This Pre-Budget Report may be the manifesto launch for a January election
Given that Gordon Brown spent his adult life plotting to get into 10 Downing Street, he has been understandably quiet about his decision to leave it. Tony Blair’s old office certainly brought him rotten luck, and his new open-plan base in Number 12 has far better feng shui for a man of his disposition. There he sits as the leader of the gang, within stapler-hurling distance of about a dozen aides. It looks and feels like a general election campaign headquarters, the environment in which, historically, Mr Brown has been at his happiest and most deadly. He is already at war.
For the second time in his career momentum is behind him, as unexpected as it is undeserved. Mr Brown’s audacity, his most remarkable characteristic, is serving him well. Here stands the architect of Britain’s debt pyramid and its inept banking regulation system posing as the solution to the problems he himself incubated. The sheer chutzpah which allowed him to pose as a world financial leader at the G20 in Washington may well take him through to the Pre-Budget Report on Monday, applying a triumphant Keynesian spin to what is an abject budgetary failure.
With each of the Prime Minister’s gravity-defying successes, the likelihood of a January election grows stronger. It would be an extraordinary time for an election, yet that very singularity would play to Mr Brown’s favoured theme: namely, that there is a national economic emergency. Even in the depths of winter, he could easily argue that he needed a new and explicit five-year mandate to implement his rescue plan. And most of all, it would get the electorate into the polling booths before the really bad news breaks.
Three economic tsunamis are speeding their way towards our shores. The first is unemployment. The seasonal bump in hiring unwinds in the new year, and employers will start layoffs they don’t have the heart to announce before Christmas. Next the quarterly heating bills, up 50 per cent on last year, will land on doorsteps. And perhaps most ominously, a secondary banking crisis may be brewing as nationalised British banks are still unable to raise private money. Serious economists are talking about London being ‘Reykjavik on Thames’. This would destroy Mr Brown’s claim to have solved the banking crisis.
With the political pavement strewn with such potential landmines, why would Mr Brown keep walking? Why wait for the bills to land, the banks to implode or the pound to reach parity with the euro? Or, most of all, why wait for the Conservatives to learn how to fight effectively on the economy? George Osborne’s bold decision to warn that Mr Brown’s policies risked a run on the pound stung so badly because the sterling crisis is a powerful metaphor for Britain’s unique weaknesses. One cannot quite blame this on the Americans.
While Mr Brown’s war room at Number 12 is working perfectly, the Tory equivalent is in disarray. Mr Cameron unwisely allowed his chief strategist, Steve Hilton, to work from California for six months, where he still is, firing off nocturnal emails in between fortnightly trips back to a country whose politics are changing almost by the day. Mr Osborne is still in the doghouse, blamed by most Tory MPs for letting Mr Brown get away with economic murder. While no plausible replacement is yet in the frame, the question of his future is widely discussed.
This is why so much now depends on the Pre-Budget Report. It will display Mr Brown’s intentions, and — if it is packed with pre-election giveaways — a window will open once more for an early election and Mr Brown will be given a second chance to do what he so disastrously failed to accomplish last autumn. The PM will, of course, go through the motions of vigorously stamping out any such speculation. Douglas Alexander, nominally the general election co-ordinator, said only last week that he had had no conversations about an early election. This tells us little. Things have changed in Number 10, and the first he’s likely to know about an election is when he hears Lord Mandelson announce it.
The Conservatives are getting ready, with a January election regarded as a distinct possibility. Mr Cameron has started his attack by declaring on Tuesday that he would spend less than the £680 billion the government intends to squander in 2010-11. While hardly radical in itself, this marks a symbolic break from the Brown-defined consensus which has trapped the Tories for so long. Labour howled with outrage, using words that have called previous Tory oppositions to heel such as ‘Thatcherite’ and ‘ideological’. Yet such words don’t work any more. On this basis, every household in Britain is ideologically Thatcherite. Everyone is tightening their belts.
This thin blue battle line may be erased by Alistair Darling, the Chancellor, who is now proving a stabilising force within the government. On Monday, he intends to lay out exactly how he will repay the borrowed money. I am told that he is also considering changing the Bank of England’s remit, to see whether it should pay more attention to asset prices in future. Instructing the Bank to ignore the debt-fuelled asset bubble was perhaps Mr Brown’s most calamitous misjudgment, and became the foundation of what will soon be known as the Brown Bubble.
While it is an exaggeration to say that Mr Osborne is fighting for his job, he will certainly be battling for his credibility when he responds to Mr Darling’s mini-Budget on Monday. He must deliver a fierce and wounding attack. If the Chancellor announces both tax and spending cuts, Mr Osborne will need to find clear ground to stake out. He hit a deep nerve when warning about a run on the pound last weekend — the perfect response to Mr Brown’s mantra-like claims that the economy is robust and well-prepared. There is a reason why sterling has been the 159th worst performer in the world’s currencies in the last year, and it has nothing to do with subprime American mortgages.
The shadow chancellor was simply stating the obvious, and this is what Mr Brown is trying so desperately to hide from. His preferred narrative — that he is personally saving a strong Britain from a global ‘contagion’ — is an elaborately constructed myth that simply cannot last the course. On Monday, he will doubtless unveil a package that will be presented as a radical remedy. Yet its failure will be obvious by Easter. This is why his best chance is to hold an election in the new year, before he is found out. For the second time, the PM is in position, ready for battle. And for the second time, Mr Cameron’s mission is to convince him that the Conservatives are ready, too.
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