George is not for turning..

BREAKING NEWS: George Osborne has just appeared on the Today programme. He stressed that while he would take steps to protect the squeezed middle, he was “clear that the richest have to pay more”.

Mr Osborne refused to give a “running commentary” on his debt targets, although he did claim that “our policy is delivering record low interest rates for this country”. Mr Osborne added that there would need to be cuts as well as tax increases as “the rich need to contribute more but you cannot balance the budget on the wallets of the rich”. 

The Chancellor also called for patience, saying: “we have got to finish the job. We need to go on with a credible plan to reduce the debt. I am saying that yes the road is longer than anyone had thought.”

GIDEON AND IDS SQUARE UP

The Daily Mail runs an extract from Janan Ganesh’s book on the Chancellor. Tomorrow’s serialisation will paint a picture of a Chancellor at war with Iain Duncan Smith over welfare. Tensions between the pair were blamed for rumours suggesting that Mr Duncan Smith would be moved from the Department of Work and Pensions during the reshuffle.

In an effort to head-off rumours of a split, Mr Osborne and Mr Duncan-Smith have put their names to a joint op-ed in the Mail. Both men are speaking today on the topic of welfare reform, and their speeches will he thoroughly analysed for any hint of discord over welfare policy.

Today’s extract is full of gems, from the teenage Gideon, a Madonna fan, listening fervently to the 1988 budget on a pocket radio, to accounts that he feels as though he “fancies he has” the same feel for national politics as Tony Blair. Today’s extract also reveals the frustrations Mr Osborne feels in coalition with the Lib Dems. After he arranged with Vince Cable to trade an increase in the income tax threshold for a cut in the top rate of income tax:

“The incontinent Lib Dems then jumped the gun. In order to grab the credit for helping the low paid, they leaked the news a week ahead of Budget Day. Osborne had warned his Coalition partners that the more a Budget trickles out in advance, the more the media dwells on its remaining surprises.

“Osborne had believed such footling measures would slip through unnoticed, ignored in favour of the bigger announcements. The Lib Dem leaks did for that assumption.”

AUSTERITY BITES

Austerity will be with us until 2018, the FT (£) reports this morning. The OBR will tell the Chancellor that he is unlikely to hit his supplementary target of cutting debt in 2015-16. The structural deficit is likely to be larger than previously thought, according to the paper’s own models. Close to £15bn extra in savings will need to be found each year if Mr Osborne is to close the gap between spending and taxation.

The news is a blow on a day when the Conservatives are launching their programme of welfare cuts. The Telegraph reports that Mr Osborne will announce £10bn of savings which will kick in after the 2015 election, these include a move to force unemployed youngsters to live with their parents by further restricting housing benefit under the age of 35. In their Mail op-ed, IDS and Mr Osborne hint at cutting child benefits for unemployed parents who have another child. 

The carrot to go with the stick of welfare cuts is the re-affirmation of the pledge that there will be no mansion tax or wealth tax under a Conservative government.The stance won the support of the Mail which praised a “bold stand for true Tory values”. At the Telegraph, we note Mr Cameron’s comments yesterday that the rich would pay more:

“Having vetoed this long-cherished Liberal Democrat plan, the Conservatives in the Coalition feel obliged to offer a concession of some kind. It will be an as-yet-unspecified tax hit against the wealthy. 

“It is a little depressing that the two most senior figures in the Conservative Party can strike such a misleading pose. For they must both be all too aware that the better off already bear a disproportionately large share of the tax burden.”

The Times (£), meanwhile, is distressed that voters who went blue are yet to get a green economy. The paper reports that the bosses of seven global electricity and nuclear energy firms are threatening to rein in future investment in the UK if Mr Osborne waters down the government’s green energy commitments.

With a rising deficit, austerity stretching into midway through the next parliament and the cuts announced today impossible before 2015 because of the Coalition, vote blue get in the red may have been a more accurate slogan.

BORIS TO BATTLE FOR MIDDLE BRITAIN

The Telegraph ’s splash this morning is the news that Boris Johnson will position himself as the champion of a middle class which feels “utterly ignored”. Writing in his column for the paper, Bo-Jo argues that London’s aspirant young professionals need a helping hand to get onto the housing ladder:

“We are not doing as the Victorians did, and providing new stock to be bought by the people in the middle – on household incomes from £30,000 to £64,000; and they are feeling utterly and understandably ignored. They cannot get the mortgages they would need, not at current prices, and not with lenders in their current mood. They have to live at a great distance from their place of work, and spend huge quantities on travel and hardly get to see their children in the evenings. They are obliged to rent at ever higher prices. In the past 10 years, the number of rented households in London has doubled, and rents went up 12 per cent last year alone. 

“The overwhelming majority of such people would like to buy, and to get on the same magic property escalator that has boosted the Milibands. It is time to help them... Of course, Labour will object, and complain that every penny of subsidy should go to “affordable” homes for those, often on benefits, who cannot afford to buy at all. My answer is simple: this plan would help the very “squeezed middle” that Ed claims to espouse. We desperately need more housing not just for the poor, but for this vast and economically crucial group who are the motor of the London (and therefore of the UK) economy.”

On the one hand, Boris is being helpful - his words tie in neatly with the aspiration agenda which the Tory leadership are looking top push. On the other, his habit of making his points with more clarity will concern Number 10, especially given Dave’s recent admission that he has failed to communicate his personal vision of the country under the Coalition.

Boris did manage to fuel leadership speculation a little yesterday by refusing to rule out a run at Downing Street, as the Guardian reports. Mr Cameron appears to have decided that wry amusement is the best Boris handling policy, as Michael Deacon writes in the Telegraph:

“Marr inevitably brought up the subject of Boris Johnson. On cue, Mr Cameron donned his special Answering Questions About Boris face, which consists of a tolerant, parental smile that seems to say, ‘Ah yes, dear old Boris, what a card, I do love his antics, ha ha, I was rather hoping you’d bring him up.’”

Still, if Mr Cameron does want to be rid of his turbulent mayor, then theGuardian has an idea. Today’s diary column suggests that Bo-Jo would make an excellent Archbishop of Canterbury.

RETURN OF THE NASTY PARTY?

The Independent seem to think so. They write that a planned rally by Conservative activists who oppose gay marriage, along with the row over abortion and the benefits cut, threatens the image which reformers have been anxious to paint of a compassionate party. This is a cudgel also taken up by the Guardian which argues that Mr Cameron’s “bouts of red-faced anger and loss of authority have got the critics’ knives out”.  Writing in the Independent, Ian Birrell argues that the Tories must continue to modernise or die:

“Cameron’s response to his loss of political capital has been to mollify the right, as with the recent Cabinet reshuffle. But they will never like him. All this has done is unnerve his core supporters, who are becoming increasingly agitated as they stay silently loyal.

“The Tories must face the future, not look to the past. .. This means ignoring the shrill voices condemning gay marriage and green issues as “metropolitan” concerns; are they not aware nine out of ten Britons live in urban areas? No wonder the Conservatives have failed to convince young and metropolitan voters outside the south-east they are on their side. Besides, these are issues Cameron has stood for since he vowed to “inspire a new generation” seven years ago.”

Whether he would prefer to return to his earlier radicalism or not, the Prime Minister does risk the perception that he has become bogged down and lost momentum. In today’s Telegraph, Iain Martin argues that his problem is that the support beneath him has ebbed away:

“The Tory tribe arrives in Birmingham for its annual conference in a foul mood...A lot of Tory MP’s are despondent. Many are not even bothering to go to conference. Says one: ‘I can’t afford four days in Birmingham, and, anyway, what’s the point?’

“Another observed that his time would be better spent in his constituency responding to letters from irate voters. Some MPs say they are being bombarded with missives from disillusioned grassroots Tories, with the Prime Minister’s determination to introduce gay marriage proving a particular concern.”

Mr Cameron is aware that the mood music is gloomy. However, he is constrained by events. Writing in today’s FT (£), Bruce Anderson puts it neatly, saying that many Tories seem to “have had enough of realism, preferring fringe-meeting fantasies”. He adds:

“He would love to be in a position to cut taxes. But that is not possible. As for Europe, he does not have a europhiliac molecule in his body. A convinced eurosceptic, he would like the UK to have a much looser relationship with the EU, based on free trade. But how do you get from here to there, while also protecting London’s financial pre-eminence? The notion that Britain has freedom of manoeuvre is, alas, nonsense. Mr Cameron has the difficult task of reaching a modus vivendi with the EU – while the eurozone has the even harder task of negotiating a modus vivendi with itself.”

Mr Anderson’s solution? Dave should show leadership. But with the party pulling in so many different directions, leading is easier said than done.

BAE/EADS DEAL ON THE BRINK

Philip Hammond has said that the BAE / EADS merger could collapse if the French government seek a stake above 10 per cent. Bloomberg report that Mr Hammond told the Conservative party conference that:

“If we are going to keep this thing in play we need a clear signal back from the French in  particular that they are willing to reduce their shareholding, where they are effectively an investor in the company, not a state party trying to run the company.”

He added that he “did not say” he was optimistic about the deal going ahead.

RIGHT ANGERED BY LACK OF IN/OUT REFERENDUM

Today’s Mail reports that the hackles of the Conservative Right were raised by Mr Cameron’s apparent rejection of an in/out referendum on Marr yesterday. Instead, the Prime Minister has offered to get tough on the EU’s budgeting during financing talks. He has also hinted at seeking to restrict access to the UK jobs market to European nationals, as the FT (£) reports this morning. 

Given Theresa May’s comments which also back the crackdown, detailed in today’s Guardian, it looks an awful lot like Gordon’s old ‘British jobs for British workers’ line.

The move would be popular in the party, and may help stave off some of the criticism likely to be coming Dave’s way for denying the base the referendum they crave. Trevor Kavanagh, writing in the Sun, is pleased that Dave is starting to hint at a more bullish European policy. He believes the Tory leader is playing the long-game:

“Timing is all-important for the Cameron plan... Cameron believes once the dust starts to settle, a British leader could walk in and seek a price for continued membership.

“He would demand repatriation of power over just about every issue that vexes British voters — law and order, immigration, welfare and the economy. Until we know where things stand, said Defence supremo Philip Hammond in a separate interview, we would be mad to reveal our negotiating position.”

GREEN BELT SAFE WITH PICKLES

Eric Pickles will this morning issue a ‘hands off’ warning to developers mulling green belt building, the Telegraph reports. Mr Pickles will tell delegates that:

“There has been a lot of press speculation in recent weeks on the green belt. Protecting the character of the countryside is stamped deep into the heart of Conservatism.

“And let me tell you – the green belt plays a vital role in stopping urban sprawl and we will protect it.”

SCOTLAND DEPENDANT ON THE STATE

This morning’s Telegraph reports that today’s conference speech by Ruth Davidson will highlight figures which show that only 12 per cent of households north of the border pay more in tax than they receive in public services. The SNP have already begun to refer to the speech as Miss Davidson’s “Mitt Romeny moment”.

CONSERVATIVE PARTY LIVE

You can follow live coverage of the Tory conference in Birmingham via the Telegraph’s website, by clicking here . 

There is also a text commentary which is available here.

TWEETS AND TWITS

Conference season has put Chris Heaton-Harris in a jovial mood:

@chhcalling: “The grim reaper came for me last night - but I fought him off with a vaccum cleaner. Talk about Dyson with death.” 

TOP COMMENT

In The Telegraph

Boris Johnson - London has turned its back on the very people it needs most

Iain Martin - David Cameron at the Conservative conference: the seven-year itch 

Shashank Joshi - The big three who can help save Afghanistan

Telegraph View - Sniping at the rich is futile and damaging

Best of the rest

Bruce Anderson in the FT (£) - Cameron must show leadership to win back the uneasy

Tim Montgomerie in the Times (£) - My 2020 vision for a Boris Johnson Cabinet

Ian Birrell in the Independent - Cameron must modernise, not appease the reactionaries 

Jackie Ashley in the Guardian - The Tories are too hardline to accept a centrist shift

THE AGENDA

Today: Conservative party conference continues in Birmingham.

09:00 am: UK in action (Theresa Villiers, David Jones, Ruth Davidson)

11:00 am: Economy speeches (Patrick McLoughlin, George Osborne)

14:30 am: Turning Communities Around (Iain Duncan Smith, Eric Pickles, Francis Maude)

16:30 am: Panel discussion on the deficit, chaired by Oliver Letwin