Hague and Portillo: can't live together, can't live apart

Tory election hopes depend on an uneasy alliance between leader and shadow chancellor

The party has a leader and below him an ambitious, charismatic politician in charge of economic policy. The charismatic politician would like the leader's job. Avert your gaze from the tensions between Tony Blair and Gordon Brown. Consider instead the relationship between William Hague and Michael Portillo.

The party has a leader and below him an ambitious, charismatic politician in charge of economic policy. The charismatic politician would like the leader's job. Avert your gaze from the tensions between Tony Blair and Gordon Brown. Consider instead the relationship between William Hague and Michael Portillo.

Together, these two sharply contrasting political personalities will shape and present the party's economic policy, the issue on which the next election will mainly be fought. More significantly, there is an awkward tension at the heart of the relationship which does not apply to Blair and Brown.

The Prime Minister and his Chancellor have titanic rows, but they are in their project together. If Blair fails, Brown will be deemed to have been a failure as well. If Blair departs the political scene in triumphant circumstances, Brown is the most likely inheritor of the crown.

Portillo requires a very different set of circumstances in order to become leader of his party. Hague must not succeed too well or else Portillo's leadership hopes will be doomed for another term at least.

Self-interest ties them together until the election. For the time being, Portillo needs to appear unequivocally loyal. He is viewed with suspicion by too many in his party, after his hesitant support for John Major, to play any other role.

So far the public remains suspicious as well. Today's NOP poll for the Sunday Express shows that 34 per cent of voters are less likely to vote Tory if Portillo were leader.

Any tensions between Portillo and Hague will be played out in private, only hinted at by those around them observing the party's pivotal relationship. "Michael has changed," says a senior party source. "He admits that himself. Whether that is a swing to the left is for others to judge." That is the difficulty, a source of suspicion in the Hague camp. The change in Mr Portillo is hard to pin down, not so easy for "others to judge". He has become more broodily enigmatic.

What seems to be happening is this. As Hague has rediscovered himself as a Thatcherite populist, Portillo seeks the centre ground, uncertain as to how he should get there. So far he has revealed a pragmatic streak which was lacking in his earlier evangelical phase, when he was the darling of the right.

The recent fuel dispute is a case in point. When the shadow cabinet met a fortnight ago in the grand surroundings of a Hertfordshire hotel, Portillo suffered a policy defeat at the hands of Hague. Prior to the meeting the shadow chancellor had toured the studios insisting that his party was being "prudent", one of several words he has consciously adopted from Gordon Brown's lexicon. Yes, the Conservatives were the party of low taxes. Yes, cutting fuel tax would be a priority. But the details would not be revealed until closer to the election as part of their overall economic package.

A member of the shadow cabinet who attended the Hertfordshire meeting suggests that Portillo was reluctant to change this line. Apparently his view was this: "We hit every button. We are not accused of being reckless with the economy or responding to protesters. But we also make it clear that we will cut fuel taxes." Another senior party source explains that "Michael was worried about the law and order issue. He did not want us to appear as if he were responding to a breakdown in law and order."

But the Hague camp, backed by most of the shadow cabinet, had reaped the rewards of following a tabloid agenda in the summer. They wanted to do so now. "The Daily Mail writes an editorial one day and we make it party policy the next," according to one senior strategist, only half-jokingly.

On the day of the shadow cabinet meeting, the party had been hit in the tabloids for failing to propose a specific cut in fuel tax. It was Hague rather than Portillo who wanted to respond by proposing a cut in fuel duty without further delay.

Hague and Portillo had a separate meeting at the hotel. At this point Portillo's pragmatism and Hague's populism combined in a proposal to reduce the duty by 3p a litre, not as much as some shadow cabinet members wanted, but a specific proposal at least, which they announced at a press conference the following day.

A senior source says: "They agreed on the 3p cut together. Portillo did have concerns about being seen to respond to the protesters, but it was agreed in principle and they agreed the figure together. There was no discussion about 5p or 10p off. And it certainly would not make sense to start offering 20p off."

Interpretations of how the two men get on vary. "Like any leader and shadow chancellor their relationship is crucial. They have established a good working relationship," says one Central Office insider. Up to a point. They talk often and row rarely. Neither has an explosive temper. Nor are they especially warm towards each other. "There is an awkward politeness," according to one observer who has recently left Central Office. Hague has no choice but to be on his guard. When the shadow chancellor's profile is low, Hague's allies have been known to ask, "what's Portillo up to? He's keeping his head down so he doesn't get blamed if we lose." On the other hand, if Portillo is ubiquitous in the media, as he has been recently, there are concerns in the Hague camp that he is promoting himself more than his party. It's Portillo's fate to be viewed with suspicion. It's Hague's fate to work closely with someone he does not fully understand, who he can never fully trust.

On appointing him, Hague allowed Portillo to hit the ground running, with announcements that the Tories would support the minimum wage and the independence of the Bank of England. "William had doubts about the timing, because we were still reviewing the minimum wage," says one Hague aide. "But he was relaxed about the policy changes themselves."

Portillo's reinvention is incomplete. It is taking place in front of our eyes. In interviews he is softly spoken, sometimes studiously calm, a pair of new glasses adding to the air of gravitas. His policy changes have pushed the party a little towards the centre ground. Yet this week in Bournemouth he will talk tough on public spending. "We will deliver lower taxes by controlling public expenditure better," he says in the Tory Conference magazine.

In contrast Hague has acquired a more aggressive, less enigmatic persona. His crew-cut hairstyle has coincided with a more populist approach to politics. According to one close observer, "Up close, William doesn't look like a one-nation Tory. He's a Thatcherite. Make no mistake about that."

Up close Portillo no longer looks or sounds like a Thatcherite. He has become the great hope of the pro-European left of the party, while some old friends on the right view what they regard as his "mid-life political crisis" with alarm. If Hague loses badly, Portillo will strike out and will be forced, in the process, to define himself more clearly. For now his task is to help Hague secure a historic election win. If he succeeds, he will have to play the role of loyal, enigmatic Chancellor, the ultimate prize as far away as ever.