Latest YouGov poll has Tory lead down to nine points

The Telegraph's monthly YouGov poll has the Conservatives on 42%, Labour on 33% and the Liberal Democrats on 15% - a Conservative lead of 9 points. For David Cameron, it is a far cry from the heady days of the summer, where the Conservatives recorded poll after poll of record leads over Labour.

The Liberal Democrats can take few crumbs of comfort from this or any of the other recent opinion polls. The third party is usually squeezed mid-term and relies on more balanced media coverage in the run up to the general election. However, I believe that Nick Clegg is failing to make any progress towards increasing the record number of Lib Dem MPs elected in 2005. In the south the Lib Dems are likely to be challenged strongly by the Tories and it remains to be seen whether the Lib Dems can mobilise sufficient disgruntled Labour voters for them to make any gains in Labour's traditional heartlands.

The Conservatives have been on a downward path since the rumbling credit crunch finally erupted. Gordon Brown's frenetic levels of activity - matched only by the levels of media coverage - have managed to turn around the Labour party's fortunes.

The seemingly sharp poll movements are a reflection not just of turbulent economic times, but of the volatility of the modern electorate. Over the past 12 months, Labour were ahead at the time of the 2007 conference season, leading to speculation that Gordon may go for an early election. A successful Conservative party conference, and in particular, George Osborne's inheritance tax proposals, and the probably more effective, but largely uncredited, proposed levy on non-doms, put an end to that. Brown decided it was too risky to hold an election and acquired a reputation as a ditherer. Since then, the government has been hit by anger over fuel prices, food prices and most damaging of all the 10p tax fiasco, and its poll ratings dived.

During the government's record unpopularity, the Tories recorded a string of electoral successes: in the local elections, the Crewe and Nantwich by-election, and most famously, Boris's triumph over Red Ken in London.

The pendulum has not swung entirely back to Brown, but the Conservative's prospects of an outright victory must look less likely than they were a couple of months ago.

In recent weeks, the Conservatives have been all-at-sea over "Yachtgate", but I still believe that this has been a trivial story, which has already sunk. And I don't think the public are either surprised or care that Osborne (and Mandelson) have been associating with rich Russians on yachts. I'd be very surprised if this has had any impact on the polls.

But unfortunately this isn't the Conservative's only problem. George Osborne, who I credit above, with having saved the Conservatives from having to face Brown's early election last autumn, has simply not been either sufficiently eloquent in his explanations as to what the Conservatives would do to deal with the recession.

Over the past few weeks, I've seen lots of Tory big beasts from the past offering their views on the crisis - from Nigel Lawson through to Ken Clarke and John Redwood. But where has Osborne been? Belatedly, the Shadow Chancellor has said that excessive goverment spending, and its likely depressing effect on the value of the pound and risks to future inflation, would hinder the Bank of England's attempts to fight the recession by lowering of interest rates.

But this doesn't play well with the media. Where's the simple message for the public?

Cameron has tried the simple approach to try and pin the blame on Brown by repeating his much repeated claim of there being "no return to boom and bust", and strategically, I believe this may work, if, people start losing their jobs and homes over the next twelve months. However, it is not without danger. If the recession proves to be more shallow than currently expected, then Gordon will be able to claim that he has steered the country through.

More than anything the Conservatives need to publish a clear set of policies to deal with the recession. Andrew Lilico outlined a series of options for the Tories over on Conservative Home. At the moment, the Conservatives appear to be following option 1 - Muddle along - let tax revenues fall, interest rates fall, and let borrowing to pay unemployment benefits rise.

This isn't a politically sustainable strategy. Cameron and Osborne must set out their own vision. They should be considering a series of limited duration tax cuts. Such cuts do not have to be significant in the overall scale of public spending - but something clear and simple which would benefit everyone. A simple increase in the personal allowance would do this. There will be plenty of opportunities in the future to reduce public debt - perhaps by looking at public sector pensions, which as I note in the previous posting are desperately in need of reform.

Simply shouting at the government from the sidelines is not going to win any converts back to the Cameron camp.

Public Sector pensions

A lot of the debate over the past few weeks has centred on Britain's levels of debt and specifically, whether the Government can afford to borrow more in its Keynesian approach to getting the country out of recession.

Many have pointed out that PFI deals are not included in the official figures as the debt is held off-balance sheet. However, the real elephant in the room is the massive liability for public sector pensions.

An excellent piece of research has been published by the Pensions Policy Institute. I should add that the PPI is a non-partisan body.

Here is a summary of some of the findings:

• On average public sector pensions are now worth 21% of salary compared to a typical private sector defined benefit scheme worth 20% of salary and a typical private sector defined contribution pension worth 7%.
• Employers contribute around £4,000 per year per employee in the public sector, compared to £1,600 per employee in the private sector. However, employees in the public sector also contribute more than their counterparts in the private sector.

Ah but, public sector workers don't get paid as much as their private sector counterparts, you say. Apparently not:

• Pay is higher in the public sector than the private sector at all but the highest pay levels based on observed annual gross pay for full-time employee jobs by sector and percentile, not controlling for occupation and individual characteristics.

Basically, if you are in the top 10% pay bracket in the public sector, then your average gross pay is £41,000 per year versus £53,000 in the private sector's top 10%. But at all other pay levels, the public sector pays more. And when you add into the mix issue of job security, probably especially relevant in current times, it would appear that public sector workers are on to a pretty good thing.

Aside from the issue of whether these generous feather-bedded pensions are affordable in the long-term, with average life expectancy increasing with a corresponding rise in the number of pensioners, the overriding question should be, 'is this fair?'

Why should low and middle-paid workers in the private sector be effectively subsidising their co-workers in the public sector?

When Gordon famously raided pension funds, by abolishing the tax credit on dividends, public sector workers were unaffected as they receive their pensions based on final salaries, rather than having to build up a fund to buy an annuity on retirement.

Pension reform in the public sector needs to go much further. This is a key issue for the next Conservative government to deal with when it comes to office. Clearly it is going to be unpalatable given the massive increase in the client state over the last ten years, but someone is going to have to grasp the nettle.

US interest rate decision due

The Fed are expected to reduce their base rate from 1.5% today. Markets rallied on Wall Street yesterday and have opened up sharply across Europe.

The ECB and the BoE meet next week to decide on interest rates. Will there be another co-ordinated rate move today? Expect to see it announced at PM's questions if it is happening. Not that it is a political decision of course.

Hedge funds hammered by short-selling VW shares

Betting that VW shares are likely to fall given the global economic downturn must have seemed like a cert for the short-selling hedge funds.

Unfortunately, Porsche, which has been gradually increasing its stake in VW over the past year or so announced on Sunday that it held options over an additional 30% of VW's shares, which would take their holding to 74% of VW's equity. With the other 20% held by the Lower Saxony regional government, that meant only 6% of their shares were available to be purchased...

The news came as a shock to the hedge funds, forcing them desperately to buy shares in the open market to cover the shares that they had loaned. Panic buying saw the VW share price rise 350% on Monday and Tuesday, and it is estimated that 22bn Euros have been lost by the hedge funds. Which funds are exposed to this have not yet been revealed.


The big bonus may be slightly smaller this year, but I'm guessing that a Porsche is not going to be on the wish-list.

Bank of England: Mortgage approvals up in September

Mortgage approvals increased in September, up from August's record lows. Approvals were around 33,000 up 1,000 on the previous month. A fair amount of this can be attributed to the Government's dithering over stamp duty, which led to many prospective buyers waiting until the situation was clearer.

And net lending by building societies was still down around 50% on last year's September figures suggesting that there remains little desire among homebuyers to get either trade-up or get into the market - assuming that they can even raise the finance of course.

McCain - gaffe

McCain - not having his best moment...

Brand Ross

Jonathan Ross and Russell Brand are under fire after making offensive phone calls to Andrew Sachs - better known as Manuel from Fawlty Towers.

The BBC has a transcript here if you want to see what the fuss is about.

Initially after broadcast on the 18th October (this was a recorded show rather than a live programme), the BBC received two complaints. However this had reached 1,500 yesterday and then passed over 10,000 today. Presumably, the listeners to the show, who probably expect such antics, were less bothered than the general public, who following the extensive coverage in several tabloids, have driven the number of complaints to the level it is now.

Now Ofcom is investigating the issue as well as the BBC, who in an interview (with themselves) said that it was too early to speculate on whether any action would be taken against Brand or Ross.

And it has, during the day, attracted more and more political attention. Nigel Evans for the Tories started the ball rolling, and was joined by James Purnell and finally even Dave and Gordon joined in - Gordon describing it as "clearly inappopriate and unacceptable behaviour", and Dave insisting on "transparency... in understanding how this came to be broadcast."

I'm not sure this is of sufficient importance for the Prime Minister and Leader of the Opposition to worry over, but I wouldn't be at all surprised to see it come up in PM's questions tomorrow.


While I don't find either Brand or Ross at all funny, and agree that leaving abusive messages on someone's voicemail concerning their grandaugher is clearly not acceptable, I can't help but think that this is one of those issues that has been whipped into a frenzy by the media - especially those who are political enemies of the BBC.

The BBC, for their part, do themselves no favours by broadcasting the show in the first place, and in taking too long to deal with the aftermath. The BBC's mission is to inform, to educate and to entertain. It is difficult to see in which category this sorry episode falls.

The BBC is in a privileged position financed by a tax on all households with a television. I think that it is very important for it to use this money to deliver quality programmes which may not be available elsewhere in the commercial sector. Jonathan Ross's alleged £18m salary over three years, is not good value for the tax you pay on your television. If that's his going rate, fine, let Ross get it from a private company, and those who wish to hear him can continue to do so, but not at licence payers' expense.