New Right piles the pressure on Cameron and Osborne

They want Tories to crush Lib Dems at polls

One of the opening lines of the most talked-about book of this year's conference season reads: "It is unlikely that the Conservative Party will fight for a further five years of coalition government in 2015." The authors cannot, with confidence, use the word "impossible", which reveals a growing tension within the party that will hang over this week's conference in Manchester: on the one side are the arch-coalitionists, some in the Cabinet, who would prefer to carry on with the Liberal Democrats after 2015 and, on the other, a growing band of MPs who want David Cameron to set out a distinctive right-wing manifesto to crush Nick Clegg's party on polling day. We can call this group the New Right and it includes, though not exclusively, MPs elected in 2010.

The book in question is After the Coalition, a collection of essays by five of their number, including Kwasi Kwarteng and Liz Truss, both tipped as future cabinet ministers. The authors claim Downing Street is "relaxed" about what they call their "grid map" to 2015 – but this is, in effect, the New Right's Bible. They call for a balanced budget over an economic cycle, the reining in of spending when there is a deficit, reform of public services, allowing free schools to make profits and a more robust Euroscepticism.

In the past week, there are signs that No10 has already conceded some ground, although there are more populist measures that have delighted the Daily Mail, including the return of weekly bin collections and a crackdown on gangs.

But on the economy and Europe, two of the biggest issues preoccupying Tories, Mr Cameron and his Cabinet are under pressure from the New Right to go further. The Chancellor, George Osborne, yesterday warned that he could not promise "tax cuts for Christmas" and insisted that the overriding priority was to reduce the deficit. But the authors of After the Coalition, and many other MPs in the New Right, are demanding that Mr Osborne get rid of the 50p top rate of income tax, a pressure that the Chancellor is, for now, resisting. On Monday, more than 20 Tory MPs, mainly from the 2010 intake but also including the Treasury select committee chairman Andrew Tyrie, will launch the Free Enterprise Group, which will call for a more competitive economy and less state control than even Mr Cameron has envisaged.

Ms Truss said that the group was "really about trying to change the attitude in Britain towards free enterprise", because countries such as China, the US and Germany are more positive about it. Mr Tyrie yesterday criticised Mr Cameron and Mr Osborne for failing to set out a consistent and radical plan for economic growth. The Chichester MP told The Times: "A coherent and credible plan for the long-term economic growth rate of the UK economy is needed. The Big Society, localism, the green strategy – whether right or wrong – these and other initiatives have seemed at best irrelevant to the task in hand, if not downright contradictory to it; likewise, the huge spending hike on overseas aid and the cost of the Libyan expedition."

The New Right is more economically liberal than Tories in government, but its members are also less socially conservative than many in the Cabinet, specifically the Work and Pensions Secretary, Iain Duncan Smith, who is driving welfare reform, and even the Prime Minister himself.

The MPs argue that Tories should "reclaim the idea of social mobility and meritocracy". In a more liberal twist to one of Mr Cameron's promises, they say the married couples' tax allowance should apply equally to one-earner and two-earner families with children under 16.

Euroscepticism has also changed. No longer is it just about sovereignty and the political aspirations of those on the continent. The New Right's antipathy towards Brussels is driven by a belief that the euro project is "economic madness". While Turkey sits just beyond the EU's borders with its economy growing by 7 per cent, Greece and Italy are in crisis.

The New Right has formed the European Reform Group under George Eustice, Mr Cameron's former press secretary. It has a more international outlook and calls for a greater focus on Britain becoming competitive with China, India and Brazil, instead of being tethered to an increasingly outdated political construct in Europe.

The agenda for the week in Manchester is packed with red meat for Tory traditionalists. Expect get-tough messages on immigration, gangs and welfare. There will be more on Mr Cameron's idea of making jobseekers sign on once a week instead of every fortnight. In response to the August riots, there will be a heavy emphasis on the National Citizen Service for 16-year-olds, which starts next year.

But in response to the growing influence of the New Right, the coalitionists are hitting back. The uber-moderniser Nicholas Boles, policy chief to Mr Cameron in opposition and an MP since 2010, has called on the party to "put away our favourite ideological hobby horses". In the Cabinet, Oliver Letwin, the policy chief, is seen as an arch-coalitionist. And in an interview with The Independent on Sunday today, the Cabinet Office minister, Francis Maude, hails coalition harmony, saying relations are "better tempered and more courteous than they would normally be".

So where does Mr Cameron stand on all this? His speech on Wednesday will play heavily on the theme of social recovery, including more community sentences to ensure criminals are seen to contribute to society. Sources say he will offer an optimistic message to the country beyond the conference hall, expanding on the conference slogan "Leadership for a Better Future".

There will be no "sunlit uplands" redolent of Mr Cameron's 2006 speech, when he called for sunshine to "win the day", but one key phrase in the current latest draft is "there will be better times ahead". The Conservative Party will take Britain on the "right track to get us there".

The big questions this week are: what will this Conservative Party look like by 2015, and can the coalitionists hold back the seemingly unstoppable rise of the New Right?

The Tory new right

Who are they?

The majority are MPs from the 147-strong 2010 intake, 21 of whom are now on the first rung of the ministerial ladder as aides to ministers. Leading lights are Kwasi Kwarteng, Liz Truss, Matthew Hancock, Chris Skidmore, Dominic Raab and Harriett Baldwin.

What do they believe?

Socially and economically liberal, they want a clear Tory mandate for 2015. Eurosceptic, but on an economic, rather than sovereignty-obsessed, basis. Less enthusiastic than David Cameron about prioritising climate change and international aid.

Policy wishlist?

More runways and roads to speed up growth, free schools to make profit, strip the BBC to a bare minimum.

Who do they idolise?

Margaret Thatcher; Michael Gove; Tony Blair without the spending.

What do they wear?

Tieless shirt and jumper under suit jacket for the men, big necklaces and bright jackets for the women.

Life in coalition: What they want from conference

"The best policy for confidence in these difficult times is to show resolution. With the world facing a debt crisis we have a credible plan and should stick to it."

Matthew Hancock, MP West Suffolk

"I would like to see a strong message about the economy and some news about how we are going to try to get it moving again. A serious economic plan for growth."

Kwasi Kwarteng, MP Spelthorne

"We are thinking about the huge challenges Britain faces. We are less competitive compared to the East. On regulation, taxation, education in maths and science, none of those basic economic indicators are very good."

Liz Truss, MP South West Norfolk

"I'm hoping the leadership will make announcements on regenerating economic growth. We need to try harder amid this euro crisis to get Britain back on its feet. We also need to renegotiate our relationship with the EU."

Andrea Leadsom, MP South Northamptonshire

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