Awkward squad wrests control of the agenda

Authority is bleeding away. On the big issues - tax, Europe, privatisation - a troupe of populist rebels are increasingly setting what passes for an agenda while ministers stand by in mute anger. The sound-bites of the awkward squad drown out the careful strategies of Cabinet. Now, to govern is no longer to choose: it is merely to writhe.

Last night will go down as a climactic moment in the lurid story of Tory dissent. Not only have the rebels assassinated a highly unpopular tax increase, earning the muttered thanks of many loyal Conservatives as well as the voters. They have, it seems, forced a government that had been boasting of its public-spending toughness to admit that further reductions are, after all, possible.

With ministers deeply worried about the markets, Kenneth Clarke charged back last night like a wounded rhino. His swift acceptance of defeat on the substantive issue was right. He had decided earlier in the day, after grim news from the whips had started to circulate round Whitehall, that to slog on would merely prolong the agony. The Government is too weak for such attrition. As a final throw, over the course of the evening, Mr Clarke played poker with the rebels about their real price. He bid high, but not high enough.

So, of the various unpalatable options, spending cuts may prove the least bad, though endless ingenious tax wheezes are being floated. However, ministers can all too easily imagine what Labour's Gordon Brown would make of yet another Tory tax increase - which would itself require Commons authority.

It is beginning to look as if the bland official statement in the House of Commons bulletin that there is no government majority is going to become a serious reality. Ministers had argued that their effective majority remained in double figures, but if they cannot carry finance measures like this it is starting to look a thin boast.

Spending cuts may help Mr Clarke's reputation with his right-wing critics, but they would not do much for the Chief Secretary, Jonathan Aitken, who has been telling his admirers on the right that he has been incredibly brutal already. If so, they will be wondering, how come a few stroppy backbenchers can make him come up with more?

Last night does not mark the end for this administration. There are Labour precedents for losing such votes and soldiering on. It may not even be bad news for the Tory party in the longer term: there were plenty of ministers who had been disloyally praying for a defeat. As one put it: ''The trouble with Clarke's position is that every blood-curdling alternative he threatened the party with curdled the blood rather less than what we were already committed to do.''

But the defeat has further cruelly damaged the Cabinet's weak grasp over the legislature, posed serious questions about John Major's parliamentary strategy, and marked another high-water mark in the rising tide of rebel influence over this government. This week may bring yet another vote of High Noon proportions when the European Finance Bill returns. The Government is not so much living from week to week as reeling wildly from day to day. We keep saying it cannot go on like this. But it does. Can ministers imagine anything worse than what is happening to them now? They can: a general election.

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