As the Tories dance to Ed Miliband’s tune, George Osborne must now change the music with his Autumn Statement

The Autumn Statement on Thursday is a chance for the Chancellor to reset the running

Political Editor

When George Osborne stands up in the Commons at 12.30pm on Thursday to make his Autumn Statement, his focus will be the big economic picture and a pledge to ensure a “responsible recovery.”  His goal is to shift the media spotlight on to the much better economic figures and away from the cost of living.

For Conservative MPs, the statement cannot come a moment too soon.  Many are worried that in recent weeks,  David Cameron and Mr Osborne have been dancing to Labour’s tune and indulging in copycat politics that has left the Government looking rudderless.

The Prime Minister and Chancellor had hoped that the crucial moment in this phase of the political cycle would be the return to economic growth, showing that their  Plan A is working and that Labour had lost the economic argument. Instead, the turning point was Ed Miliband’s pledge in September  to freeze energy prices for 20 months if Labour wins the 2015 election.  It diverted attention from the economic recovery and on to the “cost of living crisis” that Labour would much rather talk about.

Initially, Mr Cameron and Mr Osborne dismissed the Miliband pledge as interventionist and could not resist the temptation to remind voters of his Marxist academic father, branding the price freeze  “Marxist” and the same argument Karl Marx made in “Das Kapital.”

Mr Osborne agreed with Nick Clegg, who privately warned Mr Cameron not to “play on Miliband’s side of the pitch” by matching Labour’s “gimmick” with cost of living gimmicks of the Government’s own.   But a Labour’s price freeze dominated the political agenda as energy firms announced their annual price rises and a jittery Mr Cameron decided that “something must be done.”  At Prime Minister’s Questions, he rushed out a commitment to “roll back” the green taxes included in energy bills.  Some Tories hoped that would mean a cut of £120 but the Liberal Democrats were never going to sacrifice their green credentials, even if Mr Cameron was prepared to dump his.

A £50 reduction in bills was announced on Monday so that it does not grab the headlines after Thursday's statement. Downing Street insiders say the  early announcement was part of a deliberate attempt to “clear the decks” and neutralise Labour’s best lines of attack.  Last week saw a surprise U-turn by the Tories, who announced their conversion to a cap on payday loan charges,  another issue on which Labour had made the running and linked to its effective “cost of living” campaign.   The next day, there was a surprise climbdown on whether plain packaging for cigarettes should be introduced, a move the Tories blocked in the summer as an intervention too far because there was no evidence it would stop young people smoking. “This is not leadership, it is followship,” one senior Tory backbencher groaned. “We are playing into Miliband’s hands.”

Number 10, naturally, has a different version of events.  On both payday loans and cigarette packets, the Lib Dems had been nagging for the change for months.  More significantly, the Government had faced embarrassing defeats on both in the House of Lords.  The Tories would have been on the wrong side of public opinion, with Labour again on the right one. “We would have looked like the friends of the payday loan firms and big tobacco,” one insider admitted.

An all-party plot in the Lords to defeat the Government on plain packaging was called “Operation Barnacle.”  This was a reference to Lynton Crosby, the Australian strategist dubbed the “Wizard of Oz,” who has been drafted into to run the Tories’ general election campaign and inject the discipline the party lacked in 2010.  His watchword is to “get the barnacles off the boat” – remove any distractions from the two issues which he believes can deliver a Tory majority in 2015 –the party’s long-term economic plan to “finish the job” of clearing the deficit and “the choice” between Mr Cameron and Mr Miliband.

Number 10 portrays the spate of apparent concessions to Labour as pragmatism. The new mantra for Tory spin doctors when they are accused of stealing Labour’s ideas is: “We will take the steak and leave them the gristle.”  They point out that Tony Blair, still described as “the master” by the Cameron-Osborne gang if not in his own party, neutralised Labour’s weaknesses to clear his path to power in 1997.   “New Labour called it ‘clearing the undergrowth.’ That’s what we are doing now,” said one Tory minister.

Backbench Tories are not convinced.  Mr Cameron has upset modernisers by reportedly pledging to “get rid of all the green crap” from energy bills. He has angered right-wingers by intervening in areas like energy after initially attacking Labour for doing so.  A Cameron aide dismissed that criticism, saying: “All governments intervene and regulate markets.  We have never been in favour of laissez faire capitalism.”

Labour senses not only a tactical triumph on energy prices but a much more significant strategic one. Michael Dugher, the shadow Cabinet Office minister in charge of Labour’s communications, said yesterday: “David Cameron's poor imitation of Ed Miliband's cost of living agenda won't convince a country who know Conservative modernisation is over.  Labour has set the agenda because we know that hardworking households are still hurting.”

Team Miliband also dares to hope that the Tory U-turns signal that the intellectual tide is turning in Labour’s favour. Mr Miliband’s unique selling point has been his call for a new economic settlement to replace the “broken” system introduced by Margaret Thatcher.  That will require more state intervention. “Tory ministers have accused Labour of  revivalist Marxism, economic illiteracy and policy gimmickry,” said Lord (Stewart) Wood, a Shadow Cabinet member and one of Mr Miliband’s closest advisers. “It now seems clear they are planning to poach it. This might seem like smart politics when your opponent is more in tune with the public than you are. The problem is that without the intellectual underpinning of an analysis of what is wrong with our economy, the public will see it for what it is: tactical manoeuvres that are not rooted in a governing project.”

The Tories insist that most voters are not interested in Mr Miliband’s intellectual games, and will welcome the letters they will soon receive from their energy companies saying their bills will be cut by £50 thanks to government action.

Inside the Coalition, Lib Dems do not detect any sea change in the Tories’ philosophy – more an outbreak of common sense.  Nick Clegg had to fight off an attempt by six Tory Cabinet ministers to dilute his plans for flexible parental leave. And the Tories are quite happy to steal Lib Dem  as well as Labour ideas – notably  the £10,000-a-year personal tax allowance that takes effect next April, Mr Clegg’s flagship policy at the last election.

With money tight, Mr Osborne will not have many new rabbits to pull out of his hat.  The real test is whether it does enough to move the political debate on from Mr Miliband’s favoured “cost of living” agenda.  So it is a big moment. “We need to draw a line and move on,” one ministerial ally of the Chancellor admitted on Tuesday.  “George has got to change the music”.

THEN AND NOW

ENERGY PRICES

THEN

“I know you want to live in some sort of Marxist universe where you can control these things but you need a basic lesson in economics” – David Cameron to Ed Miliband, Prime Minister’s Questions, October 9

NOW

“All customers in Britain are going to see an average of £50 coming off their bills. That's good news for British families, good news for the cost of living and I think that should be welcomed” – David Cameron, speaking in China on Monday

PAYDAY LOANS CAP

THEN

“Simply introducing a cap might have the effect of pushing a lot of people into a completely unregulated black economy” – George Osborne, March 2012

NOW

“We want markets that work for people; we are stepping in where government needs to step in,” George Osborne, announcing a cap, November 25

£10,000-A-YEAR PERSONAL TAX ALLOWANCE

THEN

"I would love to take everyone out of their first £10,000 of income tax, Nick...We cannot afford it" – David Cameron,   leaders’ TV debate, 2010 election

NOW

“We are increasing to £10,000 the amount you can earn before you pay a penny of income tax. That is a real achievement, delivered in Budget after Budget by a Conservative Chancellor of the Exchequer” – George Osborne, speech to Tory conference September 30 (2013)

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