James Forsyth

Before David Cameron’s trip to Berlin later today, George Osborne appeared on the Today Programme to emphasise that in the event of a Eurozone banking union, Britain would require safeguards.   Given the importance of finance to this country, Cameron and Osborne can’t accept anything that creates a two-tier single market for financial services. The Tory leadership is also acutely aware that it was this issue that led to Cameron vetoing a proposed treaty last year. It would be politically dangerous for Cameron to do anything that could be characterised as undermining his own veto.   One option being floated by some Tory Eurosceptics is a British veto on financial services.

When David Cameron reshuffles his top team, one of the questions he’ll have to answer is what relationship he wants between the Conservative party and the coalition government. The Liberal Democrats have a deputy leader in Simon Hughes and a party president in Tim Farron who are quite often used by their leadership to try and put distance between them and the coalition. But there is no one who performs that role for the Conservatives.   Interestingly, Sayeeda Warsi has made clear that she would like to be freer to attack the Lib Dems. I also suspect that if she is moved in the reshuffle, whoever takes on the role will want more freedom to carve out a Conservative identity distinct from that of the coalition.

As the Jubilee celebrations draw to a close, attention once more returns to events in Europe. There’s a distinct sense among politicians, and especially coalition ministers, that what is happening there will change British politics in a huge way. As one senior MP said to me over the weekend, if a country leaves the Euro then the economic crisis that follows will reset the rules of the politics.   Measures that would have been deemed impossible six months ago will suddenly be on the cards. We’ve already seen a flash of this with Theresa May’s suggestion that the freedom of movement across the European Union could be suspended in the wake of a Eurozone break-up.

One of the issues that David Cameron is contemplating at the moment is the timing of the reshuffle. I hear that he devoted a considerable chunk of last week to thinking about the structure he wants for the government.   The pressing matter that has been delaying the move is doubts over whether certain ministers could survive or not; no Prime Minister wants to freshen up his government only to have to make more changes a few weeks later. So, it was deemed to be impossible to do one before Jeremy Hunt appeared before the Leveson Inquiry. Now, some in Number 10 think that the Prime Minister will have to wait until the investigations into Sayeeda Warsi’s expenses are complete.

In a bid to make Tory MPs feel more involved, Downing Street is inviting small groups of them to see Andrew Cooper, David Cameron’s director of political strategy, and Stephen Gilbert, the PM’s political secretary. Patrick Rock, who acts as the political liaison to the civil service run policy-unit, also attends. The first of these meetings took place recently, with a dozen MPs attending.   Those who were present describe the presentation as being frank about the government’s recent difficulties, it uses the term omnishambles, but also trying to offer reassurance. There was much talk about how Margaret Thatcher’s position at this stage in the political cycle post 1979 and ’83 was far worse than Cameron’s is now.

Minutes after Jeremy Hunt finished giving evidence at Leveson, Number 10 stated that he would not be referred to the independent adviser on the ministerial code. Hunt would have settled for this result at the beginning of the day. But Labour is sure to point out that the reason Hunt was not referred to him before was to avoid parallel inquiries. So, now that Hunt has given evidence, there’s no bar to Alex Allan investigating.   The evidence presented today contained no smoking gun. But it still created an impression that is deeply damaging to Hunt and his future career prospects. It turns out that Hunt carried on texting James Murdoch, albeit pleasantries, even after he had taken on the quasi-judicial role.

It has become the conventional wisdom in Westminster that Jeremy Hunt’s career will turn on his appearance before the Leveson Inquiry tomorrow. Friends of Hunt have today been arguing that the Inquiry’s focus should be on how he carried out the quasi-judicial role. They are saying that once appointed to it, Hunt behaved — unlike Vince Cable — properly. They concede that Hunt’s texts to Fred Michel were overly familiar. But they maintain that, unlike Adam Smith’s texts, they gave away nothing about the state of the bid process.

Michael Gove’s appearance at the Leveson Inquiry has set the heather alight in Tory and journalistic circles. There is, among those who fret about the dangers to free speech created by the current mood, relief that someone has set out the case for liberty so clearly and without apology. While among Tories there is a delight at seeing one of their ministers articulate a Conservative worldview so clearly. Gove was, in some ways, at an advantage going before the inquiry. His department has no responsibility for the press and so he knew that the focus would be on his work as a journalist and his attack on Leveson, saying that the atmosphere around the inquiry was having a chilling effect on free speech. But, even given that, his performance was an impressive one.

No government likes to u-turn, and particularly not on a Budget measure. So, tonight’s changes to the VAT regime proposed by the Budget for Cornish pasties and static caravans are embarrassing for the coalition. It is also worth noting that they have come after they have taken most of the political heat they were likely to take for the changes, including in the House of Commons where there were decent-sized rebellions on both issues. One of the lessons that I suspect that politicians, and particularly the coalition, will learn from this episode is: don’t try and deal with the anomalies in the VAT system. Voters, for obvious and understandable reasons, react particularly badly to taxes hitting products that were not taxed before.