James Forsyth

One ally of the deputy Prime Minister suggested to me yesterday that the press was missing the most significant aspect of Clegg’s speech on education: Clegg acknowledging that free schools would now be a permanent part of the educational landscape. This ally argued that this was a big deal given that a year ago Lib Dem conference had voted to boycott these schools. The Lib Dem leader is considerably more liberal than his party. This means that he sometimes needs, so the argument goes, to sweeten the reformist pill with some Lib Dem rhetoric. Hence the emphasis on free schools being fair schools in yesterday’s speech. But this internal Lib Dem party management is frustrating for Conservative ministers.

There used to be a time when some of the most important relationships in the government were between Tory reformers and Nick Clegg. The Lib Dem leader, to his credit, tilted the scales in favour of radicalism in both education and welfare. But those reformist alliances are now pretty much over. Indeed, Ken Clarke – with his plans to put rehabilitation first in the justice system – is the only Tory Cabinet minister who remains in a strategic alliance with the Deputy Prime Minister. Iain Duncan-Smith’s relations with the Lib Dems have soured over the issue of family policy. On the education front, the Clegg-Gove axis is clearly at an end following Nick Clegg’s speech today, and the briefing that preceded it.

It is a sign of just how close the Blairs and the Murdochs were that Tony is godfather to one of Rupert Murdoch’s young daughters. But it is also a sign of the changed politics around Murdoch that this news will now be a major embarrassment to Blair. Wendi Deng Murdoch has, the Daily Telegraph reports, told the October edition of Vogue that Blair was present at the christening of her two daughters on the banks of the River Jordan last year. He is, the paper says, godfather to the elder one.

Banking reform has always been one of those issues that was going to test the unity of the coalition. Indeed, it was the subject of the very first inter-coalition wrangle when back in May 2010 George Osborne and Vince Cable tussled over who would chair the Cabinet committee on banking reform.   To date, these differences have been held in check by the fact that the coalition is waiting for the recommendations of the John Vickers-led Independent Commission on Banking. But with the final draft of the Vickers Report being published on 12 September, these splits are starting to open up again.   Cable and the Liberal Democrats would like, at the very least, a strict ringfencing within banks of the investment and retails arms.

There’s a big coalition split coming down the road. Next month the Vickers’ review into banking reform, which is going to suggest a ring-fencing of the investment and retail arms of banks, will come out. The Liberal Democrats — led by Vince Cable — will push for the instant implementation of the report’s recommendations. The Treasury will argue that banks need to be given time to introduce these new rules. The result will be, as one senior Lib Dem source tells this morning’s FT, ‘a big fight’.   The tricky question for Cameron and Osborne is how do they win this argument when there’s a visceral desire for tough measures against the banks?

Traditionally the fact that the Liberal Democrats hold their conference first and still vote on party policy at it has been regarded as a disadvantage. But this year, I suspect that these two things will be in their favour. By going first, they will get to set the terms of debate for conference season. They’ll be able to spike their coalition partners’ guns on a whole variety of post-riots issues. They can make clear that they won’t accept any changes to the human rights act or any government push to encourage marriage. Even better, they can pass motions to this effect. They also will have first crack at setting out on what terms the 50p rate can be ended.

One of the big political issues of the autumn is going to be energy bills. Among Tory MPs, there’s mounting concern that the coalition’s green policies are driving up the price of energy rather than helping to bring it down. They fear that this is both acting as a drag on the economy and adding to the squeeze on family budgets. So, today’s story in The Times about how a carbon trading scheme—started under the last government—has led to households being charged, on average, £120 more than they should have been in utility bills is going to turn up the political heat on this subject.

If it is GCSE results day, there must be a row about government education policy. True to form, the NASUWT — a union whose role often appears to be to make the NUT look moderate by comparison — has come out with a comically hyperbolic statement accusing the coalition of a ‘betrayal of young people’ because of its decision to reform the educational maintenance allowance. What the NASUWT statement ignores is that the real betrayal of young people has been pushing them into doing courses and qualifications that condemn them to a life of low-skilled labour at best. Last year, only 16 per cent of pupils achieved a C or above in English, Maths, a foreign language, a science and one of history of geography.