Tories are arguing among themselves at the top of the Coalition

Is the menage a trois falling apart?

The expectation at the outset of the Coalition was that Conservatives would not be able, in practice, to get on with LibDems. But this has not proven to be the case. For all the long face of Cable and oddness of Chris Huhne, the whole has stuck together. The only serious resignation was the result of a disgraceful hounding campaign by the Barclays of Sark against David Laws.

Nevertheless, all is not well at the top. And the briefing against each other has now started in earnest between David Cameron, William Hague, and George Osborne.

The operation to rescue UK staff in Libya has been described as bungled. Once so described, Number Ten was quick to tell the media it had been handled by Hague. He in turn didn’t hang about in telling the same media set that Cameron had personally approved the operation. And the Foreign Secretary followed through by denying it had been bungled in the first place.

But perhaps more disturbingly for the PM, Osborne has once again broken ranks to defend the Bank of England Governor Mervyn King, following his well-founded predictions of banking doom.

Osborne in turn took a tough line with the whingeing banks, telling them that the independent banking inquiry would be tough….and that as Chancellor, he would follow its recommendations to the letter. That contrasted starkly with Cameron’s spineless acceptance of yet more unacceptable bonuses. George is well aware of how that will play: the word is that he senses which way the wind is blowing, and prefers populism to pariah status.

Things aren’t going that well for Dave at the minute. The Newcorp decision is seen as bent, his Turkey speech now looks crass and ignorant, and his Right wing is once more asking what on earth has happened to Conservatism under his leadership. Ken Clarke (closer to Osborne than many realise) also recently made a point of ignoring the Number Ten line by telling British citizens how much worse things will get before they get better.

When things like this happen, the vultures and wolves are no slow to float around the injured prey. The Slog heard from a backbench source yesterday that the old Beasties sense their time is arrriving – and that for some, Cameron’s open acceptance that Britain “is inextricably linked to the EU” was the last straw.

In this context, Osborne sits in a powerful position. He is acceptable to most of the Tory Right, and is increasingly seen as having his finger closer to the pulse of public opinion than Cameron. Equally, William Hague is seen as a duck out of water in the Foreign Office. Were he to move to Number Eleven in a rejigged Osborne administration – soon to be confirmed at another General Election where the Tories became far more eurosceptic, far more censorious of the banks, and thus able to win an outright majority – the Conservative Party would be a happier place, and more able to claim a clear mandate.

All this is, of course, speculation. But is is fascinating speculation for all that. Imagine such an Administration with David Davies at the Home Office, John Redwood as Foreign Secretary, and Malcolm Brady at Education. The Tories would be more united and popular than they had been since 1983.

UPDATE 08:11 GMT WEDNESDAY 9TH MARCH: The decision by Chancellor Osborne to purge interest-rates hawk Andrew Sentance from the MPC now means, I understand, that voting on the Committee stands at 5 against a rise versus 3 for it – added to which Governor King has the casting vote. So unless there is a change of heart by one of the 5 (and history suggests this would be a very bad career move) there will be no interest rates rise on Thursday.

George Osborne’s strategy is to stop anyone getting silly ideas about putting rates up – for that would trigger the derivatives sector meltdown we’re all dreading. So then, Armageddon out off for another month or four.