Morning:
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LOOK on the bright side: at least the politics of the financial crisis aren't going to be boring. Tired of the blur in the centre ground? Want more clear blue water between the parties? We've got an oceanful now that the Conservatives have ditched the pledges to match Labour's spending and stop divvying up those mythical "proceeds of growth".
Causal factors are clear enough: "What growth?" had become the pantomime chorus answer to Mr Cameron's mantra. The Tories are being battered hard at the polls because they don't have a clear take on how they would approach the aftermath of the biggest financial crisis since the 1920s.
Internally, they were stuck between an intellectual core seeking spending cuts to reduce the size of the state, as a central tenet of conservatism - and a populist instinct to deliver tax cuts.
The shadow chancellor has been caught unhappily between these two factions, grinding away at his Corfu-battered authority. Something had to be done.
So something was. No more spending promises for the sunlit uplands; no more "Yes we can" Dave and grim Gordon: these two have been out for a night at Madame JoJo's and swapped attire. It's "No we can't" (spend, tax cut and borrow) from stringent Dave and let it all hang out from Gordon.
Mr Brown has effectively cashed in his last ragged claim to prudence in the hope that fiscal incentives will move a moribund economy. Because he has already borrowed heavily, he has less room to play with than other similar countries but is haggling hard with his own Chancellor for a substantial giveaway.
Alistair Darling - playing the role that once was inhabited by Mr Brown the Chancellor - is spending the last days before the most important mini- Budget on record next week trying to rein in No 10's enthusiasm. "It really is comical," sighs one Treasury insider. "Alistair is saying the sort of things Gordon used to say when someone wanted money to spend - and Gordon's not listening."
Mr Cameron's furrowed brow yesterday told us that the Conservative response has cost sleepless nights. It opens up that least-welcome question, "In which areas will you decrease the rate of spending?" long before he wants to answer it.
His cover is that everything has changed. Always a son of Thatcher at heart, the Tory leader has reverted to the model of the famous 1981 budget, when she insisted on balancing the books in the middle of a recession, to the horror of the 364 economists predicting disaster. Growth subsequently resumed; she (and her own Iron Chancellor, the undersung Geoffrey Howe) won out.
Conservatives might also point out that Mr Brown's position is not as consistent as his Olympian demeanour suggests. Remember that his first response to the crisis was a national reconstruction plan, a full-on Keynsian memorial blowout, not a tax cut. Perhaps the resulting largesse will be smaller than hyped next week, and leave us something over for a mass rebuild of the aqueducts, but I doubt it.
He is also heavily reliant on other major countries following suit - a "stimulus in one country" package will look very forlorn and may well be ineffectual. He needs Obama - and China - on board, or bust.
Yet Camp Cameron also carries some serious risks before it. A central one is that the Conservatives have revived enough to survive a concerted Labour attack over spending.
The "Tory cuts" attack was based on an accurate perception that Conservative spending freezes were punitive in intent towards a public sector it neither understood nor really cared about.
Mr Cameron has tried to shift the rhetoric by having public-service-friendly voices like Michael Gove and Andrew Lansley in key roles on education and health but his shift this week offered the Government a vulnerable flank he had previously protected.
Labour will argue that any failure to raise spending will dismantle local services on which many people rely (the more so in straitened times. Still, a "spare us the cutter" argument may well not carry the day this time around: the old equivalence of spending with results is worn pretty thin.
If the next election is in 2010, people will have had four years of Brown government to see that Labour outlay has not sorted out their problems, with the prospect of tax rises around the corner to boot. Our old friend the Labour "tax bombshell" ticks again, 18 years after its last successful outing.
There is a way through this for the PM, which some of his inner counsels are considering and those around Mr Cameron are nervous about, namely to go to the polls next spring or early summer and clarify which approach the public prefers.
The upsides are that Mr Brown's tax cuts will be feeding through and he will be busily shepherding the country through the crisis. Messrs Cameron and Osborne can do nothing but jump up and down on the touchline saying "This won't work" but they will not yet be able to prove that it does not.
Also, it is a long-odds gamble that voters will feel so grateful after a lengthy period of job losses and repossessions as to feel they owe him another term. Mr Cameron's classic "Time for change" pitch works better the longer Mr Brown hangs around without a mandate, looking his age.
The downside would be the terror in government ranks at the thought of an "early" election (though not by the usual convention of four-year terms not five) after last autumn's cancelled election trauma. This was brought home to me when a usually serene Labour peeress practically spat fury when I raised the idea and attributed it to the "Right wing press and its allies". Oddly, since one former minister and diehard friend of Mr Brown had just confirmed it as "an option that has to be considered on the quiet".
There would be an opportunism charge for sure. But Mr Cameron could not afford to dwell on an argument about timing once a short campaign was under way. "You'd be mad not to think about it," says another senior figure who has worked closely with Mr Brown for decades. "He will see how the Tory poll lead fares after Christmas, then make a decision." The sudden contraction of Mr Cameron's lead shows that the public has not yet made an irrevocable commitment . The game is on again, on different terms now.
Everything about the PM's innate caution says it isn't likely to happen, but don't believe he isn't seriously thinking about it
However it all comes to a head, the Conservatives have found a new direction, one that creates a new and fierce collision course about the first principles of political economy and who has the sharper instincts.
"Right now", says one of Mr Cameron's top team, "Brown has produced the pudding and people have said 'wow what a beautiful pudding' but there has not really been enough time for the eating yet." Let alone the indigestion.
Reader views (8)
One would think that being Leader of the Opposition is the easiest job in the world - you can promise what you like, comfortable in the knowledge that the public expects no promises to be kept by any politician of whatever party. Cameron could demand total financial regulation, a windfall tax on hedge funders and investment banks and a drop in duty on petrol. He could beat up on the water, electricity, gas and telephone companies for overcharging, tell the high street banks to lengthen mortgage facilities instead of repossessing people's houses (what is the point of repossession if they can't sell what they repossess?), and tell his party to shut up about Osborne. All of these things would enjoy huge public approval and up would go the ratings again. Why are our politicians so thick? Who knows? In any event, there's too much floating like a butterfly in the opposition and not enough stinging like a bee.
- John Problem, Hackney Wick, London, UK
Could be a good strategy from Cameron. The fiscal stimulus is very unlikely to work. The financial crisis is bad, Very very bad indeed. People may ultimately see it as more money squandered, greater debt, and the economy still in crisis. A year from now everyone will be disgruntled and the polls will start looking good for Cameron again.
- Savale, London
Why is it that so many people have such a rose tinted view about Government spending? Why is it that so many people think that a Government pound spent is a pound well spent? I suppose the fact that people do believe these things explains why Labour Governments are elected.
Because the fact is that Government spending is not really, or primarily about "public services" at all. It is about creating well padded, well protected taxpayer funded jobs.
The fact of the matter is that any competent, creative and motivated manager could cut "public spending" by probably as much as 30-40% and, properly managed with motivated hard working, dedicated people (do any such creatures exist in local or central Government), such cuts would bring no discernible decline in services; in actual fact great improvements would probably ensue.
No, the problem Cameron faces is not whether he can cut public expenditure, rather where and whether he would dare to, given that the electorate would rather cling to the fiction that Government Spending is always, wise, necessary and properly managed.
- Steve, London
Yes, David Cameron has been bold and taken a risk, as a large swathe of the public are happy to live today and pay the penalty tomorrow.Rather like hire purchase really! As a pensioner, I would love a little help and not be penalised for a lifetime of hard work, but I am fearful that my children, grand children and possibly great grand children will grow up in a high tax economy. The only comfort would be, that they would know nothing else.
I yearn for a Conservative government with good schooling, health, pensions and a fairer welfare system sustained by a stable economy. I hope the majority see it my way and vote in a Conservative Government at the next General Election.
- Diana From Devon, Newton Abbt, UK
Aren't we all secretly glad (even though many would not admit it) glad that this bunch of Conservatives are not in power at this moment in time.
- Pam, Maidenhead
So its gonna be 1981 all over again if Cameron wins the GE, is it? Vat doubled and 2% on interest rates, taxes raised in a recession! Well the Tories always claimed it worked then, lets see if they'll do it again. Oh! I hope the Tories put it in their manifesto this time, they didn't in '79.
- David, London UK
Sadly as the currency markets, CBI and IOD's reaction to the Tory Party shows, they are now irrelevant. Osborne is obviously in hibernation for the winter and Cameron is eginning to behave like Toad of Toad Hall. He doesn't seem to have any confidence in his Shadow Chancellor or Shadow Foreign Secretary. The only gamble Cameron is making is keeping Osorne in his Shadow Cabinet and it looks to be an unwise gamble.
- Tommy Smith, Acton England
The funny thing is that Cameron is returning to his Thatcherite roots , which now he admits he never deserted, but Major won the 1992 Election bcause everybody was glad that he had replaced Thatcher and gave him the benefit of the doubt. In 2001 Little Willie Hague made the mistake of using Thatcher in his Election Campaign and being made to look stupid as she patronised him. He lost badly and was replaced by Ian Duncan-Smith, another Thatcherite. He was unceremoniously dumped after a laughable Tory Conference and Thatcherite Michael Howerd took over with David Cameron writing a Thatcherite Manifesto. That predictably bombed. Now Camoron, after converting his party from the Nasty Thatcherite Party to the Cuddly Tories is reverting to type. Its a strategy thought up by the Banking Party. Parcel up the Toxic Material and hope nobody notices.
- Alan Walters, Acton England
