Do prime ministers and chancellors always fall out?

In article in the Evening Standard yesterday reviewing Alastair Darling's memoirs the distinguished political commentator Anthony Seldon argued, 'Britain has specialised in bad relationships between prime ministers and chancellors.' If that is the case, the consequences for the conduct of economic policy would be very serious as this relationship is the very fulcrum of government.

Seldon is able to produce a number of examples to support his case: (arguably) Howe and Thatcher; Lawson and Thatcher (although not initially); Lamont and Major; and Brown and Darling.

But one could produce counter examples. Seldon has to concede Clarke and Major. Healey from 1974 to 1979 had an effective working relationship with Wilson and then Callaghan. And the relationship between Osborne and Cameron seems to be harmonious and effective.

But then Cameron allows Osborne to get on with the job. The worst situations arise when the prime minister really wants to be chancellor as well. That was a problem with Macmillan's succession of chancellors and it was with Edward Heath, having seen the untimely death of Iain Macleod in the opening weeks of his administration. Anthony Barber was arguably one of the least impressive of post-war chancellors and lacked the authority and political base to stand up to Heath.

Given the importance of this relationship, it is remarkable how little systematic research there has been on it.

Statement by the prime minister

Sometimes I wonder about the parallels between this current crisis and the Westland crisis which was supposed to bring down Margaret Thatcher as prime minister but which is barely remembered today (although it did unleash Michael Heseltine as an unguided missile). Actually Ed Miliband was more effective in the questions that he put to the prime minister today than Neil Kinnock was then.

Dave Cameron said that he had learnt from the experience of employing Andy Coulson and with the benefit of hindsight he would have done things differently. If Andy Coulson was shown to have lied, he would then apologise, but this 'conditional apology' was not good enough for Ed Miliband. I must say that I have never quite understood the fashion for apologies.

Ed Miliband was at his strongest when he pointed out that there were five opportunities for David Cameron to doubt Andy Coulson's suitability and the strongest of these was in relation to a New York Times article last September which led to the re-launch of the police investigation. Miliband suggested that the prime minister was caught in a tragic conflict between personal loyalty and the standards and integrity required in public life.

These are all powerful points, but Labour's relationship to the media has not been squeaky clean. The prime minister was able to castigate them as the 'slumber party' and pointed out that Rupert Murdoch had named Gordon Brown as a personal friend.

Nick Clegg's body language throughout was interesting, one of frozen immobility most of the time. Clearly the Lib Dems seen an advantage in distancing themselves over this issue.

Despite the saturation media coverage, I just wonder how interested those outside the political class are in all this. The crisis in the eurozone threatens to unleash a sovereign debt crisis and a second banking crisis which would be far more serious than what Ed Miliband described as a 'a catatsrophic error of judgment'. Which of us has not made poor personnel choices?

The Treasury story

In this article I take a look at the Treasury under George Osborne in contrast with its role under Gordon Brown: Treasury

Bigging up Mandy

The Times is bigging up Peter Mandelson's memoirs, no doubt hope to attract paid traffic to its new website. As a subscriber to the paper, I was offered 'exclusive' video access on Saturday. I didn't bother.

No doubt Mandy's memoirs will be essential reading for those interested in the toxic conflicts at the top of New Labour. The Brown-Blair struggle had a damaging effect on the conduct of public policy and the effectiveness of the Government. Mandy says that he has rushed his memoirs out in order to inform candidates in the titanic struggle for the Labour leadership, but some commentators think he has been motivated by getting his account ahead of the Reverend Blair who is none too pleased according to some accounts.

There is a sense in which the dysfunctional struggles at the top of New Labour are yesterday's story. We now have a new Government which appears to be functioning well, the odd slip by particular ministers aside. George Osborne's ratings have shot up and William Hague is getting deservedly favourable coverage for his pragmatic yet still strategic conduct of foreign policy.

Mandy has revealed that Nick Clegg wanted Gordon Brown to go as the price of any coalition with Labour and that Gordon, reasonably enough, thought he had been humiliated enough. But most people had worked that out for themselves.

No love affair with the beautiful game

It's claimed that England win the World Cup only when Labour are in office, but then there's only one example to back up that argument. However, there's no doubt that New Labour had a love affair with the beautiful game. After all, it was a way of blokes who had become middle class showing they could still connect with their working class roots.

Andy Burnham, now running for the Labour leadership, had an Everton ring tone on his mobile. Alastair Campbell, a long-suffering Burnley supporter, includes 68 references to football in the full version of his diaries as against 55 for the likely next Labour leader, the admittedly wonkish David Miliband. Tony Blair, who claimed to be a Newcastle United supporter, demonstrated his 'man of the people' street cred by doing headers with Kevin Keegan. Gordon Brown, a faithful follower of Raith Rovers of 'they're dancing in the streets of Raith' fame, is said to have limited his small talk to 'Did you see the match?'

It's all a bit different now. David Cameron claims to be an Aston Villa supporter (like Prince William), but it's unclear when he last went to a match. William Hague is into judo. Any awkward foreign customers had better watch out or they will be wrestled to the floor by the Yorkshire charm merchant! Nick Clegg likes to ski and probably judiciously avoids declaring an allegiance to either Sheffield team.

Of course, it was also top level civil servants who were into football. Cabinet Secretary Gus O'Donnell is a supporter of Manchester United: it is believed that his Irish father was as well. At Warwick University he played for the 1st XI and also for a six-a-team dominated by Chelsea supporters called the Blue Strollers.

Gordon Brown steps down

In a day of fast-moving developments, Gordon Brown has announced that he is stepping down as Labour leader and hopes that a new leader can be in place by the party conference in September: Brown

The announcement removes one major impediment to a Labour-Liberal Democrat coalition, but it may also encourage the Conservatives to try and seal the deal with the Liberal Democrats. Any 'rainbow' or 'traffic light' coalition would have a very thin majority. The case for a further election in the autumn would be strengthened by the fact that there would be another 'unelected' prime minister - although the British system is not a presidential one but seeks to elect a party to govern.

We can now expect manoeuvring to begin among potential candidates. David Miliband is the obvious Blairite candidate, but some think more highly of his brother Ed. Harriet Harman may be tempted to stand, but will Alan Johnson put his hat in the ring?

So we shall have a lot of political manoeuvring which will do nothing to tackle the problems facing the economy.

Decision day

It increasingly looks like decision day in terms of the formation of a new government. Talks between the Conservatives and the Liberal Democrats appear to have gone well this morning. It also looks as if a coalition may be on the cards as the Conservatives consider that would give a more stable basis for government. In that case Nick Clegg could be deputy prime minister and Vince Cable might be business secretary.

Nick Clegg is currently explaining the deal to his 57 MPs in the Grand Committee Room of the House of Commons. This meeting was still going after 90 minutes and coffee and muffins were sent for. It is understood that the Tory proposals have had a 'mixed reception' which could mean a resumption of negotiations later today or tomorrow.

It is being reported that Gordon Brown will make a statement later and will offer to stand down as prime minister after a stipulated period.

Labour has been trying to sow dissent in Lib Dem ranks. There have been talks between Nick Clegg and Gordon Brown this morning and there could be further discussions later today. Lord Mandelson has held secret talks with Lib Dems over the weekend in the context of a so-called 'spoiler' offer.

The choreography of Gordon Brown's departure remains uncertain. The Queen returned this morning from her home at Windsor Castle to her London office at Buck House.

Dave Cameron is meeting his MPs at 6 p.m., among them will be new Warwick and Leamington MP Chris White.

Does Dave have the big mo?

Dave Cameron emerged as the winner from last night's television debate with an articilate, polished and positive performance. But does he have enough momentum to secure an overall majority or at least to be so far ahead of the Labour Party that he can govern effectively on his own given the fragmented nature of the opposition? For all Dave's relative success, it remains a three-way race, albeit with the Conservtaives in pole position. No one landed a killer blow.

Gordon Brown seemed nervous to begin with. He tried to defuse the issue of the gaffe, but responses from the 'worm' showed that this did not go down too well with viewers. He got better as he went on, but he often looked brooding and aggrieved. He floundered on defending his record. He kept returning to the issue of the Conservatives and the Lib Dems removing child tax credits for prosperous families, but if steps like this are not taken how is the deficit ever going to be reduced?

He managed to get his soundbites in on 'the same old Conservative party', which probably only plays with core Labour voters (although possibly that vote needs shoring up) and Dave Cameron and Nick Clegg both being 'a risk to the economy'. Although Dave Cameron over egged it when he talked of 'desperate stuff from a man in a desperate state', and there is evidence that voters don't like this kind of point scoring, I thought that it was an unimpressive performance by Brown.

Nick Clegg was once again personable and he held his own, although he came under some pressure on policy issues. The 'here they go again' comment addressed to his rivals didn't really work. I thought that he was right to emphasise the fairness theme as he has a real chance of picking up disillusioned Labour voters as their campaign risks imploding. Some Labour voters think that he is articulating the values that their party should be advancing.

The issue of immigration was discussed. Dave Cameron was able to convey the message that the Conservatives would be tougher on immigration, but he was still unable to specify the size of the proposed cap when pressed by Nick Clegg. As came out, 80 per cent of immigration is from the EU which created an opening for Nigel Farrage of UKIP in his post-debate comments.

I didn't really learn anything new from the debate and I certainly got no clear idea of how the deficit is going to be tackled, but then I didn't expect that. The debates have enhanced the campaign and aroused interest in the election, even if they tend to emphasise personality rather than policy. It looks as if Dave Cameron will be the next prime minister.

Was this Gordon's Ed Muskie moment?

Bigotgate is all over the media this morning. I have been on local radio and Gillian's nephew has been interviewed by Radio 5. Even local television stations in Delaware have been carrying the story and yesterday live media was focused on her front door while Gordon was inside for 40 minutes, giving the door 'a door of the day' award on the BBC's campaign show. Is this one of these 24 hour media storms that will soon subside or will it be seen as a defining moment in the campaign?

I was reminded of an incident in the 1972 presidential election campaign in the US. Ed Muskie was a front runner for the Democratic nomination and would probably have made a better job of challenging Nixon than McGovern. On the stump in New Hampshire he appeared to break down and cry over accusations that he had insulted French speakers and in response to slurs on his wife. He said that he had got snowflakes in his eyes, but the damage was done. Seeing Gordon Brown with his hands over his eyes as the damaging tape was played back to him brought back the memories of Muskie.

It seems to me that this is damaging to the faltering Labour campaign on two levels. First, Gordon Brown raised the issue of character himself and this brings to the surface once again issues about his personality which have been around for years. Andrew Rawnsley was milking the story to promote his book and its relevations about Gordon's temper tantrums on the BBC campaign show last night for all he was worth.

Second, it brings to the surface the East European immigration issue which is damaging to Labour. One could argue that the wave of immigration brought in cheap, hard working employees who gave an impetus to economic growth. But many voters see competition for jobs and housing and pressure on public services. Labour could have imposed transitional arrangements as other member states did: the fact that many of them did increased the pressure on Britain as a destination, although English as a widely spoken language would have been a factor anyway. Labour are open to the charge that they closed the stable door after the horse had bolted.

I am no fan of Harriet Harman but she made a dignified attempt to defend Gordon on the campaign show last night. Her argument was that all of us have said things in private in anger or irritation that we would have regretted if the remarks had been made public. No doubt some electors will be forgiving. Others have a negative view of Gordon Brown already and these events simply reinforce that.

Labour tried to retrive the situation as best as it could and those aides who recommended a personal apology were surely correct. Gillian has hired a public relations agency and the Sun interviewed her but decided it wasn't worth pursuing the story.

In order to stop Labour's campaign imploding, Gordon Brown needs to put on a stellar performance in tonight's debate. The economy is at least an area in which he can sound authoritative, while Dave Cameron is open to attack on VAT and Nick Clegg's grasp of economics is not as sure as that of Vince Cable. For undecided voters, this is likely to be the decision point.

Still a 3-way race

Polls following last night's television debate show pretty much a three-way split in terms of who won. Some put Dave Cameron ahead, others put Nick Clegg in front. All of them put Gordon Brown in third place, although he improved his ratings from the previous debate. No one delivered a knockout blow and there is still everything to play for in the last debate.

Dave Cameron was more relaxed and focused than in the previous debate, although sometimes his attempts to sound prime ministerial put him on the sidelines a little. He was probably at his strongest in Europe, although the inability of the Conservatives to deliver a referendum on the Lisbon treaty was a weak point. He also clearly felt a little awkward about some of his allies in the European Parliament. However, he scored some points against Labour making false claims about Conservative policies in leaflets (one of these distributed in Gordon Brown's own constituency according to Alex Salmond later). Brown said that he had not authorised the leaflets and the Conservatives are clearly going to press on this question today.

Nick Clegg held his ground well, gave a confident performance and once again addressed members of the audience more directly than the other two. He was perhaps in greatest difficulty over Trident where Dave Cameron said 'I agree with Gordon' and Gordon Brown urged Clegg to 'get real'. It was not clear what the Lib Dem policy was, other than to have a wide ranging defence review after the election which any party could and should hold. He managed to put Dave under some pressure over immigration by pressing him on what his cap actually was.

Gordon Brown managed to get in his soundbite about Dave being 'a risk to the economy' more than once. He also referred to Cameron's policies being a 'big society at home, little Britain abroad'. (Once again we heard little from Dave about the 'big society' except in his opening statement). Brown's charge that Clegg was 'anti-American', repeated twice, was a little odd: what Clegg is asking for is a different kind of relationship with the United States. At times Brown sounded a bit clunky, as when when he addressed a pensioner questioner on the lines of 'women, and you are a woman.'

One of the trickiest questions was about the Pope's visit to Britain and the failings and policies of the Catholic church. I thought that all three leaders answered this well, but also it was the point when Gordon Brown came across most authentically when he talked about his Presbyterian values. This is much more effective than reciting figures or listing the policies put in place.

The Lib Dems have failed to get the momentum which get them towards 35 per cent in the polls and the chance of winning a really significant number of seats. At the moment Labour is losing the campaign but the Conservatives are not really winning it or brushing off the Lib Dem challenge.

Yo it's Nick

In my view, and that of all other commentators I have heard, Nick Clegg was the clear winner in last night's leaders' debate. I am not a great fan of Nick Clegg: I think he is rather lightweight. He does not perform well at Prime Minister's Questions, although it is not an easy situation for him as he has to struggle to be heard and as a result can seem to hector. In this format he was much better: he had an opportunity and seized it.

He tried to answer the question that the member of the audience had asked. He also looked at the other leaders when they were speaking. Of course, both of them were aware that they might need his support after a general election, hence the repetition of 'I agree with Nick'. A good point made on Radio 5 this morning was that it's rather like a newly promoted team in the Premiership. They often do well in their first season, or at least the first half of it, because no one knows how to play them. The other leaders will have to work out how to deal with Clegg before the next two debates.

I thought that Dave Cameron's body language was a bit problematic. His facial expression was a mixture of puzzlement and petulance when he wasn't speaking. But his answers were relatively straightforward and clear and focus group evidence suggests that he did well on the subterranean issue of immigration.

I thought that Gordon Brown was stiff and wooden to start with and gave too much detail in his answers. He gained in confidence when he started to talk about the economy and it was here that Dave was in most difficulty in explaining how he was going to pay for everything he planned to do and cut the deficit.

I didn't learn anything new about the stances of the parties and I wonder of 90 minutes may have been long for most voters. It's a shame that members of the audience aren't allowed to come back and say their questions haven't been answered.

There was no deal breaker here between the two main parties. No one made a gaffe or gave a really memorable soundbite. Nick Clegg increased the chances of the Lib Dems holding most of their seats and winning one or two more.

Dave in trouble

Dave Cameron has to make the speech of his life at the Conservative conference today after the latest YouGov poll in the Sunday Times showed that his party's lead over Labour had shrunk to two per cent: Poll

One should not make too much of one poll, and certainly not try to read the result of a general election off it, but there clearly is a trend. One point that emerges is that the 'Bullygate' affair has done Gordon Brown more good than harm. On the whole, voters don't want a wimp in Downing Street. The improved economic figures may also have helped.

Dave Cameron thinks that these polls may help him once voters realise that they are faced with another five years of Gordon Brown. However, voters may decide that they don't want five years of Dave Cameron either and not vote at all or vote for a minor party - where they have plenty of choice. The poll suggests that attacks on Dave's background are starting to make an impact in terms of his empathy with ordinary voters.

It seems to me that Dave's messages are overwhelmingly negative: I'm not Gordon Brown; austerity; broken Britain etc. Instead of engaging in more attacks on Gordon Brown's character he needs to give voters more positive reasons for voting Conservative.

Prime monster

This is the headline in the Currant Bun this morning after allegations of bullying in No.10 Downing Street. I heard the rather whiney chief executive of the Bullying Helpline on Radio 5 last night claiming that members of staff there had rung for help. She stated that she was non-political, and no doubt she is, but the whole episode has given her organisation some helpful publicity. Downing Street has requested that details of the complaints be provided, but no doubt this request will be refused on the grounds of confidentiality.

Downing Street is a high pressure environment. People work long hours in physically cramped conditions and have to respond very quickly to rapidly changing events. It is stressful and no doubt staff do feel the sharp edge of the prime minister's tongue from time to time. But one is reminded of Harry Truman's phrase: 'If you can't stand the heat, get out of the kitchen.'

All this has, of course, distracted attention from Gordon Brown's campaign slogan launch at Warwick University on Saturday. Sunday's YouGov poll saw the Conservative lead cut to six points, although I am always cautious of reading too much into one poll.

The Sunday Times thought that the cut in Dave Cameron's lead might have something to do with Gordon's rather mawkish television interview last weekend. I think that it has probably more to do with the negative tone of Dave's campaigning: austerity, broken Britain etc. People want some positive messages and some hope for the future.

The 1992 show?

Peter Hain thinks that Labour could pull of a surprise 1992 style poll victory: Hain

The difficult with this analogy was that John Major was a relatively new face in 1992 and, whatever else people thought about him, they generally found him personally likeable. Gordon Brown has been a major figure for thirteen years, initially in a 'dual monarchy' leadership.

Hain thinks the opinion polls are overstating the Tory lead because it's not 'cool' to admit one is backing Brown. No doubt when it gets to decision day some loyal Labour voters will reluctantly stick with the party, if only for fear of something worse. But it could also be seen as not 'cool' to be a Conservative.

What Dave Cameron has to be careful of is not talking the country down too much, either by predicting a Greek-style collapse of the public finances or over emphasising the broken society theme. If he can't give people some hope for a better future, they may not be enthused about voting for him.

Interestingly, Hain does admit that Labour has been losing ground in Wales, in part as a result of social changes. This is not insignificant given that the principality is somewhat over represented at Westminster: Cymru

Will Ainswoth resign?

There has been a fresh outbreak of fraternal feeling in the Labour Party with claims that defence minister Bob Ainsworth may resign: Ainsworth

This would be a fresh blow to Gordon Brown, but hardly a fatal one. The one person who could make him go is Lord Mandelson who could not credibly be a candidate for the leadership, but although his support for the prime minister is lukewarm, he enjoys the post of deputy prime minister.

The so-called 'curry house' plot has, however, diminished Gordon Brown's authority. He is having to consult more widely and Alastair Darling has come out and said that there will have to be the harshest cuts in public spending for twenty years. In other words, the cuts auction between the parties is back on again, after the electorate seemed to be blink at what was required.

It's very easy to get voters to favour cuts in a poll, but it is a different matter when they face actual cuts. If Dave Cameron becomes prime minister, the greatest service he could perform would be to reduce electors' expectations of what government can reasonably be expected to do, in particular in terms of regulation.

The plot that failed

It now appears that Geoff Hoon and Patricia Hewitt, or 'Dim and Dumb' as one newspaper has called them, thought that up to six Cabinet ministers would come out to support their attempt to unseat Gordon Brown: Plot

Quite why they thought cabinet ministers would be willing to put their heads up the parapet when they haven't in the past is unclear, particularly given that Geoff Hoon is a former Chief Whip and should understand the parliamentary party. Perhaps the person who posted in response to an editorial in The Guardian had a point: 'I'd alway's thought Hoon was a "bit" dim, but after his appearance on Newsnight tonight I'd have to upgrade that to "thick as two short planks", qualified with "mind bogglingly naive".'

There are quite a few losers from this failed attempt. Gordon Brown had David Cameron on the back foot in PMQs yesterday, but now Labour once again can be presented as a divided party that is more interested in internal in fighting than the many problems that face the country. One of the problems is that Gordon is clearly in a state of denial over public expenditure cuts, thinking that a growth miracle that no one else believes in can stave them off or at least reduce their impact.

As Trevor Kavanagh of the Sun - one of our best political correspondents - pointed out on Radio 5 this morning David Miliband comes out of this badly. His endorsement of the prime minister, PSA prize winner Kavanagh pointed out, amounted to saying 'I am in the government as foreign secretary and working on my boxes.' Once again he has shown himself unable to wield the knife, something that has already finished off the hopes of fading star Alan Johnson. Of course, the problem is that if you wield the knife you may debar yourself from the prize, Michael Heseltine being the prime example.

Increasingly this looks like an exhausted government that has run out of ideas and has lost the collective will to live. The risk for Labour is that whoever becomes Leader of the Opposition may inherit a shattered and divided party. Even Harriet Harman with her aristocratic iciness and her trade union credentials might find that a poisoned chalice.

You really couldn't make it up

To say I was surprised would be an understatement when Reuters rang me up to say that two former Labour ministers are proposing a secret ballot on whether Gordon Brown should continue as party leader. I am pleased that a more experienced commentator also finds it extraordinary: Coup

Leaving aside the dubious constitutionality of the move, taking this action just months before a general election is unprecedented. If it was successful, it would be some while before a new leader was installed. In the interim, chaos would reign. And just who is this charismatic leader in waiting who is going to save Labour's bacon? This is a gift wrapped present for David Cameron just after he had an uncertain start to his policy launch.

The underlying narrative is that there are Labour MPs who think that it is Gordon Brown who is denying them a chance of winning the general elction. Brown is unpopular, but this is not really just about personalities. It is about the exhaustion of the New Labour project with a battle going on between those (e.g., Peter Mandelson) who are still loyal to the project and those who want to see a return to core Labour values.

It all kicks off in Labour

It hasn't been very festive or fraternal/sisterly in the Labour Party over Christmas with a row breaking out over Gordon Brown's so-called 'class war tactics'. Unreconstructed Blairites Mandy and Tessa Jowell have made their concerns known and Jack Straw has also weighed as a so-called party statesman. In the other corner Ed Balls, Gordon's preferred successor, has weighed in with the argument that Gordon's remark about the playing fields of Eton was a joke which has only upset the Conservatives.

Given that voters (somewhat unrealistically) tend to favour united parties and don't like intra party bickering this won't do Labour any good in so far as anyone has noticed while they enjoy the festive period.

One complaint of the Blairites is that this is a 'core vote' strategy of the type used with little success by the Conservatives until Dave Cameron took charge and re-positioned the party to appeal to voters in the middle of the spectrum. However, a core vote strategy is not irrational if you think you are going to lose and want to minimise your losses so that you have a springboard for recovery. If you lose by 30-40 seats rather than 100, you have a chance at the next election (and, meanwhile, the Conservatives have to try and clean up the post-crisis mess).

One can't use an anecdote in academic evidence as it is the ultimate example of the individualistic fallacy but you can get away with in a blog. I was talking to a friend at our Christmas party and he said he had been a lifelong Labour voter but probably wouldn't vote at all at the next election or might vote Liberal Democrat (which is a rather odd thing to do in Warwick and Leamington given that, as another friend pointed out, the 'progressive' vote here has always been Labour rather than Liberal Democrat). Labour actually needs to hold on to and also mobilise this sort of voter. There is some poll evidence that the 'class war' tactics may have solidified the core Labour vote.

Personally I don't mind that Dave went to Eton, which is a rather good school, although I am more impressed by the fact that he got a first in PPE in Oxford which you can't do if you are spending your time on high jinks with the Bullingdon Club like Bozza (which perhaps explains why Dave is the party leader and not Bozza, leaving aside a helpful intervention from the Palace at the outset of the former's career). What irritates me somewhat is Dave's attempts to be 'blokeish', no doubt on the advice of his image makers. He should just be true to himself, i.e., a decent, intelligent, caring person. What concerns me is that a quite a few people in his party of a rather different ilk and he may have a problem controlling them.

The Conservatives may have some problems filling all the most junior posts (and certainly PPS roles) from serving MPs (or members of the Lords) given the turnover that is occurring in membership of the Commons and that may create interesting opportunities for the brighter and more clued up new MPs.

A failure on three fronts

Alastair Darling's pre-budget report has been something of a disaster. It has failed on three counts:

1. From an official Treasury viewpoint, the main short-term objective was to stabilise the markets. But there has been a flight from gilts.
2. It has not provide a platform for a Labour revival, given that it has managed to upset a range of target voters.
3. It has failed to provide a credible plan for dealing with the structural deficit.

Indeed, the fiscal position has got worse because Ed Balls and Yvette Cooper managed to persuade Gordon Brown that there should be a real increase in capital spending on school buildings. The more programmes are ring fenced, the harsher the axe that has to fall elsewhere to the extent that it is likely to do real and lasting damage. The authoritative Institute for Fiscal Studies has estimated that public spending will be have to be cut by as much as a fifth in areas such as defence, higher education, housing and transport.

Gordon Brown is also reported to have vetoed a VAT increase, meaning that there had to be a national insurance increase which in terms of the addditional levy on employers is a tax on jobs. The Conservatives are likely to increase VAT and possibly broaden its range, although targets such as children's clothing, books and newspapers would be controversial.

The IFS has also pointed out that the government's calculations do not really take account of the effects of an ageing population which would mean high public sector debt levels for a generation or more unless taxes were raised substantially or public spending was cut further.

Stand by for ten years of 'fiscal consolidation'.

The playing fields of Eton

Gordon Brown took a new line in PMQs on Wednesday, suggesting that Conservative inheritance tax policy had been formed 'on the playing fields of Eton', whilst also getting in a dig at a Conservative candidate from the Goldsmith family who is not domiciled for tax purposes.

The Conservative bench looked discomfited, while the Labour benches cheered wildly, giving Gordon a points victory. Dave Cameron has now hit back saying that the remarks were stupid and juvenile, which suggests that they did hit home.

The Conservative Party's website is surprisingly coy about the schools its front bench went to. The fact that shadow foreign secretary William Hague attended a state school is flagged up in the first line of his biography, but shadow chancellor George Osborne is simply listed as having gone to school 'in London'. In fact he went to fee paying St. Paul's.

The 'Tory toffs' line was used by Labour in the Crewe and Nantwich by-election when Labour activists dressed up in top hats in an effort to draw attention to the wealth of the Conservative candidate. It didn't work then, but it may be more effective after a recession.

I don't like it very much because I would prefer a focus on policy choices, but in politics it is what works that matters. It seems like an attempt to shore up and mobilise the core Labour vote. Nothing wrong with that, provided it isn't at the expense of votes in marginal southern seats.

I hear there is talk of a one off windfall tax on bankers' bonuses after Alastair Darling's stand off with RBS. All good populist stuff, but a distraction from a far more important debate about effective financial regulation, especially at the global level.