The quiet man finds his niche at last

For good or ill, most Prime Ministers ultimately tend to remembered for a single defining event or achievement that happened on their watch.

For Clement Attlee, it was the creation of the welfare state. For Anthony Eden, it was Suez. For Ted Heath, entry into Europe. For Jim Callaghan, the winter of discontent. For Tony Blair, Iraq.

It's early days for David Cameron. But what he most wants to avoid – apart from losing the next election - is for his government to be remembered solely for the cuts.

He wants it to go down in the history books for something else entirely – for reforming the welfare state that Attlee created and for mending the society that he claims has subsequently been broken.

It is no mean ambition. Welfare reform has proved to be a 'mission impossible' for successive Prime Ministers – even ones who told their welfare reform minsters to "think the unthinkable."

Mr Blair's failure to bring about meaningful change in this area – despite a 179-seat majority and a favourable economic headwind – has become symbolic of the many missed opportunities and thwarted hopes of his long premiership.

By contrast, Mr Cameron must depend for his parliamentary majority on the Liberal Democrats, while the economic environment could hardly be less conducive to his aim of moving people off welfare and into work.

Yet, perhaps by force of circumstances in the shape of the need to reduce the deficit, his government has embarked on a programme of change which, if successful, would amount to the biggest recasting of the welfare state since its inception.

Perhaps even more improbably, the reform programme is being overseen by Iain Duncan Smith, the quiet man who failed to turn up the volume and seemed destined to go down as no more than a footnote in Tory Party history.

Forced into the political wilderness in 2003, he skilfully reinvented himself as a Beveridge de nos jours, and now, as Work and Pensions Secretary, has the chance to put his radical ideas into practice.

At the heart of the changes announced in his White Paper this week are two relatively straightforward principles.

First, the replacement of the labyrinthine system of work-related state support with a single Universal Credit, and second, the idea that it will always pay better to work than remain on benefits.

So will it succeed where other attempts have failed? Well, in its favour is the fact that there is an unusual degree of political consensus over the central objectives of the changes.
"If the government gets this right we will support them because we accept the underlying principle of simplifying the benefits system and providing real incentives to work," said Shadow Work and Pensions Secretary Douglas Alexander.

New Labour leader Ed Miliband has already made clear he will not oppose the coalition for opposition's sake, and this is a wise strategic move on his part.

He realises there is a public consensus not just that the deficit needs to be cut, but that the dependency culture which has become entrenched in some deprived communities needs to be addressed.

But Labour's caveat, of course, is that the crackdown on benefits must go hand-in-hand with pro-growth policies to ensure the jobs are there for people to move into.

This highlights the biggest obstacle to Mr Duncan Smith's proposals – the fact that the government's cutbacks in other areas are likely to lead over the coming year to rising unemployment.

If there are not the jobs to go round, moving people off welfare into work becomes not just politically impossible but practically impossible.

As with much else, the fate of the government's welfare reform gamble depends on whether its greater economic policy gamble succeeds or fails.

Clegg will come to regret broken promise on fees

The cry of 'betrayal' is one of the most oft-heard in politics. Labour faced it on numerous issues between 1997 and 2010, not least when it introduced university tuition fees despite a manifesto pledge not to do so.

"We have no plans to introduce university top-up fees, and have legislated to prevent them" actually translated as "We have no plans to introduce them during the 2001-2005 Parliament, but we will legislate to bring them in thereafter."

The subsequent backbench revolt came close to bringing down Tony Blair, whose government only survived when a few MPs switched sides at the last moment on the orders of Gordon Brown.

One potential North-East rebel was told to support the measure with the words: "I'm not asking you, I'm [expletive deleted] telling you" - an interesting illustration of the way the Brownites used to do business.

But Labour's shameless U-turn created a huge political opportunity for the Liberal Democrats, which they subsequently sought to exploit to the full in constituencies with large student populations.

Among the seats they targeted in 2005 was Newcastle Central, and it was probably only the personal popularity of the then MP, Jim Cousins, that stopped them winning it.

The Lib Dems were again making the most of the issue during this year's campaign, which they fought on a pledge to abolish the fees in place of a 'graduate tax.'

As one Sheffield student told the BBC's Question Time on Thursday: "Nick Clegg was never out of our student union during the election. Now we can't even get a meeting with him."

The reason for that, of course, is that the Lib Dems are now part of a Tory-led coalition that is set to remove the current £3,000 cap and raise it to a maximum of £9,000.

They point out that the coalition agreement does not commit them to supporting the measure, allowing them to abstain when the proposal comes before the Commons.

But if party leader Mr Clegg saw this is some great concession wrung from his Tory partners at the height of those tense negotiations following the election in May, I suspect he has since been disabused.

In fact the public sees it for what it is – a fig-leaf to enable the Lib Dems to stand aside holding their noses while the Tories introduce a two-tier system of higher education.

The purpose of this column is not to go into the rights and wrongs of how universities should be funded and how that fits into the larger question of how to tackle the deficit.

My own personal views on the matter are inevitably coloured by my own experiences as a student in more benign economic times.

As someone who would certainly not have been able to go to university without the state support that was then on offer, I find it very hard to argue that the next generation should be denied the same benefits.

That said, alongside a 'free' university education, in those days you also used to be able to buy houses in the West End of Newcastle for a few hundred quid. It's a different world now.

No, the main point I am trying to make here is that this is yet one more example of the coalition's inherent instability.

It seems likely that a number of MPs, possibly including the former leaders Sir Menzies Campbell and Charles Kennedy, will rebel rather than abstain on the measure, calling into question Mr Clegg's control over his own party.

As the Lib Dem leader has frequently reminded us, compromise is a necessary part of politics, especially in a hung Parliament scenario, and some political promises are seemingly made to be broken

With hindsight, however, I suspect he will come to see this as one that really should have been kept.

Despite the cuts, it is Labour that has the harder task

In the normal course of political events, any government that announced the largest cutbacks in public spending for more than thirty years would be seen as batting on a particularly sticky wicket.

And it is true that there has been no shortage of criticism of the £81bn cuts programme unveiled by Chancellor George Osborne on Wednesday.

Already, the coalition’s attempts to present the package as ‘fair’ have begun to look somewhat threadbare, with think-tanks such as the Institute for Fiscal Studies claiming it will hit the poorest hardest.

Given that public spending is of necessity higher in the worst-off areas of the country, it seems to me that the IFS is making not so much a contentious political point as a statement of the bleeding obvious.

Yet for all the sound and fury directed at the coalition this week, it is my belief that the spending review – and the wider question of how to tackle the deficit - actually poses a bigger problem for the Labour Party.

Why? Because like it or not, the government has succeeded in creating a consensus that, irrespective of whether or not the cuts are fair, they are certainly necessary.

The general election in May was essentially decided on two issues: whether the public could stand another five years of Gordon Brown as Prime Minister, and how fast the deficit should be cut.

It is because Labour lost the argument on not one but both of these issues that it finds itself out of power today.

So on the question of the £18bn cuts to welfare benefits, even allowing for the undoubted human cost, there is actually a broad consensus that this is something that needs to happen.

If the coalition can succeed in reforming the welfare state – something Labour really should have done from a position of strength post-1997 – the political as well as the economic dividends will be huge.

Likewise, there is also a broad consensus that the last government created too many ‘non jobs’ in the public sector that are now having to be shed.

If as the government’s own documents appear to confirm, the cutbacks do lead to 500,000 public sector job losses, many of those not personally affected will see it as a necessary re-balancing of the economy.

It has become almost a cliché over the past week to say that Mr Osborne’s spending review will determine the result of the next election, but it is true nevertheless.

If his great gamble pays off, and the economy recovers before 2015, the coalition will have succeeded in constructing a political narrative that will be well-nigh unbeatable at the polls.

It will be the well-worn cry of Tory governments down the ages - that Labour turned the country in an economic disaster zone, leaving the coalition to clear up the mess.

However good or bad a leader Ed Miliband turns out to be, it is inconceivable in those circumstances that the country would then turn back to Labour after just one term out of office.

Yet for Labour, the alternative scenario in which Mr Osborne’s cutbacks plunge the country into a double-dip recession is almost equally baleful.

Messrs Brown and Balls would then be powerfully vindicated – but at the cost of millions of lost jobs, repossessed homes, failed businesses and shattered lives.

Hence many Labour supporters who might ordinarily hope that the Comprehensive Spending Review proves this government’s undoing will instead be praying that Mr Osborne is proved right.

It may condemn their party to a decade of opposition. But at least they might still have their jobs by the end of it.