Boarding Air Force One, the world’s coolest plane, as a guest of Barack Obama, David Cameron would have felt the exhilarating adrenaline rush of power. The 19-gun salutes, the parades, the chomping of hot dogs at an Ohio basketball game in the company of the world’s hippest leader, were designed to inflate his ego. He and his wife Samantha got to mingle with George Clooney and Damian Lewis at a White House party, too.
It doesn’t get any better than this as prime minister. Nor as chancellor either. George Osborne, a ferocious Americanophile, took time off from budget-making to enjoy the game of politics played at the highest level. Unlike triumphant Roman generals, Cameron and Osborne will need no reminding by a slave that they are merely mortal. The spell cast by the “special” or, rather, “indispensable” relationship, as it is now hyperbolically termed, may be briefly powerful but it was back to earth with a bump on Friday.
The prime minister headed straight from Heathrow to conduct his Witney constituency surgery with its agenda of leaking drains and meals on wheels. Osborne had to get his head down in the budget books.
Obama may be best buddy now but No 10 knows the limitations of his friendship. After the first stage of the Libyan campaign, Washington ordered a halt to American bombing without consulting its “indispensable” ally. The Europeans were on their own. The latest tweaking of the timetable for US withdrawal from Afghanistan a fortnight ago was similarly abrupt. In America, all politics is local and we don’t have a vote.
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No 10 is boxed in at home, too. Never mind Scotland where the prime minister’s writ scarcely runs — only one Conservative MP has been returned to Westminster north of the Tweed in the past three general elections. The Tories must rely on Labour politicians, such as Alistair Darling, the former chancellor, to champion the union in the referendum campaign against Alex Salmond’s resurgent nationalists.
Cameron is also the first peace-time prime minister since 1945 to bear the burden of coalition government. It is hardly a perfect marriage. If the Conservative party is “an absolute monarchy, moderated by regicide”, then the Liberal Democrats are, as David Laws, one of its more perceptive MPs, declared last week, an “absolute democracy, moderated by very little”.
No wonder then that the government’s health policy teeters on the edge of chaos. And no surprises, too, that this budget has been preceded by some of the wildest speculation and leaks to the media of recent times.
So where should No 10 expend its meagre political capital? After five years of government Cameron will have to show that he has been in power as well as in office. Steve Hilton, his close friend and adviser, who is now departing for California, has been arguing that Cameron should go for broke on reform — just in case Nick Clegg decides to hop into bed with Ed Miliband after the next election. The shaven-headed strategist advocates a big bang approach to tax and employment. Other radicals around Cameron such as Hilton’s bright deputy, Rohan Silva, also make the case for a buccaneering Britain that reaches out beyond Europe to the new Asian giants.
Osborne steers a course between the radicals and the do-nothings. In economic policy he neither favours the large tax and spending cuts beloved of the right nor a left-wing Keynesian stimulus to the economy. The chancellor’s orthodox views are strictly small-c conservative.
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Looking to the future, Osborne plans on winning a second term but his own long-term prospects as a contender for the party leadership depend on him making a splash right now. “You must make each budget as good as your last,” an insider says.
The last-minute round of semaphored talks with the Lib Dems on the budget must be concluded tomorrow. Clegg and Danny Alexander, the Treasury secretary, negotiate with Cameron and Osborne in the “quad” and then renegotiate with their cabinet colleagues and the party as a whole.
“We have to give them a backbone,” one senior Lib Dem says in exasperation. Clegg can be too nice for his own good, it seems. All this is gaily printed in the papers.
Osborne's message will be that the country has to make its way in the world in lean times Last week at his party’s spring conference, Clegg cheekily usurped the Tory claim to be leading “the One Nation party”. By campaigning for a popular £10,000 threshold for income tax, the junior partner hopes to get the credit for any budget relief for the low-paid.
But if Osborne cuts the 50p rate for top earners or favours business, the Lib Dems, sotto voce, will accuse the Tories of stroking their fat cat friends. The centre party aims to “drive hard down the middle of the road — tough if others get forced to the left or the right”. No 11 is keeping its cool, so cool that Rupert Harrison, Osborne’s chief economic adviser who really is an “indispensable” ally, also found time to accompany him to the White House.
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“There has been a lot of Lib Dem lobbying, but it may make them look weak in the end,” warns a source close to the chancellor. No 11’s soundings of business opinion and the electorate betray no premature alarm about the effects of budget speculation. “People will watch the news on Wednesday and read the papers on Thursday — that’s when the judgments will be made.”
Osborne can’t afford a giveway. His message will be that the country has to make its way in the world in lean times. But within the constraints of his programme to cut the budget deficit, the source promises that this budget wiill be “a corker”.
Two years into a five-year parliament, No 11 argues that there is still time to make the big decisions that will boost growth in the economy. Watch out for a further round of planning reforms, big announcements on infrastructure spending, perhaps a new tax regime to boost North Sea oil exploration and more regional pay bargaining in the public sector. The last proposal is bound to inflame the trade unions, but will snooker Ed Miliband who has previously advocated that the state should impose a regional cap on welfare benefits.
Doubtless, if the top rate of income tax is lowered, the rich will be made to pay for it through the loss of other reliefs, although this doesn’t quite amount to Clegg’s vaunted “tycoon tax”.
The chancellor has also slyly canvassed broader opinion within the Conservative party and the country. He has asked the radicals to prove that lowering the top rate of tax will stimulate the economy. The government’s green policies and expensive commitment to wind farms have also been subjected to the same detached treatment. As Osborne well knows, in America when the president rails against the policies of his own administration it is called “running against Washington”. This is the chancellor running against Downing Street.
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Any change to the tax and benefit system is bound to be fraught. The winners seldom thank you and the losers never forgive you. As prime minister, Gordon Brown thought he would win plaudits for reducing the standard rate of income tax. But when he abolished the lower 10p to pay for it, he alienated a core Labour constituency which deserted him through a series of important by-elections all the way to his final general election defeat. Osborne has already tasted a draught from this bitter cup. His proposal to remove child benefit from families with at least one person earning more than £43,000, many of whom are natural Conservative supporters, has aroused the ire of middle Britain newspapers.
Cameron’s canvas is narrow. Greeted as the temporary equal of a superpower abroad, at home he can but hope and pray that his chancellor does more than tinker with the tax bands. He wants that corker to deliver victory.