Friday, 1 March 2013

Tory collapse, UKIP surge..

Good morning. If it hadn't have been for "the Conservatives splitting the Ukip vote", Nigel Farage reflected in the early hours, his party might have won. While the Lib Dems held Eastleigh relatively comfortably, it is the third place finish of the Conservatives which will cause real worry in the Tory party. David Davis set the bar low earlier this week - beating Ukip but losing to the Lib Dems would not be a disaster - and the Tory campaign has failed to clear that obstacle. In brief:
  • Result: Lib Dems 13,342 (32pc), Ukip 11,571 (28pc), Conservatives 10,559 (25pc), Labour 4,088 (10pc)
  • Swing: Lib Dem (-14.5pc), Ukip (+24.2pc), Conservative (-14pc), Labour (+0.2pc)
  • Lib Dem majority of 1,771 (4.3pc), down from 3,864 (7.2pc) in 2010.
  • Turnout 52.8pc
  • If the result was projected forward into a general election, parliament would be: Labour 355, Conservatives 208, Lib Dem 41, Ukip 17, Others 29. An overall Labour majority of 60.
As Nigel Farage points out, there's a long way to go to the general election. He must also acknowledge that the Ukip vote is, in part, shaped by protest, a "plague on all your houses" mood that is gripping voters and benefiting the party. They are the new Lib Dems,the repository of our frustrations with the parties of power. Tory high command is clinging on to that explanation to avoid confronting some painful truths. The issues Conservatives will be considering this morning will include complaints about their organisation - the knives are being sharpened for Sayeeda Warsi by those who want to avoid blaming Grant Shapps. Expect calls for Lynton Crosby to be given greater powers. Tories might also conclude that David Cameron's Europespeech has made no difference at all, and the policy needs tightening with a referendum sooner than he proposes.
They will want to study too the impact the campaign and the Rennard affair will have on relationships at the top of the Coalition: Nick Clegg will be relieved, but furious with his treatment - actual and imagined - by the Tories,which will make the work of the Coalition harder: what impact will it have on Budget negotiations for example? First and foremost though is the matter of Mr Cameron's position. The result has moved us a significant step further towards a move against him before 2015.Others are needed too: a bad Budget, a dire result in May, no sign of economic recovery and the party's place in the polls stuck below 30pc.The threat of Ukip will heighten the desire of MPs in marginal seats to save themselves. If Mr Cameron is seen to be an albatross, anything could happen. But is it him? Or have we learned this morning that voters have had enough of all of them?
It shouldn't be lost amidst the Tory howls that Labour made no impression at all on the polling. Ed Miliband's ability to win voters in the south must also be in severe question after his party polled less than a third of the Lib Dem total and mustered only a 0.2pc swing.
Michael Gove has been sent out to do press duties this morning on behalf of the Conservatives. His line on BBC Breakfast was that Ukip's surge was a result of their status as "the obvious protest vehicle...[voters] wanted to register their hurt". He added on Today that voters "some people mentioned migration, but more mentioned the economy" on the doorsteps. "There's a sense that the establishment has let people down [but] there's also an acceptance that David Cameron's economic strategy is the right one," he explained. His line is a variant on Grant Shapps's thought overnight that "governments in mid-term regardless get a drubbing," which neatly ignores the fact that the Lib Dems are also in government. 
Over on ITV's Daybreak, Nigel Farage rejected the protest vote categorisation, claiming that "if people who have not voted for 20 or 30 years go out to the ballot box in a by-election and vote, that by definition cannot be a protest vote." He added that the Tories couldn't win in working class areas because they were led by "as one of their own MPs said, a bunch of posh boys who don't know the price of milk." Catty.
As for the Lib Dems, there's a sense of relief. Nick Clegg has said the party is now "on track for 2015", while Tim Farron has hailed a result which "completely change[d] the narrative of this parliament." The secret to Lib Dem strength in areas where they have sitting MPs has always been organisation on the ground. One of the reason the Tories were so keen on busing in MPs and staff from Westminster is that their local organisation countrywide has been neglected in favour of a belief that Mr Cameron's relative popularity will carry the day. Perhaps the real lesson of Eastleigh is that the footsoldiers, rather than the generals, can still win the battle.
A British attempt to renegotiate British membership of the EU is unlikely to find a single supporter amongst leaders who "neither particularly like...nor particularly fear" David Cameron's plans to repatriate powers, according to Herman Van Rompuy. The Guardian reports that Mr Van Rompuy continued cryptically: "how to encourage a friend to change, if your eyes are searching for your coat?" Well, quite. It appears that Britiain is increasingly receptive to Mr Van Rompuy's measured disdain. A new poll of polls in today's Independent shows that since Dave's Europe speech, support for the "in" camp has climbed eight points to an average of 39pc.
Yesterday, Dave was in Riga where he met with other leaders from countries in the Northern Future Forum. He also praised Latvia's "attractive-sounding" flat rate tax system. A hint for George? Well, Fraser Nelson argues in his column for us, the Chancellor can move mountains if he can combine radical ideas, dull presentation and a willingness to escape the Treasury view:
"Soon after he was elected, Osborne met a fellow (non-European) finance minister and discussed the impending cuts: in total, just under 4pc of state spending. He asked his guest: what to do? Should I make these cuts up-front, or spread them out over years? He was advised to act quickly, and get it over with. 'But everyone in the Treasury says I should spread them out,' he replied glumly. His guest left with the impression that Osborne was a prisoner of his officials."  
No mention at PMQs and only a very modest disavowal of Nick Clegg's handling of the affair yesterday from Dave, it seems that the claims about Lord Rennard have put the whole of Westminster on edge. No wonder, claims whistleblower Alison Smith in the Independent, there will be complaints being made behind the scenes about senior figures in both other main parties.
Whatever the truth of that claim, the Lib Dem handling of the allegations comes under further scrutiny today. We report that former chief whip Paul Burstow was asked 21 times about the action he took when he received a complaint from Ms Smith during an interview on LBC. On 21 occasions he refused to answer. The Times (£) reports that six women have now contacted the police with information about alleged sexual misconduct by Lord Rennard. But what difference is this making on the doorsteps? In Eastleigh it, like so many Westminster stories, failed to excite the electorate at all, according to Michael Deacon.
The FT (£) reports that George Osborne is "scrambling" to water down the EU's new regulation limiting banking bonuses to a 1:1 ration with salary, rising to 2:1 with the approval of a super-majority of shareholders. One particular concern is that British domiciled banks, like HSBC, will be forced to implement the ratio limit to their global operations. In contrast, competitors headquartered outside the EU, like J.P. Morgan, would only need to apply it to their European operations, giving them a competitive advantage. Boris was also unsettled by the agreement, lamenting that "this is possibly the most deluded measure to come from Europe since Diocletian tried to fix the price of groceries across the Roman Empire."
Europe isn't Downing Street's only banking headache. Despite a headline loss, RBS's underlying business model looks more robust than it has at any point since the crisis. Stephen Hester suggested yesterday that the Government might sell off its stake within two years. As we report, he was soon told in no uncertain terms that this wouldn't be the case - there's no exit plan at the minute. 
A new contract system drawn up by a consortium of 20 hospitals in the south-west could be vital to allowing the NHS to achieve its savings target of £20bn by 2015, the FT (£) suggests. Staff conditions will be altered to include lower sick pay, shorter holidays and local pay rates for some consultants. While these are on trial in the court of medical opinion, the court of media opion continues to weigh the case of chief executive Sir David Nicholson. As the Mirror reports, he will continue in his job despite the Mid Staffordshire scandal, having received the backing of the NHS board. However, as we note, public anger is still strong, and he has become something of a lightening conductor for it. There has not exactly been a rush of senior politicians wishing to back him, and the Tories (including a Cabinet minister) who want to see him go may still get their way.
William Hague has written to the Cabinet directing them not to discuss the legality of the Iraq war ahead of its 10th anniversary, the Guardianreports. Mr Hague argues that until Sir John Chilcot's public inquiry publishes its findings, any judgement would be premature. Predictably, the Lib Dems have no intention of complying. Nick Clegg is expected to make a speech on the war before the 19th of March anniversary date.
Yesterday's immigration figures were a triumph for Theresa May. Both gross and net immigration fell, as the FT (£) reports, with a fall in net immigration of 34pc, down to 163,000 a year from 247,000. As Thomas Pascoe notes on Telegraph Blogs, for the first time, the Coalition target of a net figure is starting to look achievable. The crackdown on bogus student visa applications has had a dramatic effect of the number of new arrivals. Ukip are planning on making immigration the main plank of their northern campaigning in the year ahead. But on this measure, at least, the Coalition are already delivering.
Having seen the Institute of Licencing be rather rude about his minimum alcohol price plan yesterday, Dave will be grateful to receive the support of a group who believe he should go further today. The Alcohol Health Alliance, consisting of 70 medical colleges and campaign groups, wants to see a floor price of 50p per unit, greater than the 45p Dave is suggesting, we report. 
The middle classes can feast easy on their fillet steaks only because the poor are prepared to eat burgers, Mary Creagh has explained in an interview with The House. Without demand for the "cheaper cuts", the price of fillet steak would soar, she argued. As we report, Ms Creagh dabbled with vegetarianism when she was younger but was forced the abandon the experiment owing to a hatred of carrots, which explains some of the interest in the price of steak.

Chuka Umunna over-shares: 

@ChukaUmunna: "First time I had to run off a TV set live on air tonight with a stomach bug- dodgy chicken kiev! Returned to complete the job" 


In the Telegraph 

Fraser Nelson - Act radical, sound dull - how Osborne can save the economy
Best of the rest
Philip Collins in The Times (£) - Together the prudent can beat the profligate
Samuel Brittan in the FT (£) - Revealed: a not-so-secret sterling devaluation plan
Sean O'Grady in The Independent - Negative rates? All the more reason to save

TODAY: Plaid Cymru Spring Conference. Welsh nationalist party Plaid Cymru hold their annual conference. Beaumaris Leisure Centre, Beaumaris, Anglesey.
09:30 am: Bank of England releases its lending to individuals study for January.