1 October 2008


Paul Anderson, Tribune column, 3 October 2008

So – surprise, surprise – there was no attempt to topple Gordon Brown in Manchester last week, and he lives to fight another day. Indeed, thanks largely to a better-than-expected speech that seems to have given Labour a big bounce in the opinion polls, his position appears significantly stronger after Labour conference than it did just before.

How lasting this new strength will prove is another matter. It might well have started to dissipate by the time you read this – the first polls after David Cameron’s main Tory conference speech were due to be published as Tribune went to press – and there is so much that could go wrong for Brown in the very near future. The sullen internal Labour Party truce observed (for the most part) in Manchester is fragile at best, and it would not take a lot for hostilities to break out again: a botched reshuffle, a couple of really bad polls, defeat in the Glenrothes by-election, you name it …

But the best guess is that Brown has won himself some breathing space. The young pretender, David Miliband, no longer looks quite such an obvious alternative as he did in summer. The media consensus is that he had a poor conference – his nadir being pictured holding a banana, which is apparently something only done by nerds. Whatever, there is no one else remotely credible as a would-be prime minister.

So the likelihood is that what will determine both Brown’s and Labour’s fate is the way the government handles the economy in the next six to 12 months.

The only certainty here is that it will not be easy. Economists differ on precisely how severe a downturn Britain will experience as a consequence of the combined credit crunch, energy squeeze and banking crisis. But nearly all agree that it will be severe, particularly if the housing market, currently pretty-much frozen, goes into meltdown US-style. The worst-case scenario, horribly plausible in a way that premonitions of slump have not been for 30 years, is of a vicious circle of collapsing consumption, business failures, rising unemployment and mortgage defaults that creates the worst recession in living memory.

Brown and Alistair Darling are aware of the threat – which is more than can be said of the Conservative opposition, whose economic illiteracy this week has been utterly breathtaking. The prime minister and the chancellor both made it clear in their conference speeches that current economic conditions necessitate the state playing an active role not just in restoring confidence in the banking system but also, crucially, in maintaining the overall level of demand in the economy and in ensuring that the poor do not bear the brunt of the downturn.

In other words, unlike the Tories, they do not appear to be singing from the same song sheet as Ramsay MacDonald and Philip Snowden in 1931: in the medium term at least, Labour will borrow and spend to compensate for the effects of tight private credit and will not slash the welfare state.

But if that’s reassuring, it’s not enough. Coded statements of intent in conference speeches are all very well, but they need to be translated into hard policy to have any serious impact either economically or politically – and so far the government’s proposals have been timid, unimaginative and short-term. Of course, dealing with the immediate financial crisis has to be the priority and is in itself a daunting challenge, but the government also needs to come up with concrete medium-term plans for taking the sting out of recession.

The key here is a serious programme of public works – social housing, renewable and nuclear energy, dedicated cycle tracks in every city, urban trams and light railways, a high-speed rail network – to take up the slack in the economy. Needless to say, it would take time to assemble and cost, but that is precisely why the government should be working on it right now even though the scale and duration of the downturn are unclear.

Bad economic times generally do governments no good, and it would be foolish to be too optimistic about Labour’s chances of weathering the gathering storm. The opinion polls are dire even with the post-conference bounce. The party’s position is not, however, completely hopeless. The Tories have no credible economic policy to deal with the recessionary times in which we are now living. With a coherent and bold programme of state intervention to alleviate the pain of market failure, Labour might just persuade the voters to give it another term in spring 2010. Who knows, it could even manage it under its current leader.

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