Steve Richards: What did you do in the war, Gordon?

Are we at war? During this week's emergency debate in the Commons, several MPs cited wartime conditions in an attempt to make sense of the current economic crisis. The image of war was not deployed by the Chancellor, Alistair Darling, perhaps because he has to sound a little on the optimistic side, having predicted growth next year. The shadow Chancellor, George Osborne, kept clear of such apocalyptic scenarios as well, maybe on the grounds that his limited policies would seem even punier in such a dramatic context. Elsewhere, MPs almost spontaneously moved on to war.

The first to do so was the Liberal Democrat spokesman Vince Cable. He pointed to Churchillian resolve when challenged about the risks of a fiscal stimulus, saying: "The fact is that, in emergency situations, governments have a responsibility. That is most obviously the case in war. Nobody expected Mr Churchill would stand up and say, 'Sorry, we can't keep on fighting on the beaches because there is growing worry in the gilts market about the rising cost of ammunition'. In emergency situations, governments have to act and, although this is not war, it is an economic emergency and it requires drastic action."

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Later, the former Treasury minister, Geoffrey Robinson, likened Britain's mountain of debt to "the enemy". He, too, supported the fiscal stimulus as a necessary move in a recession, comparing the Government's action now with the crisis in the early 1980s, when factory closures were announced on an almost hourly basis.

Robinson was backed by the Conservative MP, Sir Peter Tapsell, who looked back in despair at his government's 1981 recession budget. "I said that Budget would destroy the base of British industry, and that was true – the West Midlands has never recovered," he said. "The 1981 Budget is the reason why now, with the collapse of our financial industry, we do not have a proper industrial base."

I noticed another veteran MP, Sir Patrick Cormack, nodding as his colleague reminisced about that famous austerity Budget in the middle of a deep recession. In a way, these unfashionable, knighted veterans have more modernising instincts than the youthful Thatcherites on the Conservative front bench, who have virtually alone across the globe opted for a 1980s-style response to the current crisis.

The parliamentary conflict in itself shows that wartime conditions have not been reached. The Tories feel under no pressure to adopt a bipartisan approach that normally applies in war. Instead, they are feeling optimistic again about the way the politics of the recession is playing out after a wobble in recent weeks. It is certainly the case that the front bench and their supporters in the media and among influential bloggers march together at last, sensing that election victory is assured.

Perhaps the economic crisis is so grave that the Government will get the blame for it all and be kicked out on the back of the supposed death of New Labour: an exaggerated demise of an entity that never took on a clearly defined form in the first place. But I doubt whether it will be quite as simple as that. In the next few months, and probably for longer, other countries are going to announce packages that will make Darling's seem like a stroll down to the village shop. I would not be surprised if the question in the coming weeks is whether Darling has done enough, especially once Barack Obama makes his move in the US. It is quite possible that Darling will have to do more in the Budget next spring.

The Conservatives, although well placed to attack the Government for its record, would be in the odd position of again opposing interventions aimed at making a recession less deep. This position is more curious as the crisis was caused in the first place by a tendency of governments to sit back and let markets run riot. Until now, I have never thought a hung Parliament was a possibility after the next election. I wasted too much time in the 1980s reading speculation about what would happen if no party got an overall majority, only for the Conservatives to win by a landslide every time.

But such an outcome suddenly seems more likely for three reasons: first, Cameron's decision to return more overtly to a Thatcherite comfort zone at very the moment when such orthodoxy is being challenged around the world; second, the fact that Labour will be entering the next election with debt on its stooping back like sacks of coal; third, the overall state of flux. The next election will be contested in conditions closest to February 1974, the last time there was a hung Parliament.

In this context, the emergency debate in the Commons highlighted a significant divide. Labour and the Liberal Democrats agree on the need for substantial government intervention at a time of national crisis. They disagree on what form the fiscal stimulus should take, with the Lib Dems favouring tax cuts for the low paid and bringing forward more capital investment. But both parties accept the principle that intervention is vital. This is also a view shared by a few Conservative MPs, the genuine modernisers. There are even one or two Tories who tell me they support the principle, at least, of tax rises for high earners – a view now backed to varying degrees by Labour and the Liberal Democrats.

Cameron's position on Europe was always going to make it difficult for the Lib Dems to support a minority Conservative administration. The Tory leadership's response to the crisis blocks off the route almost entirely. When I put it to an influential Lib Dem that politically the Tory leadership was on a high again, and receiving rave reviews in parts of the media, he observed: "Cameron should be worried. The wrong people are cheering."

There are some echoes with wartime situations in the current crisis. No one knows how long it will last or how grave it will become. It could easily overwhelm the Government and propel Cameron into No 10 with a landslide. But if there is the equivalent to a war time coalition it is suddenly more likely that it will be a partnership between Labour and the Liberal Democrats. Whether it would last for very long is a different question.

s.richards@independent.co.uk

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