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It’s all about Growth

Last Updated: Friday, January 28th, 2011

The government was genuinely shocked by this week’s growth numbers. They expected them to be depressed by December’s extreme weather events but they were surprised by how weak they were. They may yet be revised upwards. But it’s equally possible that they’ll be revised downwards. It’s more important that George Osborne doesn’t get bogged down in explaining individual twists and turns in Britain’s economic fortunes but (1) that he and the whole government does a better job at explaining why they are making the cuts (which have yet to actually begin) and (2) he develops a serious growth agenda.

The first thing is the easier of the two. The cuts will become very unpopular if they are defended with the language of an accountant. The cuts need to be defended in moral terms if the public are to support them. Labour will certainly use righteous language as they hold up sad story after sad story – all related to “Tory cuts”. Osborne needs to say that his is a mission to ensure that Britain lives within its means. He needs to talk about this generation’s moral obligation to the next. He needs to say that the Coalition won’t accept our children and tomorrow’s job creators living under impossible levels of debt and taxes.

The second bigger and harder task is the subject of ConservativeIntelligence’s half-day conference on Monday 14th February. We’ve asked two government ministers, David Willetts from BIS and David Gauke from the Treasury, to talk about how the Coalition intends to boost competitiveness. John Redwood, who chairs the backbench committee on competitiveness, will offer his friendly critique of government policy. We end with an expert committee reviewing the three big speeches.

To book a place at the conference please go to http://www.amiando.com/GoingforGrowth.html

I’ve organised the conference because of the subject’s centrality to the success of the Coalition’s aims. David Cameron has said that you won’t get growth if you don’t cut the deficit. Ed Miliband says you won’t cut the deficit if you don’t get growth. Both are right. Up until now George Osborne has taken the tough decisions on cuts but hasn’t taken equally tough decisions on growth. He has not done anything equivalent to, for example, Margaret Thatcher’s lifting of exchange controls, modernisation of trade union laws, or her rebalancing of the tax system from taxes on income to taxes on expenditure.

On 14th February we’ll be exploring what George Osborne can do in his second budget (already advance billed as a budget for growth) and beyond. Will there, for example, be higher taxes on property to afford lower taxes on enterprise? I, for example, would prefer a new top council tax band and the end of 50p. Will restructuring of financial regulation be accelerated so that the blight associated with the current uncertainty is ended? Will trade union laws be updated? Will green obligations be postponed so that manufacturers are saved from higher energy costs? Will the government give more ground on immigration restrictions? Will Tories win the internal battle with Liberal Democrats on making it easier for employers to sack workers?

All vital questions adding up to the debate that may, along with international economic conditions, determine the government’s success.

Tim Montgomerie

 

 

DAVID CAMERON AND MPS’ EXPENSES REFORM: DAMNED IF HE DOES, DAMNED IF HE DOESN’T.

 

The second tranche of MPs’ office expenses is due to be released next Thursday.  The publication of the first tranche during the run-up to Christmas provoked an unprecedented bust-up in the 1922 Committee.  In effect, Conservative backbench MPs issued an ultimatum to Sir George Young, the Leader of the Commons: reform IPSA – the body which administers MPs expenses – or our support for the leadership can’t be guaranteed.

Last time round, the release also took place towards the end of a week, and the details were probed ferociously by many local newspapers.  It was the trying weekend in their constituencies which followed that saw Tory MPs return to Westminster determined to raise the matter at the weekly Wednesday meeting of the ’22.  So will there be a similar explosion on Wednesday week, February 9?

Perhaps not.  David Cameron, tipped off by the Whips and Sir George about the revolt, has already moved to quell anxiety – telling Conservative MPs that IPSA “must change or be changed”, and hosting a series of Number 10 parties designed to boost backbench morale.  However, the expenses drama – both for the Government and Parliament itself – is far from over.

Conservative MPs will probably accept a pay freeze.  They seem willing to live with tougher declaration requirements on outside interests, which are relatively recent.  But that uprising at the ’22 was a sign of their rising unhappiness with IPSAs expenses regime.  In short, it’s based on receipts – and this system, MPs argue, means that they’re damned in their local media if they claim expenses but are out of pocket if they don’t.

Many of them want to see receipts replaced by flat-rate allowances, which would end what they see as trial by media.  Those MPs who’ve submitted claims only since the release of the first expenses trance will be feeling particularly nervous.  Interesting, a bill proposing just such a change, tabled by Tory backbencher Adam Afriyie, is due to be read next Friday.

It will be interesting to see whether or not the Government moves to block it.  It seems that the Prime Minister wants to take reform into his own hands – believing, perhaps rightly, that the media and voters would label him weak if he were he to let the Commons simply get on with regulating itself.  But it’s far from clear whether the changes he proposes are going to be good enough for his own backbenchers.

Cameron appears to want the immediate publication of receipts online – thus ending the release of information in media-accessible tranches – and better treatment for families with young children.  However, it’s far from clear whether any receipts-based system will be acceptable to Conservative MPs – and very clear that an allowances-based system would be assailed by the media and, in turn, by voters.

Furthermore, the Prime Minister’s running out of time: the Commons has passed a motion calling on IPSA to implement a new scheme by April 1.  The Whips can probably contain rebellions on the EU, criminal justice policy and relations with the Liberal Democrats.  But for better or worse, they may not be able to do over MPs “pay and rations”.  The issue’s like a key chemical ingredient which – when mixed with others in the school science lab – can suddenly blow the roof off.

Paul Goodman

 

HIGHLIGHTS FROM THE LAST WEEK ON CONSERVATIVEHOME

  

The Conservative Party owes Andy Coulson a huge debt but he was right to resign: “The Conservative media may have been intellectually supportive of the Cameron project but there was little emotional or gut support. Leading commentators, like Tory MPs, felt locked out of the project. As David Cameron rebuilds his 10 Downing Street operation it won’t be enough for him to simply bring in a simple replacement (Guto Harri would be my top tip for that). Cameron needs to overhaul his complete operation. I’ll be setting out my thoughts on that later”.  Tim Montgomerie.  More: http://is.gd/XzoaFz

In pole position for promotion to Cabinet: Greg Clark, Nick Herbert and Grant Shapps: “Of the Ministers of State, it is Mark Prisk whom I would most likely tip for the top table…Meanwhile, promotion for Treasury minister Mark Hoban should not be discounted, with many believing that Greg Barker’s personal friendship with David Cameron will stand him in good stead as well…of the existing female junior ministers, Justine Greening at the Treasury and the minister for the disabled, Maria Miller, are probably the two to watch.” Jonathan Isaby.  More:  http://is.gd/LpvpWI

After Coulson, Downing Street should make four strategic shifts in communications strategy: “Address communications weakness (1): a lack of mission clarity.  (2): emotional detachment from the party.  (3): ministers don’t have enough help.  (4): third parties, today’s most trusted communicators, are under-deployed.  10 Downing Street needs a communications unit that has three or four big goals and works each and every day to achieve those goals.”  Tim Montgomerie.  http://is.gd/5TEZmT

Rachel Sylvester is wrong about Cameron’s strategy in opposition and the reasons why he failed to win an outright victory in 2010. “But what is really going to be difficult is persuading a country that’s not right-wing on the economy and public services but is right-wing on crime, immigration and (to some extent) Europe to re-elect you when the policies you’re pursuing suggest that you see things completely the other way around.” Prof Tim Bale  http://is.gd/fAu8Vi

A six-point plan for George Osborne, who should stay in post for this Parliament.  “As I say, complaints about Osborne will be heard again soon, and more loudly.  But there’s a credit side to the ledger.  He was the first senior member of Team Cameron to work out that modernisation could go too far.  He produced the inheritance tax and stamp duty cuts package that helped turn the polls round in 2007, and panic Gordon Brown off calling an election he might have won.  Paul Goodman  http://is.gd/6lB6im

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