Budget debacle that left Coalition floundering

Here's my annual political review of the year, published in this morning's Newcastle Journal.

Until the early months of this year, the Con-Lib coalition that has governed Britain since May 2010 had by and large done so with a fair wind behind it from the public.

Without ever reaching the heights of popularity enjoyed by New Labour as its zenith, David Cameron’s government appeared, at the very least, to have earned the benefit of the doubt, particularly when it came to the economy.

All that changed on Wednesday 21 March – the day Chancellor George Osborne delivered his third Budget.

To say it was the pivotal moment of the political year would be something of an understatement. In terms of its impact on public opinion, it may well prove to be the pivotal moment of the entire five-year Parliament.

In the space of a 59-minute speech, the Chancellor announced a package of measures which seemed almost deliberately designed to alienate as many sections of the electorate as he could find.

He slapped VAT on hot food and caravans, froze the age-related tax allowance for pensioners, removed a tax break on charitable giving that would have hit hundreds of good causes, and topped it off with a cut in the higher rate of tax worth £42,295 to anyone earning £1m a year.

It was the ‘pasty tax’ rather than the top rate cut which proved the most politically toxic, playing as it did into the ‘Tory toffs’ narrative which had increasingly started to dog Messrs Cameron and Osborne.

In the end, the plan was ditched following a campaign by this newspaper among others – one of a series of budget U-turns which left the Chancellor’s credibility seriously damaged.

From there on in, even though the festivities around the Queen’s Diamond Jubilee and the London 2012 Olympics provided useful temporary distractions, the government struggled to get back on the front foot.

And the slide in its opinion poll ratings was accompanied by increasing tensions within the Coalition itself – notably over Europe, welfare cuts, gay marriage and, most of all, Lords reform.

With his dream of a new electoral system shattered in the May 2011 referendum, deputy Prime Minister Nick Clegg was pinning his hopes of achieving lasting political reform on securing an elected second chamber - but the Tory backbenchers were having none of it.

The Lib Dems retaliated by scuppering the Tories’ plans for a review of Parliamentary boundaries that would probably have gained them 20-30 seats at the next election

Frustrated in his attempts to regain the political initiative, Mr Cameron resorted to the time-honoured tactic of a reshuffle, but some of his new appointments soon began to unravel.

He shunted Justine Greening out of the job of transport secretary on account of her opposition to a third runway at Heathrow only to see London Mayor and would-be leadership rival Boris Johnson rally to her cause.

His appointment of Andrew Mitchell as chief whip also swiftly backfired when he was involved in an altercation with police officers at the entrance to 10 Downing Street.

However in what has surely been the most interminable and convoluted political story of the year, Mr Mitchell now looks likely to have the last laugh, after it emerged that a police officer may have fabricated evidence.

In the North-East, the regional political agenda continued to be dominated by the fallout from the government’s spending cuts.

Newcastle city council responded to the spending squeeze by taking the axe to the arts budget – reminding those of us with long memories of the antics of so-called ‘loony left’ councils in the 1980s.

Yet at the same time, the year saw something of a rebirth of regional policy, driven by Lord Heseltine’s ‘No Stone Unturned’ report which was explicitly endorsed by Mr Osborne in his autumn statement.

The mini budget also saw the Chancellor forced to back down on plans to introduce regional pay rates following a fierce campaign by the unions.

The year ended with increasing speculation that the Coalition may not, after all, go the distance to the planned next election date of May 2015.

With the government seemingly stuck in a trough of unpopularity, the need for the Liberal Democrats to assert their separate identity from the Tories is growing.

Mr Clegg’s decision to make a separate Commons statement from the front bench on last month’s Leveson report into press regulation was unprecedented, but may well prove to be the start of a trend.

If 2012 was the year the Coalition lost the public’s goodwill, 2013 may prove to be the one that sees it splitting asunder.

Was reshuffle the beginning of the end for Cameron?

Much has changed for David Cameron over the course of his seven years in charge of the Conservative Party – but there are two aspects of his leadership that have remained pretty much constant throughout that period.

The first is that he has tried to avoid reshuffles as far as possible. The second is that in his efforts to detoxify the Tory brand he has, by and large, continued to lead the party from the political centre.

Well, it had to end sometime I guess. Two and a half years after taking up residence in Downing Street, he finally summoned the nerve to move some of his more middle-ranking Cabinet members around the political chessboard.

And in so doing, he tilted the balance of power within his government decisively rightwards – and away from that fabled centre ground he has spent so long trying to cultivate.

On the face of it, this looks like pretty poor judgement on the Prime Minister’s part. To win an outright majority at the next election, his party will have to win approximately 2m more votes than it won in May 2010.

Yet history shows that every time the Conservative Party has lurched to the right in recent years – most notably under William Hague in 1999 and Iain Duncan Smith in 2003 - its support has gone down, not up.

Mr Cameron's entire political success, such as it is, has been built on persuading people that he is not like those Tory leaders of old and that his style of politics, like Tony Blair's, is about reaching out to those who are not his natural supporters.

On no issue is the change in Mr Cameron clearer than that of the environment. The man who once rode a bicycle to work to show his party’s new-found commitment to the green cause has now appointed a virtual climate change denier as environment secretary.

Sure, the changes announced on Tuesday may well bring about some superficial advances in terms of both service delivery and presentation.

On the latter score in particular, new health secretary Jeremy Hunt will surely be an improvement on the hapless Andrew Lansley who, in the words of one commentator, “could not sell gin to an alcoholic.”

But these are trifling gains when set against the central strategic error of failing to recognise that parties struggling to hold onto their support rarely solve their problems by retreating into their ideological comfort zone.

Indeed, it is tempting to believe the entire exercise was less a considered piece of political strategizing than an act of petulance designed to put the Liberal Democrats in their place following the spat over Lords reform and the boundary review.

With the forces of the Tory right now ranged even more formidably against him, there is no doubt that Lib Dem leader Nick Clegg will now find it even more difficult to persuade voters that he and his party are actually making a difference in government.

Meanwhile Labour leader Ed Miliband continues to make mischief by teasingly holding out the prospect of a post-Clegg, post-election Lib-Lab deal with ‘continuity SDP’ leader Vince Cable in the deputy PM role.

But inept as it may have been to drive his Coalition partners further into the hands of the enemy, even more ham-fisted was the Prime Minister’s treatment of his erstwhile transport secretary, Justine Greening.

Mr Cameron’s decision to remove her, apparently for having reaffirmed the government’s policy to rule out a third runway at Heathrow, has handed his real enemy – Boris Johnson – both a key weapon and a key ally in his campaign to replace the Tory leader.

The long-simmering battle between the two men has now moreorless descended into open warfare, with the London Mayor angrily denouncing Ms Greening’s demotion and demanding a statement ruling out a third runway for good.

Ms Greening – a former Treasury minister, take note – must now be odds-on to become Boris’s first Chancellor if he ever makes it into Number Ten – a double case of Blond(e) Ambition.

Hence a reshuffle that was supposed to relaunch Mr Cameron’s premiership has simultaneously risked alienating floating voters, angered his Coalition partners, and handed his main internal rival a big stick with which to beat him over the head.

From that perspective, it is tempting to see it as not so much a new dawn for his government, but the beginning of the end.