How could anyone accuse me of disloyalty to my leaders?

In a democratic party, debate is essential if the Government is to get things right
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The Independent Culture
LET'S START by being positive. David Aaronovitch's column last week, "Let Ken Livingstone stand - the better to see him defeated", is absolutely right on the central issue that it must be left to London Labour Party members to choose Labour's candidate for mayor. David may overstate the case when he says that the new office of mayor may fail if the election is seen to be rigged, but I have no doubt that, at the very least, the Liberal and Tory candidates would hang the issue around our necks so effectively that Labour would lose the election.

However, David's central charge is that my criticisms of the Government's policies constitute a pattern of disloyalty. On the contrary, my commitment to taking a consistent line in the interests of the people I represent is my first duty both to them and to my party.

David claims that, with the exception of my support for the intervention in the Balkans, I rarely commend Government strategy. This overlooks my support for the Government over Tony Blair and Mo Mowlam's handling of the Irish peace process, and a host of other issues. I have supported the Government in 99 per cent of my votes cast in Parliament.

Tony Blair's Government does indeed have the potential to be a great reforming government on a par with those of 1906 and 1945. Like many Labour MPs, I believe that we should have increased public spending earlier, and set the minimum wage higher than we did, but these are matters of timing and degree. In a democratic party, that debate is essential if the Government is to get it right. Following the European elections it is now vital.

Criticism of Chris Woodhead's undermining of morale in the classroom or the cut in lone parent benefit were a warning about the scale of the disillusion of many long-standing Labour voters, a disillusion that was starkly revealed when Labour's vote at the Euro elections collapsed to its lowest percentage since the 1920s.

Labour wins elections, as it did in 1945, 1966 and 1997, when we mobilise the support of middle England as well as Labour's traditional vote. Labour loses, as we did in 1970 and 1979, when our traditional voters stay at home, or worse, defect. I intend to do all I can to make sure that Labour does not repeat the mistake that cost us office in 1970 and 1979, so that we win the next election.

In these circumstances, the question of how Labour selects its candidates becomes critical. In Tribune in February 1998, I asked: "Why has the system of One Member One Vote, which was massively backed by commentators and politicians alike, been quietly dropped by the Labour Party, with barely a murmur from the very people who so strongly supported it?" I was referring to decision to select our candidates for the Euro elections without any say for the members in the ranking or choice of candidates, which has now emerged as a serious mistake. All over the country, Labour MPs reported members who simply felt little interest in canvassing or supporting candidates who were imposed on them by the NEC. Similarly, the decision to refuse a one member one vote ballot led to our disastrous result in Wales. It is right to draw attention to these matters.

David's most substantial complaint is that I warned that unless Gordon Brown's first budget massively increased taxes we would face "a financial crisis" because of the huge deficit we inherited from the Tories. In fact, while avoiding any increase in income tax rates, Gordon Brown did precisely that, with massive tax increases that effectively ended the Tories' policy of deficit financing.

While Gordon Brown was saying that there would be no impact on the British economy following the collapse of the South East Asian economies, I warned that the world faced its worst recession since the 1930s and called for the scrapping of the standard economic orthodoxy of the IMF and individual national central banks. As the South East Asian economies sunk into recession, Britain, the US and the IMF carried on advocating the discredited orthodoxies of the Thatcher-Reagan era: high interest rates, cutting budget deficits, liberalisation of capital flows and in many cases fixed exchange rates. This nonsense merely turned the South-east Asian crisis into a disaster.

Things changed when the Russian rouble collapsed and Long Term Capital Management, Wall Street's most intellectually prestigious hedge fund, lost $4 billion of its $4.7 billion capital. As President Clinton said, the world faced its most serious financial crisis since the 1930s. Faced with a repeat of the Great Depression, the US Federal Reserve, the Japanese central bank and the European central bank embarked on strongly expansionary policies, with a virtual orgy of monetary loosening. This classic Keynesian response was taken up by South Korea, Thailand, China and India.

Without anyone admitting it, twenty years of monetarist economics was dumped as governments and central banks successfully boosted the global economy to avoid depression. I fail to see why I should have to apologise for calling it as I saw it, and as it turned out to be. In The Independent I warned that Britain's economy would come close to recession and maybe even tip over into an actual recession unless we saw a major cut in interest rates and improved public spending. In the end Britain avoided recession by a mere 0.3 per cent of GDP growth. Having increased interest rates too high to begin with, the MPC failed to cut them enough to avoid most of Britain slipping into recession. Only the buoyancy of London and the South-east kept the economy from a real recession.

It is not a contradiction to support Mo in when she is trying to implement the Good Friday Agreement in Ireland while also drawing attention to the fact that the Treasury is still far too wedded to an economic framework the rest of the world is leaving behind. Getting both policies right is important the Government's eventual success.

These are not academic issues. It is the Treasury's stubborn economic orthodoxy which is forcing John Prescott down the wildly unpopular road of raising pounds 7 billion to modernise the tube through a private finance initiative. This means Londoners will have to repay another pounds 8 billion in interest as well as the pounds 7 billion in capital investment. In effect - a pounds 1000 fine on every man, woman and child living in London. How could any London MP really represent their constituents - or their party - if they did not speak up?

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