Under-fire David Cameron signals Tory fightback

Chancellor George Osborne also insisted the battered economy was starting to “heal” and set out fresh plans to revive growth, including a government-backed bank for small businesses. The fightback comes as MPs at Westminster and MSPs at Holyrood return this week from their summer break.

Mr Cameron and Mr Osborne’s co-ordinated attempt to revive the fortunes of the coalition has comes after a summer of bruising criticism of its handling of the economy, and simmering tensions between the Conservative and Liberal Democrat camps.

Discontented Tory MPs have also slated Mr Cameron’s leadership during the  parliamentary recess, with one senior backbencher asking last week whether the Prime Minister was “a man or a mouse”.

The Chancellor promised yesterday that new legislation was to be introduced aimed at easing the planning rules south of the Border and allowing ministers to use the government’s balance sheet to  underwrite new construction projects.

In the wake of this promise, the SNP administration at Holyrood faces calls to follow the Chancellor’s lead and tackle Scotland’s planning system, which business leaders say delays development.

But UK ministers are facing an immediate challenge from the Tory right, with former Conservative leadership contender David Davis calling for a radical programme of cuts to taxes, red tape and public spending to boost growth.

But Mr Osborne insisted yesterday that the economy was now recovering.

He said: “Our economy is healing, jobs are being created, it is taking time, but there is no easy route to a magical recovery.”

He added, in an echo of Margaret Thatcher’s famous phrase: “There is no alternative easy road.”

In such difficult economic conditions, he said, it was vital that any obstacles to growth were removed – including speeding up the planning process rules so that “we can actually build roads more quickly than it takes to fight a world war”.

Mr Osborne said: “It is absolutely ludicrous that it takes years to get planning decisions in this country. This country, in the current economic environment, cannot afford to wait years for development.”

His frustration echoed that of Mr Cameron, who wrote in a weekend newspaper article: “The nations we’re competing against don’t stand for this kind of paralysis and neither must we.

“I am frustrated by the hoops you have to jump through to get anything done – and I come back to parliament more determined than ever to cut through the dither that holds this country back.”

Scotland’s planning system is controlled by the SNP administration at Holyrood, but a report by public spending watchdog Audit Scotland last year found that a recent shake-up of the system had not reduced the amount of time it took applications to go through.

The Tories in Scotland yesterday urged Alex Salmond to sort out the system and curb the burgeoning number of wind fam applications.

“Scottish Government ministers need to look at the bigger picture of getting more homes and other vital construction projects built rather than just being obsessed about meeting renewables targets,” a spokesman said.

Transport Secretary Justine Greening is to launch a major consultation on airport expansion, after the Prime Minister was accused over the summer by London mayor Boris Johnson of “pussyfooting around” the subject. Former environment minister Tim Yeo even said Mr Cameron needed to show whether he was “man or mouse”.

Mr Osborne said he was “firmly in the camp” of businesses that argued for more runway capacity in the south-east of England and that “all the options” should be examined.

“We do need to deal with the fact that there is opposition across communities to particular airport developments,” he said. “I understand all about the local pressures. But you’ve got to as a nation be able to overcome those and make a sensible decision about where that extra runway capacity in the south-east should be.”

Scottish Tory leader Ruth Davidson revealed she had changed her mind on the Heathrow runway because it was vital for Scottish firms and passengers. “I believe there is now an overwhelming argument for a third runway,” she said in an article in Scotland on Sunday.

Mr Davis said that the government should have done more to tackle the deficit earlier, and that a further round of spending cuts before the general election in 2015 was now “inevitable”.

He said: “The coalition’s cuts should have been earlier and deeper. This is not about individual policy areas. This is about something more fundamental, something deeper. There is an alternative economic policy.”

For Labour, shadow Treasury minister Chris Leslie said Mr Osborne had run out of ideas and that changes to the planning rules would not address contraction in the construction sector.

But Mr Salmond yesterday accused the coalition government of “dither, delay, division and disarray” over the absence of a capital spending programme, which he claimed would “cost Scotland dear”.

The First Minister said: “The Scottish Government submitted a list of shovel-ready projects to the UK government in February, following a request from the Prime Minister, but no action has yet been taken by the Prime Minister or his Chancellor.

“The Scottish Government are using every lever currently at our disposal to boost employment and bring unemployment down. We are achieving results but more needs to be done – it is clear the UK’s government’s austerity agenda, and failure to heed calls for direct investment in construction and infrastructure, is hampering progress.

“We have announced plans for a £105 million package of economic stimulus to maximise opportunities to create jobs and growth. It has been warmly welcomed by the construction industry, and will also deliver benefits for key industries, including renewables, tourism, transport and housing.

“Westminster urgently needs to implement a policy of capital investment – as a whole range of economic commentators are calling for – and the Prime Minister and his Chancellor must act at last.”