OH, COME ON, IT'S NOT THAT BAD

Paul Anderson, Tribune column, 6 January 2009

Sometimes it seems that everything in Britain these days is doom and gloom. The banking crisis has dragged on and on and the credit famine is now having a devastating effect on consumer confidence, the housing market and employment.

Every day there are announcements of new redundancies and business failures. Forecasts of collapsing house prices, negative growth and exploding unemployment range from the deeply depressing to the terrifying. Slump is upon us.

For anyone on the left, the political outlook is at first sight dire, too. The brief recovery in the opinion polls enjoyed by Labour in the autumn of 2008 appears to be over - and the Tories are back to being overwhelming favourites to win the next general election. Oh dear.

But is it all as bad as it seems? Well, at least it's not as bad as it might have been. Granted, some of the economic projections of the past couple of months have been a lot worse than most experts expected at the beginning of 2008 - and there's little doubt that a lot of people are now suffering, with more pain to come. But so far it hasn't been a matter of economic meltdown. The overwhelming majority of Brits are still doing OK. And although the Government has made mistakes it has given a pretty good impression of knowing what has to be done to get out of the mess we're in.

To be sure, the failure of the October bank bail-out, which necessitated this week's even-bigger emergency package, is an embarrassment; and it might well be that even this week's efforts will not be enough to prevent wholesale bank nationalisation, which the government wants to avoid (for a mixture of good and bad reasons).

Nevertheless, Gordon Brown and Alistair Darling have not done at all badly in the past few months, dealing with a crisis unlike any other in living memory with confidence and some panache. More might well need to be done to restore credit to the economy, but they appear to have the will and daring to do whatever is necessary, at least in the short term.

Certainly they have been running rings around the Tories, although whether they continue to do so now Ken Clarke is back in the Shadow Cabinet is another matter. Clarke, unlike David Cameron and George Osborne, understands crisis management and is a formidable opponent for Labour. On the other hand, as became apparent within minutes of his being appointed, his differences with his Eurosceptic colleagues have the potential to reignite the internal Tory battle that more than anything else destroyed the party's credibility in the 1990s and early 2000s.

It is less easy to be sanguine about the Government's medium-term plans. Sorting out the banks is the top priority, but once that's done the state needs to intervene with a major programme of public works to boost the overall level of demand in the economy.

So far, the proposals that have emerged from government look back-of-the-envelope and unimaginative. Speeding up planned projects is fine as long as the projects are worth pursuing in the first place - say school and hospital investment - but the case is difficult to argue when it comes to the third runway at Heathrow Airport or the Trident replacement or hard-shoulder carriageways on the M1 and M25. What's missing is the vision thing: plans for a high-speed rail network, a massive expansion in green energy generation and a large-scale revival of social housing construction. Yes, all that would take time to prepare and longer to put into practice, but Labour needs to have a bold programme it can introduce immediately after the next election: the work on it must be done now.

The good news is that the party appears to be in better shape to do that than anyone could have imagined six months ago. Last summer, Brown seemed to be on his last legs - and Labour looked ready to dissolve into poisonous factionalism.

However, the Prime Minister survived the conference, acted decisively on the economic crisis and performed a healing reshuffle (I never thought I'd welcome the return of Peter Mandelson to the Cabinet, but it appears to have worked wonders for everyone but postal workers). The bounce Brown got might have been short-lived, but Labour now comes across as more united than for at least five years.

I'm still not optimistic about the next general election. Between now and then (and it must be 18 months away, mustn't it?), there are all sorts of things that can go wrong - the economy most obviously, but there are also small problems such as the proposed Royal Mail sell-off, Afghanistan, Heathrow and June's European elections.

There is, however, more than a glimmer of hope. Hunch tells me that 2010 could be Labour's 1992.