Bloomberg News

Cameron to Pledge No Change of Course Amid Tory Doubts

March 06, 2013

U.K. Prime Minister David Cameron will urge his Conservative Party to stick to its current course today after lawmakers raised doubts about his leadership and senior ministers openly questioned spending plans.

Cameron will give a speech on the economy in West Yorkshire, in a House of Commons district the Conservatives must hold in the 2015 general election to stay in power. A week after the Tory candidate came third in a special election in a seat in southern England the party hoped to gain, the premier’s ability to win such battles is in question and his authority in the party may be waning.

“The very moment when we’re just getting some signs that we can turn our economy round and make our country a success is the very moment to hold firm to the path we have set,” Cameron will say, according to extracts released by his office. “The path ahead is tough, but be in no doubt the decisions we make now will set the course of our economic future for years to come. And while some would falter and plunge us back into the abyss, we will stick to the course.”

Britain’s economy shrank 0.3 percent in the final quarter of 2012, leaving it on the brink of a triple-dip recession. The opposition Labour Party argues that the lack of growth is the result of Chancellor of the Exchequer George Osborne’s program of spending cuts to narrow the budget deficit. Moody’s Investors Service cut the U.K.’s top credit rating last month, citing the weak growth outlook and challenges to fiscal consolidation.

Cable Call

As Osborne prepares for his annual budget statement to Parliament on March 20, Business Secretary Vince Cable, a member of Cameron’s Liberal Democrat junior coalition partners, contradicted the premier’s strategy yesterday, saying the economic argument in the U.K. may have shifted in favor of debt- funded capital investment, with slow growth now a greater concern than a loss of market confidence.

“There is a body of opinion arguing that the risks to the economy of sticking to existing plans are greater than the risks stemming from significantly increased and sustained public investment,” Cable wrote in an article in the New Statesman magazine, headlined “When the facts change, should I change my mind?”

While Cameron may tolerate a certain amount of criticism from the Liberal Democrats as the parties seek to distinguish themselves in voters’ minds in the run-up to the 2015 election, he must now contend with agitating from senior members of his own party.

Ministerial Resistance

Two of the leading Tories in the Cabinet, Home Secretary Theresa May and Defense Secretary Philip Hammond, are resisting attempts by Osborne to make further cuts to their departmental budgets. May, who’s responsible for policing and border controls, meets junior lawmakers in Parliament regularly to discuss their concerns, a practice Cameron has also adopted.

“Hammond and May are killing two birds with one stone,” Tim Bale, a professor of politics at Queen Mary University, London, said in an interview. “They look strong by defending their budgets against the chancellor and also preserve policies popular with Tories such as law and order, immigration and the military. We can’t say they are deliberately maneuvering for a future leadership race, but we can’t rule it out either.”

Cameron, 46, has been Tory leader since 2005. Under party rules, a challenge to him requires 46 Conservative lawmakers, 15 percent of the parliamentary party, to request a confidence vote. If he lost, he’d have to resign and couldn’t stand in the forthcoming contest.

‘Right Thing’

“I know some people think it is being stubborn to stick to a plan,” Cameron will say today. “That somehow this is just about making the numbers add up with no care whatsoever for what it means for people affected by the changes we make. But nothing could be further from the truth. My motives for sticking to the plan are exactly about doing the right thing to help families and business up and down the country.”

Labour leader Ed Miliband, whose party has a 10-percentage- point cushion over the Tories in national opinion polls, joked yesterday about whether May had leadership ambitions during Cameron’s weekly question-and-answer session in Parliament.

“The home secretary is shaking her head,” Miliband said. “I’m looking forward to facing her when they’re in opposition.”

Minutes later, May was holding one of her regular “surgeries” for fellow lawmakers in the tea room next to the House of Commons chamber.

Cabinet Table

Cameron has begun his own meetings with rank-and-file Conservative lawmakers, inviting 12 of them to lunch around the Cabinet table in his Downing Street office two days ago to air their concerns, according to one of those present, who asked not to be identified as the meeting was private.

One topic raised was the Feb. 28 election in Eastleigh, where the Conservatives, who began the campaign with the goal of winning the seat from the Liberal Democrats, were beaten into third place behind the U.K. Independence Party, which campaigns for withdrawal from the European Union and opposes Cameron’s plan to permit gay marriage.

The prime minister told the group that Lynton Crosby, his newly appointed campaign chief, was advising the party to “remove the barnacles from the ship” and stick to delivering a clear message about the benefits of continuing the austerity program, rather than change direction.

The prime minister was also challenged about what the government can do to get the economy growing again, according to the Tory lawmaker, and replied that the issue now was implementation of policies that had been agreed on.

After Eastleigh, one Conservative, Stewart Jackson, was quoted as telling London’s Evening Standard newspaper that “unless things are demonstrably different” by the early summer, Cameron “will have great difficulty in persuading the electorate that we can win a general election.”

Hammond Rebuffed

Hammond, who was sitting next to May when Miliband made his jibe yesterday, gave media interviews last week urging that his department’s spending be protected and saying cuts should be made to welfare. Those comments were rebuffed by Cameron’s spokesman. Questioned by reporters two days ago, Hammond denied that the skirmishing meant he’s in conflict with the chancellor.

“The reality is, I worked with George Osborne very closely for many years,” Hammond said. “It is about us working together to resolve the best way of dealing with the fiscal consolidation that we need across government. We have got to work together to do it in the most effective way, and in the case of the MoD do it in the way that is least damaging to military capability.”

Cable wrote that the coalition’s decision when it was formed in 2010 to emphasize austerity and deficit reduction was right at the time “in the context of febrile markets and worries about sovereign risk, at that stage in Greece, but with the potential for contagion.” Now, he said, “the question is whether the balance of risks has changed.”

To contact the reporters on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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