Benedict Brogan

Bob Russell, MP for Colchester, on BBC News

Bob Russell has just stitched up his own side by tabling an urgent Commons question to the Chancellor about the state of the spending review (fascinating that the Speaker allowed it; there have been quite a few, is this a trend?). It was an embarrassing moment for George Osborne, who had to account for himself before MPs this afternoon.

But what made it particularly difficult was the simple fact that Mr Russell is a Lib Dem MP, so poor George had to refer to the guy as “My hon friend”, even though his friend had just kebabed him. The Chancellor had to sit there while Mr Russell berated him for not making a statement to the Commons last week and for running an “immature turf war” with IDS on welfare. His main criticism was aimed at welfare policy and what was being cooked up between Mr Osborne and Iain Duncan Smith (maybe he read my post yesterday?)

The Chancellor managed to show more courtesy than Mr Russell, making the point that that “it is impossible to conduct a spending review without looking at the welfare bill”,  and praising his good relationship with IDS and his Cabinet colleague’s “inspirational plans” for welfare reform. But privately he must be seething. It’s bad enough for the Chancellor to be forced to come to the Commons to answer awkward questions, but when they come from your own side, it’s unbearable. That he showed such good grace and equanimity is remarkable.

Unless, of course, it’s all part of the plan. After all, when Vince Cable stuck his oar in about the appointment of Bob Diamond to run Barclays, we didn’t hear a peep from Mr Osborne. Or when he appeared to pre-judge the outcome of the inquiry into tuition fees. Imagine the mayhem if another Cabinet minister had waded onto Gordon Brown’s turf. I know that in the upper reaches of the Coalition there is surprise that is now shading into concern about the easy ride the Lib Dems are given when it comes to their habit of challenging Coalition policy-making.

What is even more curious is the way Downing Street is responding. It might be that as long as the texting brothers Dave and Nick are getting along, nothing else matters. In which case we might see Mr Osborne’s equanimity as a sign that he and his friends see Mr Cable’s pronouncements, and those of other Lib Dems, as the acceptable venting of a safety valve. Talk is cheap after all. Others though are beginning to wonder if the Coalition can withstand having some Lib Dems behave as fifth columnists.

Woolas faces Joanna Lumley in May last year (Photo: PA)

The general election may be slipping into distant memory, but for one seat it remains unfinished business. The High court will today hear an election petition against Phil Woolas, who held his Oldham East and Saddleworth seat by just 103 votes. His Lib Dem opponent Elwyn Watkins is claiming the former Labour minister invented lies against him to increase the turnout of white voters and aggravate racial tensions. It is the first petition of its kind on more than 90 years, and if Mr Woolas loses he will be ejected from Parliament and there will have to be a by-election (when Gerry Malone petitioned against his defeat in Winchester in 1997, it was on the basis of the closeness of the result, not dirty tricks).

I mention it because the Daily Telegraph has obtained court papers detailing the claims against Mr Woolas and they make for gripping reading. Politics is a rough old trade but there are instances of alleged dirty tricks here that would be too extreme for the writers of The Thick of It.

“The MP’s election agent, Joseph Fitzpatrick, allegedly sent an email in the run-up to the poll saying: “We need … to explain to the white community how the Asians will take him [Woolas] out … If we don’t get the white vote angry he’s gone.”

“Mr Woolas is accused of fighting a “dirty and dishonest” campaign full of “lies, smears and totally false allegations”. Mr Watkins’s lawyers argue in High Court papers that: “Mr Woolas, believing that he was going to lose the election, resorted to terrifying white voters into believing that there was an extremist militant Muslim element in Oldham, who were in cahoots with Mr Watkins. He wished to convey the message that a vote for Mr Watkins was a vote for extremists.”

You may remember Mr Woolas as the minister who was publicly humiliated by Joanna Lumley over the Gurkha business. He was also the founder of Blairites for Brown, a grouping of opportunist MPs who joined the Gordon Brown operation to harry Tony Blair out of office. Mr Woolas has been an unstoppable political force, always ready for the fray (although his election diaries revealed how miserable he sometimes was in private as a result of the pressures closing in on him). If he loses and is removed, Westminster will face the prospect of a tricky three-way contest at a time when the Coalition is suffering its first hiccups and Labour will be galvanised by the election of a new leader.

The Department for Work and Pensions has denied this morning Observer’s story about ’secret plans to slash the welfare bill by £2.5bn for people who are disabled or too ill to work’. The story is based on a leaked letter from George Osborne to Iain Duncan Smith in which the Chancellor welcomes an agreement betwen DWP and the Treasury to find £2.5bn in net savings from the employment and support allowance (ESA) which replaced incapacity benefit. One reason, I suspect, that DWP can deny the story is that the letter was written on 19 June. Negotiations between the two departments carried on well beyond that date. Danny Alexander said this morning that ‘things have moved on since June’ and IDS has published ambitious plans for welfare reform.

What is clear though is that it has been a summer of ding-dong between the two. In August I heard from the Treasury that a deal had been agreed between Mr Osborne and Mr Duncan Smith, and was told last week that it was holding. But I also hear that DWP ministers are proving surprisingly reluctant to accept cuts to welfare. Given that the terms of the deal involve the Treasury approving money to spend for welfare to work reform in exchange for significant cuts in DWP spending, it may be that the principle has been agreed but the detail hasn’t. Which is why Mr Osborne’s announcement of £4bn additional cuts last week has surprised people and infuriated DWP. Mr Osborne is accused of trying to bounce Mr Duncan Smith into cuts that have yet to be agreed. If they are agreed on the way ahead, then they have a strange way of showing it.

So David Cameron and Downing Street need to come out fighting. And here’s how he might give that fightback speech. Complete with useful body language tips (when saying ‘politics is a tool’ make a screwdriver gesture…). Councilman Phil Davison of Minerva, Ohio, addressing the Stark Co Republican party executive in pursuit of the Republican nomination for county treasurer (Hat-tip: HuffingtonPost).

Downing Street must re-engage (Photo: Getty)

Paul Goodman has written an important post on ConservativeHome in which he points out that the summer of Labour scrutiny promised by Sayeeda Warsi has not materialised. There has been very little traffic from the centre. The other night a Labour leadership contender asked me whether David Cameron planned to hold regular all-comers news conferences, as Tony Blair and Gordon Brown did, and I hesitated. The answer must be yes, but we haven’t had one in a while and a planned one was cancelled recently according to the rumour mill. No10 is distracted by Labour’s successful trouble-making on Andy Coulson, and today by the Jonathan Djanogly mess. Where is the wider the problem? This is Paul’s analysis:

In the meantime, the Labour and media assault on the Government over Coulson and “cuts” is inventive and relentless.  But there’s been no effective counter-attack. Why? There are three main reasons.

• The Government is a Coalition. It’s easier for one Party to attack another than to co-ordinate two to do the same.
• Too many Conservatives assume that ours is the natural party of office – and that government, therefore, is primarily about administration rather than politics. This is wrong, and surprising after 13 years in Opposition and three election defeats. None the less, there’s a tendency among Ministers to believe that if they set out their individual programmes and plans, the electorate will listen. But a package of policies isn’t a message for voters. If the Government doesn’t have one, the electorate can’t hear it.
• Downing Street’s not doing enough to discourage this tendency. After the era of Campbell and McBride, a clean-up was overdue. Ministers are right to want to end sofa government. But there’s a difference between welcoming the civil service back into the room, so to speak, and allowing them to arrange the furniture. As Tim’s pointed out previously, the Government cut back on special advisers has blunted its political edge. In political terms, the Coalition’s in danger of disarming unilaterally.

Paul goes on to argue, with plenty of detail, that No10 must start giving more direction to the Government and to the party. I’m sure that’s right. It will help to have David Cameron re-engaged, as George Osborne is understandably taken up by the press of the CSR.

Boris Johnson plans to run again for mayor of London (Photo: Paul Grover)

It may be that the success of his Boris Bikes has encouraged him to show his hand. London seems to be in love with this addition to our already crowded streets  (there are three stands within yards of my house in Lambeth and they are humming). Word has it that Hizzoner is about to announce his political intentions. I gather he will confirm today what has been obvious to anyone who knows him, namely that he will stand for a second term as Mayor of London. There had been some speculation that he needed to secure the approval of his formidable wife Marina. Be that as it may, the lure of being the Mayor of Olympic London was too great, and he will stand in May 2012, hoping to welcome the world to the capital two months later. True, it would have been a bigger story if he had decided not to.

The timing of today’s announcement is useful. I gather Number 10 and CCHQ plan to make the most of Boris’ popularity with the grassroots when the party gathers in Birmingham next month. There is to be a big Boris for mayor rally on the Sunday night, with all the trappings, and on the Monday he addresses conference. In these troubled times, when so much seems to be going not quite to plan for Dave, it must be a comfort to have his friend Boris on hand to help out.

Robert Chote

George Osborne has persuaded Robert Chote to take on the Office of Budget Responsibility. It’s a coup for the Chancellor, who desperately needed someone of substance to take the job and get the organisation back on track after a rickety start.

The director of the Institute for Fiscal Studies thought long and hard about the prospect. He has established himself as an unimpeachable source of authoritative analysis of the public finances and could be forgiven for wondering whether taking on the OBR wasn’t a bit too risky.

The handling of Sir Alan Budd’s departure and questions over the OBR’s actual independence have left it needlessly damaged and in need of a relaunch. Mr Chote is the ideal candidate, and with luck his confirmation by the Treasury Select Committee will be no more than a formality.

University students face paying far more for a degree under Coalition plans (Photo: REX FEATURES)

The introduction of a graduate tax of some sort is turning into the next big crunch point for the Coalition. Remember, tuition fees very nearly killed Tony Blair, and he was sitting on a whacking majority. David Cameron has a majority that relies on Lib Dem MPs who are opposed to a man and woman to any extension of tuition fees. If he wants to address the funding of higher education, he has to find a scheme that can get through the Commons and past his ‘allies’. The Parliamentary arithmetic is against him; he must therefore compromise.

The FT today fleshes out the debate by claiming that Civil Servants are drawing up various schemes in case Lord Browne of Maddingley comes up with something that is unpalatable. Nick Clegg told the Telegraph recently that he favours a graduate tax, yet the Times claimed this week that Lord Browne had ruled one out. In a column a few weeks ago I reported that David Willetts and Vince Cable had agreed to go further than the Coalition agreement by introducing a ‘progressive’ solution that could mean asking graduates to pay more for their degrees. The question they and the Treasury are grappling with is whether successful graduates should be asked to pay back more than the cost of their education. Two options are being canvassed: making graduates pay a premium back to their universities on top of the cost of their degree, and a one per cent lifetime levy on income. The idea is that by giving the money raised direct to universities, and not to the Treasury, ministers would be able to say it is not a graduate tax. To which most people, I suspect, not least those who will have to pay the levy, will say ‘hah!’

Turbulence is expected when George Osborne unveils his Comprehensive Spending Review (Photo: EPA)

My Telegraph column this morning makes the point that however grim the Hague and Coulson sagas may be – and there’s more to run with both it seems – they pale in comparison to the political horrors that await the Coalition when it comes to the CSR. Cabinet ministers I’ve spoken to worry that the public and even MPs do not yet appreciate how difficult it is going to be.

One adviser rang me this morning to say his minister is reluctant to settle departmental cuts until he’s had explicit agreement from his Cabinet colleagues that they will bear the consequences when they hit, and not run scared. Here’s an extract:

“Yet all this turbulence is nothing compared with what will hit the Coalition next month when George Osborne unveils his Comprehensive Spending Review (CSR) – at that point, all hell will break loose. “We are in a canoe paddling down the Zambezi, and Victoria Falls lie dead ahead. Once we’ve gone over the edge, none of this will matter,” one leading Cameroon told me. The edge, for those at Westminster who worry about it, is the moment we discover just how bad the cuts are going to be. To judge by what Cabinet ministers and officials are saying, many worry that the Coalition has not done nearly enough to warn the public of the abyss into which the country is about to plunge. ‘If we have had a collective failure,’ one Cabinet minister says, “it is that we have underplayed the scale of the problem’.”

Vince Cable wants to 'make banks safe' (Photo: ANDREW CROWLEY)

Vince Cable was a right twinkle toes on Today this morning, dancing his way around the Bob Diamond appointment. But should he be addressing the issue at all? And if so, what language should he use? Reading across the papers (esp the FT splash), Westminster will be tempted to conclude that the BIS secretary was the unnamed Cabinet minister who told Robert Peston he didn’t think much of the Diamond decision*.  Yet No10 rightly said it was not a matter for government. Mr Cable has to promote the work of his banking commission, and he can hardly duck the question if asked. But his choice of words was interesting, and loaded.

First he dropped this non sequitur: Mr Diamond’s appointment “illustrates in a particularly graphic way what happens when you have an extremely highly paid head of an investment bank taking over one of these major international banks.” Eh? Illustrates what? Graphic how?

He then rightly pointed out that it wasn’t the Government’s job to make these appointments, though he might have added that neither was it Government’s job to pass judgement on them.

He talked repeatedly about “making banks safe”, a phrase loaded with meaning. For making safe read neutralising or emasculating. Where does making safe end and preventing necessary risk taking end? more details please?

He also used on several occasions the “c” word – casino – which makes for great polemic but buys in to a particular view of banking which, if allowed to prevail, can only do damage to the City. The point about Barclays surely is that it got through the crisis without recourse to the taxpayer, which sounds like smart business rather than the reckless behaviour of a gambler Mr Cable tries to suggest.

The BIS secretary takes a particular view on banking and is advancing his case often elegantly and with some style. But if the Coalition has decided that it is now legitimate to provide a running commentary on banks and their staffing issues, should it be coming from him or the Treasury?

*Meant to add: Is Lord Oakeshott really a “Lib Dem Treasury spokesman”? Does the Coalition have spokesmen who are not in Government? He can always be relied on for pungent comment, but who exactly does he speak for?