Steve Richards: To dream or to despair? Labour just can't decide

A whiff of excitement punctuates the otherwise depressed mood of conference
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This is the strangest Labour conference for decades. In the past there have been triumphant gatherings. There have also been bloody ones. The conference in Manchester defies such easy definition. It is grimly subdued and yet excited. There are displays of loyalty to Gordon Brown inside the hall, while his future is the main talking point outside.

The dual context for the elusive ambiguity is the global economic crisis and the party's abysmal poll ratings, so low that they eat away at the confidence of the leader and, in different ways, of just about every other Labour figure, all of them wondering what will happen next.

For now the convulsions in the financial markets overwhelm other considerations. In time they will transform the landscape of British politics in the way that the collapse of 1970s style corporatism paved the way for Margaret Thatcher. But already there are political consequences which make this week feel different from the last.

Most immediately the crisis gives Brown a mission, a sense of purpose that his leadership has lacked entirely over the last year. As a result, in interviews he has appeared authoritative and a little more relaxed. After the attacks on September 11 Tony Blair declared that the world had changed and for a time his authority soared. Perhaps with a conscious echo in his speech today Brown will declare that the world has changed once more. He dares to hope that his authority will also rise from the depths of his current unpopularity as he plays the role of the global statesman, the figure who is qualified to steer a steady course.

It has been said many times over in the last few days that the crisis might have saved Brown's job at least for the short term. Even without the crisis I sense it is quite possible that he would have carried on this autumn. One senior minister, who is no fan of Brown and who believes the party will be slaughtered at the next election unless there is a change, tells me that talk of a cabinet deputation calling on him to go is a fantasy and always has been. He suggests that there is little or no conversation between cabinet ministers about a ministerial act of regicide. I believe him.

Cabinet ministers confide in journalists, almost as a form of therapy. They do not do too much confiding in each other. The same applied to the fall of Margaret Thatcher. It was only after the first round of a leadership contest that, separately, many cabinet ministers told her that she had to go. There was no conspiracy in advance of that even though some in her cabinet had concluded she was going bonkers.

The economic background, while giving Brown some space, also explains the whiff of excitement that punctuates the otherwise depressed mood of the conference. The striking, irrefutable evidence of market failure has emboldened some ministers, Brown included, to talk in ways they have never dared to do in the past. This is one of the reasons why this conference is so peculiar. Here they are in a political nightmare and yet on one level they feel their time has come. Consider the language of Brown himself.

Until this weekend he could not bear talking about the nationalisation of Northern Rock. Instead he spoke gingerly and rarely about a temporary public ownership. Now he declares with some relish that while the government was right to nationalise Northern Rock the Tories were wrong to oppose it. If anyone had told him even a year ago that he would be erecting one of his famous dividing lines over the issue of nationalisation he would have collapsed on the spot. In the changed economic context he chooses to do so.

Other ministers are more daring. They are like prisoners emerging from the darkness of extreme caution, sensing that they can hide behind the protective clothing of a suddenly highly active right-wing republican administration in the US, to put the case for government as a benevolent force.

Politically as well as practically they are still feeling their way through epoch-changing times. Alistair Darling is worried by the tone of some ministers and stressed in his speech yesterday that the government was in favour of "effective" regulation rather than heavy-handed measures. Always neurotically alert to the dangers as well as to the opportunities of any political situation, Brown stresses persistently that Labour is pro-markets and pro-business. Yet on the whole ministers detect possibilities in the new economic situation.

In the short term I am not sure they are right. "Our time has come" can hardly be the slogan for a party that has been in power for more than a decade. Politics will still be viewed through the pre-credit crunch prism for a little longer. There is always a time lag between seismic economic shifts and political change. The prospect of cuts in living standards is not neccesarily a route to survival for a government.

There will be no tax increases before the election, but a fear of them could also be politically damaging. This makes the broader political situation as weird as the mood of the conference. Soaring in the polls, the Conservatives face an economic situation which challenges some of their deeply held assumptions. Slumping in the polls, the centre-left claims vindication as the era of lightly regulated free markets comes to a close.

If the polls are still ghastly for Brown in the coming months it goes without saying that he remains vulnerable. Any leader with such dire ratings cannot be safe. There is a wider feeling here in Manchester of power slipping away from Labour. Fewer are attending the conference than usual. I suspect that more will be in Birmingham for the Conservatives next week.

In some ways the mood was symbolised by an event outside the conference hall on Sunday when Alastair Campbell and John Prescott joined others launching a new campaign for a fourth term. They were upbeat, good-humoured and positive, yet a few years ago they were mighty figures at the heart of a landslide government. Now they are outside a fragile government urging others to unite and fight, a robust message framed in a dark context.

No one knows for sure what will happen in the coming months, but I sense that the Cabinet will not move against Brown this year unless he falters badly, which of course is possible. I doubt if a Labour defeat at the Glenrothes by-election will be a trigger for a cabinet revolt. The contest has been written off already. The public mutineers will stir, but they still might not be strong enough to remove their leader. I sense that the key period is moving forward to the European elections next June.

Like Hamlet, the senior ministerial doubters can find always agonising reasons to delay rather than wield the dagger. In my view their reasons for delay in the autumnal whirlwind are sound, at least for now. Shakespeare's play is a long one. This drama has several acts left.

s.richards@independent.co.uk

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