A clear song from the shadow chancellor

Gordon Brown's speech yesterday did much for Labour's economic credibility. Ken Clarke is doing the rest; He was funny, sharp and almost completely devoid of waffle
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The Independent Online
For Gordon Brown, the past 18 months have been dark and cold, overshadowed by the double blow of John Smith's death and his own agonising decision not to stand as a leadership contender. That was followed by a period when he seemed to lose his ability to communicate a stirring message, either to the party or to the country. He became bleak.

He suffered the indignity of national lampoon after using the phrase "endogenous growth theory". The mocking laughter wasn't confined to enemies; in the Labour family, too, he had come to be seen as a frozen politician, gagged by his own caution. Finally came rumours that he was no longer close to Tony Blair, for whom he had sacrificed so much. As Brown relentlessly hammered out the soundbite attacks on Tory tax rises, it seemed a harsh reward.

This is good material for drama, a story David Hare could use to pack the National Theatre. But there was always a lot more to Brown than tragic self-censorship. He was the man who knew that a single incautious sentence from him could blow apart Labour's hard-won respectability. He had been struggling to think his way through the central economic dilemma of all centre-left parties in our times, which is how to make a difference without frightening off tax-shy voters and the socialist-shy bond markets.

This is not easy. Plenty of clever people say it can't be done. Brown's first go, emphasising training and investment, and pointing out that if there was less unemployment there would be higher tax revenues, became a stuck record. It was true, but it skated over the huge gap of getting from a failing economy to a succeeding one. It seemed to rest on the proposition that, if he won office, he wouldn't be starting from here.

Now the old Gordon Brown is back. Something good has happened to this bull-like political obsessive. His speech sang. It was funny, sharp and almost completely devoid of waffle. And it contained at least some glimpses of light.

His proposed utility windfall tax may be unorthodox and a one-off, but its combination of monopolist losers and unemployed gainers will prove popular and gives Treasury ministers working on their Budget plans a headache. It has been generally hailed in the business world as a bad idea. Well, as bad ideas go, it seems rather a good one.

The suggested cut in VAT on fuel is shrewder still. It is politically cute because it gives Labour a credible response to the coming Tory challenge to vote for tax cuts or against them. From now on Brown can contrast unwholesome, divisive, greed-driven Tory tax cuts with virtuous, wholesome, fair-minded Labour ones. The argument between the parties is deftly switched from the hard question of being for or against tax cuts to the easier one of who should benefit.

Though the proposal depends upon the Conservatives declaring that there is room for cuts, and is relatively modest, amounting to pounds 480m, it is serious politics because it gives clear evidence of how a future Labour government would approach the issue of direct taxes as against consumer taxes.

It reasserts Labour's traditional belief in progressive taxation, without proposing new income-tax rates. There have always been environmental and economic arguments for VAT on fuel, but at least Labour has finally made it clear where it stands. We now know where Labour tax cuts would come, if they came.

Neither the VAT proposal nor the windfall tax, however, are answers to the wider dilemma of taxation and leftish politics with which Brown has been struggling. They are bold cavortings on the edges of the problem. They don't obliterate it.

No, Brown's escape from his years of political bondage are likelier to depend on the British politician who is currently doing more than any other, bar Tony Blair himself, to make the first years of a future Labour administration a resounding success. I refer, of course, to the Member for Rushcliffe, the Chancellor, Kenneth Clarke.

For if Labour wins the next election, it will inherit an economy which is in the short term growing stronger, not weaker. The rundown of industrial stocks, the likely downward pressure on interest rates and the impact on confidence of tax-cutting are among the reasons to look forward to good growth with rising but moderate inflation by 1997.

That would be a rare inheritance for Labour, placing Blair in a different position from his prime ministerial predecessors. The rule is that Labour governments are only allowed to take power when the economy is already in a bad way. It has been the party's historic duty to take the blame for previous splurging, while guilty men recuperate. Saddled with an unpromising situation, Labour has then tended to flounder about, making things worse.

Suppose, instead, a Blair government was able to enjoy the benefits of the low-inflationary growth which had been created by the Major government? For once, Labour would get the credit for other people's hard work. This would confirm Blair as a lucky politician. And it would make Gordon Brown a Labour chancellor who might be in a position to fulfil some, at least, of the spending commitments his party yearns for. After years as a talker, he would become a doer.

There are many assumptions built into this, the biggest of them being that Honest Ken won't succumb to political temptation and go for a Maudling- style loosening of policy over the next year. To do so would be dangerous, partly because of the damage it would cause to Major's reputation for straight dealing, and because of what it would do to interest rates. Much more likely are tax cuts. But, as we have seen, Labour might well survive that.

It is not possible for Brown, or anyone else in the Labour leadership, to admit quite what is happening, though senior party people talk about it privately. They can hardly laud a Conservative chancellor for making things easier for them should they win in the late Nineties - any more than they can admit they agree with him about monetary union and say they admire him for standing up to the Governor of the Bank of England on interest rates. But it's so.

And so irony piles on irony. The very same Tory tax rises that Gordon Brown has so savagely attacked are partly responsible for the reconstruction of the public finances which may yet help make his reputation. You have to laugh.

Even in a globalised economy ruled by free trade rules and bond markets, Labour chancellors won't behave in just the same way as Tory ones. Yesterday Gordon Brown showed himself different from any Conservative minister, in his instincts, his priorities, his dislikes.

But all are anti-inflationists and all are working under similar constraints. The difference in the behaviour of one chancellor and the next may depend as much on when in the cycle they inherit the job and therefore how much room they have for manoeuvre, as on the ideology they carry through the Treasury doors. By that test, Gordon Brown's luck is probably turning. It has been a long, cold wait.