SAFETY FIRST?

New Statesman & Society, 9 June 1995

Contrary to chancellor Kenneth Clarke's claims, there's a world of difference between the Tories and Labour on the big issues of economic policy, shadow chancellor Gordon Brown tells Paul Anderson

Shadow chancellor Cordon Brown is in a happy, bullish mood  – and that, for him, is unusual, at least if you believe the Fleet Street con­sensus. Brown attracts the whole gamut of disapproving adjectives from journal­ists: glum, cagey, humourless, dour, cau­tious, workaholic to the point of driving his staff nuts. He talks in soundbites, they say. He doesn't make jokes. Worst of all, he never mentions his personal life.

A couple of years ago, the caricature seemed cruel but almost apposite. I inter­viewed Brown at length just before Christmas 1992, after the debacle of Britain's withdrawal from the exchange rate mechanism of the European Mone­tary System. Then, he came across as a man besieged in a bunker  – and in many ways he was. Labour's Eurosceptic ten­dency, led by Bryan Gould, had revolted publicly over his backing for British membership of the ERM and his refusal to endorse devaluation: three months after the event and six months into his occupancy of the shadow chancellorship, he still had to be pressed to admit that, if Labour had been elected the previous spring, the new government would have devalued the pound as soon as it took office (albeit within the ERM). Brown wasn't exactly downcast, but he was any­thing but relaxed. If he knew what he wanted, he also knew that it would be a long, friendless struggle to get it  – and he was right. The next year saw Brown sub­jected to near constant attackfrom the left and the unions. In autumn 1993, he just scraped on to Labour's National Execu­tive Committee.

Now, however, as he leans back in his chair in his Westminster office, Brown seems a lot less anxious. He still talks in soundbites  – there's no other politician in Britain today who comes up so consis­tently in conversation with the phrases he uses in his speeches  – but the joins don't show as they once did. He is still just as serious, and he is still just as careful. But he smiles at awkward questions and shrugs off criticism. Gordon Brown, although he'd never admit it publicly, is a man who thinks his time has come.

It's easy to see why. After the trials and tribulations of his first two years as shadow chancellor, things at long last seem to be going his way. Labour is not only well ahead in the opinion polls but has overtaken the Tories in ratings for economic competence. Brown's populist crusade against the excess pay and perks of privatised utility bosses has struck a chord with both his party and the public at large. And, particularly since Tony Blair's victory on Clause Four, left-wing critics of the leadership line on economic policy seem to have melted away. The only people to have had a go at Brown's string of policy speeches in the past few weeks have been newspaper columnists.

"The principal reason for our defeat in 1992 was our failure to convince people on economic policy," says Brown. "No matter what the truth was, we were seen by the public as the party that would tax for its own sake and spend wastefully, we were caricatured as the party that would take the soft option on devaluation and give in to special interests. Since then, we've pursued a strategy that hasn't made me popular with some people at some times. But it's now the Conservatives who are seen as the party that has taxed unfairly and spent wastefully and ineffi­ciently, on unemployment in particular, the party that has devalued and has repre­sented special interests, particularly with the privatised utilities. Labour is now seen as speaking for the public, as the party of economic competence as well as social justice. We've got a clear analysis of the economy, clear prescriptions. They are different from what we were saying 16 years ago. But the world has changed."

There are those who believe that Brown has taken more from the Tories than their reputation for competence, and that the differences between the two parties on the broad questions of policy are now minimal. If his critics in the Labour Party have been quiet of late, their worries were given voice by Chancellor Kenneth Clarke the week before last, when he declared: "I must be the first Chancellor
who has a shadow chancellor who is not criticising what I am doing. Gordon Brown's problem is he thinks what I am doing is working. He has not for some for time opposed anything I have done."  

Brown is contemptuous of the accusation that he has adopted the Tory approach. "We start from a wholly differ­ent analysis from the Conservatives' of what is wrong with the British economy. We believe that it simply doesn't have the capacity to sustain the levels of growth, of living standards, of public services that we want. That's a product of 16 years of a government with a wholly wrong philos­ophy. If the Tories take on our agenda, it's a recognition that the political argument is moving in our direction. But for them to become believers in intervention for industry, skills, training and education will make them look like tourists in a for­eign country with a phrasebook they don't properly understand."

Labour's promise to be "tough on infla­tion, tough on the causes of inflation" does not indicate an acceptance of the Tories' priorities, he insists. "We've got an understanding of the causes of infla­tion and they haven't. The cause of infla­tion is the same as the cause of high levels of unemployment: the limited capacity of the economy. Every time the economy expands, it runs into skills shortages and technology bottlenecks, and the result is inflationary pressures. Labour will be tougher on the causes of inflation than the Conservatives because we under­stand its causes. And it's right that we should be tough. The war against infla­tion is a Labour war. It affects pensioners and those with savings, it damages investment and therefore jobs. The idea that Labour should be less tough on infla­tion is wrong."

Similarly, "the Labour Party is not the party of devaluation: the Conservative Party is. The value of the pound against the Deutschmark has halved since 1979. Britain had to devalue in 1992 because of the Tories' failure. Labour is not the party of the soft option."

This stance is underlined by the com­mitments in the draft of Labour's new macro-economic policy document, A New Economic Future for Britain, which goes to the party's National Policy Com­mission this weekend and, suitably amended, will then be adopted by the Labour conference in the autumn. It states that "Labour's economic objective is to deliver the highest possible level of sustainable growth consistent with low and stable inflation", promising "an inflation target alongside a medium-term target for the trend rate of economic growth". Labour will "eschew short-term, quick-fix, tax-spend-and-borrow solutions": in particular, it will not bor­row to finance consumption and will "keep the ratio of government debt to gross domestic product stable at an appropriate and prudent level".

Brown insists that this does not mean business as usual. The policy document includes the objective of meeting "the 1944 white paper commitment to achieve high and stable levels of employment", he points out, and he is certain that a mixture of supply-side measures to encourage employment growth and a new emphasis on the long term in eco­nomic policy will deliver the goods. The document also explicitly backs moves towards European monetary union.

Brown won't be drawn on the timetable for EMU  – "We've got to wait and see how things develop"  – and rehearses Labour's familiar insistence on tougher pre-EMU convergence criteria and greater political accountability for the European central bank, but he is unashamedly enthusiastic about Europe: "The idea that Britain should distance itself from Europe is simply not credible. We ought to be leaders in Europe." He points proudly to the proposal in the new document for the creation of a "new Euro­pean growth fund that would be explicitly countercyclical, that could run with a sur­plus during a period of recovery and run in deficit if necessary in a recession". If Keynesianism in one country is no longer feasible, it seems that there is still room for it on a continental level.

What's missing in all this, of course, is the detailed tax, spending and borrowing plans that Labour will put before the voters at the next election. The sort of budget measures Labour would intro­duce are familiar from the party's sugges­tions at budget time in the past couple of years: bigger tax breaks for investment and more spending on education and training, paid for by tightening up on tax evasion and introducing a windfall tax on privatised utility profits. But, aware of the problems Labour faced in 1992, when it fought an election in the middle of a recession on policies decided at the height of a boom, Brown won't even promise that his budget proposals from 1994 will find their way into the manifesto.

"It would be irresponsible to make promises two years before an election when we don't know what the economic circumstances will be at the time," he says bluntly." I assure you that we are not going to hide what we're planning to do. But we will make our decisions on spend­ing and taxation and so on at the appropri­ate time." If Brown has reason to be pleased with the way things have turned out so far, it's impossible to avoid the con­clusion that the most difficult part is still to come.