Welcome to the new Independent website. We hope you enjoy it and we value your feedback. Please contact us here.


Michael Brown: All eyes are now on Cameron

The pressure is on the Tories to confirm that they stand for fiscal balance

Now that Damian McBride has utterly shattered the illusion of personal rectitude Gordon Brown sought to create when he became Prime Minister, the stage is set for the spotlight to fall on an inevitable, and massive, Tory election win in May 2010. Labour MPs with majorities of less than 10,000 can look forward to receiving 12 more pay packets and expenses payments before the electoral grim reaper finally requires the House of Commons to send out their P45 notices.

Any remaining chance of a Labour victory has been torpedoed by incompetence, sleaze and spin at the heart of Mr Brown's operation in Downing Street – already being dubbed "down in the gutter street". The dying days of the John Major government look positively wholesome by comparison. The worst the Tories' messy attempts at the "black arts" could muster was the Tony Blair "demon eyes" campaign. Any allegation, true or false, now made about any Tory shadow cabinet minister, backbencher or parliamentary candidate will be dismissed as the work of Gordon Brown and will have only a counter-productive influence on voters. Mr McBride has been more use to the Tory Party than any mole they might have inside the government machine.

Of course the ability of any political party to snatch defeat from the jaws of victory knows no bounds but I cannot see any way, thanks to Mr McBride, Jacqui Smith and Tony McNulty – to name just a few – that the Tories can now lose next year. The obvious consequence is, however, that more attention will be paid to David Cameron's budget response, next week, than to the actual budget speech by Alistair Darling.

What exactly is Tory economic policy? Whatever the answer, it no longer has to withstand the stress test of an election campaign. But it will have to withstand the test of actual implementation. Sensibly, Mr Cameron wants voters to cast a positive decision in favour of Tory policies. His biggest danger is that his victory will be based solely on an overwhelming desire to "kick these sordid rascals out". The early years of the Cameron project were devoted to accommodating Tory policies to an age of Labour plenty which ensured that the formula of "sharing the proceeds of economic growth between increased public expenditure and lower taxes" successfully avoided the charge of "Tory cuts" that bedevilled the 2001 and 2005 campaigns under William Hague and Michael Howard.

But the banking and economic crises have so far been as much a nightmare for the Tory treasury team as for the Government. During the last Tory conference, the party leadership fell victim to the "let's all be statesmen and play the national consensus card". George Osborne has since recovered his composure and managed to stumble his way towards some policy coherence. After finally abandoning the commitment to match Labour spending plans he has carved out space to prepare for public expenditure cuts. Already the Labour charge that the Tories are the "do nothing" party is losing its resonance. But the pressure is on the Tories to confirm, in public, that they are the only party that stands for fiscal balance.

Tories, however, still face a conundrum. How do they maintain that they remain a party of tax cuts when there is no room for manourvre during the lifetime of their first parliament? Ken Clarke tried, but failed, to prepare for the possible abandonment of the promise to downgrade the pledge to lower inheritance tax from a commitment to an aspiration – only to make unhappy waves among the party faithful and backbenchers. Within hours the promise was re-stated. How, the Tory right was arguing, can voters believe that they will keep an election manifesto promise, in government, if they cannot keep, in opposition, the one spectacular promise that led to Mr Brown scrapping the plan for a 2007 election. Similarly, Mr Osborne last week momentarily dallied with the possibility of cancelling three year public sector wage agreements and even hinted that public sector pension arrangements might be in jeopardy before engaging reverse gear shortly afterwards.

It has also taken several weeks of unresolved soul searching for the front-bench to make up its mind about its attitude to quanitative easing – printing money. Mr Cameron needs to be aware that it will be on his watch that the inevitable consequences of this policy – massive double digit inflation – manifesting when he faces re-election in 2015. His first response next week should be to oppose, unequivocally, all present government action involving the use of the printing press. Since Mr Brown appears to be instructing his chancellor to adopt a slash and burn policy, without regard to the post election consequences, a high inflation and high interest rate economy now looms. Mr Cameron needs to pin future inflation on current government policy.

Tory strategists believe that it may be possible for Mr Cameron and Mr Osborne to fudge precise spending and tax proposals until after the election. They are right – they can. But only if they are totally sure in their own minds that they are willing to endure instant unpopularity within weeks of the polls closing.

The Cameroons' cultural difference from the Thatcherite leadership of yesteryear is that, hitherto, they have only been built for good times. "Let there be sunshine" was the rallying cry from Mr Cameron at his first party conference. Now the political weather for the next Tory government is destined to be dark clouds.

Thatcher, Howe, Tebbit and their fellow travellers only ever knew grim disasters and thrived in such a climate. Thirty years ago I campaigned as the successful Tory candidate for Scunthorpe on a pledge of lower taxes. Within weeks, however, Geoffrey Howe had torpedoed my promise by doubling the rate of VAT. Yet voters readily accepted the bigger picture of economic bankruptcy. Most MPs thought their pledges of lower overall taxes would be realised only if unpalatable medicine was first administered. Thatcher and Howe had decided these plans well in advance.

Having spent four years shedding the image as the "nasty party", Mr Cameron is obliged to administer the nastiest economic medicine ever prescribed by any government since the Second World War.