. Could the government go further?  Over the long term I think it can, and must.” Read more: http://is.gd/a4e7PL

For better or worse, this is not the world that David Cameron and Nick Clegg inhabit.  And no single item of Coalition business is more likely to prove this true than the latter’s plans for Lords reform.

We do not yet know the final shape of those proposals, but can be certain that they will propose in a bill the election of some members of the second chamber by some electoral system other than first past the post.

The following considerations will therefore come into play:

* Conservative backbenchers will not want to allow Clegg to gain electoral reform through the back door now that the voters slammed the front door in his face – in other words, voted overwhelmingly against AV in last year’s referendum.

* Liberal Democrat backbenchers will not want to see their wish for such change to be stymied by the Tories for the second time (as they see it).  If Lords reform is snarled up or watered down a significant proportion of them may vote against reducing the size of the Commons in 2013 by way of revenge.

* Ed Miliband could try to prise the Coalition apart by backing the Liberal Democrats and thus help a Lords reform bill get through the Commons.  However, the temptation to gang up with Tory rebels to attempt to defeat the Government may be irresistible.

* There is no Government majority in the Lords.  But even were there one the second chamber wouldn’t simply nod through its own abolition or transformation.  Liberal Democrat peers themselves are broadly against a part or wholly elected second chamber.  If that’s the view of Clegg’s own party wait until the others – plus the crossbenchers – start probing the detail of a bill.

* The Government risks defeat in the Commons perhaps not on the principle of a bill but on major votes when its committee stage is reached.

* It also risks gridlock in the Lords as the revolt over a reform bill spreads to other pieces of legislation.

* It further risks a backlash as major media outlets ask why so much energy is being spent on such a bill.

* And Cameron risks angering both his backbenchers and the Liberal Democrats – thus perhaps losing the Commons seat reduction which his party needs to help win a majority at the next election.

The great wartime radio series ITMA boasted a character called Mona Lott whose catchphrase was: “It’s being so cheerful that keeps me going.” I don’t want to turn into the Mona Lott of this newsletter, but it is hard to see this story of Lords Reform ending well.

Essentially, no-one really wants it very much – except Nick Clegg and his party in the Commons.  No wonder it was reported today that Viscount Astor, the Prime Minister’s father-in-law, has a plan to force a watered-down measure through the Lords.

His gambit is apparently to elect only fifth of the Upper House first-time round – thus making Lords opposition to the proposal seem unreasonable, and getting public opinion on Cameron’s side if he uses the Parliament Act to force a bill through.

A joint Commons-Lords committee is due to report on Clegg’s plans soon.  A bill of some kind will surely follow in the new session.  This looks like the slow motion horror movie of the new session – and it is coming soon to a Parliament near you. 

By Paul Goodman 

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

Mark Menzies MP on Comment: In defence of the Union – a cause for common concern.  “Of course, Members with English, Welsh and Northern Irish seats have a primary obligation to represent their constituents. But to represent their constituents effectively they must also defend our constitution. Scottish independence would have significant consequences for the rest of the UK. Not least of these would be the end of the United Kingdom as a nation state: Alex Salmond may say that Scotland would retain the monarchy, at least for a while, but Scotland and England would become no more united a kingdom than England and Australia. Read More: http://is.gd/Ii6Lve

Tim Montgomerie: We need shock-and-awe tax cuts in the budget, financed by a mix of wealth taxes and spending cuts.  “I guess that financing tax cuts by deeper spending cuts won’t be controversial among ConHome readers. Yesterday Paul Goodman called for a “Lower Spending Commission” to investigate ways of delivering a smaller state more quickly. On Comment today Lord Flight says faster cuts in spending are essential…More controversial among ConHome readers will be my belief that we should increase wealth taxes too so that we can reach towards a pot of £25 billion for cuts in income and other more economically-harmful taxes.” Read More: http://is.gd/scaTpF

Paul Goodman:  We need to think less about raising tax and more about cutting spending. Let’s have a Lower Spending Commission.  “A Commission on Affordable Spending a body would look at Britain’s long-term spending challenges and how to tackle them.  On the political side it could include, for example, Lords Lawson and Lamont, senior former Labour politicians such as Alan Milburn and James Purnell, Andrew Tyrie (if membership was judged compatible with his role as Treasury Select Committee Chairman), Frank Field and David Laws.  It would make recommendations to which the Government would respond.” Read More: http://is.gd/RztA4F

Martin Callanan MEP: How I invented “The Grexit”.  “The press release went out as I sat down… and the phone immediately started ringing in my office. Before I was back at my desk the speech was running on the Press Association wire and had been highlighted on this worthy website and others. A round of ‘down the line” TV and radio interviews followed – and a frantic day ended with a live spot on Newsnight about a subject which by now had its very own newsy nickname – The “Grexit”.” Read more: http://is.gd/pgWmUn

Bruce Anderson: The Second World War was the key to the history of the EU and it still is.  “The reality is that Britain has never really joined Europe. It is true that we signed up to all sorts of stuff, but we did not mean half of it and we did not understand the other half. As Jacques Delors said a few years ago – the wisest comment ever from a Eurocrat – the British are allergic to Europe. Eventually, on the other side of the present crisis – if there is another side – we will have to renegotiate a limited but sustainable membership of some European entity “A common market” will do as the working title. In the meantime, the crisis continues, oscillating between farce and tragedy.” Read More: http://is.gd/1iKa0N

Nadine Dorries MP: Liberal Democrat MPs want to have their Coalition cake and eat it.  “Call me old fashioned, but I was rather hoping for a Conservative majority next time. Allowing the Liberal Democrats to have an unfair competitive advantage against our own candidates at the next election doesn’t seem to be a clever way to go about it. Unless of course, the Prime Minister’s long term plan really is to keep working in coalition. He possibly feels he can manage the double standards of expectations from MPs in both parties. If that’s the case, he may find a turbine blows him a fair wind which will bring him ill luck.” Read More: http://is.gd/af6AIB

J P Floru: The Falklands are small fry compared to Antarctica.  “Occasionally diplomats try to reach some sort of agreement about the exploitation of Antarctica. Sadly a free market and workable system does not seem to be at the top of their mind. In 1988 a Convention to the Treaty attempted to allow for mining, but is was never ratified. It would have established an eye-wateringly complicated bureaucracy and a quasi-communist proceeds distribution system similar to the unworkable International Seabed Authority. Until a new Treaty is signed, extracting Antarctica’s mineral treasure remains unlawful. Britain has the oldest claim on Antarctica and must stand by it and defend it. Exposing Argentina’s breach of international law should be Government Policy.” Read more:http://is.gd/sRSkA3

We are currently planning other events and would appreciate your thoughts on topics and speakers you would like featured. My email address is tim@conservativehome.com if you have any thoughts.

THE NHS BILL: Some of you may have noticed that I caused a bit of a media fuss ten days ago when I argued that the Coalition should drop the Health and Social Care Bill (http://conho.me/wB4Gij). I certainly wasn’t expecting my advice to be heeded and it hasn’t been. The Government ploughs on in the teeth of public opposition, holding seminars on the reforms which exclude the major representatives of NHS staff. Anyway I’m not wanting to continue my mini-campaign here. What is notable is that large numbers of MPs, ministers and of course journalists contacted me after my intervention by txt, email and phone. Number 10 hasn’t contacted me once since the morning of my blog. This is not unusual, even when I’m not causing trouble. Number 10’s default setting is to give the silent treatment to nearly all people except lobby journalists. As a way of building support and understanding across the party it’s not a winning strategy. Cameron desperately needs an external relations function so that it doesn’t lose touch with key columnists, bloggers, think tank chiefs and other third parties that help shape opinion. His shaky support within the Tory Party is a relational as much as a policy failing.

THE BLUE HALF OF THE TUG-O-WAR: In the Mail on Sunday James Forsyth revealed (http://conho.me/xJx9X7) that Cameron’s 17 top advisers went to Chequers last week to discuss, among other things, a game plan if the Lib Dems left the Coalition early – say next year. The Lib Dems are in no position to want an early election but the danger is they might leave the Coalition and the Conservatives would have to govern as a minority administration on confidence and supply. The smart money is still on the Coalition lasting until full term or close to full term but Numbers 10 and 11 have been concerned at the way the Lib Dems have been pushing a more aggressive differentiation strategy. This has been particularly evident on tax policy with Nick Clegg publicly warning the Chancellor and the Conservative Party to cut taxes for low income people or, alternatively, guard the interests of the wealthy. Nice. Tugged hard one way by the Lib Dems the Conservative leadership has been encouraging Conservative MPs to tug from the other direction. The recent letter signed by more than 100 Tory MPs against windfarm subsidies was very much encouraged by Number 11. It, goes the strategy, will reinforce George Osborne’s hands over climate change policy in negotiations with, now, Ed Davey. Tory MPs were also encouraged to kick up a fuss over university access tsar Les Ebdon. Vince Cable may have prevailed against Michael Gove on that appointment but aides to Cameron calculate that they are more likely to get concessions from Lib Dems in other areas if Cameron is seen to have to keep his party happy.

DIVISIONS IN THE PARLIAMENTARY PARTY: In last week’s Intelligence Letter Paul Goodman previewed what might be contentious elections to the backbench 1922 Committee in May. These elections will be used by ‘Cameroons’ and more mainstream Tories to dilute the so-called Old Right’s control of the ’22. Paul writes more about this on ConHome today (http://conho.me/AwMgHc). My guess is, like Paul, the loyalists will attempt to topple the biggest critics of David Cameron on the Cttee (e.g. Brian Binley, Mark Pritchard and possibly Chris Chope) but will leave Graham Brady and other officers in place. Trying to completely replace the existing leadership could be a lose-lose strategy for the loyalists. If an attempt to remove Graham Brady is unsuccessful the risk is the Cameroons will create an emboldened centre of opposition to Number 10. Topple Graham Brady and the defeated minority will stop being team players and organise in new and potentially more aggressive ways. Adjusting rather than transforming the composition of the ’22 is probably the best strategy for ‘friends of the Prime Minister’.

DANNY ALEXANDER AND THE QUAD: Last week on ConHome I profiled (http://conho.me/xsxaOd) ‘The Quad’ – the group of four that is the Coalition’s sovereign body. I noted how Danny Alexander had come under the spell of George Osborne. One Intelligence subscriber sent me an interesting reaction that I’d like to share with you. “The observation of Alexander’s peculiar loyalty is accurate, but the analysis of why isn’t quite right. It’s not the svengali like powers of Osborne. You have to understand that Danny has always been like this. To an almost absurd degree he is a naturally loyal number two to whoever he works for, whether Stephen Woodard at the European Movement, Simon Buckby at Britain in Europe or Nick and now George. I assume, but do not know he had another strong patron who he served devotedly at the Cairngorms National Park.”

By Tim Montgomerie

HIGHLIGHTS OF THE WEEK FROM CONSERVATIVEHOME

OSBORNE GIVES TO BUSINESS WITH ONE HAND BUT TAKES WITH THE OTHER: “If George Osborne is doing the right thing on the deficit (and like most Tory members we wish he’d cut harder and faster and have avoided tax rises) he still lacks a competitiveness agenda. For every tax cut (eg corporation tax) there are bigger tax rises (VAT, CGT, bank levy). For every reduction in red tape (eg health and safety) more regulations are being imposed (eg the Agency Workers Directive). For every good initiative (planning reform) there’s a bad one (big policy-induced increases in the cost of energy).” More via http://conho.me/wAriBQ

THE TAXING CHANCELLOR: “George Osborne’s plan is to bring the government finances back into balance in the medium term and reduce government spending to just below 40% of national income. This is very worrying. By the Chancellor’s own admission, the UK government has never been able to tax its citizens more than 40% of national income. The limit of the ambitions of a Conservative Chancellor of the Exchequer appears to be to tax the British population at the maximum taxable capacity.” More from the IEA’s Philip Booth via http://conho.me/xcltNE

THE POWER OF THE QUAD AT THE HEART OF GOVERNMENT: “The Quad isn’t just half blue/ half yellow but also half Treasury. “The Treasury,” concludes James Forsyth, “is an even greater force in the land than it was in Gordon Brown’s day.” Wow. He continues: “The Treasury fought for decades to get a second Cabinet post, finally succeeding in 1961, and even then remained vastly outnumbered in Cabinet by ministers from spending departments. Now it has half the people in the room whenever a major decision is taken.” Nine more observations can be read via http://conho.me/xsxaOd

NEW TORY-LED EURO-ENTHUSIAST GROUP ESTABLISHED: “The group, which has offices in London and Brussels, provides daily bulletins – written by David Gow, formerly of the Guardian, and David Seymour, formerly of the Daily Mirror, and bulletins for MPs “of all parties”. Starting in April, Nucleus will also be providing briefings for MPs, journalists, think-tankers, business figures, and in March, they will start hosting quarterly visits to Brussels.” More via http://conho.me/yNPQyf

STUDENT MIGRANTS SHOULD BE EXCLUDED FROM IMMIGRATION TARGETS: “The government says it wants a more diverse higher education sector with new entrants driving down tuition fees – a laudable aim. Yet its student visa controls are destroying private sector HE colleges that can offer fee rates for degrees which are over a third less than those offered by public universities. Where is the sense in that? The Conservative Party’s wish to curtail net migration to the tens of thousands is clear. But it makes no sense to include student migrants in this total. Doing so is harming economic growth and risks destroying a highly successful part of the UK economy.” More from Centre Forum via http://conho.me/wSgAhJ