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Cameron Set to Revamp Ministerial Team as Tories Demand Tax Cuts

U.K. Prime Minister David Cameron is set to overhaul his government team this week as his own Tory lawmakers challenge his economic strategy, calling for tax cuts.

Cameron will announce changes to ministerial positions as early as tomorrow, in a set-piece event that seeks to stamp the premier’s authority on his party. More traditionalist Conservative lawmakers demanded today that he change course and cut taxes rather than increase spending on projects to boost the faltering economy. Their Liberal Democrat coalition partners are seeking to increase the tax burden on the better-off.

While stopping short of saying he will fund new infrastructure, Chancellor of the Exchequer George Osborne told BBC television yesterday that the government will announce proposals this week to guarantee investment finance and overhaul planning laws to accelerate the approval of projects.

“My view is that high taxes are the enemy of growth, not the answer,” Conservative lawmaker Mark Pritchard told BBC Radio 4’s “Today” program this morning. “The government needs to reward success, not penalize it.”

Senior Tory lawmaker David Davis, who challenged Cameron for the leadership of the party in 2005, will use a speech today to back Osborne’s so-called “Plan A for Austerity,” but will also call for “a Plan C for Competiveness,” according yesterday’s Sunday Telegraph newspaper. Davis will focus on tax simplification alongside faster spending cuts and lower rates.

‘Age-Old Debate’

“It’s the age-old debate about favoring the supply side through tax cuts or favoring investment expenditure,” Stuart Thomson, a fund manager at Ignis Asset Management in Glasgow, Scotland, said in an interview. “The markets are not a fan of public-works expenditure, and will always prefer the tax-cutting route.”

Government reshuffles are a piece of political theater in the U.K., with ministers walking up Downing Street to the prime minister’s London residence to be told of promotions, demotions or sideways moves.

Cameron’s coalition partners, the Liberal Democrats, hold five Cabinet positions and 18 other ministerial roles, a fifth of all government positions. While Liberal Democrat leader Nick Clegg, the deputy prime minister, recommends who should fill the jobs, it is ultimately for the premier to decide who serves under him.

Dissent among rank-and-file Tories has been getting more vocal as lawmakers prepared to return to Westminster today after their summer break.

Heathrow Demand

Last week, Tim Yeo, the chairman of Parliament’s Energy and Climate Change Committee, used an Daily Telegraph article to call on Cameron to decide whether he is a “man or a mouse,” and stop blocking a new runway at London’s Heathrow airport, Europe’s busiest hub.

Brian Binley, the treasurer of the 1922 committee of Conservative lawmakers, criticized Cameron in a blog post a day later for agreeing to the “self-indulgent lunacy” of the Liberal Democrats and said he needed to show he was the “leading partner” in the coalition.

“The country needs a full-time prime minister and not a chambermaid for a marginal, irrelevant pressure group who have got him in a virtual arm-lock with a constant stream of threats to abandon ship,” Binley wrote.

“The warning I would give about reshuffles is that while they can be advantageous to a prime minister in sorting a department that’s lost a sense of direction or in promoting people that deserve a chance, they are not a substitute for a wider sense of purpose,” opposition Labour lawmaker Pat McFadden told the BBC’s “Westminster Hour” radio program late last night.

“The government’s essential purpose, they said when they came into office, was to cut the deficit, get the economy moving. Neither of those things is happening,” McFadden said. “The reshuffle will not answer the bigger question about the government’s sense of purpose.”

To contact the reporters on this story: Kitty Donaldson in London at kdonaldson1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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