Cameron's declaration that "money is no object" has destroyed his austerity message

By insisting that he will spend "whatever money is needed" on flood relief, Cameron has undermined his claim that austerity means we must tolerate rising homelessness and poverty.

It was just a few years ago that David Cameron was warning that Britain was "nearly bankrupt". The claim was, of course, nonsense. With its own currency, its own monetary policy and the ability to borrow at historically low rates, the UK was never at risk of insolvency. In extremis, the Bank of England could simply buy up government debt (as it has done through quantitative easing).

But the suggestion that Britain was bankrupt, or at least close to being so (Cameron often casually alternated between the two), was an immensely valuable means of justifying the coalition's austerity programme. Since 2010, Cameron has repeatedly invoked the deficit and the "tough choices" required to reduce it when confronted with the social and economic harm caused by the cuts to welfare and other government programmes.

Britain today is a country in which more than half a million people have turned to food banks since April 2013, in which homelessness has risen by 34 per cent since 2010, and in which, for the first time ever, there are more people from working families living in poverty (6.7 million) than from workless and retired ones (6.3 million). But Cameron has been able to justify all of this pain by presenting it as the tough medicine required to clear the country's debts. As yesterday's YouGov poll showed, 54 per cent of voters believe the cuts are "necessary", compared to just 30 per cent who believe they are unnecessary, a gap that has remained consistent throughout this parliament. 

But yesterday, during his Downing Street press conference on the floods, Cameron suddenly abandoned this austere message. "Money," he declared, "is no object in this relief effort. Whatever money is needed, we will spend it." Many voters, not least those who have lost their homes to the floods, will appreciate the sentiment, but it prompts the question: if money is no object in the case of flooding, why is it an object in the case of homelessness, unemployment and poverty? Indeed, had he adopted such a generous stance from the start, and not cut real-terms spending on flood defences (what a false economy that has proved to be), Britain would have been far better prepared for the deluge than it was. 

During the same press conference, after being challenged to divert money from the foreign aid budget to flood relief schemes, he replied: "I don’t think it’s needed to go for the aid budget because we will make available the money that’s needed here in Britain. We are a wealthy country, we have a growing economy. If money is needed for clean-up, money will be made available." 

The decision of the Daily Mail, Nigel Farage and others to target foreign aid may be a cynical one (exploiting the misperception that it is one of the largest areas of government spending) but it is entirely consistent with the logic employed by Cameron since 2010: spending increases in one area must be matched by cuts elsewhere. 

Yet having once declared that there is "no magic money tree", the PM now gives entirely the reverse impression. The coalition would no doubt argue that the return of growth, with GDP rising at its fastest rate since the crisis, and the fall in the deficit (from £160bn in 2009-10 to £115bn in 2012-13) means that there is some spare cash around. But this ignores the scale of austerity that the government believes is still necessary and desirable. As the IFS noted last week, just 40 per cent of George Osborne's planned spending cuts have been delivered. Indeed, so wedded to austerity is Cameron, that he has argued it should continue even once the deficit has been eliminated. As he argud in his speech at the Lord Mayor's banquet last year:

We are sticking to the task. But that doesn't just mean making difficult decisions on public spending. It also means something more profound. It means building a leaner, more efficient state. We need to do more with less. Not just now, but permanently.

By now carelessly insisting that "money is no object", he has dramatically weakened the force of this message. 

David Cameron addresses the media during a press conference at 10 Downing Street yesterday. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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I believe only Yvette Cooper has the breadth of support to beat Jeremy Corbyn

All the recent polling suggests Andy Burnham is losing more votes than anyone else to Jeremy Corbyn, says Diana Johnson MP.

Tom Blenkinsop MP on the New Statesman website today says he is giving his second preference to Andy Burnham as he thinks that Andy has the best chance of beating Jeremy.

This is on the basis that if Yvette goes out first all her second preferences will swing behind Andy, whereas if Andy goes out first then his second preferences, due to the broad alliance he has created behind his campaign, will all or largely switch to the other male candidate, Jeremy.

Let's take a deep breath and try and think through what will be the effect of preferential voting in the Labour leadership.

First of all, it is very difficult to know how second preferences will switch. From my telephone canvassing there is some rather interesting voting going on, but I don't accept that Tom’s analysis is correct. I have certainly picked up growing support for Yvette in recent weeks.

In fact you can argue the reverse of Tom’s analysis is true – Andy has moved further away from the centre and, as a result, his pitch to those like Tom who are supporting Liz first is now narrower. As a result, Yvette is more likely to pick up those second preferences.

Stats from the Yvette For Labour team show Yvette picking up the majority of second preferences from all candidates – from the Progress wing supporting Liz to the softer left fans of Jeremy – and Andy's supporters too. Their figures show many undecideds opting for Yvette as their first preference, as well as others choosing to switch their first preference to Yvette from one of the other candidates. It's for this reason I still believe only Yvette has the breadth of support to beat Jeremy and then to go on to win in 2020.

It's interesting that Andy has not been willing to make it clear that second preferences should go to Yvette or Liz. Yvette has been very clear that she would encourage second preferences to be for Andy or Liz.

Having watched Andy on Sky's Murnaghan show this morning, he categorically states that Labour will not get beyond first base with the electorate at a general election if we are not economically credible and that fundamentally Jeremy's economic plans do not add up. So, I am unsure why Andy is so unwilling to be clear on second preferences.

All the recent polling suggests Andy is losing more votes than anyone else to Jeremy. He trails fourth in London – where a huge proportion of our electorate is based.

So I would urge Tom to reflect more widely on who is best placed to provide the strongest opposition to the Tories, appeal to the widest group of voters and reach out to the communities we need to win back. I believe that this has to be Yvette.

The Newsnight focus group a few days ago showed that Yvette is best placed to win back those former Labour voters we will need in 2020.

Labour will pay a massive price if we ignore this.

Diana Johnson is the Labour MP for Hull North.