Labour's love looks to be lost

THEY'RE BACK.

The Conservatives have returned to the City with a vengeance after several years of absence. The party looks electable under Michael Howard and, with shadow chancellor Oliver Letwin and a shadow Treasury packed with former Square Mile toilers, it appears ready to listen to the City's needs.

Some 500 members of the newly-formed Conservative City Circle will hold their launch reception on Monday, and it will be addressed by Howard. City Circle was set up by fund manager Howard Flight, shadow chief secretary to the Treasury and a director of Investec.

'We are not a fund-raising organisation. We are looking for support from and to give support to the City, which feels it has not been nurtured by the party for some time,' he says.

Flight will hand over the running of City Circle to Colin Barrow, the former managing director of ED&F Mann who now works for Sabre Fund Management. The Circle will form 15 chapters, each covering an area of specialism such as insurance, banking and stockbroking. Chapters will get together regularly and willmeet the shadow Treasury team.

The Tories have had more contact with the City since the ousting of leader Iain Duncan Smith, who was seen as unsympathetic to the world of high finance. In particular, Letwin has been making himself available to public and private gatherings.

Michael Spencer, chairman of broker Icap and a regular donor to the party, says: 'There's a much greater receptiveness than there was under the previous leadership. The initial approaches are just to press the flesh but as we run up to the election out will come the begging bowl.'

THE Tories' revival comes as the City's love affair with New Labour wanes. The affair began with John Smith's prawn-cocktail offensive and continues with Tony Blair speaking at Goldman Sachs last week and Gordon Brown opening Lehman Brothers' new headquarters at Canary Wharf next month. But the intensity of the love-in is weakening.

When it comes to fund-raising from the City and business, the Tories now have a sophisticated four-tier system in place. The bottom rung is Fastrack, run by Mark Florman, a partner in private equity house Doughty Hanson. Its members pay at least £250 a year and tend to be in their twenties and thirties.

Above this is Team 2000 which held a cheque-writing event this week. Lord Saatchi and Michael Ancram were among the worthies encouraging people to give between £2000 and £5000.

Up another rung is the Front Bench Club, headed by Sir Archie Hamilton. Membership is £5000 a year and you are invited to lunch with members of the shadow cabinet. The pinnacle is the Renaissance Forum run by Lord Feldman, which is merging with a group organised by corporate financier George Magan.

A minimum donation of £10,000 a year gets you invited to a black-tie dinner and small gatherings for 'enjoyable, political debate' with members of society, business figures and shadow cabinet members.

The feedback from all these events is turning positive. As David Buik of Cantor Index puts it: 'The City does not yet believe they will win the next election but it does think that Howard and his team could give a very good account of themselves. It is all about electability and Letwin is just the sort of person the City wants to hear from.'