It was the year that defied conventional wisdom. From the beginning of the long election campaign a Conservative victory seemed there for the taking, with most commentators and pollsters still predicting a Tory majority even as the country went to the polls. The same figures were certain that David Miliband would triumph in Labour's first leadership election since 1994. But in both cases the voters decided otherwise. As the establishment reacted with dismay to the first hung parliament since 1974 and to Ed Miliband's election as Labour leader, one was reminded of Bertolt Brecht's gibe about the need to elect a new people.
The year began with another outburst of existential angst over Gordon Brown's leadership. The third and final coup attempt came in January, when Patricia Hewitt and Geoff Hoon moved to rid Labour of the most unpopular prime minister since polling began. But fear of a prolonged civil war, the absence of a Heseltine-type challenger, and Hoon and Hewitt's lack of credibility made Labour pull back from regicide. Peter Mandelson, who acted as the then PM's life-support machine, has since estimated that Brown's continued leadership cost Labour 20-30 seats at the general election and, come June, the party looked admiringly on the ruthless efficiency with which Australia's Labor replaced Kevin Rudd with Julia Gillard.
Thanks to a surprisingly inept start to their campaign, the Tories failed to capitalise on Labour's woes. The poster of an airbrushed David Cameron, bearing the legend "I'll cut the deficit, not the NHS", became the most parodied image of the election, ridiculed in scores of spoofs. The poster, like the revelation that Cameron's car followed him with his briefcase as he cycled in to work at Westminster, was a gift to those eager to portray him as vain and narcissistic.
Meanwhile, following polling evidence that George Osborne's "age of austerity" was scaring swing voters away, Cameron softened the party's line on the deficit and suggested that in-year cuts would not be "particularly extensive". His rhetorical U-turn muddled the Conservatives' economic message and suggested that they shared doubts over early spending cuts. Worse was to come as Cameron appeared unsure of his party's tax policy for married couples ("I messed up," he later conceded) and the former deputy party chairman Michael Ashcroft's non-domicile tax status was finally exposed. By the end of February, the Tories were just 2 points ahead of Brown's party, despite having led Labour by 26 points in May 2008.
Cameron's biggest strategic error was to agree to the televised leaders' debates, which transformed Nick Clegg from the little-known leader of the Liberal Democrats into the head of a revolt against the Labour-Tory duopoly. Having shared top billing with the revered Vince Cable at the start of the campaign, Clegg finally emerged as a national figure in his own right and Cable's photo was quietly dropped from the party's home page. It was during that strangely serene weekend following the first debate, when the Icelandic volcano grounded all UK flights, that the Liberal Democrats topped the opinion polls for the first time in their history. Time itself seemed out of joint.
The Lib Dem surge would not last but it forced the Tories to fight a war on two fronts. Moreover, the debates institutionalised three-party politics, making hung parliaments more likely in the future. But "Cleggmania" also cost the Lib Dems, as activists hubristically campaigned in unwinnable seats, neglecting key marginals. Ultimately the party won just 57 seats, five fewer than in 2005.
Meanwhile, conflict was brewing between Cameron's chief of strategy, Steve Hilton, and his director of communications, Andy Coulson. Hilton, heavily influenced by a stint in California, was determined to run a hopeful, Obama-style campaign with the "big society" at its heart. By contrast, Coulson, a former tabloid editor, favoured a fierce and aggressive campaign that relentlessly targeted Brown's record. The result was increasingly incoherent. The "big society" failed to engage Cameron's own party, let alone the public. One Tory backbencher memorably described it as "complete crap", while others referred to it more succinctly as "BS". Oscar Wilde once declared that the problem with socialism "is that it takes up too many spare evenings". Voters working ever longer hours were unimpressed by the suggestion that they should set up their own schools and run local services.
If the Tories' campaign was incoherent, then Labour's was frequently risible. The appearance of an Elvis impersonator at one event and the much-spoofed poster depicting Cameron as the TV detective Gene Hunt are only the most memorable examples. The nadir came on a visit to Lancashire when Brown was overheard describing a Rochdale pensioner, Gillian Duffy, as a "bigoted woman". But despite the media furore over "Bigotgate", the incident had no discernible impact on support for Labour. Polls showed that freshly unpredictable voters even sympathised with the PM.
It was only two days before the election that the Labour leader finally found his voice, in a remarkable speech to Citizens UK. As Brown thundered with the passion of an Old Testament prophet, an excited Mandelson said: "That's what I've been telling him to do all along!" In the event, even though Labour won just 29 per cent of the vote - its second-worst vote share since 1918 - the overall result was not the 1983-style wipeout that some had feared. The party ended up with 258 seats, more than it won in 1983 and 1987, and significantly more than the Tories won in 1997, 2001 and 2005.
“David Cameron will be Prime Minister by teatime Friday," blogged the Daily Telegraph's Benedict Brogan confidently, several days before the election. In the event, the election delivered a hung parliament for the first time in a generation and the country entered a power vacuum for five days as the Liberal Democrats played the two main parties off against each other. For several days, the prospect of a "rainbow alliance" between Labour, the Lib Dems and minority parties was touted as a serious possibility, though the former Labour home secretary David Blunkett summed up the doubts of many when he warned against a "coalition of the defeated".
Cameron's "big, open and comprehensive offer" to the Lib Dems was a game-changer, though intense secrecy continued to surround the talks. Brown's surprise resignation on 10 May prompted many newspapers to accuse him of staging a "coup", a last-ditch attempt to keep Labour in power. They were proved wrong. At 8.45pm the very next day, Cameron announced that he and Clegg would together form a government.
The formation of a Conservative-Liberal Democrat coalition took most by surprise, but the signs had been there all along. Since his election as Lib Dem leader, Clegg had moved the party steadily rightwards and promoted those from the free-market, Orange Book faction. It was he, not Cameron, who first spoke in 2009 of the need for "savage cuts". Moreover, the onus was on the Lib Dems, as the party of electoral reform, to prove that coalition government could work. We now know that they had little intention of sticking to their pledge to delay spending cuts until 2011. Even in their negotiations with Labour, as papers leaked to the New Statesman revealed, the Lib Dems were calling for "further and faster action on the deficit", including "some in-year cuts".
While many column inches have been devoted to finding the "cracks in the coalition", it has become increasingly obvious that this is no marriage of convenience. The Tories may have run election broadcasts against the "Hung Parliament Party" but Cameron seems happier sharing power than he would be with an all-Conservative government. The coalition allowed him to marginalise the right of his party and affirm his liberal conservatism.
The benefits for the Lib Dems are harder to discern. The loss of support for them has been startling, some polls putting approval for the party as low as 9 per cent, and one in five Lib Dem voters switching to Labour. Never again will the electorate fall for Clegg's holier-than-thou act. The party that warned of a Tory VAT "bombshell" during the election ended up joining the assault. The party that pledged, at the very least, to vote against higher tuition fees, has voted to triple them. Attracting the anger of student protesters is nothing new for the Tories, but for the Lib Dems - hitherto the party of protest, supporting free education and civil liberties and opposing the war in Iraq - it is a new and disconcerting experience.
Away from the coalition, attention turned to Labour's leadership contest, where David Miliband's coronation appeared a formality. With the full force of the New Labour machine behind him, he led from the front. He had more endorsements from the party establishment and larger donations, although his brother, Ed Miliband, won the support of the "big three" trade unions: Unite, Unison and the GMB.
In the event, it proved to be the tightest Labour election since Denis Healey defeated Tony Benn for the deputy leadership in 1981. Only in the 24 hours before the result did Ed Miliband - a one-time 33-1 outsider - become the bookies' favourite. Peter Hain, a leading ally of the younger Miliband, later reflected: "It came from nowhere. He didn't have any infrastructure or resources in place at the start."
As the brothers entered the specially convened leadership conference on a late September afternoon in Manchester, David smiled winningly and waved to the crowd as Ed sat tensely, biting his lip. It meant nothing: the elder Miliband gained the most votes in every round except the last, and eventually lost to his brother by just 1.3 per cent.
Speculation about David's next move dominated the Labour conference proper, as he delivered one of his finest speeches to date. But an unguarded aside on the Iraq war to Harriet Harman ("You voted for it. Why are you clapping?") during his brother's victory speech showed why he could no longer remain in front-line politics. Tensions between the rival camps remain unresolved, notably over Ed's claim to have opposed the war. As for the brothers, one Labour peer tells us that they are no longer on speaking terms.
One family drama soon replaced another as attention turned to Ed Balls and Yvette Cooper, husband and wife. Although the couple were considered front-runners for the shadow chancellorship, the new leader appointed Alan Johnson. Given the uneasy relationship between Balls and Miliband, perhaps the decision was not surprising. "It's just like being back at the Treasury," Miliband had quipped at the NS Labour leadership hustings in June, after a verbose response from Balls. "Tell us the answer then, Ed, like you always do," Balls shot back.
It's often forgotten that Miliband has an astute grasp of economics, having taught the subject at Harvard during his sabbatical in 2003-2004. Appointing Johnson signalled that, unlike Tony Blair, he was unwilling to subcontract economic policy to his shadow chancellor. Yet Johnson has been no puppet, using Miliband's paternity leave to reaffirm his opposition to a graduate tax (before backtracking in December) and a permanent 50p top rate of income tax.
Labour has struggled to articulate a convincing alternative to the coalition's cuts as George Osborne, hitherto regarded as a liability, has emerged as a dominant figure. As recently as March, his unpopularity was such that Cameron insisted there was no pact between the pair and he could sack Osborne if he wanted to. The then shadow chancellor was left out of the "famous five" election squad - Cameron, Kenneth Clarke, Michael Gove, William Hague and Jeremy Hunt - after reportedly receiving low ratings in confidential Conservative polls.
Worse than Thatcher
Since the election, however, the Chancellor has frequently led from the front as the emperor-like Cameron has remained above the fray. Osborne's emergency Budget and Spending Review defined this year, and their effects will define the next. The cuts will reduce spending from 47.3 per cent of GDP in 2010-2011 to 39.8 per cent in 2015-2016 - equivalent to reductions made by Margaret Thatcher between 1979 and 1990. Osborne is determined to use his economic muscle to construct a Tory majority between now and the next general election. The recently announced cap on benefits was not just a populist measure but an act of supreme electoral engineering. The Tories believe that the flight of poor, mainly Labour-voting families from inner London will allow previously unwinnable seats to fall their way.
Conventional wisdom suggests the coalition should prepare for extreme unpopularity as Osborne's £81bn cuts kick in. The Climate Change Secretary, Chris Huhne, has privately predicted that support for his party will fall to 5 per cent and support for the Tories to 25 per cent. International experience suggests that austerity does not always result in electoral punishment, however. The three governments that executed the largest expenditure-based deficit reductions in modern times - Ireland in 1987, Canada in 1994 and Sweden in 1995 - were all re-elected. In addition, the next election will be fought under redrawn constituency boundaries that will strip Labour of about 25 seats.
Should the economy have returned to full health by 2015, Osborne will be in a position to hand out pre-poll sweeteners and to claim, as John Major once did: "It hurt but it worked." After a year in which the script was repeatedly torn up, there is every possibility that the same thing will happen again.
Samira Shackle and George Eaton write for the New Statesman blog The Staggers.