For a man whose economic policies had once again been stolen by the government, George Osborne looked unusually cheery as he delivered the opposition response to the pre-Budget report on Tuesday. Alistair Darling had brazenly claimed as his own the Tories’ new ideas: raising the inheritance tax threshold, an airline levy and taxing foreign financiers. But to the shadow chancellor, this theft represented victory. ‘From this day on,’ he declared, ‘let there be no doubt who is winning the battle of ideas.’
It was a fair point. Mr Darling had spent the first half of his speech denouncing Conservative policy and the second half aping it. Conspicuous by its absence was the mysterious ‘vision for change’ which Gordon Brown had promised as he cancelled the election last weekend. The only vision was of deteriorating public finances, and the largest deficit in western Europe. The spending review had been the Prime Minister’s best chance to recover from the disaster of last weekend. As Mr Osborne already sensed, he had blown it.
The tables of British politics have, once again, turned in the space of just a few weeks. David Cameron has been transformed from the affable leader of a suicide mission into a potential prime minister. Mr Brown is no longer seen as a titan led by a moral compass, but a hesitant bungler. In all the excitement, few have noticed that the Liberal Democrats have weakened to the point of total collapse. Everyone is now working to a new timetable, with an election expected not on 1 November, but in 2009, or even 2010.
Much of the damage to Mr Brown is, of course, self-inflicted. Not since Jim Callaghan sang ‘Waiting at the Church’ to the baffled TUC congress in 1978 has the decision not to hold an election been surrounded by so much drama. With striking honesty, Mr Brown’s aides last week admitted an election would be called if the opinion poll numbers were right. And with striking dishonesty, Mr Brown has spent the last few days claiming he delayed because he had not yet conveyed his ‘vision’. This mantra is incredible to the point of comedy.
The election decision overshadowed all the Prime Minister’s attempts at recovery last week. The spending review — delayed for more than a year — looked like little more than the abandoned launch pad for a cancelled election campaign. The Iraq statement had the whiff of unseemly politicking. At his press conference on Monday the PM said he would have won an election, had he run. Yet the cameras picked up his handwritten note which said ‘could’ have won. The all-important element of doubt is, of course, why he did not run.
In another era, Mr Cameron could have released a live chicken into the chamber to make his point. But at Prime Minister’s Questions on Wednesday, Mr Cameron acted as if he had found a live chicken, in the shape of the Prime Minister, and grabbed it by the neck. For most of the week, the Labour benches have maintained a stony silence. It is not just that the MPs are embarrassed about the disingenuous manner in which the election was cancelled. Almost all of them do not have a clue how, precisely, Mr Brown intends to recover — and whether the damage already sustained will prove permanent.
Mr Brown has been in a foul mood (no pun intended) since returning from Labour party conference — flouncing, wincing and making late-night protests to editors of newspapers whose front pages displease him. The ultraviolence which goes on behind the scenes has reached levels not seen since the botched coup against Tony Blair last year. Mr Brown’s aides are each trying to avoid blame, and seem to have agreed like a pack of school bullies to finger Douglas Alexander, the election co-ordinator. A bloody cycle of reprisals may be about to begin.
Deliciously, we can see the first glimpse of a new Labour split. There are grumblings among older Labour hands that Mr Brown only trusts his small, handpicked entourage and does not take advice from (or even acknowledge) outsiders. Team Brown, it is argued, was assembled to fight a long guerrilla war against Tony Blair and is ill-suited to the set-piece battles of government. But the Prime Minister is famous for placing a high premium on loyalty — and for being notoriously slow to accept outsiders. So little is expected to change.
Now that Westminster is settling down to the likelihood of an election in 2009 (with some even pencilling in May 2010) every party must now pace itself for a two- or three-year marathon. What Mr Brown himself plans remains a mystery. Even members of his Cabinet had expected there to be a big picture of some kind outlined in Tuesday’s pre-budget report — and were stunned when Mr Darling sat down after 33 minutes. ‘Perhaps it was an hour-long speech, with the pre-election passages removed,’ said one member. ‘We’ll never know.’
The Conservatives, however, are settling down for that rare privilege in politics: a revamp from a position of strength. A month ago I was told that if Mr Brown was scared away from holding an election, there would be radical change at Conservative headquarters — and that even Steve Hilton, for years Mr Cameron’s closest adviser, may take a step back. He was said to have been badly shaken by the grammar schools row. ‘He’s worked so hard, he may consider himself mentally spent — or at least due a break,’ said one source. Others who have seen Mr Hilton more recently say he has never been on better form. ‘He is fizzing with excitement and reckons he has at last cracked the message that the Tories need to win — not just social responsibility, but opportunity, responsibility and security,’ says one friend. Mr Cameron would, in any case, be likely to resist any diminution in Hilton’s role. A year ago, there were complaints that the two formed a closed duumvirate. Now the party is governed by a quartet, with the other two corners provided by Mr Osborne and Andy Coulson, the new communications director. ‘David loves the dynamic of these four,’ says a close ally. ‘He wouldn’t want it to change.’
Now would be the perfect time for Mr Osborne to move on — precisely because no one can accuse him of being a failure. He has a reasonable claim to being the most successful Tory shadow chancellor since Iain Macleod and visibly outshines Mr Darling. His decision to become part-time election co-ordinator has led to speculation that he may complete the transition by becoming party chairman — and hand his job to an older, more experienced MP. ‘We need a grey hair like William Hague,’ says one Cameroon. ‘Not that he has any hair.’ In any case, Mr Osborne is in a strong enough position to take his pick of the two roles.
If Mr Cameron has also lost fear of Mr Brown, this gives him the chance to recast much of Tory policy. The review groups have finished their work, giving him the chance to take personal control of turning their findings into an eventual manifesto — which can now be drawn up at a sensible pace, rather than rushed out under duress. Expect the intellectuals most closely associated with the review to be sidelined to the ‘Tranquillity Room’ made famous by our own Tamzin Lightwater. Those forging the future of the Conservatives in the new ‘two-year war’ do not envisage a central role for Oliver Letwin. His shadow Cabinet critics say that he overcomplicates strategy, where clarity is required.
There is also the chance to respond to a shift in public mood, which Mr Brown accidentally compell ed the Tories to test in Blackpool. Feelings about tax and spending have moved on, and the inheritance tax cut was more popular than any senior Conservative could have predicted. After many years running scared of the ‘Tory cuts’ taunt, which Labour will always use anyway, this could be a good juncture for an intellectually self-confident Tory party to depart from the straitjacket of Labour’s spending plans.
Perhaps the biggest problem for Mr Cameron could now be the Liberal Democrats. While Tories were celebrating at the postponement of the election, Sir Menzies Campbell’s heart would have sunk. His survival as party leader was dependent on the prospect of an immediate election — his party’s recognition there was no time to find someone better able to halt the exodus of voters from the Lib Dem box. His party was polling 30 per cent under Charles Kennedy and has now dropped to 11 per cent. Two out of three Lib Dem supporters have walked.
If the party has any sense of self-preservation, Sir Menzies will be gone soon, perhaps by Christmas. If it chooses Nick Clegg as his successor, then things could get tricky for Mr Cameron. Currently, the party’s home affairs spokesman looks, talks and acts like a Tory. Yet — unlike David Laws — he espouses ideas that are not quite right-wing enough to repel the party’s membership. Both Labour and the Tories have been feasting on the disintegration of Lib Dem support. Few parties allow themselves to perish in this way.
All parties will sharpen their election war machines. Coming to the brink of an election forced them to look at their preparedness and discover major weaknesses. Labour is more exposed than it imagined on the issue of immigration, especially in the south of England, and found that the Tories have achieved a substantial lead on the issue without saying much. ‘We can talk far louder about immigration than the Tories can, and we need to use this,’ says one minister. Labour now has time.
Mr Brown can also turn his attention to Lord Ashcroft, the Tory deputy chairman, who was arguably his biggest enemy this time around. The election was cancelled not after Mr Cameron’s speech but when the Prime Minister saw polling data showing that the Tory lead in marginal seats was five points higher than nationally — and that he’d risk a hung parliament by going now. This is the result of Lord Ashcroft’s Target Seat scheme, whereby he has been donating £30,000 of his personal fortune per constituency. This surgical financing has given the Tories a strength concealed by national polling data, the full extent of which Labour discovered only at the last minute.
I am told Mr Brown’s instinct is to outlaw Lord Ashcroft’s scheme, saying it breaks the spirit of campaign funding laws. But if he fails, Labour will need to match the Tory system. Mr Brown had always feared Lord Ashcroft was doing well in the marginals, but had never seen data showing just how well. Until Brown finds a way of thwarting him, there will be no election. This is another reason why this Parliament may run until the summer of 2010. Yet Prime Ministers who postpone elections tend not to win them in the end, as Jim Callaghan and John Major taught us. This is the tantalising knowledge behind the Conservatives’ new optimism. Everything in Mr Darling’s report suggested things will get no easier for Mr Brown once the economy slows, the debt builds and house prices wobble. It is also possible that there is no ‘vision’, that the speech at the Labour party conference was the sum total of his creed — that Brownism is exhausted, even if Brown is not, and that the Tories really will now make the intellectual weather.
To read the Comprehensive Spending Review (http://www.hm-treasury.gov.uk/pbr_csr/pbr_csr07_index.cfm) is to step into another world, where unemployment is low, where immigration does not feature, where child poverty can be eliminated with tax credits, where crime is falling and the world is safe enough for defence spending to take the smallest slice of the spending cake in modern British history. It could be that the Prime Minister was incarcerated in the Treasury for too long and that this document genuinely reflects how he sees Britain.
Yet Mr Brown has already shown the Tories the dangers of underestimating him. He may be sitting in No. 10 with 100 pages of knockout pre-election policies removed at the last minute from Mr Darling’s speech. He may have damaged his reputation as a Big Clunking Fist, but he has an enviable record as a long-term political survivor. He lost the game of chicken. His mission will now be to draw Mr Cameron into a game of stamina, and see if the Tories can last the pace.