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It happens to every prime minister.

There comes a moment when they take a decision which could lead to the loss of British servicemen and women's lives in military action.

Little noticed, it happened today in David Cameron's Commons statement on Libya when he said:

"We do not in any way rule out the use of military assets. We must not tolerate this regime using military force against its own people. In that context I have asked the Ministry of Defence and the Chief of the Defence Staff to work with our allies on plans for a military no-fly zone."

Now Downing Street are stressing that they are just examining options; that a no-fly zone would require international support; that it could operate in a variety of different ways - covering part of, rather than the whole of, Libya's massive territory, involving Nato or some other alliance of nations and with or without aggressive rules of engagement allowing for Libyan planes to be shot down.

HMS Cumberland evacuates British and foreign nationals from Benghazi

They are pointing out that it is at the end of a long list of other non-military ways to put pressure on the Gaddafi regime. They explain that the reason they can talk now about an idea they poured cold water on a few days ago is because most British citizens are now safely out of Libya.

Clearly, this may be little more than sabre-rattling by a prime minister determined to look on the front foot this week after being on the back one for much of last week.

However, the man who was once a sceptic about Tony Blair's liberal interventionism and who stressed that military action should always be in the British national interest has just made clear that he's prepared to contemplate the loss of British lives to save lives in Libya.

If it happened - and, of course, that remains a big "if" - Libya would be Cameron's first war. The military decisions he took before today all concerned the war he inherited in Afghanistan.

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Colonel Gaddafi took a napkin and drew a circle. That, he told his visitor, is Libya. Then taking his pen he banged a dot in the middle of the circle. And that, he explained, is me.

The visitor was Tony Blair. . The location was a huge tent just outside Tripoli.

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I was standing outside recording a piece to camera about a British prime minister shaking hands with a man who had more British blood on them than any other alive. Gadadfi's spin doctor was looking less than impressed. The camels no more so - they belched loudly and incongruously through this moment of diplomatic history.

All this - and the outrage caused by the release of the convicted Lockerbie bomber five years later - took place in the interests of securing a new ally in the war against the spread of weapons of mass destruction and securing business for British firms too.

Today, as the signs grow that Gaddafi may lose his place as the point around which his country must circle, questions will grow as to whether Tony Blair's unforgettable trip to the desert might turn out to be, well, unforgettable to those who eventually take over control of Libya.

PS I write this watching from afar as I am taking a few days off for half term.

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"I am different to Margaret Thatcher," David Cameron told me earlier this week and today he demonstrated just how different.

She famously said "the lady's not for turning".

He said today - the day his government confirmed u-turns on selling off the forests and cuts to housing benefit for the long-term unemployed - "should we listen to people along the way? Yes. I thought that was the point of a listening government".

You can, of course, take listening too far. The prime minister confirmed that he does occasionally listen to but joked that only in limited amounts as "sometimes I find it gets in the way of my well-being and general breeziness".

PS This is beginning to feel like the week reality hit this government. Until recently ministers were largely in control of the political news agenda. At today's welfare launch, however, the PM faced awkward questions about forests, NHS cuts and battles with councils. He had to placate Iain Duncan Smith who angrily denied calling the unemployed "lazy". The noise of angry protesters drifted through the windows of Toynbee Hall. As someone once remarked about a previous Tory government: "never glad confident morning again".

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"Two roads diverged in a... wood and sorry I could not travel both." Today the Prime Minister follows the words of the poet Robert Frost* and takes the road less travelled - making an instant, screeching u-turn on the sell off of the nation's woods.

The signs were all there when I spoke to David Cameron on Monday:

Nick Robinson:

"You have in some ways had a bumpy few weeks after a comfortable few months, alleged u-turns on forests, and prisoner voting, and difficulties in the courts with school building. Is there something that you analyse and say 'actually there's something we are not getting right here'?"

David Cameron:

"I think, look. Government is a lot harder than opposition. You know you are making decisions, you are doing things, and I think when you have a government that has quite bold plans to deal with the deficit... but also to make our public services better, to try and open up our country in the way that we are, you know there's an awful lot of decisions, an awful lot of issues, and you have to try to get a hell of a lot of things right all in one go. Of course governments make mistakes. I hope that when we do, we are relatively fast in trying to admit a mistake, put it right, sort it out."

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*hat tip to Today programme presenter Justin Webb for the literary reference

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Who's to blame for town hall cuts - the government or the councils? That's the debate which will rage from now until local election day.

At Prime Minister's Questions David Cameron highlighted Labour-controlled Manchester, accusing it of making politically motivated cuts hours after I attended the council's executive which claimed that it had suffered politically motivated cuts in government grants.

Ministers have highlighted the pay of Manchester's chief executive - £230,000 a year - and its recent decision to spend £150,000 (half of it from EU funds) on street art.

Compare that, ministers say, with frugal Tory Trafford next door.

Manchester, however, points to cuts in government support for the most deprived areas - in particular, the 35% or £12.6m cut in their Supporting People Grant whilst Trafford enjoyed a 4%, or £500,000, increase.

Today - having met with both council's leaders and executives - I have tried to make sense of the comparison.

The figures show that Manchester has much greater needs than Trafford. It receives much more public money, spends much more and is now having to cut much more.

It is a matter of political judgement whether the story is one of Manchester spending too much or government cutting too much. Some may believe the answer is both.

Here are the figures both councils gave me:

Manchester, ranked the country's 4th most deprived area, has an annual budget of approximately £620m excluding schools, equivalent to £840 per person. It is making cuts of £109m and an estimated 2,000 of its approximately 10,000 staff could lose their jobs.

Trafford, ranked the country's 203rd most deprived area, has a budget of about £230m, equivalent to £420 per person. It is making cuts of £22m and is set to cut 150 jobs this year.

What struck me most today was that the row in Westminster about Manchester and Trafford is much louder and more intemperate than it is on the ground.

The council's leaders respect one another and co-operate. The council's officials work closely together and senior figures have moved from one to the other.

Indeed, all 10 Greater Manchester authorities are already quietly working on sharing back office functions and carrying out their procurement together saving many millions of pounds.

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Eric Pickles is one of those politicians who would not be content merely with crossing a road for a political fight, he would sprint across a six-lane motorway for a scrap with his opponents.

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That is all most people would notice of the secretary of state for communities and local government. Well, not quite all. He is, after all, a big chap and with those soft Yorkshire vowels looks and sounds like no other contemporary politician. Put some mutton chops, a waistcoat and a watch chain on him and Pickles would look and sound like many a council leader of yesteryear.

All this, though, is to miss the point about Eric Pickles. What few ever notice about him, though he cheerfully talks about it, is that he was once a Marxist - or a Marxist-Leninist to be precise (these distinctions matter, I'm told). As such he is a student of political theory - a man who is fascinated by the practice as well as the theory of how political change is brought about.

Pickles is picking a fight with councils for a reason. He is a believer in what Marxists call "creative destruction" - the idea that before creation can begin destruction must come first. PIckles believes that many councils got, well, fat in the New Labour years. They hired more staff, they paid themselves big pay rises, they took on jobs that their voters didn't really want them to carry out.

The minister could have done what his predecessors did in the Thatcher and Blair eras - issue diktats capping their council tax levels and ordering them what to spend on and what not to spend on. He chose not to. Pickles is issuing orders from Whitehall which are irritating councils but they are orders to be more transparent and, he argues, more democratic.

First, councils were forced to publish details of everything they spend money on which costs more than £500. Next, he limited the ability of councils to produce their own newspapers in the hope of both protecting and unleashing the old fashioned local press on their local politicians.

He wants them to do to council budgets what the national media did to MPs' expenses - publish, scrutinise and criticise. Today he's telling councils to have full public debates on any new council pay packet over £100,000. Next year they will be able to set any council tax level they like but - and it is a big but - rises above a certain level will trigger a referendum on the council tax level.

Some see this as an old fashioned war between local and central government, some see it as an attempt to distract from the coalition's cuts, some - even in government - see it as more destructive than creative. However, Eric Pickles's closest colleagues see method in what others see as the minister's madness.

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It is not just a new cat that is moving into Downing Street.

The appointment of a new director of strategy is to be announced very soon. Andrew Cooper, the founder of the polling company Populus and the former director of the Conservative research department, is dotting the i's and crossing the t's on his new role. His task will be to give the government "narrative coherence".

Downing Street certainly needs someone to ensure that the government had a clearer message and makes fewer unforced errors. In my interview with the PM yesterday he as good as acknowledged that the government had tripped over itself while trying to go too fast. Stumbles over school buildings, books and sport, the sell-off of the forests (soon to be abandoned I predict) and prisoner votes have all unnerved Team Cameron.

Cooper's appointment will be controversial, however. He has been seen as an uber uber moderniser () ever since producing polling that told the Tories they need to keep modernising to salvage a contaminated brand. Cooper joined the Tories when David Owen's SDP folded. Those who portray themselves as "mainstream Conservatives" will see his appointment, alongside Craig Oliver's, as evidence that their party is not interested in reaching out to them. Our mistake, one Cameroon told me, was to look like we wanted and were enjoying coalition rather than being dragged kicking and screaming into it.

Further evidence of the confidence wobble in No 10 is the creation of a new policy unit to shadow and monitor the work of government departments. It will be staffed by civil servants as the Tories have run out of special advisers having promised to cut their number and then having to share them with the Lib Dems. First on the list for monitoring will, I'm told, be Defra and those forests.

A minister confesses that for a while the coalition thought it could do anything. It has now become painfully clear that that is not the case.

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Moments after the prime minister made a passionate defence of the Big Society I interviewed him in the Cabinet Room where Margaret Thatcher used to sit.

He told me:

"I am different to Margaret Thatcher, different to past Conservative governments, this whole idea of emphasising the importance of building the Big Society and all the things that we can do, Government is not just making cuts, sitting back and saying 'let's hope society steps forward."

He defied critics of his big idea saying that he didn't care whether people thought he was being naïve. The government was bound to be blamed for cuts, he said, but that didn't mean that councils did not have a choice over whether to cut in ways that did less harm to charities and voluntary organisations.

Finally, he seemed to accept that the government had been making mistakes as it was going so fast.

Below is a transcript of some of the most interesting moments.

On the Big Society:

David Cameron: "Now, people that say 'oh, that's naive' I don't care, that's what I think, that's what I think government ought to be doing, and it's what my government is going to do."

On whether cuts are undermining the Big Society:

Nick Robinson: "Isn't it grown up to say, look, the cuts I am imposing, that my government has chosen to put on councils, will mean cuts to services even when councils deal with top people's pay and merge the back room. The councils you've listed are all cutting front-line services. They have to do it."

DC: "Inevitably there will be some cuts that are difficult and painful, that is clearly the case. But councils do have a choice to try and do these things in the right way. I think of my own small council in my own constituency. They are struggling hard so they don't reduce the budget of the citizens advice bureau. I happen to think that's a good decision. They are sharing their chief executive with the neighbouring council, so all councils, I know we have given them a difficult job to do but I do believe they can do it in a way that is friendly to building a bigger society."

NR: "Are you saying don't blame me? Blame the council?"

DC: "No, clearly, everyone in the end will blame the government for having to make cuts. I hope they will fairly say that we are doing this not because we want to but because we have to, because of the inheritance we've had from the last Labour government that racked up these debts, racked up this deficit that means that frankly whoever was sitting here as prime minister would have to make difficult decisions about spending and tax."

NR: "The suspicion that people have I think is what you're effectively doing is getting the councils to make the cuts and saying don't blame me, I'm only the prime minister"...

DC: "No, I'm not saying that, as you've just seen, I'm absolutely not saying that. You know, the responsibility for the mess we're in, I blame the last government, the banks that got us into this mess and all the rest of it. But I absolutely accept that I am having to take very difficult decisions as prime minster and I know that will mean that, you know, this is not going to be an easy year, and it will not be an easy year for me. I absolutely accept that. I see it as my duty. I'm trying to do the right thing for the country."

On whether he is like Margaret Thatcher:

NR: "Can I put to you what I think underlies some people's concern about Big Society, the cuts and the banks... You presented yourself as a different sort of Conservative, and I think there are some people who believe that who now look at you and say Margaret Thatcher all over again?"

DC: "Well I just, I am, I mean, I am different to Margaret Thatcher, different to past Conservative governments. This whole idea of emphasising the importance of building the Big Society and all the things that we can do, government is not just making cuts, sitting back and saying 'let's hope society steps forward'. You know, we are establishing the Big Society bank that's lending, (interruption), look these are really important points... (interruption)...

NR: "But they think, I suspect, many people, they think, I think, he cares, he seems to say the right things, but we see some dreadful things happening as a result of cuts, and in the end he says you've no alternative?"

DC: "Well I don't, I do think that what we are doing economically is the right answer, because as I say we are borrowing this year, you know, more than countries that are in real difficulties. The plan we inherited of halving the deficit over four years, would have got us in four years' time to where Portugal was last year. That's no plan at all. I do believe that you have a duty in this job to do the right thing, even if that is painful and difficult, and getting the debts and the deficit under control has to be done But just because that is your duty doesn't mean you shouldn't have, as I do, a burning mission to try and build a stronger bigger society where people look out for each other more, where people make a bigger contribution and work together to make this country a better place."

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Can David Cameron make us love his Big Society this Valentine's Day? He's certainly determined to try. Those who refuse to be wooed may wonder why he bothers.

The first reason is the next election. The prime minister accepts that the deficit, the economy and cuts will define him, his party and his government whenever he goes to the polls. However, David Cameron wants to be seen to stand for much more than that. From the moment he became party leader he spoke of decontaminating the Tory brand. With Ed Miliband now speaking about re-contaminating it, the stakes could scarcely be higher.

The second reason is captured in a phrase Tony Blair liked to use when party supporters demanded to know why he was going along with George Bush and his war in Iraq - "it's worse than you think, I actually believe this stuff".

For years Tories have been clear what they are against - what David Cameron called the big, top down, bossy bureaucratic society - but they struggled to articulate what they were in favour of. The Big Society is his answer but it's still a struggle.

One thing worth noting today is that the Tory leader is reaching for phrases he's had more success with. Phrases such as "responsibility" and "broken society" to explain the concept he's finding it hard to make us love.

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No policy has produced more anger recently than the government's decision to dramatically increase university tuition fees.

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No-one has been the subject of more anger than the Liberal Democrat leader Nick Clegg.

Today the deputy prime minister agreed to come face to face with students who the Ö÷²¥´óÐã had chosen and who come from homes around the country. They accused him of breaking his word, of not understanding the fear of debt and of creating an unhealthy market for education.

He revealed his fear that many young people are being put off university by their fear of what they might owe when, in fact, he claims the government's plans would ensure that university is affordable for the poorest.

The confrontation came on the eve of the government publishing proposals for a National Scholarship Programme to subsidise students from the poorest backgrounds attending English universities. It is clear that ministers have all but abandoned their plans to promise two full years free for students on free school meals and chosen instead to allow universities to choose how they spend the money the government has pledged.

You can watch the debate in full on the Ö÷²¥´óÐã News Channel at 7.30pm.

PS. Here's what Nick Clegg had to say to the students on the subject of Oxbridge fees.

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Comparing David Cameron with Gordon Brown was risky, cheeky and took personal nerve but Ed Miliband's done just that .

"He shouldn't get so angry - it'll cloud his judgement. He's not the first Prime Minister I've said that to."

Thus, Labour's leader posed as Mr Calm and Reasonable facing Mr Tetchy. And you know what? It worked.

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Whitehall sources are hoping that a deal with the banks on lending, transparency and bonuses will be announced by the chancellor later today. The so-called Project Merlin has been negotiated for many months and the government has been determined to complete it before the banks publish their end of year results and bonus pools.

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The George and Ed Show was full of heat but shed very little light.

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Ed Balls sneered at the chancellor's "mini Budget", asked whether Britain was growing slower than America because we had the wrong sort of snow and criticised his opponent for spending too long on the ski slopes.

George Osborne sneered at the shadow chancellor for being the second choice of the leader who once did his photo-copying and dubbed him as a "man with a past" rather than a man with a plan.

As for policy... I'm afraid I can't recall a single revealing word from either of them.

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Labour claim that even after today's announcement of a tax rise on the banks that the Treasury will be raising less from the banks than they were last year.

They even quote the Treasury's own figures to make their point. The levy, they say, will bring in £1.9bn in 2011/12 compared to £3.5bn in 2010/11 from the bonus tax.

The Treasury has two responses to that:

First, they say that the £3.5bn figure takes no account of the loss of corporation tax and income tax. The net figure, they say, is £2.3bn.

Secondly, they say that since, unlike most businesses, banks' balance sheets apply to a calendar year - not April to April - the chancellor's £2.5bn applies to the year 2011.

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When a tax rise is announced outside of Budget time (see my previous post), it's fair to assume that the announcement may have as much to do with politics as it is about economics. When you're raising less than a billion pounds that impression is bound to be reinforced.

The Tories bashed the banks in opposition to symbolise that "we're all in it together". Now, Labour in opposition are using ministers' failure to curb banks bonuses to back up their assertion that that claim is hollow.

At Prime Minister's Questions last month Ed Miliband accused the PM of living on "Planet Cameron" where taxes went up for ordinary people and down for the banks. "The country" he said "is getting fed up with the prime minister's pathetic excuses on banks". David Cameron accused him of bailing out the banks and asking for "nothing in return".

Labour's aim is to "re-contaminate" the Tory brand. George Osborne's objective today was to make that just a tiny bit harder.

It's not really a clash about the banks or the economy. It's about the symbolism, stupid.

Update 11:00: The Treasury insists that the George v Ed show had nothing to do with the timing of today's tax announcement. The reason for the curious timing they say was the need to ensure that any commitment the banks make to increase lending under Project Merlin is not threatened by their reaction to a tax increase announced after the deal was done.

The message now to the banks is "you know where you stand" - if you deliver on loans, bonuses and transparency you are guaranteed a stable and predictable tax environment with no nasty tax surprises around the corner. On the other hand, if you don't deliver "nothing is off the table".

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The chancellor is increasing the bank levy to £2.5bn this year - raising an extra £800m for the exchequer. George Osborne has decided to bring forward an announcement which would normally be made in next month's Budget. He argues that banks should know the context they are operating in before announcing their bonus payments in the next few weeks.

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The government had hoped by now to have announced a deal with British banks to increase loans to businesses, to limit bonus payments and to increase transparency but the so-called Project Merlin has not yet been finalised.

George Osborne's critics may point out that today sees his first Commons clash with the new shadow chancellor Ed Balls.

Labour have pointed out that the banks were enjoying an effective tax cut this year compared with last. The bankers bonus tax introduced by Alistair Darling raised £2.3bn net (after taking account of the fact that the tax reduced income tax and corporation tax receipts) compared with £1.7bn raised by George Osborne's bank levy.

Thanks to today's announcement, the chancellor will be able to claim that he is raising taxes on the banks and has introduced a levy which will hit them year after year. George Osborne will point out that Alistair Darling said that his bankers bonus tax was a "one off" and would be evaded if introduced again.

Nevertheless Labour have called for the bankers bonus tax to be raised again this year and will insist that they would raise billions more than the government this way.

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They said one thing in public while saying something different in private. That was David Cameron's central charge about how the last government handled the release of the Lockerbie bomber although he was very careful not to use those actual words. Indeed, he was very careful to sound measured, saying merely that today's report by the Cabinet Secretary, Sir Gus O'Donnell "tells us something that was not made clear at the time" by which he meant that Gordon Brown and Jack Straw never made clear that - in Sir Gus's words:

"Policy was therefore progressively developed that HMG should do all it could, whilst respecting devolved competences, to facilitate an appeal by the Libyans to the Scottish Government for Mr Megrahi's transfer under the PTA (prisoner transfer agreement) or release on compassionate grounds as the best outcome for managing the risks faced by the UK."

He pointed to two Foreign Office documents - one in which the then Foreign Office Minister Bill Rammell is minuted as saying that:

"Game plan should be PTA as vehicle for his transfer in Jan."

Another which says that government should:

"work actively, but discreetly, to ensure that Megrahi is transferred back to Libya under the PTA or failing that released on compassionate grounds."

Unfortunately for the prime minister he now faces the charge that he too has said one thing in public while his aides said something completely different in private. He said there was no evidence of a cover-up or conspiracy. He had also given Sir Gus's conclusion that:

"It is clear from the paperwork that at all times the former Government was clear that any decision on Mr Megrahi's release or transfer under a PTA was one for the Scottish Government alone to take. The documentation considered by the review demonstrates that they were clear on this in their internal deliberations and, crucially, in their contacts and exchanges with the Libyans, including at the highest levels, and with the Scottish Government. In Gordon Brown's only meeting with Colonel Qadhafi, on 10 July 2009, he made clear that the decision was solely a matter for Scottish Ministers and HMG could not interfere."

Yet as the prime minister was speaking in the House his aides were championing a Conservative Party briefing accusing Messrs Brown, Straw and Balls of a "lack of honesty on al-Megrahi". To prove its point it quotes Gordon Brown as saying,

"there was no deal...We couldn't pressure the Scottish government. It was a quasi-judicial decision... They had the power to make the decision. If we had tried to interfere in it, it would have been a mistake."

The underlining is in the Tories' press release. The problem is that today's report and David Cameron's presentation of it backed Gordon Brown's assertion that there was no deal.

For those uninterested in all this detail I draw these conclusions:

Labour ministers were desperate to avoid Megrahi dying in jail because they were worried about the impact on British jobs - the BP-Libya deal - and British foreign policy - Gaddafi had recently repudiated his policy of developing weapons of mass destruction.

They did not want the public to know how desperate they were and hoped the Scottish government would take the blame for Megrahi's release.

David Cameron is keen to ensure that Labour are blamed for the spectacle of Megrahi continuing to live as a free man in Libya.

Mr Cameron's aides have done everything in their power to quote those parts of today's carefully written report to damage the former government while ignoring the key conclusion that there was no cover-up and no deal.

PS. The two key documents David Cameron quoted are:

Ministerial Confirmation
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Mr Rammell made the following manuscript comments to the submission:
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1 - I agree to sign PTA - please set up
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2 - Can I meet this week with officials to discuss this sub + way forward?
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1 - PTA to be signed
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2 - Game plan should be PTA as vehicle for his transfer in Jan
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3 - Can I have a diplomatic strategy to reassure Libyans we have are doing everything possible to secure a solution
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4 - Can I have advice on what to do if it looks like he might die in prison - should we publically make clear our desire for humanitarian transfer? B.R.

22 January 2009; footnote 41; FCO Submission - Contingency Planning
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Under the heading:
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To: Christian Turner
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"Megrahi's health remains a key high risk issue. We do not want him to die in a Scottish jail, with the likely negative consequences for our relations with Libya. That he is prepared to abandon his appeal is a significant step - we should now work hard to enable transfer under the Prisoner Transfer Agreement."
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We now need to go further and work actively, but discreetly, to ensure that Megrahi is transferred back to Libya under the PTA or failing that released on compassionate grounds.

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The fact that we haven't published a growth plan doesn't mean we haven't got a plan for growth. That was Nick Clegg's core message today.

After all, he argues, our deficit reduction keeps interest rates low which stimulates growth...and then there's the Green Investment Bank...and the decision to press ahead with High Speed Rail...and the (relative) protection of the science budget...and so on and so forth.

Next week they hope - at last - to be able to unveil a banking package containing guaranteed commitments to increase lending to businesses.

The deputy prime minister also tried to provide some of "the vision thing" - painting a picture of an economy rather more European and rather less transatlantic, more based on making things and less on making financial instruments, more spread around the UK and less focussed on the South East. It is an ambition shared by many across the political spectrum.

Nevertheless, ministers are locked in tense negotiations about how to make next month's Budget a more growth friendly package. Planning, I'm told, will be a key part of any growth plan. Reforming the planning system is seen as the key to boosting the construction industry - the key sector for employing low and semi-skilled young men. Just one problem - ministers may want to see more house building but their MPs are sure to be resistant to them being built in their back yards.

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Saving the Big Society will have to be high on the agenda of David Cameron's new message messenger Craig Oliver.

When the idea was unveiled it was greeted with indifference by many who couldn't tell what it meant. Ridicule followed. Now the danger is that anger will come next.

The reason is the tension between the message of empowering people and voluntary organisations and the reality of spending cuts.

Liverpool City Council has withdrawn as one of four pilot schemes for the Big Society. A letter from the council leader declares:

"[W]e can no longer support big society as a direct consequence of your funding decisions"

More tellingly the council Leader Joe Anderson claims that:

"Your government promised to work with us to remove some of the problems and blockages that were preventing us from successfully delivering our Big Society programme. I have to say, the government has failed to deliver a single change that we have requested, which has severely hampered many parts of our programme."

Now Councillor Anderson is a Labour politician and Liverpool is not the whole of the country but his warning may be a sign of things to come.

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The prime minister has found his man.

Just days after Andy Coulson walked out of Downing Street for the last time his replacement has been appointed.

The name of the new Director of Government Communications will be unknown by most, come as a surprise to many and a shock to those who've worked with him for many years.

It is a senior executive at Ö÷²¥´óÐã News who will lead efforts to sell David Cameron, the coalition and the Conservative Party to the country. His name is Craig Oliver.

Craig is someone I have worked closely with at both the Ö÷²¥´óÐã and ITV. He masterminded the Ö÷²¥´óÐã's 2010 general election results programme after several years editing both the Ö÷²¥´óÐã News at Six and News at 10. Five years earlier he had been at the helm for ITV News's 2005 General Election coverage. A former ITN trainee he edited ITV's early evening news after working for both Channel Four and Five News.

I am one of those shocked and yet not altogether surprised by Craig Oliver's switch from being poacher to becoming gamekeeper. Hard though this may be to believe I had no inkling of his political views in all the years I worked with him. What I do remember is how interested and intrigued he was by David Cameron's early efforts to re-shape the Conservative Party. Whilst others were scathing about that trip with the huskies or the "hug a hoodie" speech Craig thought they mattered as more than mere spin.

Perhaps that was what Andy Coulson remembered when he was forced to resign from his job. Last week Coulson stunned Oliver by phoning to say that he was his natural successor. The call came at an awkward time - Oliver had only just been involved in announcing painful and controversial cuts at the Ö÷²¥´óÐã World Service in his current job as Controller of English at Ö÷²¥´óÐã Global News.

Coulson persuaded Oliver to meet the Prime Minister's Chief of Staff, Ed Llewelyn to discuss what the job might entail. That meeting led to others - a weekend trip to George Osborne's West London home and then onto Chequers to meet David Cameron himself. They liked what they saw and heard. After a meeting with Nick Clegg this morning the decision was sealed.

The Tories hope that Oliver, like Coulson, will help craft messages that can be clearly understood, will lead and manage a team bringing together not just civil servants and party propagandists but staff from two rival parties and will be privately forceful but publicly discreet.

Unlike Coulson he offers no links to or first hand knowledge of the press and is no Essex Boy but, like him and unlike many on Team Cameron, he went to a comprehensive and has never been a member of or involved in any political party.

I think he has taken the job for the same reasons as his predecessor. Perhaps for the same reason another hack - The Times's Tom Baldwin - recently signed up for Ed Miliband. He wants to be able to look back and say that he was more than a mere spectator as history unfolded.

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I have now had the time to read the full and it shows the downsides of no longer having a former journalist at the helm (the IFS's former Director Robert Chote used to write for the FT). There are lines in there that both the government and its opponents may deploy.

On the one hand the report endorses the coalition's approach to the deficit:

"It is important that Chancellor George Osborne resist the temptation to engage in any significant net giveaway in the Budget."

"The case seems strong for the March 2011 Budget to contain no significant permanent net giveaways or takeaways."

"Any fiscal loosening aimed at helping the economy could be ineffective if it prompts an offsetting monetary tightening, and risks undermining investor confidence"

On the other hand it advises that given the potential downsides ministers should have a Plan B up their sleeves:

"Although there may be no need to implement an alternative plan at this stage, with such large downside risks to the public finances, having alternative plans to hand could prove useful."

"It may therefore make sense for the government to consider ways of reducing the pace of fiscal consolidation should demand conditions deteriorate significantly - enabling it to 'trim the sails' again in the same manner that it did so last November."

"The government should be prepared to review its 2010 Spending Review settlements in a couple of years' time in the light of any changes to the economic and fiscal outlook or of particular difficulties faced by departments in delivering spending cuts that are palatable to the government and the wider public."

It is more an endorsement of George Osborne than Ed Balls but it's closest to what Sir Gus O'Donnell, the cabinet secretary, seems to have been pushing - a policy of hoping for the best and planning for the worst. Of course, were the chancellor to say he had a Plan B up his sleeve it could trigger the very crisis of confidence the IFS say he should avoid.

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You'll have to be damned lucky to deliver spending cuts deeper than any made since the World War II but, if you do try to alter your plans, interest rates will have to go up. Oh, and by the way, you might be wise to have a "Plan B" up your sleeve.

That, in summary, is the chilling message to the chancellor this morning from one organisation he must sometimes wish he could cut - the Institute for Fiscal Studies.

Their lookahead to the Budget is the latest in a string of bad economic news since the turn of the year to add to that GDP statistic, and yesterday's blow - the plan to close Pfizer's pharmaceutical factory in Kent.

In themselves none of these alter the economic weather. What's more there are other better bits of news to put in the balance - such as yesterday's confirmation that manufacturing is booming.

However, they do add up to a political problem for the coalition as the public shows sign of losing their nerve - showed a growing number saying ministers had lost control of the economy*.

They also raise an intriguing prospect. Will this government, like so many since the war, face an internal crisis of confidence as some ministers echo calls for a Plan B? Will Cameron in 2011 join this long list - Wilson 67, Heath 72, Wilson 76, Thatcher 81, Major 92?

* The poll suggested that almost half the country (48%) believes the government has lost control of the economy. This compares to 29% who believe that the government is in control of the economy. 52% of the public believe that the UK is on course for another wave of recession, up from 38% when asked the same question in October. In contrast, 17% of the country doesn't believe there will be a double dip - compared to 24% in October. Asked whether they think things are generally heading in the right direction, 48% said no, up from 32% when asked in October. This compares to 28% saying they think things are heading in the right direction, down from 41% in October.

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