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'DAVID CAMERON TO HOLD BUDGET TALKS DURING "DISTRACTING" LABOUR CONFERENCE' [EXTRACT]

PM understood to believe in necessity of last-minute push for agreements on welfare, Trident and tuition fees

By Nicholas Watt, Chief Political Correspondent

Guardian – 24 September 2010

David Cameron and George Osborne are to use the cover of the Labour Conference next week to hold a series of meetings with ministers to try to hammer out agreement on the spending review, amid wrangling on sensitive areas such as Trident and higher education. Ministers have decided that the Labour Conference in Manchester provides the perfect opportunity for the meetings while the political world is distracted by the election of a new leader of the Opposition ... Cameron is understood to believe that a last-minute push needs to be made to reach agreement in the sensitive and expensive areas of welfare, the replacement for Britain's Trident nuclear deterrent, university tuition fees and how much money will be allocated for the pupil premium ...

In a sign of the urgent need to reach agreement on Trident, Cameron met the Chiefs of the Air Force, Army and Navy on Wednesday. The Strategic Defence and Security Review and a decision on the long-term plans for Trident are to be announced at the same time as the spending review. The replacement of the Trident nuclear deterrent is one of the main sticking-points. Liam Fox, the Defence Secretary, is resisting Treasury pressure to delay the replacement by as much as five years.

A relatively amount of £700m is due to be spent on preparations for replacing Trident during the 2011–14 spending period to be decided on 20 October. But if a like-for-like replacement is approved, Osborne will have to factor in £2bn a year in the following spending period from 2015. The Chancellor is pressing Fox hard because his plans to cut the structural element of the fiscal deficit are due to be completed in 2015. Osborne is reluctant to make a large commitment just as the deficit is addressed.

Fox's deep concerns about the pressure from the Treasury are highlighted today in a letter to the Guardian from a key ally. Julian Lewis, a member of Fox's Shadow Defence team before the election, has written after the Guardian reported yesterday that the 'main gate' decision on whether to replace Trident is to be delayed until after the 2015 general election.

Lewis writes:

"It is suggested that, to humour them [the Liberal Democrats], the Prime Minister may postpone the 'main gate' decision on Trident until after the next election. In parliament last week, I described any such move to renege on replacement as a 'breathtaking betrayal' of pledges given to the country, to the parliamentary party and to individual MPs, including me. I find it hard to believe that the David Cameron I have known for 20 years would ever contemplate such a breach of faith."

... The Treasury insisted that spending negotiations are proceeding well after five Whitehall departments reached agreement on their budgets.