New Labour is dead. All that is left is the sleaze and spin that voters have always loathed. The New Tory project is buried too Historians of the future will argue about the precise time of death of NewLabour. While it still breathed, this was an extraordinarily successful political construct, a project that delivered three successive election victories to a party that had previously been much better at losing than winning. Its opponents became so transfixed by those successes thatDavid Cameron tried to ape them by turning his party into New Tories. So when and why New Labour expired is of more than academic interest. Some will say that New Labour's heart stopped on 5 May 2005, when Tony Blair won a third term but lost a chunk of his majority and with it the authority to drive any more radical reform through his party. Other political pathologists will contend that brain death occurred whenGordon Brown replaced him at Number 10 in June 2007. Yet there's a case to be made that you could still feel a pulse then. Mr Brown did not want to be seen as the death of New Labour when he entered Downing Street. One reason he did not was because David Cameron was at that time claiming to be the reincarnation of New Labour on the grounds that he was the true "heir to Blair". A later moment of death would be October 2008 when the Great Crunch inflicted the coup de grace on all the economic assumptions that underpinned New Labour as a governing project. Historians will find it easier to agree about the time and place when the coffin lid was nailed down. New Labour was finally interred by Alistair Darling in his budget. That does not mean that I am accusing the chancellor of being the murderer of New Labour. Mr Darling was merely the undertaker, a task for which his heroically stoic demeanour in mournful circumstances makes him well-equipped. The critical decisions that led to this point were not made by the chancellor, but by the man glowering next to him in the Commons and jammy old Tony Blair, who got out of Number 10 just before the roof started to fall in. The most obviously symbolic respect in which the budget marked the final full stop on the New Labour era was the new top rate of tax on higher earners. For three elections in a row, they pledged not to do that in the belief that it was politically suicidal to hike any of the rates of income tax. They have slyly bent and sometimes flagrantly bust other promises over the years, but the pledge not to touch income tax was treated as inviolate - until now. When he was chancellor, Gordon Brown went further. At more than one budget, he revelled that he was outflanking the Tories and cut the basic rate of income tax. Some members of the cabinet, contemplating the amount of red ink that now weeps from the public finances, sigh with regret over the many billions of revenue foregone by those earlier tax cuts. It was always debatable whether it was sensible for New Labour to have so heavily defined itself by income tax rates. The pledge made huge political sense in order to reassure middle Britain before the 1997 election, but it was less obvious that it was wise from 2001 onwards. The smart time to have asked for a bigger contribution to society from high earners was during the boom years, when there were lots of bankers, hedgies and bonuses to tax. It is too late for Gordon Brown to go galloping after all those bolted horses. Sir Fred Goodwin and his ilk are over the hills and away with their swag. The depleted ranks of the super-rich will be consulting their accountants or moving abroad to avoid the tax. In so much as it raises revenues, they will come from those who are wealthy without being quite rich enough to avoid it. Gordon Brown was evidently hoping that David Cameron would oppose the 50p rate so that the Tories could be painted as the buddies of the bankers and the pals of the privileged. As a political snare, this was too crude. Mr Cameron said to himself: "Oh look, Gordon has laid a cunningly undisguised elephant trap for me. Should I oblige the prime minister by jumping into it? No, I will carefully step around it." Hiking tax rates on the top earners is not a return to the politics of envy; this is the politics of sheer desperation. Peter Mandelson, the keeper of the New Labour flame within the cabinet, did not try to argue against breaking their income tax pledge. He and other ministers didn't feel they could oppose it when they were simultaneously trying to persuade the chancellor to scrape together some money for initiatives to help businesses and the young unemployed. Superficially, the tax appears to be popular. Early polling suggests that most voters agree that the wealthiest should take more of the pain of the recession. Yet the more electorally astute ministers feel queasy about the longer-term implications of breaking this pledge. Symbolism matters. Labour is back to where it was before Blair. It is again the party that jacks up income tax. For that reason and others, one former cabinet minister describes the budget as "catastrophic" because it risks "ditching more than a decade of work to make Labour the party of aspiration". He is anticipating what the Conservatives will say to those on middle incomes. "They came for the rich last time," David Cameron will contend. "Elect them again and Labour will squeeze you next." The Conservatives are already priming their "tax bombshells" with the claim that every family faces a bill of nearly £3,000 for "Labour's debt crisis". That Tory argument will sound more plausible because of the shocking state of the national finances and the almost universal disbelief that the budget has produced a credible flight path out of the mess. The chancellor's advisers don't need independent analysts to tell them that the figures for debt and growth are ludicrously optimistic. Many of the Treasury's own officials don't believe the budget figures either. The government has been forced into this baleful position because of the collapse of the fundamental governing assumption of New Labour. That was the belief that sound management of the economy would avoid the wild swings from boom to bust of the Tory years and the financial calamities that swamped every previous Labour government. For a decade, they seemed to have pulled it off. Continuous prosperity sustained them when the government was unpopular for other reasons and was crucial to securing that hat-trick of election victories. Sustained growth spared them having to grapple with any really nasty choices about tax and spending. The politics of the last decade have been about how to slice a growing cake. Even in those happy days, there were ferocious disputes about spending. "You've stolen my fucking budget!" Gordon Brown raged at Tony Blair during one argument about how much more they could afford to commit to the NHS. The battles over spending are going to be 10 times as brutal when the argument is about how deep to cut. The politics of the post-New Labour era will be about how to ration a shrinking cake. What is that knocking sound I hear from the coffin? It is my Lord Mandelson insisting that New Labour is not dead yet. Yes, a couple of its limbs are still twitching. One is spin: the smeary emails of Damian McBride are the latest manifestation of one of the least attractive attributes of New Labour. The other is sleaze. The lowering scandal over parliamentary expenses is going to get more squalid. Westminster should brace itself for a tidal wave of public disgust at the end of July when all MPs will be forced to reveal exactly what they have been claiming at the taxpayers' expense down to the last bath plug, pot plant and porn film. One senior Labour figure tells me that he fears the behaviour of a few MPs will be exposed as so shameful that it will lead to resignations and byelections. Hands up anyone who fancies their chances as Gordon Brown's candidate in a byelection when the Tories have such a big, double-digit lead in the polls? What voters most liked about New Labour was moderate taxation and rising investment in public services. That is buried. Haunting them from beyond the grave is the sleaze and spin that voters most loathed about New Labour. The only consolation is that the Conservatives have also been at the cemetery to bury David Cameron's first political project. The last rites have been read over the New Tories. In a skilful reply to the budget, he talked about "a day of reckoning" for the government. Yet his plans for the Tory party originally assumed that Gordon Brown was correct to claim that boom and bust had been abolished. The New Tory project was based on the belief that continuous growth would allow them to avoid hard choices about tax and spend. That is dead, too. A Conservative government will have to implement an excruciating squeeze on spending and may struggle to avoid putting up taxes as well. The more that the Tories assert that Labour is concealing just how dire things are, the more David Cameron implies that he will have to cut even deeper than he is yet saying. If the next government is Labour, it won't be a New Labour government. In the rather more likely event that the next government is Conservative, it will not be New Tory. This was the week that Westminster saw no weddings and two funerals.Gordon and David are both whistling in the graveyard
Sunday, 26 April 2009
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