Steve Richards: Dancing on the edge of the economic precipice

The Prime Minister shows again that he is a sharp reader of dance-floor moves

The political choreography of the recession is as compelling as anything on Strictly Come Dancing. We have had the clumsy footwork of the Conservatives, moves that make John Sergeant seem like Rudolf Nureyev, the recovery of Gordon Brown after being the most awkward figure on the dance floor, and the desperate lunges from the Liberal Democrats in an attempt to get noticed. If only voters were as engaged with the dance that shapes their lives as they are with the twists and turns of Sergeant's fortunes.

Perhaps for once they are following the political story more closely. As in a war, the connections are suddenly more tangible between politics and daily life. Leaders meet and actions are taken. Some of the actions make an impact almost immediately. In this context Brown's rise is not a mystery, and nor is it a conjuring trick alone, although the Prime Minister has played his hand cleverly. Voters are frightened.

When they are fearful, they turn to government for a response. They do not sit there and think, "The free market is the wonder of our age, let's wait for it to get us out of the nightmare". To a limited extent Brown has risen to the epoch-changing moment. The banks have not collapsed. Interest rates are falling fast. On Monday taxes will fall, I suspect, by a substantial amount as well.

Senior government figures I have spoken to cite the interest-rate reductions and calls from the IMF for a large fiscal stimulus as justifications for a big move on tax. There have been tensions between Brown and his chancellor, Alistair Darling, over quite how big the move should be and what form it should take.

The two of them have been meeting every day for some time to discuss the proposals and the wider economic crisis in addition to their sessions at the newly established National Economic Council, which gathers at least three times a week. But disagreements between Prime Minister and Chancellor on the eve of a pivotal announcement are not unusual and in some ways are encouraging. They suggest that Darling is more than a spokesman for Brown.

But Brown is driving the politics and has shown once again that he is a sharp reader of movements on the dance floor, sensing the steps ahead. For reasons I have never understood he is persistently underestimated, not least by his opponents.

As I suggested after Labour's win in the Glenrothes by-election Brown has had more comebacks than Bruce Forsyth. No one serves as a Labour Chancellor for a decade without substantial political skills. In this case Brown plans to cut taxes by borrowing more, along with every major government in the world and with the support of senior business leaders. Brown would never take risks on tax in isolation. His genius is to make the risky seem part of the mainstream orthodoxy.

Ministers cannot believe quite how quickly David Cameron has moved away from the mainstream and his supposedly modernising path. They were worried by his early period as leader and more recently when he appeared to be offering bi-partisan support in the economic crisis. They were not used to a Tory figure committed to issues such as the quality of life and public spending, then appearing to show a willingness to break with outdated Thatcherism in expressing support for the government's interventionist response to the crisis. Now, like his predecessors, at almost the same point in the parliamentary cycle, Cameron returns to a more familiar part of the dance floor and ministers are more relaxed about how to handle him.

There are no painless public spending reductions that can finance an immediate tax cut, especially in a recession. I can understand why Cameron has ended up in this position but, as some in his party have been telling me, this could have been his Clause Four moment, declaring to his party that in a new era, one in which the Conservatives still want to introduce some radical public service reforms that are costly, there is no scope for overall spending cuts.

I will read with interest their detailed proposals and how they plan still to create a surplus of good schools and hospitals in order to provide genuine choice in public services, an extremely expensive commitment at least in the early stages. More immediately: If there is a big tax cut will they oppose it or explain where they will find the cash from many billions of spending cuts? This is not an easy step on the dance floor.

In contrast to the Tories, at every stage since the collapse of Northern Rock the Liberal Democrats have been far-sighted in predicting the future moves, even if they have not got much credit for their vision. Of course Vince Cable is a star, but Nick Clegg is fortunate at such a time to be surrounded by several other trained economists. Chris Huhne, David Laws and Steve Webb also take part in daily meetings to discuss policy with Clegg and Cable.

As a result they understood the wider implications of the Northern Rock crisis almost before it erupted and have had a clearer sense that something epic has been going on ever since. Clegg is frustrated that no one notices as he dances with his economically literate colleagues, but he will get a break of sorts at some point. Lib Dems must show patience until the lights shine on them.

There is, as with all good dances, a dramatic and important twist. Brown makes his big moves but so far not much of the furniture shifts with him. Both Cameron and Clegg were right to point out at Prime Minister's Question Time that banks are still not lending. Also in spite of the big cuts in interest rates people are not spending.

That is why the nature of the tax cuts matters as much as the scale. One of the lessons politicians can learn from Strictly Come Dancing is that its easy accessibility is part of the appeal. Nothing too complicated gets in the way of the dialogue between viewers and participants.

The opposite is the case with pre-Budget reports where figures are bandied about that are meaningless to most voters. Deliberately Brown made the tax system more complicated partly so he could increase taxes without people noticing. The downside of his approach was that when he cut taxes people did not notice either.

Robin Cook used to point out to me that his constituents thought tax credits were a technical adjustment from the Inland Revenue and had no idea that they came from the government. On Monday the tax cuts need to be transparent and clear, not lost entirely in a maze of tax credits and technical adjustments. The cut needs to be as clear and simple as an episode of Strictly Come Dancing. We have had the interest rate cut and the bail-out for the banks. If a big tax cut does not get people spending, the choreography will change dramatically again. Let's Dance.

s.richards@independent.co.uk