Britannia Radio

THE TIMES   5.12.08
It's all going to end in tears again - or is it?
Runaway spending, debts, and a sterling crisis have done for almost 
every Labour government. Can the tide of history be resisted
    Philip Collins

The official line is that circumstances are exceptional. Yet doesn't 
it all seem so familiar? A huge public sector, the state running the 
banks, the economy directed by a political council. Borrowing higher 
than ever; taxes on the rich going up, sterling falling rapidly; 
growth in reverse. Isn't this how Labour governments fail?

Only four Labour leaders have suffered the fate that Gordon Brown is 
trying to avoid. Ramsay MacDonald (twice), Clement Attlee, Harold 
Wilson and James Callaghan all met their end on the way out of 
Downing Street. Tolstoy wrote that all happy families are the same 
but that all unhappy families are different. The last days in office 
of Labour prime ministers show us that the same is true in politics.

MacDonald is now a metaphor for treachery like no other. I once 
comprehensively lost an argument in which I suggested that Stalin was 
probably worse than Ramsay MacDonald. Not in Islington North Labour 
party he wasn't.

This reputation dates from the catastrophe of 1931, which sets the 
template for Labour financial disasters. A crash in the value of 
stock, began in America and spread to Britain, causing a serious run 
on the pound. MacDonald formed a National Government of all the 
talents and Labour was annihilated.

That was his second term in office. The 1924 Labour Government fell 
in unique circumstances. Just before polling day, a letter was sent 
to the Daily Mail and the Foreign Office, purportedly written by a 
senior source in the Kremlin. The Zinoviev Letter, as it became 
known, demanded a British revolution. It was probably a forgery but 
it had its effect. Labour was thrashed in the election in November 1924.

After 1931 Labour had to wait 20 years to fail again. The 1945 
Government is the shining exception in the history that Labour tells 
itself. But, in fact, Attlee's Government expired exhausted after six 
years.

The country was struggling with bills accumulated in winning the 
Second World War. Rationing was in full force and Stafford Cripps, a 
former gentleman firebrand, had transformed himself into a very 
austere Chancellor of the Exchequer. Only Alistair Darling has 
surpassed him either for willed dullness or borrowing requirement.

The same mitigation cannot be applied to Harold Wilson. In 1964 
Wilson was elected as the common man from the North who, all the 
same, understood new-fangled things such as aluminium smelting. But 
in 1966 his Government went through protracted agonies about whether 
to devalue sterling. The November 1967 Budget provoked a serious run 
on the pound and the Government was devalued even more than the 
currency. The Wilson Government stumbled on until 1970 when it 
vacated office with no great fanfare.

Wilson had a second spell as Prime Minister in 1974 but was too tired 
to last more than two more years. Jim Callaghan, the unelected Prime 
Minister who walked straight into the financial disaster, is the 
precursor who haunts Gordon Brown. Problems with the balance of trade 
and a debt of £12 billion caused another sterling crisis. The IMF 
demanded cuts in public spending as a condition of a loan.

It was only a stay of execution. The Government's inability to impose 
a 5 per cent pay settlement on the trades unions led to mass strikes. 
Bernard Donoughue watched it all from inside No 10, as head of the 
Policy Unit. “Greedy capitalism with a union card”, as he puts it. 
Food and oil supplies were interrupted. The North of England had no 
water. As Donoughue recalls “there were far too many marshmallows and 
too few vertebrae in Jim's Cabinet”. The final straw was when the 
public sector union refused to bury the dead.

Donoughue captures the atmosphere perfectly in his diary. As he says: 
“The depth of the crisis is reflected in the fact that it is not 
hectic and fraught... it is all very quiet.” Downing Street is a 
strange warren of a place and moods don't spread round its corners 
very easily. The atmosphere on the day of the July 7 bombs in 2005 
was exactly the same - oddly quiet.
The 1974 Government ended not in tragedy but in farce. The whips 
squeamishly declined to force Dr Alfred Broughton, a very sick MP, to 
attend a decisive no-confidence vote. They lost 311-310. The winter 
of 1978 had done for the Government.

When we search for the start of new Labour this is where the traces 
lead. When people wonder what new Labour is for, they are missing the 
point. New Labour was against something. It was against the sort of 
old Labour that brought the country to the sorry pass of 1978.

The big fact to learn about the Blair and Brown generation is that 
they resolved that this would never happen to them. This is why 
people so often get Brown wrong. He is widely thought to be a man of 
fixed views, derived from deep and serious book learning. In fact, 
Brown no more has a fixed set of beliefs than a chess player does. He 
is an expert on opening gambits but is too much of a strategist to 
waste a lot of time thinking. Brown's secret is the same as Blair's: 
he is addicted to victory.

This is why the Prime Minister has revelled in the financial crisis. 
It has given him a problem to solve and moves to make. Hence the 
search for the hidden beliefs that are finally coming to the surface 
- the desire for state control, the envy of the rich - is mostly 
misconceived. Even his fabled faith in the power of the state is 
limited. He remains the main cheerleader for the Private Finance 
Initiative. He conducted an audit of government assets to see what he 
could sell off. And, to give him the credit that is due but has not 
been paid, he has resolutely made plain, throughout this crisis that 
open markets are the only long-term answer.

That is the basic difference between now and previous occasions when 
Labour governments came to a fatal end. They were slowly finding out 
that the things they believed in actually made no sense. Gordon 
Brown's latest policies, by contrast have come as a big surprise, not 
least to himself. Most of what has happened he would not conceivably 
have imagined. Indeed, the delay in nationalising Northern Rock was 
rooted in a desire not to do anything so irretrievably 1970s. It was 
the political equivalent of a good Elton John album.

He has one other get-out clause. The constant incantation that “it 
started in America” has now gone beyond irritating into comic. But it 
is basically true. Previous Labour crises were entirely made in 
Britain. The Government got the blame because it was the Government's 
fault.

Not that this offers any immunity from political failure. The reason 
why Labour will lose, if it does, is that the public will conclude 
that it has nothing more to say. But, for the moment, a fleeting 
opportunity has opened up before Brown. His Government was, for too 
long, an administration of bits and bobs. The financial crisis offers 
an opportunity nobody would have dared to hope for even three months 
ago.

And this may yet be the ultimate departure from the historical 
record. Financial crises have broken previous Labour administrations. 
It is not likely, but it is possible, that this time around, it might 
be the making of it.
---------------------------------------------
- Philip Collins is a Times leader writer and was chief speechwriter 
for Tony Blair