Inside Westminster: The Coalition is steadily coming undone

Ed Miliband's pledge last month to freeze energy prices has not only dominated headlines, ait has driven a wedge between the Tories and the Lib Dems

Prime Minister David Cameron and Deputy Prime Minister Nick Clegg arrive at the State Opening of Parliament at the House of Lords (Reuters)

The glue that held the Coalition together is starting to come unstuck. Until now, the Conservatives and Liberal Democrats have remained remarkably united on the Government’s core mission to cut the deficit.

Now the economy is growing again, the Coalition has reached a fork in the road. It was always going to happen, probably next year as the 2015 election loomed large. I suspect that Ed Miliband has speeded up the process. His pledge last month to freeze energy prices has not only dominated the political agenda. It has also driven a wedge between the Tories and the Lib Dems.

We might have expected the Tories to react more intelligently to Labour’s promise. But they have been unable to resist the temptation to match what they dismissed as a gimmick with lots of gimmicks of their own – the latest about the cost of mobile phone calls. We might have expected the Lib Dems, who know a thing or two about making rash, uncosted promises in opposition, to play Labour at its own game. Yet Nick Clegg has adopted a more grown-up approach than his senior coalition partners. He has stood aside from the bidding war between the Tories and Labour as they try to trump each other’s micro measures to cut the cost of living. In a speech on Wednesday, Mr Clegg argued: “The only route to higher living standards is shared prosperity and sustainable growth.” Although Mr Cameron and George Osborne have made the same point, it has been eclipsed by the blizzard of Tory announcements to cut the green taxes included in energy bills, cap rail fares, urge water companies to keep down charges, freeze fuel duty and now their “telecom consumer action plan”, which sounds like something out of The Thick of It. “The Government is playing on Miliband’s pitch and it’s a game we can’t win,” one Lib Dem minister said.

The danger for the Tories is that if they look like they are throwing money around like confetti, it would undermine their 2015 election pitch to let them finish the job on the deficit. The public might think it safe to let Labour distribute the fruits of the Coalition’s labours, and judge that Labour might do it more fairly.

I suspect Mr Osborne has some private sympathy with the Lib Dem critique, and that the driving force behind the Government’s gimmicks is a jittery Downing Street. “We can’t vacate the pitch and leave it clear for Miliband; we have got to fight back,” one insider said.

Yet the cost of living goodies also jarred with an unexpectedly tough economic message from Mr Cameron in his speech to the Lord Mayor’s Banquet on Monday, which deserved more attention than it got. The great Tory moderniser who in opposition pledged to match Labour’s spending plans and who in 2010 declared that he “didn’t come into politics to make cuts,” outlined a vision of “a leaner, more efficient state” in which austerity is permanent. No sunlit uplands there from the man who once said “let sunshine win the day” and that general well-being (GWB) is as important as GDP.

A surprised Mr Clegg was quick to spot an opening. He distanced his party from such an “ideological approach”, saying: “My party didn’t come into government just to make cuts.” While Labour wants to “spend for spending’s sake”, the Lib Dem leader said, the Tory right believes “it’s good to cut for cuts’ sake.” In contrast, the Lib Dems’ starting point would be providing decent public services.

The space Mr Cameron unwisely vacated may also help Mr Clegg to see off Labour’s attempt to tarnish the Lib Dems with the “Tory cuts” brush, and to find the distinctive message his party desperately needs. Mr Clegg will argue that a “Tory recovery” would have seen an inheritance tax cut; a 40p top rate of tax instead of 45p and the marriage tax allowance that is coming in 2015, while a “Coalition recovery” influenced by the Lib Dems will deliver a tax cut for 24m people as the personal allowance rises to £10,000 a year next April.

The governing parties also diverged when Mr Cameron, during his visit to India, claimed the Coalition had sometimes not taken decisions in the long-term national interest. Again, the Lib Dems were surprised and sniffed an opportunity. Whether by accident or design, the one-time moderniser appeared to tack to the right, appealing to voters who want more welfare cuts, and a harder line on crime, immigration, the EU and the European Convention on Human Rights. Perhaps those flirting with the UK Independence Party. These people are not going to vote Lib Dem; a much bigger group in the centre ground are Mr Clegg’s target audience. They will also need to be in Mr Cameron’s sights if he is to win a majority in 2015, so his positioning in the past week seems a bit strange.

With the Bank of England confirming that the recovery is for real, the biggest challenge for the parties is to ensure a fair recovery that tackles the cost of living crisis facing millions of ordinary people. So far, Labour and the Lib Dems are making a better fist of it than the Tories.

Is it a bird? Is it a plane? No, it's John Major

When Sir John Major was Prime Minister, the cartoonists lampooned him as someone who tucked his shirt into his underpants (which he never did). In the past three weeks, he has somehow been transformed into the political equivalent of Superman.

He deserves it. At Westminster, hard-bitten political hacks still talk about last month’s remarkable speech at a Press Gallery lunch in which Sir John called for a windfall tax on the energy companies and warned the Conservatives they must speak up for the millions of "silent have-nots locked into lace curtain poverty.” A week ago, he scored another bullseye when told Tory members in Norfolk that “every single sphere of British influence” in society is dominated by men and women who went to private school or who are from the “affluent middle class”.

Both speeches were uncomfortable for David Cameron. But Sir John was not being disloyal, or attempting a political comeback. He was just being an elder statesman giving us the benefit of his wisdom. Mr Cameron would be wise to listen.

Sir John suffered a crushing defeat in 1997 at the hands of Tony Blair, who now beats him by zillions in the earnings league. And yet Sir John may be having the last laugh. He has achieved something Mr Blair craves but has failed to secure: being loved.