Tax U-turns: The Government rediscovers its ruthless streak

I don't know what this government has against grandparents. We've had u-turns on the pasty tax and the caravan tax and the charities tax, but the granny tax still stands as the last remnant of a budget that looks more incompetent as each day passes. So is this another day of humiliation and disaster for the government?

Well, yes and no. The climbdown on petrol tax is an embarrassing reverse, but it seems to me that it is also another example of a government that has rediscovered its ruthless streak.

We political journalists love to jump up and down as any government exercises a u-turn. And so we should.

It is part of our core purpose to try to highlight inconsistency. But there is no evidence that the public minds terribly much as long the government gets to the right decision in the end. Indeed, there are plenty of reasons to conclude that they like to see evidence of flexibility.

A long-term reputation for incompetence can be deadly, of course, but the truth is that it would have suited Ed Balls better to be able to hang all these mistakes around George Osborne's neck for the next three years.

The Chancellor may have faults, but he is neither stubborn nor dogmatic. He has taken a step back, assessed his mistakes and corrected them accordingly.

So we have now had a month or more of what you might call naked populism. David Cameron has attacked Jimmy Carr for (legal) tax avoidance and started talking about welfare reforms which will probably not be implemented for at least three years (but are easily the most popular part of the Tory programme). Michael Gove and George Osborne have robustly defended the press in front of the Leveson Inquiry. The Chancellor has clinically reversed as many of the mistakes as he can feasibly get away with (the granny tax is probably just too expensive to consider).

On the face of it, Labour's strategists ought to be delighted by today's announcement. But I suspect the party's smarter brains are less pleased. It suggests the government might finally be getting its act together.