How Gordon Brown has stamped on New Labour, Tony Blair and the Third Way
PETER ()BORNE
There have been three great turning points in the history of postwar Britain. The first came immediately after the end of the war, with the election of Clement Attlee's Labour government of 1945. It nationalised much of British industry, introduced punitive taxation, and established the principle that the state should dominate the individual.
The Attlee paradigm, though modified, was never fundamentally threatened by the Conservative governments that followed from 1951 onwards. It proved immensely resilient in the long years of post-1945 economic decline and was only challenged when this decline turned into collapse in the 1970s.
The emergence of Margaret Thatcher in 1979 was the second great turning point. She reforged the relationship between the individual and the state, and by doing so released a surge of creative energy in the British economy. Gordon Brown's Budget statement on Tuesday was, in a way that he did not intend, a tribute to Margaret Thatcher. He took pleasure in showing how, far from being the sick man of Europe as we were in the 1970s, Britain now outperforms the rest of Europe on every economic measure.
The tragedy of Gordon Brown is that he is unable to perceive the link between the buoyant economy he inherited from the Conservatives and the supply-side reforms that made it possible. Intellectually he is a statist and emotionally a control freak. He genuinely believes that the relative success of the last few years is down to the frenetic meddling in the micro-economy that has become his hallmark as Chancellor, and — amid other even more malign consequences — has caused the Tolley's tax guide to swell by 50 per cent.
For five years Gordon Brown has, in short, been quietly unpicking the Thatcher economic settlement by inflicting massive new bureaucracy, complexity and regulation on business. The importance of last Tuesday was that he finally had the courage to renounce the Thatcherite settlement altogether. The autumn of 2001 will be seen by historians as the beginning of a third postwar epoch, the moment when Labour started to roll forward the frontiers of the state.
It is this which made Gordon Brown's speech such a humiliation and a defeat for Tony Blair. For the central premise of New Labour — a political party that can now be spoken of in the past tense — was that it accepted the economic insights of Thatcherism. Tony Blair said many times that the ability of the state to tax its citizens had peaked and that the 'age of tax and spend is dead'. The Prime Minister's beloved 'Third Way' — about which very little has been heard since the general election — was an admittedly feeble-minded attempt to synthesise free markets and a humane and compassionate public environment. This was what the Prime Minister's campaign for public-sector reform — still being timorously proclaimed at the Labour party conference in October — tried to do.
On Tuesday, Gordon Brown stamped on New Labour, the Third Way and Tony Blair. He ruled out private finance and identified as the way forward public spending funded by massive tax rises. There has been a lively debate in the British political class on whether New Labour was — as Tony Blair repeatedly claimed — a genuinely new party, or simply a cunning device to bring back Old Labour through the back door, Gordon Brown's Budget statement gave a final answer to that question. For the Chancellor, steadily building his constituency on the Left, this week was a triumph. It was the moment when anything even resembling a `Blairite. domestic agenda ceased to exist.
It is entirely appropriate that the individual used to give cover for this intellectually catastrophic and generally unforgettable lurch in British public policy was Derek Wanless, for seven years chief executive of the National Westminster Bank. The large proportion of the population unfamiliar with Wanless, perhaps coming across his name for the first time in the reverend citations from the Chancellor in the Commons on Tuesday afternoon, would have been left with the belief that here was some industrial magnate or Nobel prizewinner of great insight and gifts.
Wanless has certainly made himself useful to the Chancellor with his hastily compiled report allegedly concluding that public money is the only way forward. He is a life
long clearing banker, who in 1992 became chief executive of NatWest, then a proud and independent institution. It would be unfair to blame Wanless for all that followed, and in particular his chairman Lord Alexander must take a large part of the blame. What can be said with complete certainty is that under Wanless's stewardship the NatWest embarked on a series of misconceived acquisitions and, above all, calamitously failed to control costs. NatWest between 1992 and 1999 provides an almost perfect model of how not to run a public company. By the time that Wanless was fired, shareholders had despaired and NatWest was in a fit state only to be banded over to the Royal Bank of Scotland. Had Gordon Brown scoured the entire country, it is hard to believe that he could have discovered anyone less appropriate than Wanless to give advice on how to run a great national institution. It beggars belief that Gordon Brown should have chosen this failed clearing banker for the important and sensitive task of assessing the finances and strategy of the NHS, upon which the lives of so many of us will ultimately depend.
As the dust settles after Tuesday's momentous announcement, it is clear that the geography of British politics has dramatically changed. A large stretch of the political centre-ground, previously occupied by New Labour in barricaded positions, has suddenly been abandoned. The calculation of Gordon Brown and his colleagues is that the Tories are now so demoralised, hangdog, publicly discredited and unclear of their own identity that they will be unable to take the slightest advantage. Labour believes that its dominance of public debate and political strategy is so complete that it can take the country with it to the Left.
This calculation may well be correct. If the Tories stand out against Labour tax rises, they will be savagely accused, as they were at the last election, of favouring cuts in public services. On Tuesday night in the Commons, I detected no consensus among Conservatives about how to move forward. Some MPs were strongly against tax rises; others felt that if the Tories are to lose their tag as the nasty party, they have no choice but to surrender themselves to Labour's vision of a thriftless future. The success of lain Duncan Smith's leadership will turn on whether he turns this treacherous new landscape into a problem or an opportunity.
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