A furious spin battle is going on right now that may decide whether Gordon Browns main plank for the election holds up or shatters in pieces. At first glance, the spectacularly disloyal leak that the Treasury wanted to go much further and raise Vat rather than national insurance has the smack of a government losing control. Brown promptly denied any split but he would say that wouldn’t he? The challenge to his credibility at such a time seems deeply wounding, made worse by the rod Brown made for his own back , his pledge, set in law in the Queens Speech, to halve the deficit in four years. This allows the Institute for Fiscal Studies to work out the fiscal options in the three years following the last Darling budget – if the election doesn’t come first -and for hypercritics like Fraser Nelson to expose what they believe is the emperors nakedness.
Brown may be on the ropes but as the architect of three election victories, he’s not on the canvas yet. He obviously knows that the NHSs ring fence is already full of holes and that cuts of up to 20% in unprotected areas are intolerable. So he’s pinning his hopes on the belief that the pressures are containable. The UKs credit rating resilient though not resistant” like France’s and Germanys is holding up. And hes got a fillip from Sarkozy over a Tobin tax to rein in the bankers. Contrary to what the Times seems to believe this is less about financial regulation than a straight political hit against bankers bonuses, about which the Economist, note, is relaxed. So why might Browns plank hold up? Well, perhaps the banks will oblige but can they repay and lend the same time? Then again, repayment can last half a century and more. Britains second world war debt was fully repaid only in 2002, as David Blunkett recalled this morning. But that ignores the four year straight jacket. Nick Robinson has a more immediate explanation.
The NIC rise will do the trick! Over to you, Dave.