John Rentoul: Collaborators, your country needs you

The original Phoney War lasted only eight months, between September 1939 and May 1940. This one has already lasted nearly two years, since the collapse of Lehman Brothers in September 2008 or, more accurately perhaps, since Alistair Darling predicted in his pre-Budget report of November that year that public borrowing would go up to 9 per cent of national income.

Since then, British politics has been in a peculiar form of suspended animation. We know that something important has happened; that everything has changed. But we are waiting for the actual fighting to begin. The gas masks have been distributed. The posters have been put up: "Freedom is in Peril: Defend it With All Your Might" and "Your Courage, Your Cheerfulness, Your Resolution Will Bring Us Victory"; the most famous, "Keep Calm and Carry On", was printed but not displayed – until it was rediscovered 10 years ago. But the bombs have not started to fall.

We know that the public finances are in a terrible, unsustainable state. And yet, so far, the only tax to rise has been income tax, to 50 per cent on income over £150,000 a year, about which barely a squeak has been heard from even the most voluble of pips since 5 April. And the only cuts that have fallen, so far, are free school meals that were planned but never eaten and a cheque to Sheffield Forgemasters, the cancellation of which has yet to put anyone out of work. Nationally, unemployment even fell by 49,000 last quarter. For the overwhelming majority of people in work, things have never been so good. Getting a mortgage may be difficult, but if you have already got one, interest rates are lower than anyone can remember.

Thus the oddity of an election fought largely in the abstract, about things that hadn't yet happened. Followed by an "emergency" Budget in which taxes were raised – but again not yet, the big rise in VAT coming in January – and future spending cuts were described with greater arithmetical precision than before but less credibility. Paradoxically, everyone seems to agree that George Osborne, by raising the average non-NHS cut from 20 to 25 per cent over the next four years, has reassured the markets even though they do not expect him to succeed in making cuts that deep. If I were a market, I'd feel that my intelligence was being insulted.

So it may be phoney, but it is definitely a war. And we know that because there are collaborators. John Prescott, a personification of the spirit of Dad's Army, said that "after Field and Hutton, Milburn becomes the third collaborator". Frank Field, who once denied that he would defect to the Conservatives because he did not want to give Gordon Brown the satisfaction, is advising the Government on its anti-poverty policies. John Hutton, the former Defence Secretary who eventually admitted that it was he who told the BBC that Brown would be a disaster as prime minister, is advising on public sector pensions. Now Alan Milburn, another Brown-sceptic brought in to advise the former Prime Minister on social mobility, is to do the same for the present Prime Minister. "They collaborated to get Brown out," growled Prescott. "Now collaborating to keep Cameron in."

Well, if they are as successful in the second objective as they were in the first, Prescott the tribal Labour loyalist has little about which to complain. But the real significance of Prescott's typically grumpy intervention lies in what it tells us about what will happen when the fighting war begins. For all the media excitement, which I sort of share, about the cross-party centrist pluralism of the Coalition, the Cameron-Clegg affair is a mere bivouac compared with Tony Blair's big tent in its early days.

Back in 1997, there was a much wider consensus about the modernisation of Britain, the need for a more open, tolerant society and better public services. When the Conservative MPs Alan Howarth and Shaun Woodward defected there was – in the first case especially – little of the language of treachery, betrayal and collaboration from their former colleagues. Most Tory MPs could perfectly well understand why someone would want to be part of the New Labour new wave. There was, in fact, talk of treason and suchlike, mostly a little later, but it was directed at Kenneth Clarke and Michael Heseltine for sharing the stage with Tony Blair under a pro-euro banner. Then, the only opponents of the centrist coalition known as New Labour who talked of collaboration with any passion were the Little Englander anti-Europeans, fighting the phantasm of the single currency. It was telling that, although Blair was indeed sympathetic to the idea and keener than Gordon Brown on keeping the option open for Britain to adopt it, it was a policy that never achieved even the basic level of plausibility. Blair never got to the stage where a referendum on the prospect of adopting the euro was a credible option.

The traditional Labour opposition to the Coalition's fiscal retrenchment may turn out like that, of course. It may be that Prescott and others who accuse the Blairites of aiding and abetting the enemy will find they are declaring war on an enemy that vanishes, like the euro, in the mist. But it does not feel like it. There will have to be cuts in public spending. They may not end up being as deep as George Osborne set out in his Budget, because the Chancellor's strategy is fairly clear – prepare for the worst and then take credit for not having to be quite so brutal as the next election approaches if the economy picks up faster than expected. But Labour will always be able to say that they would have cut slightly less deeply, and that is a message that is always likely to hit a receptive audience. Labour leaders are not likely to end up looking like cranks croaking from the back of a flatbed truck about saving the pound if they oppose cuts in defence spending or universities.

No, the objection to Prescott's language is not that he is lashing out at shadows; it is that he is clumsy and ineffective in preparing for the real battle ahead. The voters are uncertain and apprehensive. If they are to be persuaded of the rightness of Labour's case, the best way to do that would be to offer to help the Coalition to achieve the social-democratic aims that it pretends to espouse. Frank Field and David Blunkett are quite right to advise on how to deal with benefit dependency. They know, after all, how difficult it is. They know how simplistic ministerial soundbites about ensuring that help "goes to those who really need it" really are because they tried to put them into practice and found out how more targeting further reduces incentives to work. For example. John Hutton knows about pensions. Boring, technical and really, really difficult. Alan Milburn knows about social mobility – it is more complicated than criticising Oxbridge for rejecting any particular state-school applicant.

Having engaged with the Coalition on the centre ground, Labour would then be in a much stronger position to oppose the Government if it fails to come up to the mark. We don't know what will happen when the bombs – or in this case the cuts – start to fall. All we do know is that the Phoney War ended in Britain in 1940 in a change of government.

John Rentoul is chief political commentator of The Independent on Sunday.

John Rentoul blogs at: www.independent.co.uk/jrentoul