Even at the end of a long leadership campaign, there is no clear sense that any of the candidates fully understands why Tony Blair and Gordon Brown won three elections, and there has been only a vague attempt to explain what went wrong. Yet until lessons are learned, positive and negative, Labour will struggle to win again. A key to Labour’s victories after its calamitous defeat in 1992 was Brown’s determined, ruthlessly disciplined development of an economic policy. It commanded wide support (for a time) and gave him space to increase public spending while redistributing fairly extensively.
As shadow chancellor in the early 1990s, Brown faced a nightmarish dilemma: voters did not want Labour to spend any more of their money and yet the decrepit public services were in need of huge investment. It has become fashionable to attack Brown for having been too dependent on tax receipts from the financial services industry to fund the increases in spending. But politicians, especially Labour ones, function in tiny amounts of space most of the time, and if anyone cares to look back at the public and media mood in the mid-1990s, few would argue that there was an alternative route. Nonetheless, by 2002, Brown was in a strong enough position to propose openly a tax rise to pay for big increases in spending on the National Health Service. This formed the centrepiece of the most popular Budget since polling began, even winning the backing of a majority of Conservative voters.
Brown’s career peaked before his overwhelming desire to replace Blair led him to make some terrible misjudgements. But, for ten years, from 1992 to 2002, he was the biggest figure in British politics.
It is strange, therefore, that in the retelling of New Labour history, only passing reference is made to economic policy, and this is invariably done out of context. So Blair’s memoirs refer fleetingly to the increased investment in public services as if it were a policy as peripheral as opening a new chip shop in Southend. In Peter Mandelson’s account, the economy barely features until he gets to the dramas of the financial crisis of 2008-2009.
Labour ministers came and went, more interested in pouring poison into the ears of influential columnists about “reform”, and the importance of remaining New Labour, than they were in advancing economic policy. (What was a Blairite economic policy? Actually, Blair answered that question in the postscript to his memoirs. It is the same as George Osborne’s, which does not get the new Labour leader very far.)
Contrary to current mythology, Brown was more ambitious than Blair in what he sought to achieve in policy. And he shared with Blair an instinct that Britain was a centre-right country, but had a unique way of coping with it. His public narrative was apolitical. He spoke of Britishness, prudence, purpose, fairness and consensus – who could possibly be against any of this? Behind the narrative, he was taxing stealthily, targeting help on poorer areas and over time vastly increasing public spending. Only after the policies were implemented did he put the case for them; look in vain for arguments about increases in spending in 1997.
By 2005, Brown was retrospectively hailing increases that he did not argue for in advance. Working on the assumption that the British media would not report such arguments fairly, he adopted words and phrases that the Tory-supporting newspapers could not oppose. Crucially, he did not put the case for the 2002 tax increases during the 2001 election. It is true that he refused to rule out National Insurance increases – resisting pressure from some timid Blairites to do so – but that was as far as he went. Similarly, the decision to increase taxes on high earners was made only after the 2005 election. During that campaign, which culminated in Labour’s third victory, he pledged not to increase income-tax rates.
The tax factor
The new Labour leader and shadow chancellor will face challenges similar to those that Brown confronted in 1992, and while it has become orthodox to cast the former PM as a disaster, the next Labour generation can learn much from him – especially his days in opposition. Consider that, for newspaper support, Labour can rely only on the Daily Mirror: hostility towards the party is similar to that of the early 1990s. Consider, too, the media consensus that any move to the left of David Cameron is a lurch back to the vote-losing ways of the 1980s. The papers are not as influential as they were, but their power to shape opinion remains significant.
Meanwhile, the new leader will face a coalition that has a political strategy as much as an economic one. Cameron and Osborne hope to propose tax cuts at the next election. They note that Margaret Thatcher won landslides, with little over 40 per cent of the vote, using a tax-cutting strategy. They might not be in a position to make such a move, but what if they are?
During the contest, most of the leadership candidates put the argument for higher taxes rather than spending cuts. There is a strong case for such a balance. But can Labour win an election on such a basis, and without the support of most newspapers? The question that Brown had no choice but to address in 1992 is back.
Steve Richards’s book “Whatever It Takes” is published by Fourth Estate (£14.99). His series “The Brown Years” is running for another two Tuesdays at 9am on BBC Radio 4
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