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Maitland Political Insight Conservative 2014 Conservative Conference 2014

Maitland Political Insight – Edition VI - Conservative Conference - September 2014

Contents

Introduction ……………………………………………………………………………………….3

Economy ……………………………………………………………………………………….....4

Business……….…………………………………………………………………………………..4

Welfare…...... 5

Health……………………….…………………...………………………………………………...5

Foreign Affairs & Defence………………………………………………………………………..6

2 Conservative Conference 2014

Introduction

As Party Conference season continues, last week it was the turn of the Conservative Party in .

It‟s safe to say that #CPC14 (as it was known on ) didn‟t get off to the start the Leadership would have wanted with the news of Mark Reckless, MP for Rochester and Strood, defecting to UKIP breaking on the eve of the conference. Conservative Party Chairman MP was firm in describing the move as “completely illogical”, but there was a definite purple cloud hanging over Birmingham at the start of the conference.

That said, all was forgotten when Leader of the House, MP took to the stage on Sunday afternoon. In what many labelled as his last hoorah, Hague‟s speech was an emotional goodbye to the party he once led and labelled as a “party for everyone” as evidenced by him. This speech was to kick of a series of substantive contributions from the party leadership as they set the course for the 2015 General Election.

Monday saw some of the Cabinet heavyweights take to the stage. Chancellor MP announced £23,000 and the Conservatives‟ plan to cut the deficit. Minister for the , MP spoke about the continuing Government efficiency reform programme that would take place in the next . The afternoon was capped off by Work and Pensions Secretary, MP, who had the hall on their feet when he broke free from the autocue to address party unity.

Home Secretary stole the show on Tuesday with a composed performance which focused on tackling extremism and reform of „stop and search‟. It was a tough act to follow, but threw everything into it, including a brick. There is no doubt the Mayor won the line of the conference award, declaring that the new Conservative fisheries policy was "to chuck Salmond overboard, then eat Kippers for breakfast!"

Then it was the turn of Prime Minister MP who took to the stage to close the conference on Wednesday. Looking back on the year past, Cameron paid homage to those who fought on D-Day. He was not bashful when making a joke at ‟s expense, referencing the Labour leader „forgetting the deficit‟. Key policy announcements included the raising of the personal allowance and raising the 40p tax rate from £41,900 to £50,000 by 2020, which was criticised by Labour as an unfunded . The Prime Minister also committed English votes on English issues in Parliament by the next election. Whilst this was a traditional Conservative speech in many respects, some announcements did indicate a tack back to the centre ground ahead of next May‟s general election.

This is the third edition of the Maitland Political Conference Insight, providing you with detailed analysis of the major announcements from the Conservative Party Conference 2014.

3 Conservative Conference 2014

Economy

As was expected the economy formed the centrepiece of the conference, with a raft of tax and spend measures being announced. The Conservatives are hoping the economy becomes the crucial battleground at the next election, due to their long-held poll lead over Labour on the issue.

The Chancellor of the Exchequer delivered his speech from the podium on Monday. He opened on an optimistic note saying “ believe it is perfectly possible for Britain to be the most prosperous major country on earth.” He then moved on to trumpet the Government‟s economic record, referring to Britain as “the fastest growing, most job creating, most deficit reducing nation on earth”.

The Chancellor then took aim at the Labour Party opposition, enjoying a cheeky jibe at Labour leader saying “Ed Miliband made a pitch for office that was so forgettable that he forgot it himself”. He then announced the speech‟s headline message, saying deficit reduction requires a further £25bn of public spending cuts in the first 2 years of the next parliament. The announcement was meant to ease the electorate into the idea of further public spending cuts should the Tories win in May next year.

If George Osborne MP‟s public spending cuts announcement portrayed him as the „bad cop‟, then David Cameron MP intended to be the „good cop‟ with tax cuts at the heart of his conference address. He began by saying in plain terms that “If you work hard, we will cut your taxes…but only if we keep on cutting the deficit, so we can afford to do that”. He moved on to pledge the lowest corporate taxes in the G20, a nod to the pro-business instincts of many Tory activists.

The Prime Minister‟s speech then got into full swing with a commitment to raising the tax-free personal allowance from £10,500 to £12,500, a policy which has been touted by the Lib Dems for some time now. He went on to say how this would take a person earning minimum wage and working 30 hours a week out of income tax altogether. “So with us if you work 30 hours a week on minimum wage, you will pay no income tax at all. Nothing. Zero. Zilch”.

The Prime Minister moved on to perhaps his most surprising announcement, that the Conservatives would raise the threshold at which people pay the 40p tax rate to £50,000 by the end of the next parliament. He said “The 40p tax rate was only supposed to be paid by the most well-off people in our country but in the past could of decades, far too many have been dragged into it”. The total cost of these tax cuts amounts to £7bn, with the Conservatives yet to outline how they are to be funded.

Both the Prime Minister and Chancellor have set out their economic stall ahead of next May‟s election, believing it will be enough to sway the electorate their way.

4 Conservative Conference 2014

Business

The Conservatives have often been characterised as the most business-friendly party and at its Conference in Birmingham the party sought to show how it intended to honour that accolade. As Chancellor George Osborne said during his speech: “the future for Britain is to be a pro-business country.”

The most eye-catching announcement was made by Prime Minister David Cameron MP in his speech on Wednesday, saying a Conservative government “will always have the most competitive corporate taxes in the G20.” At the same time, Cameron referenced Chancellor George Osborne MP‟s speech given on Monday, and warned companies that the UK does expect companies to pay the tax they are due to pay. Osborne had singled out major technology companies in particular as an example of aggressive . He said his “message to those companies is clear: we will put a stop to it. Low taxes, but low taxes that are paid.”

He gave some details of this clamp-down, which has been dubbed the “”, but more details will be announced in the Autumn Statement on 3 December. The new measure will specifically target the “Double Irish” - a transfer pricing scheme. This involves transferring profits internally, first to Ireland, and then to another low-tax jurisdiction, to limit a firm‟s tax liability. Companies using this strategy will be made to pay tax on profits as if they were incurred in the UK.

The party also set out plans to invest in apprenticeships, aiming to increase the total number between 2015-2020 to 3 million. This increase will be funded by lowering the household benefit cap from £26,000 to £23,000. The plan also sees access to Jobseeker‟s Allowance for 18-21 year olds abolished and replaced with a Youth Allowance, time-limited to six months, after which young people will have to take an apprenticeship, a traineeship, or do daily community work for their benefits.

On infrastructure, Cameron has sought to re-assert the Conservatives as the party of the homeowners, announcing that to 100,000 new homes would be offered to first-time-buyers under the age of 40 at a discount of 20%, by exempting them from certain taxes and regulations, if the Tories win the next election. The houses would be built on brownfield land that has already been earmarked for development but which is not needed for commercial use.

In more broad-brush strokes, Osborne summarised the Conservative plan that is partly underway already under the Coalition Government: “we will tap the shale gas, commission nuclear power and renewables, and guarantee our energy for the future. We will build the high speed rail, decide where to put a runway and support the next generation with starter homes in a permanent .” He also said in response to concerns over the dominance of London that “the answer is to build up the rest of our country”, in particular creating a of cities, connecting up the South West and putting the Midlands at the centre of a manufacturing revival.

5 Conservative Conference 2014

Welfare

Welfare formed a significant part of the Conference agenda, with both Chancellor George Osborne MP and Work and Pensions Secretary, Iain Duncan Smith MP, making a series of announcements. With welfare reform also prominently on the agenda at Labour‟s conference last week, it is set to be an important battlefround in next year‟s general election.

Osborne‟s announcement that the household benefit cap would be lowered was trailed heavily in the media. The plan would also abolish Jobseeker‟s Allowance for 18-21 year olds and replace it with a Youth Allowance, time-limited to six months. After six months, young people would have to take an apprenticeship, a traineeship, or do daily community work for their benefits. The money that would be freed up with this reform would be invested in apprenticeships, aiming to increase the total number between 2015-2020 from 2 million to 3 million.

The second announcement was that working age benefits would be frozen for two years. The Conservatives have long supported this policy but could not get agreement from their Coalition partners to implement it. Osborne said that the freeze would come into effect in April 2016 and would include Jobseeker's Allowance, Income support, tax credits, and but it would not affect pensions, benefits and maternity pay. The benefits freeze will save £3.2bn over two years and the money saved would be used to cut the deficit. The rationale is that earnings of those in work have risen more slowly than working age benefits: if the benefits are frozen then by the end of the two years, earnings will have risen to match benefits.

When Iain Duncan Smith took to the stage he set out a number of further reforms. After a number of delays in the roll-out of the flagship policy which rolls together most benefits, he said that the Government will be accelerating the roll-out: “Universal Credit is going nationwide – we are going to finish what we started.”

His major announcement, however, was that the Government is testing prepaid cards, on which benefits are loaded and can only be used in certain shops. This harks back to Duncan Smith‟s days at the Centre for Social Justice, where he tried to tackle the root causes of benefit dependency and poverty in the UK. In his speech, he argued that he has “long believed that where parents have fallen into a damaging spiral – drug or alcohol addiction, even problem debt, or more – we need to find ways to safeguard them – and more importantly, their families, their children (…) That means benefits paid should go to support the wellbeing of their families, not to feed their destructive habits.”

This was a strand throughout Duncan Smith‟s speech and something he has tried to convince the public off: the welfare reforms are compassionate, as they are designed to support those who want to get back into work and not be something that people are given and left with for the rest of their lives, regardless of their changing circumstances or their capacity for more. It will be an important message of the election and something he received a lot of support for in the hall.

6 Conservative Conference 2014

Health

Last week‟s Labour conference was widely thought to have done well on the issue of health, setting a challenge which the Conservatives needed to respond to. Labour hold a 30-point lead over the Conservatives as the party with the best policies on healthcare and it could indeed prove the trump card that wins them the 2015 election.

The Health Secretary MP made his pitch on Tuesday with a speech that contained no real „rabbit out of the hat‟ announcements, but that did carry some significant pledges. He told delegates that the Conservatives would „train and retrain an additional 5,000 GPs‟, as well as confirming „extending GP access to weekends by 2020 and giving patients access to their GP records by April‟. In addition he said a future Conservative government‟s health plans would include greater use of sector, though insisting this did not represent privatisation.

Summing up his political approach to the health budget he said any increase in spending had to be accompanied by reform declaring „securing the NHS budget is not about an extra billion here or there‟.

With the NHS shaping up to be a major battleground at the election the Prime Minister made it one of the central planks of his speech and he made it clear that he will cede no ground to Labour saying “the one thing that matters above everything is having a functioning ”.

Addressing conference in his keynote speech Cameron committed a future Conservative government to protect the NHS spending budget from 2015-2020. He linked this pledge on the health budget with the economy saying „you can only have a strong NHS if you have a strong economy‟ and in a direct challenge to Labour said his strong record on the economy means that he can afford to protect spending on the health service.

In the most passionate and emotional section of the speech he said „understood very personally‟ the importance of the NHS after the experience he went through was his late disabled son Ivan. Close to tears he talked about how the NHS was a „personal issue‟ saying “I am someone who has relied on the NHS and whose family knows more than most just how important it is”.

He went on to tear into the Labour party‟s criticisms of his management of the NHS “how dare they suggest I would ever put that at risk for other people's children? How dare they frighten those who rely on the National Health Service?” Following the powerful comments, he received loud applause and a standing ovation from the packed hall in the ICC.

The focus on health from the Conservatives shows that they will not lightly concede this ground to Labour in next year‟s general election.

7 Conservative Conference 2014

Foreign Affairs & Defence

Just days after Parliament voted to take military action in , MP and Defence Secretary MP were clear that the Conservative Party‟s priorities were security at home and confronting a growing number of challenges abroad.

Both men identified Islamic State and ‟s involvement in Ukraine as the central concerns of British security policy. Hammond argued that the government had no choice but to join the international coalition against IS. He said: “When evil rears its head, we have the courage to confront it…they can and must be driven out of Iraq. And in Syria, we will continue our support for the moderate opposition”.

IS also took a prominent role in the ‟s speech. Theresa May struck a defiant tone, highlighting the threat to Britain and pledging to “defeat the ideology that lies behind the threat”. She said the government would introduce new counter-terror legislation in November and begin removing passports from Britons travelling to fight for the group.

Hammond was equally scathing in his assessment of Russian President and indicated that there would be no let-up in the pressure being applied through sanctions. This was echoed by Fallon, who spoke of his efforts to “re-galvanise” NATO in the face of continuing conflict in the Middle East and the danger posed to Eastern Europe by Moscow. He praised “the first formal public commitment by our allies to reverse the decline in defence spending.”

Fallon went on to announce that £164bn would be spent on the military over the next ten years; £3bn worth of investment was earmarked for naval bases in and the Clyde, in unison with new fighters and transport aircraft for the RAF and vehicles for the army. As well as this, the pair sought to reaffirm their support for the international aid budget despite popular calls for the current funding pledge to be dropped.

Turning to the , Hammond said his primary political concern in the run-up to the election is to “lay the groundwork” for negotiations and convince “every single EU member of the need for change”. He made the case for the Prime Minister‟s planned re-negotiation after accusing of “hovering up powers that properly belonged to the nation states”. Asking delegates to imagine the reforms a „proper Conservative government‟ could deliver, he called for a Europe of open markets where there was “free movement, not freeloading” and which could out-compete the rest of the world without being weighed down by red tape and regulations.

Concluding, Hammond pressed home the message, vital if the Tories are to see off the electoral danger posed by and UKIP, that only David Cameron MP is able to offer an in/out referendum in 2017 saying “only we, the Conservatives, will deliver that referendum. No ifs; no buts.”

8 Maitland Political is part of the wider Maitland Consultancy Group, Europe‟s leading financial and corporate communications consultancy.

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