Stand by for big spending on transport
Published 03 April 2000
How big a majority will Labour win at the next election? Everybody, with the possible exception of William Hague, assumes that Tony Blair will still be Prime Minister once the votes have been cast. The scale of his win is not quite so certain. Some psephologists predict another landslide. Others are earning a small fortune writing articles on how the election could be much closer. One such article appeared in the New Statesman recently, although that writer will not have earned even a tiny fortune.
Because it won such a huge landslide in 1997, Labour knows that, next time, even what would normally be regarded as a pretty stunning result could look puny. There are two very different ways, for example, of viewing an overall majority of around 80.
Such an outcome next May or June could be seen, with some justification, as a triumph. What a contrast to the 1970s, when Harold Wilson toiled with a minority government and Jim Callaghan struggled with a majority that soon became a minority. Hail the "historic" second term. But a quite different interpretation is possible. With 80, Labour's majority would have been cut by more than half. The Conservatives, having been virtually wiped out in 1997, would have performed creditably. William Hague could take a bow.
In my view, the second interpretation would prevail. Politics is all about mood and momentum and a greatly reduced majority would not be seen as an ideal springboard for a more radical second term. This would not necessarily be the initial verdict in the media, which tends to fawn over victorious parties in the immediate aftermath of an election. But it would be the instinctive reaction in Downing Street itself. With a majority of 180, the government's leading figures have often behaved as if they were on the verge of defeat. A majority below three figures would send some of them into a bout of despair.
I raise the question because there have been some premature celebrations about new dividing lines in British politics. Certainly, the political mood at Westminster has changed since the Budget. Even Roy Hattersley has written an article praising the government. Most of the government's "critical friends", with the exception of Peter Kilfoyle, were genuinely pleased with the Blair/Brown performance. Spending versus tax cuts seems to have become the new political battleground, and, for the first time in decades, spending is winning.
I doubt if the next election campaign will be anywhere near as clear-cut as this. Ever since the Budget, Brown has been highlighting his tax cuts as much as the new money on the NHS. If there is an appetite among voters, and in the media, for more tax cuts next March, and the level of the pound permits, Brown will deliver. Meanwhile, Michael Portillo has stressed the Conservatives' determination to match Labour's spending on the NHS and education (he mentioned it three times when he closed the Budget debate in the Commons). In other words, the election debate will focus on the much fuzzier area of which party is being more credible in claiming that spending can rise and taxes can fall.
Labour will win this debate, partly because, at this stage in a benevolent economic cycle, Brown has been able to increase spending and make some judicious tax cuts. As far as the government is concerned, the icing on the cake is the Conservatives' tax guarantee. Even ardent Thatcherite MPs regard it as a big mistake. One frontbencher pointed out to me that the right's great hero, Enoch Powell, argued during the recession in the early 1980s that taxes should go up. So even the great Enoch did not advocate tax reductions in all circumstances. In the next few months, Hague will face internal pressure to change this policy.
The pressure will increase this July when the government unveils its comprehensive spending review. Last week, I suggested that the Budget had stolen the spending review's thunder. I am now told that this is not the case, and an array of announcements will be made this summer, linking additional cash to policy reforms.
Transport, in particular, will benefit. Indeed, transport will be "the story" of the spending review in the same way as health grabbed the headlines after the Budget. The review is regarded with such significance in Downing Street that thinking on the election manifesto has been virtually put on hold. It will have huge implications anyway for the manifesto, as the spending announcements and policy changes will encompass the first two years of a second term.
Almost certainly, Hague will respond, as he did after the Budget, by supporting the spending increases. He will then enter an election having backed significantly higher public spending on health, education, transport, defence and the Home Office. Labour, while parading its spending commitments with much greater confidence than in 1997, will stress equally its support for tax cuts "for the many rather than the few". So both parties will march into the election as simultaneous tax-cutters and public spenders. The hard choices will be postponed until the votes have been counted.
Only if Labour wins by a three-figure majority will the dividing lines become clearer. Then a Tory civil war (oddly avoided after the last election) will begin over public spending, tax, the involvement of the private sector, and Europe. Blair could stride on, modernising the public sector and mustering the courage to hold a referendum on the euro.
We all know the winner of the next election, but it will be an exciting and important campaign. The size of Labour's next majority matters, not only for the government, but for the future direction of the Conservatives as well.
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