James Forsyth James Forsyth

Osborne is the St Augustine Chancellor – he wants to balance the books, but not yet.

After months of squabbling and not-so-civil war, the coalition now appears to be functioning again. This is one immediate consequence of George Osborne’s Autumn Statement. The Chancellor was allowed to present a package to the House that had not been leaked earlier by coalition partners in an act of preemptive spin. This matters not only for the orderly proceeding of affairs of state but also because the Autumn Statement was the first of a two-part coalition effort to seize the political initiative. The second will come in the new year with the publication of its mid-term review.

Time is running out for further radical reform. The Autumn Statement was limited in its ambitions, and the mid-term review will be the last chance. Any policies announced much later than the start of 2013 are unlikely to have an impact before an election in May 2015. I understand that new policies on child care, education and social care are all part of the final negotiations on the package. One No. 10 source predicts that ‘the mid-term review will have more of a lasting effect than the Autumn Statement’.

It is hard to overstate the damage that the March budget (and the leaks which preceded it) inflicted on government relations. Until then, the coalition was run smoothly by a four-person council at the top: David Cameron, Nick Clegg, George Osborne and Danny Alexander. This ‘quad’ took all the key coalition decisions, and never leaked. But the budget changed that. The most politically sensitive decision the government has taken — the cut in the 50p rate — ended up on the front pages days beforehand.

When I asked one mild-mannered individual who had been present at the birth of the coalition and then returned to Downing Street after the budget what had changed in their absence, they replied, with a note of shock, that ‘people in there really hate each other now’.

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