Breaking News: George Osborne has been speaking on the Today programme.
Mr Osborne said there would be no pact with Ukip: "There aren't going to be any deals with UKIP, and there are not going to be Conservative-UKIP candidates locally."
He also emphasised that the cost of living crisis was the result of the economic situation that the Government inherited, saying "if you don't have a credible economic policy you don't have a living standards policy."
Good morning. Has George Osborne won back the affection of the Conservative party he mislaid following the omnishambles budget? His speech today will give us a measure of his restored credibility with activists. There is a vacancy for the under-a-bus candidate who would be the obvious choice in case of a sudden crisis. Some suggest the Chancellor has clawed his way back to that position, though for my money William Hague is the more obvious bet.
It's the economy that's done it. A rising tide raises careers as well as yachts. The better things get, the more Mr Osborne is forgiven for his misjudgments. MPs are relieved that circumstances have changed in their favour. Activists too. Mr Osborne gets credit for holding his nerve, sticking to Plan A, and therefore crushing Ed Balls into the dust.
His success, it could be said, is two-fold: he has been proved right on the economy, and as a result has left Labour high and dry. City people say they are confident the recovery in Britain will carry on through the election, giving the Chancellor a story of success to tell the voters. A potent weapon against populist Red Ed. What also helps Mr Osborne and the party - and this is not talked about in quite the same way - is the new arrangement for campaign organisation. The Chancellor has been spared responsibility for the next election campaign by the decision to put Lynton Crosby in charge. David Cameron has made explicit that all decisions and the party's strategy are in the hands of Mr Crosby.
Mr Osborne will still have a powerful voice. But responsibility for the campaign is no longer his, which amounts to a liberation. Expect to see a buoyant Chancellor on stage, who knows things are going his way. The briefing of his speech into this morning's papers suggests the Tories know there is more mileage to be had from demanding more from those who claim welfare. House-buyers get Help to Buy, job-seekers get Help to Work, which means compulsory workfare for those who can't find paid employment. The calculation? There's plenty of evidence that the drop in claimants is evidence that many are opting for untaxed, under-the-counter work. The Tories are calculating that the tough message will act as an incentive to those who, if presented with a choice - work for benefits or find a job - will prefer the latter. Mr Osborne wants to associate himself with this no-nonsense message. He knows there are votes there.
FARAGE OPENS DOOR TO PACT
With a flair for timing worthy of Damian McBride, Nigel Farage has opened the door to a Tory-Ukip pact. Mr Farage says that he would not stop agreements in individual constituencies. Peter Bone and Jacob Rees-Mogg are cited as Tory MPs who Ukip might want to endorse. Mr Farage writes in a piece for The Times: "If they, or others like them — even Labour MPs — with their local associations chose to propose running on a joint ticket, then I would leave the local UKIP association to have those negotiations." CCHQ would not officially sanction any such deals. But Eurosceptic Tory MPs privately think the idea could have legs, saying that it would be barmy for the Right to divide and stop a referendum on EU membership. Some MPs even concede that the Tory brand is so damaged in parts of the North that in some seats Ukip is a far more likely winner. Lord Ashcroft is unconvinced, telling Today: "I don't think that will be necessary and it will be well, well above my pay grade to suggest it."
BORIS KNOWS HOW TO FIGHT ED
Boris Johnson thinks he knows how to stop the Red Ed threat: stick it to the Labour leader for his record at the Department of Energy and Climate Change, and present the Conservatives as the only party with the forward-thinking answers to Britain's problems. "I know how hard it is to fight against a Labour Party that dishonestly pretends it can cut your costs. I’ve done it; and I know that in the end people see through the con. The public will go for the party with vision and ambition and sheer courage to take the big long-term decisions that will boost Britain’s competitiveness, cut costs and improve the standard of living for everyone."
But evidence from conference suggests not all Tories are as confident. Tory MPs admit that Ed Miliband's speech out-performed their expectations in its delivery. James Kirkup observes the confused response to the energy plan - it seems like every Conservative has a different fightback plan, with the result that the message is all rather muddled. Is it Red Ed or weak, indecisive Ed? It can't be both. Labour sources say that they now make it £1.6 billion in "unfunded announcements" and would like reassurance that it's not based on funny money.
Dave isn't going anywhere - at least if Sam gets her way. An interview with The Sun reveals that Samantha has said that she wants him to go on as PM until at least 2020. Mr Cameron also says that Samantha "is never going to do a Sarah Brown" and introduce him onstage and "there are boundaries" that Samantha doesn't want to cross in her dealings with the media.
Dave yesterday hinted on the Marr Show that Andrew Mitchell could make a return to ministerial life pending the conclusion of the plebgate affair. That would be a popular move with the grassroots, who feel that Mr Mitchell has been shafted. But another potential minister (although probably not in this Parliament) is Kwasi Kwarteng, who has given an interview to Total Politics suggesting that Brittannia Unchanged, which he co-authored, has influenced the PM's agenda. "It seemed a bit of a coincidence to me and to others that we started talking about the ‘global race’ at about the time it came out." Mr Kwarteng is also open about his higher ambitions: “obviously I’d love to, you know, it’d be great to be a minister one day".
LYNTON'S CORE VOTE STRATEGY
Nicholas Watt's piece provides a reminder of Lynton Crosby's qualities. At the Tory away day, Mr Crosby made a joke about the wealth he had seen at a fundraising dinner in the PM's constituency. "If just one of the ladies had managed to sell one earring we could have funded the Tory party for three months," Crosby said. The anecdote goes to the heart of Mr Crosby's appeal - his ability to talk truth onto power and his lack of deference to the PM. But while Labour's 35 per cent strategy is often mocked, the Tory approach may not be too dissimilar. Note the quote from a Tory: "There is only one type of politics Lynton Crosby understands, which is the core vote thing … He gets the vote out by really going for the lowest common denominator."
TUC MARCH TURNS UGLY
Here's a link to the 10-minute 'Our Maggie' video that kicked off the Conservative conference. The TUC, alas, did not approve, and their Save Our NHS march outside conference turned rather ugly. Sebastian Paynewrites of his encounter with demonstrators: "If you don’t put you f**king camera way, we’ll smash it off your face... Go and f**k off back to your conference, you p***k".
TWEETS AND TWITS
Ed Miliband is agree about the Mail's profile of his dad:
The Daily Mail has agreed to publish a reply by me on Tuesday to their piece about my father headlined "Man Who Hated Britain". My dad loved Britain, he served in the Royal Navy and I am not prepared to allow his good name to be denigrated in this way.
In the Telegraph
Boris Johnson - Miliband in power 'like a turbine on a windless day'
Daniel Hannan - Greece is starting to look like Weimar Germany
Jeff Randall - Who will end this pension scandal?
Telegraph View - Economic recovery remains the top priority
Best of the rest
Nigel Farage in the Times - I'm happy to link with the Tories
Trever Kavanagh in the Sun - UKIP’s Farage is haunting the Tories like a bad smell
Gavin Kelly in the Financial Times - Why living standards and the deficit matter
John Harris in the Guardian - A conservatism is spreading that the Tories can't fathom
Conservative conference day two:
9.15: Panel discussion with Owen Paterson, Exchange Auditorium
10.30: George Osborne addresses conference. He will be followed by Transport Secretary Patrick McLoughlin
14.30: Speeches from Theresa May and Chris Grayling
13:00: Conservatives and UKIP: enemies or allies? Nigel Farage, Peter Oborne, Bill Cash. The Great Hall, Manchester Town Hall
17:30: Europe: The challenge of 2014 William Hague. Manchester Central: Exchange 9
18:00: An Audience With Boris Johnson: Destination signs from Manchester – how London drives the UK economy Boris Johnson. Manchester Central: Exchange Auditorium