UK Tory party conference

Seeing the words "Tory crisis" plastered across the right-leaning national daily "The Telegraph" is no doubt not how David Cameron wanted to get in the mood for the British Conservative party conference in Birmingham. The conference, which started on Sunday and will last until Wednesday, is the last one before national elections next May.

"It's not been an ideal start," Cameron admitted on Sunday. His governing party, commonly referred to as the "Tories" in Britain, has recently seen yet another lawmaker, Mark Reckless, defect to Britain's right-wing, anti-EU UK Independence Party (UKIP). Another MP, Brooks Newmark, resigned after being caught sending a graphic picture of himself to what he thought was a young female activist, but turned out to be an undercover reporter.

In August, Conservative backbencher Douglas Carswell left Cameron's center-right party for UKIP, insisting that the Tories were "too soft" on Europe.

The EU and immigration

When he defected on August 28, Carswell complained that the Conservatives did not focus on national wellbeing and that their main interest was "not changing things," reflecting a growing sense among Tory MPs that the party is becoming too middle-of-the-road.

One contentious issue is the European Union. Cameron made it clear that, if re-elected next May, he would call a referendum on whether the UK should remain part of the EU or not. But he has also made it clear that he believes that being in the EU is in "Britain's interest."

Speaking on BBC TV ahead of the party conference on Sunday, Cameron reiterated that he believes what is "right for Britain is to seek reform, get reform and get Britain to vote to stay in a reformed European Union."

Unlike the increasingly vocal euroskeptic wing of his party, Cameron is convinced reform can be achieved. The EU's new European Council president, Poland's Donald Tusk, is indeed striking a softer note with Britain. "The European Union, and I personally, will certainly meet the concerns voiced by Britain," he said at the end of August.

The EU has also given the Financial Services Commissioner post to Jonathan Hill, a Conservative and former British education deputy minister, in another move seen as a concession to the UK.

On Sunday, Cameron emphasized that "immigration will be absolutely at the heart of my renegotiation strategy," with the EU. The more malleable tone from Brussels in this issue and others is likely to help his cause, which is just as well, as the pressure from UKIP at home forces him to act.

'Earning or learning'

Welfare and public spending is a hot topic for the Tories, who pride themselves on their "long-time economic plan" to reduce Britain's deficit and create more jobs.

On the European level, Cameron insists that new countries joining the EU should not have free movement to the UK until their economies are at a similar level to Britain's.

EU nationals in the UK should also be banned from claiming benefits which are sent to their families back home.

Back home, the Conservatives want to fund new apprenticeships with cuts to some benefits for 18 to 21-year-olds to prevent them from going straight from school to living off welfare.

"You should be earning or learning," Cameron told the BBC's Andrew Marr Show.

The Conservative-led government has made austerity its trademark in the last few years, and while the UK economy has picked up considerably and at an unexpectedly fast pace and the unemployment rate has dropped to just over 6 percent, the budget deficit remains stubbornly high.

Britain's government said in March it would aim to cut borrowing by 10 percent in the 2014/15 tax year to lower the deficit to 5.5 percent of the GDP from about 6.5 percent in 2013/14.

So far, however, weak wage growth, which has fallen to its lowest level since records began, has depressed income tax and national insurance contributions, leaving the Treasury with a shortfall that has led to higher borrowing.

Critics, like internationally renowned economist Paul Krugman, have long argued that austerity does not necessarily lead to improved growth. In an op-ed for the New York Times last December he called UK Finance Minister George Osborne "the most brazen example" of someone attributing an improved economy mainly to austerity.

Scotland & devolution

Another issue that Cameron is hoping to capitalize on is the fact that Scotland decided against secession from the rest of the UK on September 18.

In a speech delivered after the referendum he promised to make good on his pledge to give Scotland more powers over tax, spending and welfare, "all agreed by November and draft legislation published by January."

But he was also quick to include as yet unspecified plans to bring devolution to England, partly to take the wind out of UKIP's sails, a party increasingly seen as the closest to an English national party, but also to placate disgruntled backbenchers from his own party.

Although England is Britain's biggest nation, it is the only part not to have been given any devolution of powers.

Two days before Scots voted "No" to independence, Britain's three main parties - the Conservatives, Labour and the Liberal Democrats - agreed to give Holyrood new powers over tax, welfare and spending and to continue a controversial arrangement whereby Scotland receives far more central government funding per head than the rest of Britain, causing MPs to demand more powers for England, too.