There's a difference between meddling and muddling

THERE are some allegations about politicians to which the only reaction can be: is he really that stupid ?

Into this category falls the claim that Tony Blair last week lobbied his Italian counterpart on behalf of Rupert Murdoch's pounds 4bn attempt to buy the Berlusconi television empire.

Mr Blair's desire to keep on the right side of the owner of the Sun is well known. But to intervene so soon after Mr Murdoch's recent gracing of the front pages? That would display as much acumen as the BBC offering Messrs Hall and Shepherd a consultancy on Match Of The Day after the Newcastle fiasco.

"It was Prodi who called Blair," a Downing Street spokesman is said to have snarled, "the case falls at the first hurdle." And maybe it does. But about Tony Blair's hankerings to meddle in industry, the case is rather stronger.

From the moment he became Labour leader four years ago, he has courted businessmen, and understandably so. Nothing would help exorcise memories of bad Old Labour, and its kneejerk hostility to enterprise, than their support.

Successful industrialists also were by definition dynamic, and, increasingly, classless - the very image of Blair's New Britain. And it is an affair not just of the head, but of the heart, born perhaps of naivete, perhaps of the instinctive affinityof members of the high achievers club, perhaps even of the romantic notion that in mutual admiration's golden glow, all Britain's ills would vanish.

And feelings were reciprocated. New Labour's courtship of the City of London dispelled ancient fears. Business liked Mr Blair's pleasant certainty of tone, his conciliatory language on Europe. They liked him for his knack of combining the lucrative and the visionary, as in the pre-election promise of BT linking every classroom to the global information highway (in return for a relaxation of the current ban on BT's moving into conventional, entertainment television). Above all, it liked him becausehe looked a winner. But since May, Mr Blair's interest in industry has only grown. Indeed, he shows signs of wanting not just to encourage it, but to shape it.

At one level, the reasoning is impeccable. You may quarrel with his thesis that in the post-Cold War world, where the market is king, the most powerful men on the planet are not heads of governments, but the chairmen of multi- national corporations,

able to move their money and operations to where labour is cheapest and government most welcoming. But if that is the case, then a politician has little choice but to seek to win over these new emperors, and make sure that as many of them as possible owe their ultimate allegiance to Britain.

That philosophy was most visible in the recent SmithKline-Beecham/Glaxo affair.

There is little doubt that Downing Street encouraged the proposed merger, in the belief that if SKB carried out an earlier plan to link with a US competitor, it would be lost to America. Far better to endow Britain with a mighty drugs company that would dwarf its international competitors, Sir Richard Sykes of Glaxo contended. And not surprisingly, Mr Blair agreed. Good for Labour, he must have thought, and good for the country.

Of course, none of this is exactly new.

Thirty years ago, another Labour Prime Minister was vowing to modernise Britain. Back in those days the catchphrase wasn't "globalisation" but "the white heat of the technological revolution." Its author, Harold Wilson, was no less smitten with businessmen than Tony Blair; he backed to the hilt Arnold Weinstock's efforts to fuse English Electric, AEI, and General Electric into a single company that would give Britain a seat at the top table of the world's electrical industry.

A press baron was around too: Cecil King, who as proprietor of the most important British tabloid of the day had to be kept on board (though in the end he jumped ship spectacularly). Thanks to globalisation, King's counterpart today comes from Australia, and carries a US passport (and may one day jump ship too).

But is it necessarily good for Labour, let alone Britain? The spectacle of politicians cosying up to businessmen raises three separate problems.

The first is that malign intersect of fundraising and influence-buying: Bernie Ecclestone's pounds 1m donation to the Labour party "co-incided," as they say, with a notable change of Labour policy on tobacco advertising in Formula One. Then there isthe age-old pitfall of cronyism.

Governments are not elected to favour one company among many, nor to give a particular entrepreneur the inside track over his rivals. Their job is to create a benign and equal environment for all.

Let the public sector use the skills and experience of businessmen by all means, and this Government has done so more than most, but not if, for argument's sake, the presence of Martin Taylor of Barclays at the head of the tax-and-benefits task force were to see any future merger of Barclays and NatWest judged not on its merits, but on the man.

And finally, even in this era of globalisation and the single currency, size may not be everything.

Mr Blair may think so. But perhaps not his Chancellor, and certainly not Mrs Margaret Beckett, the President of the Board of Trade, known in the City as 'Mrs Block-It' for her habit of referring every deal in sight to the Monopolies and Mergers Commission.

She believes that competition, at least as much as the huge economies of scale generated by oligopolistic mega-corporations, produces the best deal for consumers.

The argument is open. It could yet contain the seeds of ruinous internal strife for Labour if its industrial policy goes wrong.

But there is one consolation. Tony Blair the deal maker is not so hot. Indeed, if he'd been head of the mergers and acquisitions department of a bank, rather than a Government, he would have been out on his neck by now.

Labour had to give back Bernie Ecclestone his pounds 1m. BT's promise of the Internet in every classroom has not come to pass.

The merger of SmithKline and Glaxo fell through, and Rupert Murdoch isn't going to buy an Italian TV network.

If this really was the Bank of Great Britain PLC, and Tony Blair its Chief Executive, he would long since have picked up his golden severance cheque.

- Rupert Cornwell