Ten years on, the Labour Party is finally ready to go back to the future

Ideologically, New Labour is not so far on tax and spending, after a decade, from where it was it was back in 1992, when the election was lost
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It isn't exactly celebration material. There won't be a Festival Hall bash, or a Billy Bragg concert. Or, perish the thought, a revival of Absence of War, David Hare's cruelly recognisable lament for the state of contemporary politics, in which the late John Thaw played a Labour leader with marked resemblances to the job's incumbent at the time. New Labour won't be marking the anniversary, having burnt out of its system, as far as it can, the profoundly painful memory of its last election defeat, exactly 10 years ago today.

And yet perhaps it should. Electoral defeats matter to a party's history, as military ones do to a country's. It was, moreover, the darkness before Labour's dawn. A mere two months after the election, and with a new leader in John Smith, Labour was ahead in the polls again, and did not fall behind again for eight years.

But there are more instructive reasons, rooted firmly in the present and immediate future, for Labour to commemorate that deeply traumatic event on 9 April 1992. The first, of course, is the man who led the party then (until he stood down 10 years ago this Saturday) and during the earlier years when the long march to Labour's modernisation was over much rougher ground that it was to travel later. The first, and most easily forgotten, change Neil Kinnock introduced, powerfully symbolic of his commitment to reconnect the party to the social and political realities of the time, was to reverse the policy of withdrawal from the European Community on which Labour had fought the 1983 election. He did it single-handedly and he did it in the first year of his leadership.

But he managed the change on Europe, like those on defence, public ownership and democratisation of the party which were to come later, against much deeper opposition on the traditional left than Tony Blair would have to confront when he continued the process.

It's a curious tribute to the man how often the Kinnock yardstick is applied to the modern Tory party, including by the Tories who once reviled him. Can its leaders put Conservatism back on the road to electability, as he did with Labour? Not yet, it seems, whatever Ken Clarke says about Iain Duncan Smith.

All this is well known. As is the fact that Mr Kinnock has been an exemplary ex-leader, as he toils in the vital but unglamorous task of reforming the European Commission against the entrenched opposition of – among others – the more pig-headed of the unions representing its 20,000 staff. He holds views which differ from the present leadership – he is pro-electoral reform, and strongly in favour of a health tax, for example – but he doesn't make trouble. They won and he didn't. Therefore they are entitled to loyalty and respect.

But there is something much bigger than these reasons of sentiment for thinking about 1992. Next week, Gordon Brown will introduce a hugely important, even epoch-making, Budget. Maybe the trails suggesting that the Chancellor needs to raise between £5bn and £10bn in taxes are simply a blind, so that we will all breathe a sigh of relief when he doesn't hit us at all. But it seems highly unlikely. There would be deep disappointment among those in the party who think, rightly, that they are needed for the public services – the NHS foremost among several. And it would be odd indeed, given that both Mr Brown and Mr Blair have been busily foreshadowing a turning point on tax for many months.

Ideologically, in other words, New Labour is not so far on tax and spending, after a decade, from where it was back in 1992, when the election is generally held to have been lost on what Michael Heseltine said were three issues: "tax, tax, and tax". This isn't meant to contradict the New Labour mantra that it is in better shape to do this than it was then; that its hard years, post-1997, of re-establishing economic credibility weren't necessary to make it electorally possible to raise taxes openly now. But it is to suggest that Neil Kinnock's – or if anything even more so his shadow Chancellor, John Smith's – aspirations for a more equalising tax system can't simply be written out of the script as an obsolete aberration. (And by extension that the Liberal Democrats have a point when they say that it's what they, unlike Labour, argued for in the last election.)

Even the much-canvassed methods of doing it have an eerie resonance from those years. In the end, Mr Brown may not do as Labour promised to do then and abolish the ceiling on national insurance. But there are signs that he has not been ruling it out in the Budget-making process. And it's a reasonable bet that he will at least raise the ceiling. It's ironic to think that it was precisely in this area that Labour suffered so much heartache in the run-up to the 1992 election, causing considerable tension between Mr Kinnock and Mr Smith.

Of course, the outcome of the 1992 election was a profound shock to the Labour system. As Tony Blair was the first to point out, Labour still didn't manage as high a share of the vote in 1992 as it had when Jim Callaghan was defeated by Margaret Thatcher in 1979. Secondly, John Major's majority was much smaller than it would have been if the electoral system had not been already skewed against the Tories.

That said, it would have required fewer than 4,000 electors in the dozen or so most marginal constituencies to change their minds for the Tories' overall majority to be turned into a hung parliament. Which means there is still an excuse for playing the seductive game of "what might have been". So much has been written about what Labour had to change after 1992, it is worth remembering what could, perhaps, have reasonably stayed the same had it won. To take one random example, it would have introduced state funding for political parties, avoiding a good deal of the furore over funding that has afflicted the Blair government. To take another, Labour would have taken office, not committed to reversing Mr Major's EMU opt-out at Maastricht but firmly committed to taking a decision without a referendum. It is reasonable to speculate that a government led by the now strongly pro-euro Neil Kinnock – or by John Smith – would have found it significantly easier to join the single currency than the Blair one – so far – has.

The other cause for Labour regret, of course, is what it had to handle coming into office five years later. The railways would not have been privatised; and maybe, just maybe, there wouldn't have been the deficit Gordon Brown had to contend with when he became Chancellor, thus helping to ensure that it would take even longer (as he would argue) to start rebuilding the public services. Of course, this game is pretty pointless. And of course there were several things – such as the annual economic assessment by the unions, business and the government – which would sit uneasily with a post-corporatist Blair administration. But after 10 long years, direct taxation, at least, is no longer as taboo as it was then. Neil Kinnock would be pardoned for reflecting wryly next week that in an important sense, Labour is travelling back to the future.

d.macintyre@independent.co.uk

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