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The Week


Fraser Nelson reviews the week in politics

29 December 2008

12:00 AM

29 December 2008

12:00 AM

When David Cameron agreed last June to let his chief strategist work from California for six months, it seemed a timely break from what was threatening to become a dull job. Gordon Brown looked finished, and his party too weak to depose him. British politics threatened to be a comedy of errors stumbling on until the middle of 2010 — leaving plenty of time for Steve Hilton to go abroad, get married and send email advice from beside the swimming pool. From there, he must have watched in horror as British politics changed utterly.

Even his fortnightly flights home will not have been enough to keep up with the bewildering speed of the Brown bust. Boarded-up shops and pubs are starting to scar high streets, alongside jumble sales from retailers who fear they won’t be here at Easter. Across the country 1,500 jobs and 200 homes are lost each day — Britain is expected this year to suffer the worst rise in unemployment of any developed country. Soon, most people will know someone who has been laid off.

Mr Hilton is due to return next month, and will be tasked with drawing up a 2009 battle plan. It will have to be written in the lightest, most erasable pencil. There may or may not be a general election, a secondary banking crisis (which could yet bankrupt the country), and these are the risks we know about. Those we do not — what Donald Rumsfeld called the ‘unknown unknowns’ — will likely shape this year. The trick is for the Tories to stay as versatile as possible, and make the best of these Black Swans (rare and unpredicted events) when they arrive.

There are, however, a few certainties. The first is that a later election suits the Tories best: far better to have this murderous year on Labour’s record. Cabinet members dragged by Gordon Brown to his ridiculous underground crisis meetings on the economy think the same: there is no sign, anywhere, of his economic rescue package having the slightest effect. The public will notice this soon enough and, in Mr Cameron’s words, their anxiety will shift to anger.

While Mr Brown can hold the general election anytime until the middle of next year, he cannot decide the date of another electoral reckoning: the European Parliament elections in June. Once, there may have been a temptation to conjoin the two — but not now that the Lisbon Treaty has been unearthed from the grave that Irish voters thought they had consigned it to last year. In what one shadow cabinet member described to me as ‘proof that God is a Tory’, it is back on the agenda — making Europe a toxic issue for Labour once again.

Ireland’s verdict will, of course, bind Britain because our ‘yes’ was passed through Parliament last July and then flown to where it now lies in Italian government vaults. As William Hague will delight in pointing out, there is only one way of getting it back: vote Tory. A Conservative government would hold a referendum on it if they were in power, and the Irish aren’t expected to be sent to the polls until October. No self-respecting Eurosceptic newspaper could refrain from backing Mr Cameron in such circumstances.

So Mr Brown is likely to wait until next year for an election, hoping he can continue to outflank Mr Cameron on the economy. The Tory strategy to fight back has three prongs. The first is to react more quickly and convincingly when disaster occurs. The next is to call for prosecutions in the City, making the point that this was a regulatory failure rather than a market failure. This both defends capitalism, and magnifies Mr Brown’s role as architect of Britain’s calamitous regulatory system.

But most of all, the Tories need to offer a different approach to the economy. Mr Cameron is making good headway in warning about Mr Brown’s debt, and defying the media consensus in saying that more debt is not the answer. He recently appeared on breakfast television explaining to a family chosen by GMTV that the Prime Minister’s debt binge risks pushing their mortgage rate higher. The rhetoric and political positioning is in place — but the numbers, alas, are not.

Should the child at that GMTV breakfast table have asked, ‘But how much would you increase debt by?’, Mr Cameron would have had to dodge the question — because he has no good answer. He rightly rails at Labour proposals to take the national debt from £520 billion to £1,080 billion. But what is his alternative? Without cutting spending it will be at least £1,000 billion. There is no real difference between these two outcomes, and it is dishonest to pretend otherwise.

Britain is being bankrupted not by a Brown splurge, but by the day-to-day cost of government. Words will not blow the debt away. Any British prime minister faces a choice between massive debt or sharp real-term spending cuts. This choice is becoming rapidly apparent to Mr Cameron and Mr Osborne. Their policy, as it is now, will not stand the scrutiny of an election campaign. Either they offer cuts, or their electoral manifesto would be a version of saying ‘We wouldn’t have started from here’.

This is not what either Mr Cameron or Mr Hilton had in mind when they undertook the task of rebranding the Conservatives three years ago. But history tends to leave the Tories with the worst jobs. It is Labour’s role to wheel the British economy into the casualty unit, while Conservative prime ministers need to pull on their surgical gloves and operate. It will be a miserable task, and shadow cabinet members wonder aloud whether Mr Hilton will really want to come back to perform it.

Events may yet overtake this conundrum. Mr Brown may himself be forced to make cuts if the world refuses him when he wants even more debt — as he inevitably will in his next Budget. If there is to be a rule for this tumultuous year, it will be this: that there is no rock bottom. There will be no growth of which to share the proceeds. The convulsions which have transfigured the British economy are by no means over. This is why Mr Cameron’s best strategy will be to prepare for the worst — and then some.

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