No one quite dares to bash George Osborne. He has become the Cardinal Richelieu of Cameron’s court, and has his allies strategically placed in government departments and committees. They make a formidable intelligence network, and a power base that he can hope to activate when the time comes. His allies don’t see why his mastery of the Westminster game shouldn’t take him to the very top.
The Chancellor’s personal ambitions are entirely tied up with Cameron’s re-election. This is why Gove and Osborne are now seen to be acting in tandem, out to stop mischief from Boris – or anyone else. This makes sense, insofar as any posturing before an election would be political suicide. But this tactic can go too far, as was demonstrated in the Gordon Brown years, where the most likely leadership challenger was identified, and treated as a suspected traitor.
It is Theresa May, the Home Secretary, who is now the bookmakers’ favourite to succeed Cameron. The thought does not seem to appal her, as she occasionally hints when making wide-ranging remarks about the nature of Conservatism. Gove got his teeth stuck into her ankles the last time she did so, and she has never quite forgiven him.
Her problem as a leadership candidate lies in her utter lack of interest in talking about herself. A few months ago, I chaired a discussion with her about modern slavery, and the audience questions soon turned to her own vision. “There’s so much cynicism in politics,” said one woman, “but remembering Martin Luther King, do you have a dream?” The Home Secretary looked flummoxed. On a personal level, such reticence is admirable: she wants to be judged by actions, not words. But if she wants to run for leader, it’s a fatal handicap.
Relations between the Home Office and 10 Downing St are, to put it politely, frosty. But Mrs May is in a strong position: she is proving to be one of the most accomplished home secretaries in living memory. Still, her allies feel she has been cast in a kind of purgatory, under suspicion of harbouring leadership ambitions which she’s deemed incapable of fulfilling.
This adds to the overall feeling of disharmony and mutual suspicion, and produces some bizarre battles. We have seen Osborne’s well-publicised feud with Iain Duncan Smith about welfare reform, thrown in among the now-standard crossfire between the Conservatives and the Liberal Democrats. Every achievement seems to trigger an instant battle to claim credit – a battle between Tories, as well as between Tories and Lib Dems.
This is far from an ideal backdrop against which to conduct a Budget. As Osborne knows, his statement next week will set the narrative for the final year of the Government. He has a good story to tell. The British economy is now set to grow faster than the rest of the G7, inflation is back under control, manufacturing is going gangbusters and living standards are finally edging ahead.
But there is one simple narrative that should trump all others: the British employment miracle. Each day, the economy is creating 2,000 jobs. In the Labour years, there were plenty of jobs, but most of the rise was accounted for by foreign-born workers. There is, of course, no point in economic growth unless it shortens dole queues and increases prosperity. This problem looks as if it may be sorted. In the past six months of last year, a full 89 per cent of the increase in employment was accounted for by British-born workers.
An employment miracle is under way, but it’s not clear the Tories recognise it. “We have no idea why the jobs are increasing so much,” a senior Treasury source tells me. This is worrying, because there are plenty of plausible explanations. Work now pays more, thanks to the tax cuts delivered in the form of a rising personal allowance. The Treasury, as an institution, struggles to recognise the positive effect of tax cuts, and doesn’t seem to be looking too hard for evidence that they promote jobs.
The most obvious contender, however, is the welfare shake-up. Thousands on incapacity benefit are being assessed for what work they can do, but the able-bodied are also finding it harder to game the system. There has been a sharp rise in sanctions for those who turn down job offers, or miss appointments. This is tough, but it corresponds with a spike in the number of Brits in work. The Bank of England recently conceded that a “tightening in the eligibility requirements” for welfare might have done it.
All this adds up to a powerful narrative at Budget time: it’s working because of what the Government, as a team, is doing. It was the Lib Dems who demanded that the personal allowance be raised, so taxes fell for the low-paid. Duncan Smith’s “tough love” is helping to restore the link between British jobs and British workers. The record number of apprenticeship schemes, overseen by the Business department, has played its part. And the (mild) cuts have not caused the misery predicted, as people such as Theresa May have demonstrated by squeezing better results from less money.
When he reached the White House, Reagan adopted a new commandment – which he displayed on a plaque on his desk in the Oval Office. “There is no limit to what a man can do,” it said, “if he doesn’t mind who gets the credit.” This should be the motto of the next Budget. This Coalition Government does have a good story to tell. The question is whether ministers can stop feuding for long enough to tell it.
Fraser Nelson is editor of 'The Spectator’