Cameron hints at EU referendum..

BREAKING NEWS: On the Today programme, the Prime Minister has said that a referendum to establish fresh consent on EU membership is the “cleanest, neatest and simplest” solution, but that Britain needed to approach its relationship in a “tactical, strategic” way throughout the current crisis.

The Prime Minister also spoke out against “state sponsored poverty” through the welfare system. In a fractious interview, he defended the Chancellor’s speech against accusations that his policies would force children into poverty and denied that his party is missing its economic targets:

“I don't accept that. I think people are very understanding of the inheritance we had...They understand it takes time. It has changed. The deficit is down by one quarter in two years...We have to wait until the end of the year to see what the deficit is. The only thing we do know is the deficit is down by a quarter over the last two years.

Mr Cameron also praised the Lib Dems for “enabling a government to act in the national interest”.

On Sky News, Mr Cameron backed Chris Grayling’s proposals on giving homeowners more latitude when dealing with burglars:

“I've been burgled a couple of times when I lived in London, in North Kensington. There was one occasion when I left the keys in my car and they loaded up my Skoda and drove off...It is a horrible feeling when your house has been invaded...Some people say it is not a violent crime but in many ways your house has been invaded and your privacy has been invaded”

Meanwhile on ITV’s Daybreak, he said he was delighted to have Boris in town on his birthday:

“I think it's great that we've got someone with rock star status in the Tory Party...I've got the opposite of tall poppy syndrome. I want to have big stars in the Tory Party...There are lots of people that are more popular than me in this world because I have to be the one that takes the difficult decisions on behalf of the country to recover us from the dreadful situation that Labour left us in.” 

GORGEOUS GEORGE GIVES THEM WHAT THEY WANT

As the Telegraph reports, Mr Osborne’s conference speech delivered the widely anticipated pledge to cut a further £10bn from the welfare budget, as well as couple of surprises, including the proposal that workers could exchange unfair dismissal rights for equity stakes in their employers. The Chancellor has done well here: he’s secured Vince Cable’s agreement to introduce a chunk of Beercroft that establishes a beachhead against excessive employment rights. Mr Osborne was also sent out to attack Ed Miliband and reclaim the ‘one nation’ mantle. In fact he went further, demanding that “workers of the world unite”. Despite the dry delivery, the speech will read well this morning for Tory activists:

“How can we justify giving flats to young people who have never worked when working people twice their age are still living with their parents because they can't afford their first home? 

“Get shares and become owners of the company you work for. Workers, owners and the taxman, all in it together. Workers of the world unite.”

Mr Osborne’s speech also re-introduced the idea that “we are all in this together”, once a former Tory favorite but increasingly a stick for Labour to beat them with. The point may have been lost on Jacob Rees-Mogg, who the Sun reports was quaffing champagne throughout. It may also have been lost on the IMF, who delivered a veiled call for ‘Plan B’ on the morning of the speech, as the FT (£) reports. It predicts the economy will shrink by 0.4 per cent this year.

I thought that the speech was a success, given the pressure which the Chancellor was under when he delivered it. Writing in the Telegraph this morning, I say that George’s clear vision, and his directness, sets him apart from the opposition:

“The Chancellor demonstrated yesterday where the difference lies between Mr Miliband’s dishonest guff about One Nation, which never once mentioned the deficit, and a Tory message of unadorned honesty about the sacrifices that are still necessary and the changes that are possible. This week we will come to see that, between now and polling day, a choice will become clear, between politicians who tell the truth about the mess we find ourselves in, and how to get out of it, and those who don’t.”

Mr Osborne, who is off to the IMF this morning, is acclaimed for the “thread of honesty” in his speech in the Telegraph’s leader column, he also wins praise from the Mail, whose leader hailed a speech “spoken like a true Tory”.

While George’s content wins praise this morning, his delivery does not. The Mail ’s Quentin Letts writes that “as political showmanship, George Osborne’s speech was as underdone as a Frenchman’s horse cutlet”.   Meanwhile, in the Times (£), Ann Treneman refers to him “relish[ing] his role as fifth horseman of the apocalypse”, while the Telegraph’s Michael Deacon points out a certain inconsistency in the Chancellor’s speech:

“His most brazen line, though, was the one about blinds. ‘Where is the fairness for the shift worker, leaving home in the morning, who looks up at the closed blinds of the next-door neighbour, sleeping off a life on benefits?’”

A fair enough point, except that he said it just three minutes after saying, ‘We’re not going to get through this if we set one group against another – if we divide, denounce or demonise.’ In summary: ‘We mustn’t pick on anyone. But if you see your neighbour’s blinds down, smash the workshy sod’s windows!’”

The Left’s reaction is cagy. The most significant comes from Nick Clegg, who refused to lend any support to the Conservative plans without extra taxes on the wealthy, as we report. The Lib Dems were consulted formally several weeks ago, though Dr Cable’s price was his business bank. “Comrade Gideon” is slated in the Mirror for his “perma-snarl [and] dead eyes”.Polly Toynbee’s criticism in the Guardian is more substantial:

“This feels like a party lost to common sense. Unlike the old days, Labour people were exceedingly sensible, no one said anything mad, but here psalms to free-market extremism and chants about grinding down the feckless idle ring out at most fringes. They bark for a referendum on Europe, against gay marriage, against public workers, for tax cuts and for less state. At a serious event about infrastructure, a speaker from the Institute for Economic Affairs astonished the construction industry with his remedies: to avoid public spending on road building, rip out cycle and bus lanes. To solve train capacity, use standing-room only carriages.”

BORISMANIA HITS BIRMINGHAM

Bo-Jo arrived on a train from Paddington yesterday and was given the full rock-star treatment by the party faithful, as we report . Addressing a rally hosted by ConservativeHome in honour of his Olympic success, Mr Johnson was firmly on message. The Times (£) quotes him as telling the faithful:

“No one as a result should have any cause to doubt my admiration for David Cameron...I believe that in tough circumstances he and George Osborne are doing exactly what is needed for this country and to clear up the mess that Labour left.”

What will worry the Tory high command is the rapturous reception Boris received, especially given the sometimes lukewarm applause for Mr Osborne earlier in the day. As Telegraph blogger Dan Hodges writes, “it had the feel of a campaign launch, which is exactly what it was”. Counter-insurgency measures are also well advanced. Ken Clarke told Channel 4 yesterday:

“If he really wants to be a Prime Minister for serious reasons and not just getting his picture in the paper more often, he really does have to settle down and demonstrate he can seriously deliver on some complicated subjects.” 

As the Mail adds, Mr Clarke was clearly pitched into the attack dog role. He also went to war on UKIP, whose members he describes as “swivel-eyed”.

London’s Mayor addresses conference this morning. No matter how well behaved he is, expect his oratory and his capacity to connect with his audience to be the standard by which Mr Cameron is judged tomorrow.

OSBORNE’S NIGHT IN TRANSYLVANIA

The serialisation of Janan Ganesh’s semi-authorised biography of George Osborne continues in today’s Mail. The main takeaway is the Chancellor’s determination not to waver in his austerity programme. Mr Ganesh writes:

“Osborne showed little patience towards tremulous colleagues faced with the realities. ‘This is what austerity looks like,’ he said, with flat realism. ‘What did you think was going to happen?’ But that didn’t stop the whingeing. The then Defence Secretary Liam Fox did not disguise his alarm at the Government’s review of defence spending...much the hardest Cabinet member to reach agreement with was Work and Pensions Secretary Iain Duncan Smith, whose vision of welfare reform aimed to improve incentives to work whatever the cost. If that meant spending more rather than less money, then so be it.”

The Chancellor won out, indeed he appears to have won most of his political battles within the Tory hierarchy where he is regarded as having the sharpest political instincts of any of his colleagues. The battles he did not win were with the Prime Minister himself, with Dave accused of having “trimmed and tilted” whenever austerity threatened to upset a core constituency. As an ultra-loyalist, George, who we are told is “not interested” in being Prime Minister, accepted this. As the paper reports, he only wavered once in his support of Dave, and has been teased mercilessly ever since:

“When Cameron was standing to be party leader, some on his campaign team suspected that Osborne half-expected his friend to lose to David Davis and attempted to position himself to thrive in a Davis-led government. He even dined with Davis’s campaign manager, Andrew Mitchell.

“Osborne is now teased about his ‘night in Transylvania’, but Cameron and his supporters were not so relaxed at the time.”

TORIES UNLEASH DISPROPORTIONATE FORCE

Today’s big policy announcements will be on criminal justice. Chris Grayling will announce plans to allow homeowners to attack burglars, with prosecutions only forthcoming where violence is “grossly disproportionate”, according to today’s Telegraph. Mr Grayling will also pledge to increase the number of prison places by 2015, and will also say that “no change is not an option” when it comes to unpopular human rights laws.

Theresa May will back-up Mr Grayling’s remarks in her own speech, which the Mail reports will encourage victims to “pick your own punishment” for offenders. The Home Secretary will force police and crime commissioners to choose from a “menu” of penalties for anti-social behaviour, with victims able to decide whether they would prefer compensation, repair of damage or the cleaning up of a public space.

It’s a good job that the option of custodial sentences does not appear on Mrs May’s menu, otherwise Mr Grayling’s new prison places would be nowhere near enough.

PM ADVISED TO SEIZE THE DAY

There is plenty of advice for the Prime Minister in today’s papers. Most of it takes the side of the reformers over the traditionalists. Writing in theFT (£), Janan Ganesh urges him to start shaping the European issue, lest the natural Euroscepticism of Tory MPs consume the Government. This view is echoed in the Times (£) by Roland Watson, who writes that the diplomatic challenge facing Mr Cameron and William Hague will “define the age”.

Meanwhile, Rachel Sylvester, also in the Times (£), says that the Prime Minister should steer clear of those in the party, including Mr Osborne, urging him to run a highly personal, negative campaign against Ed Miliband. 

Whether the party is ready for further modernisation remains to be seen. The Independent reports that gay marriage could be on the statute book by the end of the year. It also reports that MPs will get a free vote and that yesterday’s anti-gay marriage rally was very well attended and warmly received. Mr Cameron has more of a battle on his hands than he realises.

HS 2 TO EXPAND

Patrick McLoughlin confirmed yesterday that re-tending the West Coast main line contract will take up to 18 months, the FT (£) reports. In the meantime, commuters will have to take some cheers from the news that HS2 will expand. The £32.7bn project may go beyond Manchester and Leeds, with Mr McLoughlin’s intention being that the journey time between Scotland and London falls to under three hours. As the project will not be delivered until after the independence referendum, best pencil that in as ‘provisional’ for now.

BAE / EADS DEAL FINDS MOUNTING OPPOSITION

With only one day until the ‘put-up or shut-up’ deadline, the FT (£) reports that up to 30 per cent of BAE’s investors have expressed concern about the deal. With Germany demanding the combined company move it headquarters and France hinting that it may want more than 10 per cent of the combined entity, the mood music is not great, and the deal is now looking at face-saving as much as creating a European champion.

ENERGY POLICY SPARKS INTO LIFE

The Independent reports that Britain may attempt to circumvent the prevailant NIMBY culture at home by locating its wind farms in Ireland. More than 700 wind turbines could be located in fields to the west of Dublin, with power relayed back to Britain via an underwater cable running to Wales. Coming in the wake of George’s conference announcement of tax breaks for shale gas exploration, it looks as though the Coalition have been jolted into action by the difficulty they are having in securing funding for their nuclear programme.

MITCHELL’S RWANDA AID MAY BE INVESTIGATED

The Mail reports that Thrasher’s problems may not be over yet. The former International Development Secretary could be forced to answer questions about unlocking a £16m grant to Rwandan president Paul Kagame’s regime on his final day in office. Sir Malcolm Bruce, chair of the Commons International Development Committee has apparently raised concerns about the transaction.

PERRY’S ECONOMIC REPUTATION PERISHES

As a former banker, Claire Perry was confidently put forward to answer media questions in the wake of the Chancellor’s speech yesterday. Unfortunately, as the Mail reports, she confused debt and deficit on 5Live yesterday, claiming there was “no difference” between the two. 

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

Denis MacShane isn’t enjoying footage of the Tory party conference:

@DenisMacShane: “Weird procession of cab ministers reading out blah blah text. No debate, no questions, no exchange with hall. No anger, oratory, passion. ” 

TOP COMMENT

In The Telegraph

Benedict Brogan - The knives were out for Osborne – but he may well have saved his reputation 

Philip Johnston - A return to policing before the days of Z Cars

Allan Massie - Scotland’s vitality was the envy of the world 

David Blair - And still the Syrians keep coming

Best of the rest

Douglas Murray in the Daily Mail - Getting people off welfare is not uncaring - it's a moral duty and the only way to save us from fiscal suicide 

Polly Toynbee in the Guardian - For these one-term Tories a shrunken state is the prize

Rachel Sylvester in the Times (£) - To win, David Cameron must try a little tenderness

Janan Ganesh in the FT (£) - Cameron must shape his European policy 

THE AGENDA

Today: Conservative party conference continues in Birmingham.

09:00 Owen Paterson speech on the environment

09:45 Justine Greening speech on international aid

11:00 Boris Johnson speech

11:30 Health and education (Jeremy Hunt, Michael Gove)

14:30 Home affairs and justice (Theresa May, Chris Grayling)

16:30 The road to 2015 (Stephen Gilbert)