Morning brief..

What is David Cameron going to do? He’s stuck between a Coalition Agreement and a hard place. The Sun’s headline “Knifed in the backbenchers” and the FT’s  “Cameron seeks to rebuild authority” say it all.

Yesterday evening, the Tory leader faced up to the 1922 Committee and said he was willing to water down the Lords reform proposals. The FT, Mail and the Telegraph say this would involve reducing the number of elected peers in the plan. Dave said: “There is not going to be endless haggling with the Lib Dems... If we fail to do that then we need to draw a line. We are not going to go on and on with this and damage the rest of the Government's programme."

The Guardian’s Nick Watt reports that Dave’s planning to tell Nick Clegg that it’s not happening in this Parliament - he’ll have to wait for the next. Watt also says that ministers are looking to build on the DPM’s mild concession in the debate on Monday that he’d let MPs debate at the committee stage of the bill whether to pause the legislation after the first elections in 2015.

Whether the Lib Dems play ball remains to be seen, but Dave does seem to have a trick up his sleeve for calming the backbenchers: William Hague is formally announcing his “comprehensive audit” of the European Union “as the first step in renegotiation a looser relations with Brussels”. Subtle. You can read more  here.

Unsurprisingly, the PM got a roasting at PMQs yesterday. He didn’t grab the sketchwriters’ attention, though. The starring role went to Anne Marie Morris MP, who screamed her question - to much amusement - to fight with the noise in the chamber. If you missed it, you can watch it here . The Telegraph’s Michael Deacon  described her as “a modern-day Guy Fawkes” who “set Parliament ablaze”. Mrs Morri‏s defended herself on Twitter saying “The House can be a noisy place... but I care about the issue I raised and I will always passionately speak about causes in my constituency.”

COMMENT

Peter Oborne says these events demand that the Coalition return to the Rose Garden because “a fresh agreement with the Lib Dems might just give the careworn PM a new lease of life”.

Martin Kettle warns that the Lords fiasco is “school-of-Brown politics” and will hurt the Coalition. He also includes quotes a Tory minister saying: “Rebellion is like adultery... It's a big thing the first time. Later it becomes a bit easier, perhaps even ends up as a habit.”

CLIPPING BRITAIN’S WINGS

In the world outside Westminster, business leaders are kicking off about the Coalition’s dithering aviation policy.  The Times has published a letter from business and trade union leaders condemning the Government’s latest delay in delivering a coherent aviation policy. As we report today , the important part of the long-awaited review on a new hub airport has been put back, partly in deference to the Lib Dems’ tender sensibilities. This, as we say in our leader, is very much a bad thing.

The Times quotes Sir Richard Branson calling the Government’s failure to make a decision inexcusable, adding that every business in Britain is “losing tons of money” because of the absence of “proper airline services”. Peter Mandelson  has also joined the fight: the paper carries an op-ed by the Dark Lord demanding that the Government removes the issue from party politics by setting up an independent commission.

Airports aren’t the only thing businesses are upset about, though. We carry a letter today from  bosses in the construction industry, arguing that the failure to invest in infrastructure is damaging the economy in the short and the long term, and could lose Britain investment from overseas. In short - build, Dave, build.

TONY’S BACK IN TOWN

It appears as if Tony Blair’s long-anticipated return to British front-line politics has begun - starting, true to form, at a glitzy sports fundraiser at the Emirates stadium last night. At the event, he shared a stage with Ed Miliband and announced that he’d be advising the Labour Party policy review on sporting matters after the Olympics. This article by Nick Watt (yes, him again) -   “Return of the king to heal divisions within the Labour tribe” - is worth reading for more details.

Not everyone was happy to see Mr Tony, though. Anti-war protesters gathered outside, and a disgruntled Shadow Cabinet minister told the Mail : “Tens of thousands of people have joined the party since Ed became leader.They’d either left [under Blair and Brown] or refused to join. Why demotivate them like this?”

Unsurprisingly, the Blairite/Leftist war lives on. These battles die hard, after all. Even David Miliband - who yesterday in a Guardian interview vowed not to talk about Ed any more - makes a veiled swipe at the current Labour Party in today’s New Statesman  (which he guest-edited). He warns that the party must “become a magnet for votes, not just a receptacle for them”. Ouch.

But Mr Tony himself is unlikely to care. He’s probably worrying about much bigger things: world peace, international development, and - er - UFOs. Our story on  his questions for the MoD on the pressing matter of little green men is worth reading for a giggle.

TWEETS AND TWITS 

Looks like the rebel leader survived his encounter with Darth Dave:

“@Jesse_Norman: Rumours of my demise are somewhat exaggerated.”

POLL WATCH

Latest YouGov/The Sun results: Conservatives 35%, Labour 42%, Lib Dems 9%, UKIP 8%

Overall government approval rating: -35

TOP COMMENT

In The Telegraph

Peter Oborne:  In the Coalition’s darkest hour, it must return to the Rose Garden

Sue Cameron:  The nudge, nudge unit has ways to make you pay

Leader:  Wishful thinking won’t solve the care crisis

Leader:  Clipping Britain’s wings

Best of the rest

John Kampfner in the Financial Times: Coalition malcontents have nowhere to go

Steve Richards in the Independent: What's in it for us? The question Nick Clegg must ask himself

Martin Kettle in the Guardian: School-of-Brown politics is as destructive as ever

Peter Mandelson in the Times: Only the wise men can land an airport policy

THE AGENDA

Today:  The Office for Budget Responsibility releases its annual fiscal sustainability report

10.30am: Energy and Climate Change Questions

2.30pm: Philip Hammond and General Sir David Richards, Chief of the Defence Staff, appear before the Defence Select Committee. Wilson Room, Portcullis House

6.30pm: Vince Cable gives a speech on science to Royal Society