Fraser Nelson

The below chart sums up the extraordinary announcement from the Office for Budget Responsibility. George Osborne did his best to maintain the “things are worse than we thought” line but the reverse is true. Unemployment, inflation, the deficit – everything is better than not only the Treasury forecast but better than the market had been preparing for. (And Citibank, which compiled the graph, thinks things will get better still – because the economy will keep surprising in the upside).   I have a piece in the Daily Telegraph saying that this will be deeply irritating for Osborne.

I had expected Alistair Darling to have slumped off to spend more time with his memoirs after the election, but here he is, fists aloft, fighting the government. About the only member of the Labour front bench effectively doing so. He has a point. The economy is looking better than expected, not worse - as David Cameron has been pretending. Each new forecast for the deficit seems to give a less ghastly picture. British house prices are on the rebound. And when the Office of Budget Responsibility announces its forecasts on Monday, it is likely to give a better picture than that in Darling's budget. Already Darling is telling the Guardian that he wants "an apology" if this is so.

Barack Obama knows language and innuendo: he will know what he’s doing by deploying what Boris Johnson rightly calls “anti-British rhetoric” in the BP disaster. BP has not – for many years – stood for British Petroleum’ – you won’t find the two words anywhere in its annual report. But you hear them plenty tripping off the presidential tongue, as if to point the finger on the other side of the Atlantic. It makes you wonder how highly he values UK-US relations: Bush was genuinely grateful for the fact that Britain was America’s most dependable ally in Iraq and Afghanistan. It’s hard to imagine Bush using the rhetoric that Obama has so quickly resorted to.

What is Vince Cable up to? He is on manoeuvres, keeps making attempted power grabs from George Osborne. Barely a week passes without him rattling the cage to which Cameron and Clegg have confined him  - that is, the unwieldy and yet fairly powerless Department for Business, Innovation & Skills. For all its bulk, the department doesn’t really do anything. It has the universities brief, which is important, but it is certainly not an economics department as Cable was pretending last week. “It is a bit like the German economics ministry and the finance ministry,” he claimed. “Two departments, working in parallel.” As if.

It still looks like your TV set is on a horizontal flip when you see Cameron at the government dispatch box. Even more disorientating to see Chris Huhne on the front bench and Nick Clegg beside Cameron - making supportive facial gestures on areas he agrees with (pupil premium), and looking quizzical on areas on which he does not (marriage). Cameron’s performance shows that Britain has just had a tremendous upgrade in the eloquence of its Prime Minister: his performance was no better than as Leader of the Opposition, but still at a high standard. Without Brown’s henchmen leading Labour, their backbenchers were disorientated. But still rather numerous: Labour has 258 MPs, more MPs than any party which has not gone on to win the next election.

Polly Toynbee was on ‘mute’ on Sky News in my office, the remote wasn’t working, which is frustrating because I’d love to hear how someone mounts a passionate defence of why local government should have monopoly control of state schools. Very few things in politics are indefensible, but a system which doles out sink schools to sink estates is one of them. When Michael Gove was a journalist, he described comprehensive education as the greatest betrayal of the working class. And now, as Education Secretary, he is outlining a system that will give the poor the same choice of schools that the rich have. Who on earth could be against that?

Great to hear that David Cameron has decided to keep the 1922 committee reinstated. This is a significant, unexpected development – and sign of strength, not weakness. Interestingly, I hear that George Osborne had not been properly consulted about last week's events: ie the way in which MPs were asked to vote into effectively abolishing the 1922 committee of backbenchers and being strongarmed, Blair-style, by the leadership. Cameron had not intended things to turn out as they did and Osborne, in particular, was dismayed.   I always suspected that last week's fracas was a simple misjudgment, easily explained under the chaotic events of coalition.

Last weekend, David Cameron had few rebels at all in his party. This week, he has 118. The vote on the 1922 Committee membership was a free vote, of course, so this can by no means be compared to a proper, whip-defying Commons rebellion. But we have seen there are scores who are not prepared to support the leadership automatically. As I say in my News of the World column today it was unnecessary to draw such a dividing line over a party that badly wants the coalition to succeed. True, Tony Blair bossed his party about. But Blair earned the right to when he won a landslide victory. His message was “if you follow my modernising path, we get mass popular support”.

Amid the chaos in the House of Commons, with newly elected MPs finding their offices and newly appointed ministers being kicked out of them, Graham Brady is the picture of calm. As the only MP to resign on principle from David Cameron’s front bench (over grammar schools), he knew there would be no phone call from Number 10. Yet next week, he may end up being more important than any minister of state. He is favourite for a position that has suddenly started to matter again: chairman of the 1922 Committee of backbench Tory MPs. In the era of Blair-style landslides, the likes and loves of backbench MPs mattered little: the government’s majority was big enough to force through most votes. But the loyalty of Tory MPs to a coalition government is untested.

In tomorrow’s Spectator we have an interview with Graham Brady, tipped to be chairman of the 1922 Committee of backbench MPs – which David Cameron has just proposed to abolish in his 4.30pm meeting with MPs today. Technically, he is proposing to dilute its membership by including the payroll vote, thereby making it synonymous with the parliamentary party. So the backbenchers would not have a voice of their own. And Mr Brady’s position would be much less important. Here is an extract from tomorrow’s interview: In the era of Blair-style landslides, the likes and loves of backbench MPs mattered little: the government’s majority was big enough to force through most votes. But the loyalty of Tory MPs to a coalition government is untested.

Ed Miliband has given a surprisingly good speech this morning: free from all the junk language that his older brother has a weakness for. But he raises an interesting question: Why did Gisela Stuart win in Birmingham Edgbaston? Why did Karen Buck win Westminster North? Why did Andy Slaughter win in Hammersmith? Might it have been because all three of these politicians were, at one point, thorns in the flesh of their government? That they all at times campaigned, on principle, against the Labour government? As I said in The Times yesterday, the German-born Ms Stuart was a committed foe of the EU Constitution - who denounced it, and the Lisbon Treaty, as loudly as she could.

Today's civil partnership between two men who look uncannily like each other will, I suspect, be remembered as a festival of misplaced optimism. Cameron overdid it a little, making out that this was his ideal outcome. It seems rude to point it out, but there were two podiums in that rose garden because he flunked the election (see Tim Montgomerie's superlative report for details). The cost of his failure to win is having to do a deal with Nick Clegg. The country didn't vote for a new politics: the Lib Dems did worse than last time, so polls show most voters would have preferred Cameron to have formed a minority government. This is an alliance designed to stop Cameron fighting an election again soon, and repeating last week's jarring experience.

Here are some details of the LibCon deal, and my brief comments: 1. Clegg as Deputy PM. It’s a non-job, but a senior one – it means Clegg will take PMQs in Cameron’s absence, and will defend all those nasty cuts (sharing the blame for these cuts is the main rationale for coalition). This follows the 1999 Lib-Lab deal in Scotland, where Jim Wallace was made Deputy First Minister to everyone’s surprise. 2. Laws replaces Gove in education. This has not been confirmed yet, and I will not believe it until I see it. Of all of tonight's moves this is potentially the most concerning – especially for all those (including myself) who had said that the Gove schools policy was the best single reason to vote Tory.