Steve Richards: Prudent government? More like paranoid if you ask me

Labour's decisions on the Dome, fuel duty and pension provision are driven by its lingering fear of the Tories

Here is a quiz question for you: what have the Government's decision to build the Millennium Dome, the Chancellor's 3p cut in fuel duty and the presentation of his spending plans got in common?

Here is a quiz question for you: what have the Government's decision to build the Millennium Dome, the Chancellor's 3p cut in fuel duty and the presentation of his spending plans got in common?

I will give you a clue: the answer is not Gordon Brown, although his name pops up in the question a couple of times. Mr Brown cannot be the common link as he opposed the Millennium Dome from the beginning.

Indeed Mr Brown, with his fingerprints nowhere near the site, can bring his prudent self to joke about the hundreds of millions being poured down the drain in Greenwich. The Chancellor has been known to relate a story about a recent meeting of EU finance ministers, in which one of them reminisced about the joys of his country's New Year's Eve celebrations. Another of them joined in. The spectacular fireworks, they agreed, were worth the investment of a few liras or pesetas. "No doubt you were more prudent and cautious, Gordon," suggested one of the exuberant ministers. "Sure," Mr Brown replied, "we only spent £628m." The Chancellor saw his fellow finance ministers converting this grotesque figure into euros with a look of bewildered horror.

It remains an intriguing question as to why a government so cautious when it came to power in 1997, wary of spending a few additional pounds to repair a school drainpipe in Byker, gave the go-ahead for the Dome.

Peter Mandelson offered a characteristic explanation in an interview with me in July 1997. "The world will be looking to Britain and Greenwich in particular. They don't want to see us all eating Spam fritters in street parties." I bet poor old Charlie Falconer, the minister who happened to be in the chair when the music stopped, wished we had stuffed ourselves with Spam on New Year's Eve rather than gone ahead with the Dome. Free Spam fritters all round would have been a lot cheaper.

But there was another more decisive and understated reason for the ministerial go-ahead than Mr Mandelson's modernising vision. For a nervy government, fresh to power, the Conservatives had already legitimised the project. The Government did not want to initiate any spending of its own. As far as the Dome was concerned, the Conservatives had cleared the path. What is more, the Conservatives could not attack the spending spree because they had signed up to it as well.

In other words the Dome would not have happened if it were not for the Conservatives and the protective shield they supposedly offered a new government. In the summer of 1997, when Mr Blair was walking on water and Mr Hague was bring crucified for wearing a baseball cap, the Conservatives were strongly influencing government policy.

In a curious way they have been doing so ever since, not only with regards to the Dome. The Government has a strong story to tell about the way it has changed the debate over "tax and spend". Mr Blair and Mr Brown can now state openly that Britain is an underinvested country and that they are trying to address the problem by spending billions of pounds. Only a few years ago, Labour was not trusted to spend a single pound.

Sometimes, though, the narrative gets lost. The Government is still suffering, for example, from the presentation of Mr Brown's first spending round in 1998 when he gave the impression he was handing out more money than he really was. Why did he do it? According to a Treasury aide who I spoke to at the time, "It was to trap the Tories into opposing figures that were actually very prudent ... and it worked." Yes, it worked. The then shadow chancellor, Francis Maude, described the prudent plans as "reckless". Mr Brown saw off Mr Maude.

With ease he is seeing off Mr Portillo as well. What could the brooding shadow chancellor say in the Commons last Wednesday when the Chancellor had trumped his 3p cut in fuel duty? He looked awkward and spoke uneasily. Perhaps he would have been better-off telling us all once again how he had spent a night as a hospital porter or offered some further reflections on his Spanish origins. "Did you see Portillo after Gordon's speech?" Labour MPs asked with glee.

Yes, we saw Mr Portillo. But Mr Portillo is not a mighty threat to the Government, at least for the moment. Even so, Mr Brown partly had Mr Portillo and the Conservatives in his sights when he cut the fuel duty. Surely it was no coincidence that he offered a 3p cut, the same as the Conservatives had proposed last September.

In my view Mr Brown made a mistake. The Treasury is not exactly thrilled with those newspapers that had accused the Government of being out-of-touch and arrogant, and are now taunting Mr Brown for giving in to the protesters. I have always taken a different line, that the Government is not arrogant enough, that it is too much in touch with every flicker of public opinion. This makes it harder for them to stick to a clearly thought-through strategy.

On fuel, Mr Blair has been saying for months that the duty was necessary to release funds for schools and hospitals. Ministers have pointed out that there are no road tolls in Britain. Occasionally they suggest that the higher fuel prices have helped the environment by reducing car usage. Then, out of the blue, they cut fuel tax. And what do they get in response? Polls suggesting that the ungrateful motorists want more cuts.

Ironically, the fuel tax detour comes at a time when Mr Brown's iron discipline is bearing fruit. Several years ago he hit upon a rather novel idea that in order to help the worst-off and improve public services, economic stability is an essential pre-condition. Last week he stuck to his conviction that work enhances not only the economy, but also the individuals involved. His pension reforms, which have roused the august Institute of Fiscal Studies into a state of high excitement, will ensure that the poorer pensioners get most help. Sometimes, though, Mr Blair and Mr Brown trim needlessly.

Which brings me to the answer to my quiz question. What do the Government's cock-ups have in common? The answer is the Conser- vatives, or to be more precise, the Government's awe of the Conservatives. Like Margaret Thatcher between 1979 and 1987, ministers have been given a blank page on which to paint a picture of their own choosing. Instead the Tories are always in their sights. How can we outmanoeuvre them? How can we get them on board if a project looks tricky?

There is a mixed message in this for William Hague. His party is most powerful because it is there, because it has ruled for so much of the recent past, when the current ministers served their political apprenticeships wondering if they would ever win against the mighty Tories. Perhaps Mr Hague's most effective strategy would be to say nothing at all, to merely exist. That is when ministers become vulnerable, when in trying to outwit the poor, demoralised Tories, they tend to outwit themselves.