Cleverness is not enough: In his debut, the Independent's new chief political commentator sees a dilemma for John Smith

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Can John Smith's Labour Party do what Neil Kinnock's couldn't? Has Mr Smith the passion and cunning needed to reverse the slither towards irrelevance? Despite the journalistic feeding- frenzy caused by Bryan Gould's coup de theatre, no other question really matters at Blackpool. If this conference fails to focus on an election unknown years away, rather than current dramas, it will be merely another staging-post in Labour's long decline.

To his critics, John Smith is the great play-safer of British politics, whose impeccably conservative exterior shrink-wraps an impeccably conservative mind. Labour happened to be the establishment in Scotland, so Mr Smith went Labour. Even left-wing carpers will add, lucky for Labour: last week he reminded Westminster what a ruthless debater he is. But many in the party are privately worried that Labour has its first leader with the wit of a lawyer and the soul of a banker.

Unsurprisingly, this is not how Mr Smith sees himself. Nor is it true. Labour is now led by a most unusual politician, who has it in him to startle and galvanise a wearily cynical electorate - but only if he learns to take risks with his public self and private personality. The next few days should demonstrate whether he can.

He certainly possesses a public self-confidence rare in the contemporary Labour Party. He knows, in the words used by John Buchan about the old Liberal Party, that Tories may be better born, but Labour folk are born better. Far from there being an element of cultural cringe, Mr Smith displays an effortless Scottish assumption of superiority - part, of course, of his success at the dispatch box.

But why does he want to stand there in the first place? Not, I think, primarily because of personal ambition or because, as Scots would say, he has a good conceit of himself. Mr Smith is moral. Talk with him one-to-one and you will come upon an uncomfortable intensity and sense of grievance about the lives and shrivelled expectations of the poor.

He is, as the more astute left- wingers privately acknowledge, the real thing. He said of himself recently: 'The roots of my politics lie in a socialist instinct in a Christian household. You have to start from a set of moral propositions of what is right, and that should be a light shining behind everything you do.' The only other senior politician I can think of who would use such unabashedly ethical language is Margaret Thatcher.

Mr Smith has come to the leadership at a time when the 'culture of contentment' (the phrase used by J K Galbraith to describe a smug, selfish political dominance of the top two-thirds) is being eroded by a recessionary counterculture of unease. Not the complacent property owner but the overmortgaged family raddled by anxiety. Not life on the gold card but the boring and penitent repayment of debt. Beyond that, as middle-class people spend more and more time discussing criminality and the decay of public standards, there is a general feeling that 'we didn't used to be like this' - a worry that when Mrs Thatcher promised to make Britain more American, she may have succeeded a little too well.

This may be merely a passing recessionary phase that will be replaced; with recovery comes Galbraith's contentment culture as bug-eyed and implacable as ever. Nor does such a mood change guarantee an easy time for the left: you can do various things to cheer up a debt-ridden and uneasy household, but increasing its taxes is not one of them. Still, there is a change in the national temper that, with skilful handling, Mr Smith is well placed to exploit. Social solidarity and planning for the long term is language that fits the sickening aftermath of an exhilarating boom. The best temperance campaigner is a hangover.

To exploit this unease with the principles as well as the products of Conservative rule, however, Mr Smith would have to lead Labour on the moral crusade Harold Wilson promised it in 1963 but so singularly failed to deliver. The trick would be to jump beyond mere cleverness. Can Mr Smith combine his clever pragmatism with a more interesting, riskier, crusading intensity? It is not clear that he can.

An early and ominous sign was the deep reluctance of the Smith camp to turn the post-electoral leadership contest into a real debate about Labour's future. Then came much briefing that the 1992 conference would not be enormously significant - better wait till '93 to see the real Smith regime emerge. If there is a pattern here, a too-eager readiness to put off for another day, then the thousands of Labour activists, not to say journalists, camped on the Lancashire coast will be wasting their time.

Nor will ritual Tory-bashing fill the gap. A week of Schadenfreude- on-sea is not what Labour needs. Some quiet gloating, by all means - but it should be reserved for recreational purposes and would be a poor substitute for the urgent and adult debate about its future Labour so desperately requires.

Such a debate must start with the issue that prompted the Gould walkout - Euronomics. It highlights perfectly the balance Mr Smith will need to strike between radicalism and pragmatism. The division between leadership and rebels is essentially one between monetarists and inflationists. Mr Smith and Mr Kinnock were so close to the establishment orthodoxy on European monetary policy - in it, indeed, up to the very tips of their glossy scalps - that they became barely distinguishable from the Treasury. As long as Norman Lamont sounded inflexible, so did Mr Smith. A de facto coalition of ideas existed. Now it is in retreat before an anti-establishment coalition of right-wing nationalists and Labour inflationists. Though Mr Major's policy was shredded, so, too, was much of Mr Smith's. His critics have pointed this out, with fraternal good nature.

From the Labour left, Ken Livingstone described him as a feeble practitioner of 'echo politics'. From the Labour right, Austin Mitchell denounced 'the great betrayal . . . of Euro-monetarism' and condemned the Smith leadership for producing 'a state of impotence unparalleled since the MacDonald government of 1931'.

Mr Smith is, of course, right to ignore the sirens. If inflation were the way out, silver Bentleys would be parked nose to tail round every housing estate in the land. Embracing a wrong economic policy now, breaking free of German- style rigour, would produce a roar of approval for Mr Smith the like of which he has probably never even fantasised about. From left and right he would be hailed as a man of action who had seized the decisive hour.

All of which would be romantic but wrong. It would split the party and, in the (relatively unlikely) event of a clear Labour victory following some early parliamentary crisis, would produce an isolationist, siege-mentality government that would come to be remembered as even more disastrous than MacDonald's.

None of that means, however, that Mr Smith can afford to be closely identified with the full Major orthodoxy on either Europe or economics. There are potentially popular ways of opposing failed policies that would not take Labour back to its failed nostrums of years ago. And Mr Smith is at least aware of them.

The most significant words he has uttered since becoming leader are 'social justice commission' - his proposed method of investigating ways of persuading the better- off two-thirds to pay more taxes to help the bottom third. The British hate income tax, which accounts for only some 24 per cent of the total tax take nowadays. But we have proved (when Mr Lamont funded poll-tax cuts with higher VAT) that we barely notice taxes on expenditure. This pleasing streak of navete in the national char-

acter offers Labour a fascinating opportunity.

Ingenuity on tax and other economic levers will sooner or later take Mr Smith up against Brussels - and the other urgent area for a rethink of policy. Labour's problem with Europe is that it spent so long asking an obsolete question - in or out? - that it never got round to discussing what sort of Europe it would be comfortable in.

The leading Europhiles always tended to come from the party's sophisticated establishment - men such as the Roys, Jenkins and Hattersley; Giles Radice; and, of course, John Smith. They fought the good fight against the siege- mentality economists and the patriotic prejudices of working-class MPs. But their thinking became as glossy and elitist as that of the self- congratulatory conferences and high-minded journals where the new European ruling class converses. The culmination of this process was the party's extraordinary refusal last week to contemplate a referendum on Maastricht.

There may be no easy answer to the democratic deficit, but it provides the only starting point for a new Labour policy on Europe. If the Council of Ministers is to be Europe's central forum, why should it meet secretly, like some furtive treaty negotiation? How can the role of national parliaments be bolstered? How can subsidiarity (which should appeal to Labour even more than the Tories) be established in law so that people understand it? There is a good populist case to be made on Europe that is neither xenophobic nor inflationary.

On both those areas of policy, and, of course, many lesser ones, Mr Smith has the chance to initiate great changes - but only so long as his party trusts him as a crusader, not a banker. We should be in no doubt: Labour is still in deep trouble, despite the collapse of the core policies of the Major government. It still needs to remake itself, starting now. This week matters to Labour, and to Mr Smith personally, a lot. Last week he showed us again how clever he is. Now he needs to move beyond cleverness.

If he can send a shiver of interest and surprise down our spines, a new ingredient will have been shaken into the already unstable brew of British politics. If he disappoints, he may disappoint for good.

(Photograph omitted)