Election 1997: Labour shaken after bumpy ride by air traffic control

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When Margaret Thatcher sat down after speaking to 300 Conservative candidates a week ago, a curious act of political faith took place. The meeting, held in private at Conservative Central Office, transformed itself into a mock 1922 committee - the weekly gathering of Conservative MPs in the Commons. Sir Marcus Fox, chairman of the 1922, turned to the Chief Whip, Alastair Goodlad, and asked him to outline the parliamentary business for the first week of a new Conservative government. He did so to the banging of fists on desks.

Far-fetched perhaps, but last week the Tories suddenly began to believe that their vision of a fifth term might be something short of pure fantasy. They hadwon much of the Westminster press conference war; despite two days of sleaze and one of Tory Euro-splits, the heat was on Labour. The talk was of a "wobbly week". Whether the public changed its mind to any significant degree is, of course, entirely another matter.

The root of Labour's discomfort lay in its audacious media "spinning". The trouble began last weekend when Tony Blair's office briefed two Conservative- leaning newspapers, the Sunday Times and the Sunday Telegraph, about a forthcoming Blair speech, and the party's plans to sell off surplus government land and buildings. The idea was to reassure Tory voters that Labour was safe on the economy; the result raised privatisation as the key issue of the week - the Sunday Telegraph's headline claiming that Mr Blair now wanted to privatise "everything".

The Labour leader's words, when delivered, turned out to be far less dramatic, but because of the news coverage, the media's attention was drawn to a Labour weak spot - the sale of air traffic control. In itself, this was a fairly piffling issue but one which Labour had opposed at its 1996 party conference. Now, since Labour had accepted Tory spending plans into which this sale was factored, the sell-off would be considered.

Last Wednesday morning the Conservatives made hay with a letter, sent by a Labour junior transport spokesman to union officials, which had spent two months mouldering on a noticeboard at Heathrow airport. They produced it as evidence of Labour's opposition to privatising air traffic control. The next day another letter was produced as evidence, then a third. Mr Blair retreated, arguing that the air traffic sell-off was simply a plan inherited from the Tories. The damage, however, had been done. As one Labour apparatchik conceded: "At one point The World at One was spending 20 minutes on a misinterpreted conversation between a union official and a junior researcher to one of the party's junior spokesmen."

There was trouble too on other fronts, including the windfall tax. The Financial Times reported a division of opinion between the Blair office and the Brown office over the scope of Labour's proposed one-off tax on the privatised utilities. This has yet to be agreed but, broadly speaking Mr Brown wants to net a larger number of firms - British Telecommunications, British Airways and the airports group BAA - than Mr Blair, who would prefer to restrict the number to the gas, electricity and water companies which made the term "fat cat" famous. As one insider put it: "It's electricity, gas and water - the pigs in the trough - versus British flagship companies doing global deals and becoming big transatlantic players. This was closed down by Mr Blair saying publicly that the decision would be made by the Chancellor in government.

Unfortunately for Labour all this coincided with a MORI poll, now thought to be a rogue, with a 12-point drop in Labour's lead. But did this all amount to a wobbly Thursday in which strategy was re-orientated?

Rumours circulated of crisis meetings at Labour's Millbank Tower, with the phones being taken off the hook, only to be smartly denied. In fact on Thursday the two regular strategy meetings, at 11am and 3pm, were attended among others by Peter Mandelson, the campaign director, David Hill, the chief press spokesman, Tim Allan, one of Mr Blair's press spokesmen, and Ed Balls, Mr Brown's economic adviser. Mr Brown was in Manchester but participated by telephone. Strategy was, indeed, reviewed but Labour had some successes last week, notably on the increase in the tax burden under the Tories, identified by the Institute of Fiscal Studies. Stories favourable to Labour led all but one of the early evening news bulletins during the week.

There is no evidence of any panic decisions or big rows; that would be unlikely, knowing the individuals. As one Labour source put it: "It's not a question of clashing between Prescott, Brown and Mandelson - the problem between them is one of silence." But there has been a more thorough- going strategy re-think, one which started earlier in the week. The conclusion was that the Tories had been allowed to dominate too much of the agenda, that Labour had not been successful enough in presenting the dangers of the fifth Tory term or in attacking the Government. There was, for example, concern that Wednesday's Newsnight had more examples of election literature from Tory candidates critical of the single currency, than Labour had. When John Redwood's literature popped up to embarrass the Tories yesterday, the source was the Liberal Democrats and not Labour.

Conservative weak points have not been highlighted. They include the contradiction of Conservative claims that the economy is "booming" - after years of cautioning against boom-bust economics. Mr Brown's reassurance on tax and spend is, so the argument goes, important but it is also defensive. One source said: "We've got to broaden the attack." Key Labour areas such as health and education have barely figured in the campaign; as one Labour MP put it: "At some stage we have to shift ground. We are four weeks into an election and health has not been mentioned. In 1992 you couldn't get away from health."

That relatively small issues can unravel has alarmed Labour's strategists and boosted Tory morale. But before the Conservative candidates break open the champagne they would be wise to remember that their party remains firmly on a losing trajectory. Labour MPs on the doorstep report a good reception with little evidence that voters are changing their minds. As yet there is no consistent evidence that Labour's massive poll lead is being eroded at more than two points a week - though at least one weekend poll will hearten the Tories. Europe returned to haunt the Tories on the single currency and there is no sign of a big event to turn the election tide the Tories' way. If this continues for another week or so, the reality of a Labour landslide may put more pressure on the Conservatives as fears of a meltdown test their loyalty. In the meantime much of the minutiae of the press conference circuit washes over an electorate somewhat less than dazzled by the election. Debate is, as one Labour source put it, subsumed in a fog of charge and rebuttal.

"And," as the source went on, "every day of fog is another good day for Labour, because that's another day passing without people changing their votes."