Alan Watkins: Loyal to the end. And it is the end

From the 'austerity' Budget to MPs' attendance allowances, the Prime Minister must take the flak

Once a year, in April, a group of us who were active in the Cambridge University Labour Club in the mid-1950s meet for lunch. This year the number was up to eight. There were two retired diplomats, two former professors (of modern languages and mathematics), two representatives of advertising, recruitment and market research, a psychiatrist and a journalist – myself.

About the only significant thing about this collection was, I suppose, that none of us had ever practised as a lawyer. And none of us became an MP, though several had devoted part of their lives to good works within the Labour Party. They had seen Wilson, Callaghan and Blair come and go.

And yet they were all proposing to carry on voting Labour with two exceptions: there was one of us who intended to shift to the Liberal Democrats, and there was myself. There was somebody else who had lost all taste for Labour politics. None of us was contemplating voting Conservative.

This small gathering happened before the Budget. Most of us would have guessed what was going to be in it anyway. But it is change at the margins that decides general elections. My completely unscientific straw poll would still be enough to get rid of the present Government.

The tendency of all newspapers after a Budget is to find a theme. Old news editors will say to young reporters: "Don't sit staring at that screen all day, lad. Come up with a theme." Several themes present themselves to the wide-awake correspondent. One of them is austerity.

Quite naturally, people searching for an analogy will go back to the 1970s rather than to the 1940s. In the 1940s, times really were hard. I know. I was there. So was Neil Kinnock, just about. When he was leader of the Labour Party a Tory backbencher yelled: "What did you ever do for your country?" Kinnock replied: "I went without bananas for my country." So did all children during the war, and in the immediate post-war period.

The 1970s were, by contrast, a time of abundance, even comparative luxury. The real change in the condition of the people of this country was carried out under Harold Macmillan a decade previously. Even so, under Edward Heath, Harold Wilson and James Callaghan, the 1970s have received a bad press.

It was Anthony Crosland, then responsible for the environment, who said in 1975: "With its [the local government world's] usual spirit of patriotism and its tradition of service to the community's needs, it is coming to realise that, for the time being at least, the party is over."

Next year, in his first speech as Prime Minister to the party conference, Callaghan said it was no longer an option for a Labour government to spend its way out of a crisis. This was, I believe, written by Mr Peter Jay, his son-in-law, the economic journalist and future ambassador to Washington. It marks the first break with orthodox Labour Keynesianism, and its flirtation with monetarism.

In the same year, Denis Healey went off to solicit funds from the International Monetary Fund. Healey, Callaghan and the majority of the Cabinet supported the loan because they thought they had no other choice; Crosland, Tony Benn and a few others were against. I read in the papers that a loan from the IMF is once again on the cards, with what degree of probability, if any, I am unable to

say. Just as "austerity" has been embraced as an all-purpose catchphrase, so also has squeezing the rich. Mr Alistair Darling has been addressing his various audiences with more dignity than anyone has the right to expect when he is making his points with one hand while trying to keep his trousers up with the other.

All Mr Darling is asking for is a 50 per cent rate (it used to be 90), not on total incomes of over £150,000 but on tax bands beginning with that last, substantial sum. He has even told us, or allowed it to be known, that the proposal may be jettisoned in due course for whatever reason.

Left-leaning commentators, or those who think Labour still has a chance of winning the election, immediately saw this as a fiendish trap to ensnare the Tories. Mr David Cameron and Mr George Osborne would immediately promise to repeal the increase. Some hope! Mr Kenneth Clarke, who has been a reassuring presence on the Conservative side ever since he returned to his front bench, at once walked round the Maginot Line as if he had been invading Belgium.

Repeal the new tax? The very idea: it was not a priority. There was a previous example, also to do with Mr Clarke, on that occasion involving inheritance tax. I predict that "not a priority" will enter the Conservative lexicon between now and the election when questions of taxation are raised, as they will be every week from now on.

The Labour government is trying to make a virtue of higher taxation because it has no choice in the matter. The party went through a similar phase in the early 1970s when the party was in opposition, and Lord Healey, as he was to become later on, was Shadow Chancellor.

At the Blackpool conference, he said he would extract "howls of anguish" from the rich when he became Chancellor. I remember Dr Nicholas Kaldor, Labour's then economic adviser, or one of them, expressing his strong approval of Healey's speech after he had sat down. What he did not say was that he would squeeze the rich until the pips squeaked. That was Sir Eric Geddes, speaking at Cambridge in December 1918, and he was not speaking of the rich but of Germany just after the Great War.

Perhaps the era of budgets is behind us. Norman Lamont had a brave try at changing the date of the Budget when he became Chancellor under John Major. For one year, it was shifted to the autumn, but the old practice was quickly restored. In Lord Healey's time, there seemed to be several budgets a year.

The papers, even the most popular among them, would produce tax tables of the utmost elaboration on the next day. They may still do, but, if so, I no longer read them, if I ever did. For some reason, my precise circumstances are never covered adequately or, indeed, at all.

For a short time, my late friend Frank Johnson occupied a position as one of several political correspondents of The Sun newspaper. On Budget Day it was one of his functions to compile the taxation tables. In many respects he was touched by genius. He was to become the leading parliamentary sketch writer of his generation, but he had no head for figures, could not understand them. Most of the papers last week were in the same position. The sums involved were so huge, the amounts dispersed or removed so insignificant, that precise quantification seemed without purpose.

Throughout the week, the question of MPs' expenses refused to go away. Both Mr Cameron and Mr Nick Clegg had offered Mr Gordon Brown an escape hatch by means of consultation. Mr Brown thought he knew better, and proposed an attendance allowance which nobody wanted. If the Government now loses, Mr Brown will be able to blame nobody but himself. All that and the Budget too.