Osborne and Heseltine spoil Cameron’s week

For a party leader 17 points or so ahead in the polls, on course for a victory in the 2010 general election, David Cameron is having an uncomfortable week on the personnel front. It's down to two men - George Osborne and Lord (Michael) Heseltine.

First, Osborne. The shadow chancellor is becoming a liability. He's had his moments in the past couple of years - the inheritance tax was a curve ball Labour found hard to deal with - but his reputation in the City, never brilliant, has taken a nosedive.

His much-leaked speech yesterday, in which he called for a cap on cash bonuses for high street bankers, and for any rewards above £2,000 to be paid in shares, has met with derision. "It's hard to find anyone in the Square Mile who doesn't think he's a complete dick," the Mole was told last night.

Lord Oakeshott of the Lib Dems was a little more polite - but not much - when he pointed out that Osborne's plan would still mean taxpayers footing the bill for City bonuses.

"If state-owned banks such as RBS and Lloyds pay bonuses using shares, they would have to issue new equity, which would dilute the taxpayer's holdings," he said. "George Osborne clearly does not understand how shares work... His ignorance is toe-curling and he hasn't a clue how markets and public companies operate."

A banker speaking anonymously to the Times said he was baffled by Osborne's speech. The City had already signed up to pay terms set out by the G20, he said. "We can only assume that this is pure political rhetoric from the Conservatives."

Telling people what they want to hear is not the problem in Michael Heseltine's case.

Two Sundays ago, it was reported in the Mail on Sunday - broadly accurately, so the Mole is informed - that Hezza "could make an astonishing comeback" if the Tories win the general election. Cameron intends to give the former deputy PM (under John Major) a post as unpaid Minister without Portfolio in the Lords.

It makes sense. Cameron could deploy his "attack dog" skills and it would certainly add some weight to a generally untested government. "He may be 76 but he still enjoys the cut and thrust of debate in forums such as Question Time and he is fizzing with ideas," a source in the Lords told the Mail. "It would only be for a year, while a Cameron administration bedded in."

There's just one problem... Like Kenneth Clarke, also brought in for some old-school Tory ballast, Heseltine is pro-Europe and spent many years fighting the Eurosceptic wing of the party.

At a private meeting with party leaders last week, the Times reports today, Hezza warned that the party must be prepared to rejoin the mainstream European People's Party in Brussels, even if it doesn't suit the Tories' current Euosceptic stance. The alliance with eastern European right-wingers, repeatedly accused of anti-Semitic and extremist tendencies, risks damaging Britain's foreign policy interests.

What the Tory elder statesman was effectively telling Cameron was: what might be OK - just - in opposition will not be acceptable once you're running the country. Or in two words, Grow up!

That's a message Cameron in turn is going to have to give Osborne.

Of course, if Dave decides to ditch George before the election, the Mole has the perfect candidate for his replacement - Prince Andrew, who made his views on the needs of the rich and powerful very clear in an interview with the Daily Telegraph at the weekend.

Bankers' bonuses were "minute, in the scheme of things", and Gordon Brown was wrong to be closing tax loopholes for non-doms living in London, Andrew said. Indeed, the Queen's second son displayed just the sort of old-school Tory values many in the City would love to see back at the heart of government.

If Brown can bring the Prince of Darkness into his government, why should Cameron not have the Prince of AirMiles?