Here we go again

The Tories will face prolonged embarrassment and questioning about their funders following the Derip

Can it really be the case that Peter Mandelson has finally turned his love of the high life to the political advantage of the Labour Party? As the shadow chancellor, George Osborne, struggles to extricate himself from the swirling allegations made by the scion of an international banking dynasty, involving party fundraising and a Russian aluminium oligarch, it is tempting to think so.

Lord Mandelson is like a political cluster bomb. Since he arrived back in Britain less than a month ago he has shown that he has lost none of his ability to attract the most explosive controversy. But his years in Brussels appear to have brought a new edge. With previous scandals, over his home loan from the then Labour paymaster general, Geoffrey Robinson, or his troubled relationship with the Indian billionaires the Hinduja brothers, he was content to bring only his own party into disrepute. This time his activities look set to drag in the opposition as well.

The label of “novice”, waved by Gordon Brown in his enemies’ direction at the Labour conference in Manchester, now weighs heavily around George Osborne’s neck. He is starting to discover that when you mix it in the big playground, the older boys can play rough. It is one thing picking off Gordon Brown when he is isolated; it is quite another when Big Brothers Mandelson, Alastair Campbell and John Prescott have turned up.

From the moment “sources” spilled the beans about a private conversation between Osborne and Mandelson at a dinner hosted in Corfu by the financier Nathaniel Rothschild, the shadow chancellor found himself in a potentially dangerous position. He chose to let the story run that Mandelson had “dripped poison” in his ear about Brown. This was a high-risk strategy – because, at this point, Osborne knew very well that while he himself was in Corfu he had taken the Tories’ chief fundraiser, Andrew Feldman, to meet the Russian aluminium tycoon Oleg Deripaska on board his yacht. Is it credible that Osborne took him along to make a social call to Deripaska? Of course it’s always possible.

This raises worrying questions about his judgement. Feldman now appears to be unclear as to whether a suggestion was made at any point that it might be possible for Deripaska to make a donation through a British company.

“What the public are entitled to know,” said Feldman, “is whether we accept donations and whether we explain to people exactly how to make a legal donation.” Osborne has failed to deny that such discussions took place, assserting only that no donation was solicited and none was given. At the time of writing there was no suggestion that the Conservative Party broke the rules in this case or that they intended to. Deripaska never made a donation. But it certainly attracts attention to donations that have been made to the Conservative Party during the David Cameron era, when the party has operated at the very fringes of what is permitted. Antony Barnett, of Channel 4’s Dispatches, recently revealed details of the cash the Tories had received from City hedge -fund managers who had profited from the economic crash, and asked whether Cameron was being entirely open with the British public about his party’s sources of funding.

There remain several outstanding questions in the light of the Deripaska affair. The Political Parties, Elections and Referendums Act 2000 was introduced to end foreign donations to British political parties. It is, therefore, perfectly legitimate to ask whether the Conservative Party is now following the spirit of the law in receiving these donations. How about the £50,000 donation from Venson Automotive Solutions Ltd, accepted on 20 September last year?

Venson is owned by the Irish businessman Dermot Desmond, also the single largest shareholder at Celtic Football Club, who is listed as worth $2.5bn by Forbes this year. Venson is a British company, so no rules have been broken. But as an Irishman, Desmond is a foreigner and his company made a donation to the Conservative Party. Is it a foreign donation? Strictly speaking, no it is not. Was this the model suggested to Deripaska? Who knows? As transparency in politics is something Cameron’s Conservatives are keen to promote, it would be interesting to clarify this. The Liberal Democrat leader Nick Clegg put it best when he said: “What does strike people is the slight whiff of hypocrisy about the Conservatives talking about the new politics, turning a new page, turning their back on the old ways of politics, and yet still going around, it’s alleged, with a begging bowl to the rich and famous around the world.”

In this case, how do they explain the donation of £50,000 from 22 January this year made by Australian mining magnate Robert Champion de Crespigny, or the £50,000 from the German Andreas Heeschen, who owns the firearms manufacturer Heckler & Koch, made in May 2007?

Again, the law has not been broken in either case. This is because both Heeschen and de Crespigny are on the UK electoral register. As such they are, strictly speaking, able to donate to British political parties. But would they describe themselves as British? All this money was brought in by Feldman, who has been a brilliant fundraiser for the Conservative Party.

Will the British public be persuaded by Mandelson’s assurances that Chinese walls were strictly respected during his own conversations with Deripaska when he was European trade commissioner? Helpfully, we have the testimony of Benjamin Wegg-Prosser, Mandelson’s former aide, who now works in Russia himself. Writing on his blog, Wegg-Prosser described a visit by the trade commissioner to his “dacha”, followed by a dinner with Deripaska. He reported fierce arguments over the World Trade Organisation and Russian tariffs on Finnish timber imports. “Their friendship was founded on these sort of jousts and arguments,” wrote Mandelson’s close political ally. Perhaps he thought he was being helpful, but this is precisely the sort of conversation the EU commissioner should have been avoiding. There is no obvious conflict of interest here, but some would argue that an EU commissioner should never have put himself in this potentially compromising position.

There is genuine delight on the Labour benches at Osborne’s embarrassment at the hands of his old university friend Rothschild. But when the dust settles over the claim and counterclaim surrounding the events in Corfu last summer, the Labour Party will have to assess whether it really has fallen in love with Mandelson, as Tony Blair once suggested it must. He has certainly brought a vibrancy to the government. But it is a difficult call for Brown, who would never be seen on the yacht of a Russian oligarch. In his Presbyterian universe, such behaviour is best left to the Tories.

Back in Westminster, the Prime Minister should be pleased at the way his party has rallied behind him at this time of crisis. One backbencher previously hostile to Brown said: “Gordon looks 20 years younger and has been really commanding in the House. He is a different man.” Cabinet ministers are talking enthusiastically about the National Economic Council, the group of 19 ministers and civil servants set up to tackle the economic crisis.

At first ridiculed for its unwieldy size, the NEC, which meets twice a week, is now being hailed as one of the Prime Minister’s most important innovations. In particular, ministers are said to be delighted that their proposals are being acted on by civil servants within days rather than months. Already proposals on increasing the speed at which small businesses will be paid have emerged from the Council’s deliberations. Ministers have been instructed to work on contingency plans in their own areas and further announcements on housing, regeneration and training will be made in the next few weeks.

It is also significant that Dan Corry has been moved to lead the group of specialist advisers to the committee from his previous job as head of the Downing Street policy unit. Corry, a special adviser from the Blair era with a Treasury and DTI background, is widely respected across Whitehall and is seen as a non-sectarian figure.

The polling remains dismal for Labour, though. The government’s electoral recovery is slipping despite admiration for Brown’s handling of the crisis within the Westminster village. The latest Guardian/ICM poll had the Conservatives on 42 per cent and Labour on 30 – a 12-point gap, which remains unchanged from the same poll a month ago.

As we move towards this winter’s pre-Budget report, the thoughts of Labour backbenchers will turn once more to the package the Chancellor has prepared to compensate their constituents for the abolition of the 10p tax rate and measures to protect people against the ravages of the credit crunch. As the rebel MP Frank Field has noted, there is plenty of scope for critics of the Prime Minister to regroup if the measures are not seen to be adequate.

The challenge for Brown in the months to come will not be persuading the Labour Party to embrace Peter Mandelson and his unsavoury Eurotrash friends. It will be to embrace the Labour Party and engage with the genuine fears of working people and the businesses that employ them as the country enters recession.

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Roy Hattersley: Labour is far closer to extinction now than in the 1980s

 If the takeover of the party by the far-left succeeds there will be no opportunity to rescue it from the wilder shores of socialism, says the former deputy leader.

The comparison with the Eighties is irresistible but misconceived. Labour is far closer to extinction as a major party than it was 35 years ago. That is not because Jeremy Corbyn is incapable of leading the party to victory — although he is. Nor is it because his supporters threaten the political assassination of anyone who says so — although they do. It is because, for the first time in its history, Labour is in real danger of a permanent domination by the unrepresentative and unelectable left.

All the other regular crises in the party’s history — German rearmament, nuclear disarmament, the defection of the Gang of Four to found the SPD — were resolved by mistakes being rectified, resolutions reversed and Labour resuming its place in the mainstream of British politics. Nor was there any genuine risk that the infiltrators from the far left would play a decisive part in national policy making. The Militant Tendency controlled municipal politics in Liverpool and attempted, with mixed success, to unseat vulnerable mainstream MP’s. But there was no possibility of them subverting the whole party. Now the far left operating through Momentum  aspires to make a decisive, and irreversible shift in Labour’s core ideology by initiating a purge of mainstream Labour MPs and a cull of headquarters office staff, reducing the part that the parliamentary party plays in choosing the leader and making the election manifesto the preserve of the annual conference. If the putsch — described by its instigators as an extension of party democracy — succeeds, there will be no opportunity for a latter day Neil Kinnock to rescue Labour from the wilder shores of socialism and the odds on its survival lengthen.

The crisis could have been averted. The parliamentary party  with the exception of a handful of residual Blairites  is ready for some sort of compromise. That is why, three weeks ago, it gave its overwhelming support to the proposal that the shadow cabinet should be elected by Labour MPs rather than chosen by the leader. The change was intended to allow an honourable return to the front bench for the shadow ministers who resigned in the spring. As a move towards unity, it is no more than papering over the cracks but better that than gaping fractures. Although Corbyn had neither the sense nor the grace immediately to accept the gesture of conciliation, the choice between an uneasy peace and continued guerrilla warfare still lies with him. If — as his victory speech suggests — he regards last Saturday’s victory as a mandate to impose his sectarian will on the party, the battle is likely end with mutual self-destruction.

Even if Jeremy Corbin succeeds in his attempts to create a permanent far-left hegemony, the Labour Party is unlikely to split as it did 30 years ago . The fate of the SDP — absorption into a Liberal Party which kept the Tory-led coalition in office or defiant independence that ended in the ignominy of polling fewer by-election votes than the Monster Raving Loony Party — has dampened enthusiasm for a breakaway movement. Nor are there charismatic potential leaders who stand ready to lead their followers into battle in the way that Roy Jenkins and David Owen (the Fidel Castro and Che Guevara of social democracy) marched a dozen Labour MPs into the valley of political death. But a futile attempt to form a new party would at least imply the hope of some sort ofresurrection. The more likely outcome would be the product of pure despair — the parliamentary Labour party would not divide and instead would begin slowly to disintegrate.

If the worst happens some Labour MPs will suddenly discover previously undetected virtues in Corbyn and Corbynism and line up behind him. Others will grow weary of being abused by local extremists and fade away. Contrary to public opinion, most MPs could earn more from less demanding jobs outside parliament. The politically dedicated, determined to be candidates in the next election, will accept the challenge of reselection. More will succeed than fail, but the harm to the party’s reputation will be immense.

One feature of the 1980 desertion will certainly be replicated. When the Gang of Four defected, the damage done by the loss of glamorous leadership was more than matched by the loss of hard working membership. If Labour MPs begin to believe that the battle for reason and recovery is no longer worth fighting the disenchantment will become infectious. Jeremy Corbyn’s devotees would still turn out for the rallies. But the enthusiasm with which they would tramp the streets on rainy nights, or spend boring weekends telephoning target voters, is in doubt. Reliance on the notion that the election can be won online is the refuge of politicians who either have not identified or do not understand the floating voters.

The haemorrhage has already begun — increased by the behaviour of recently recruited Corbynites who do not seem to have heard that their hero has an olive tree outside his office door. All over the country they are bullying and filibustering their way into the control of local parties — excoriating mainstream members, manipulating the rules of debate and postponing votes until late in the evening. Of course, the men and women who oppose them could play the same game. But they are, by their nature, reasonable people and they want to lead reasonable lives. That is why they represent the sort of Labour Party with which voters can identify. 

Unfortunately, many of the Labour MPs who should have led the campaign to recreate an electable party have spent the last year either sulking or complaining. They have been anti Corbyn but pro very little. Owen Smith’s leadership campaign ended in disaster not because of the size of the incumbent’s votes but because of the challenger’s failure to set out an alternative vision of the society that socialists hope to create. Angela Eagle would have won fewer votes, but she would come closer to reassuring party members that "moderates" (a deadening description which should be abandoned) have principles and policies. A campaign that relied on nothing except the obvious truth that Jeremy Corbyn would lead Labour to defeat was doomed from the start. A majority of the party members who joined before 2015 voted for Smith. Think of how many more would have done the same had he offered them more to vote for than disapproval of his opponent.

Corbyn, and many of the Corbynites, are unmoved by the evidence that they are heading straight to defeat. That is, in part, because Corbyn himself is in what psychiatrists call “total denial.” There were times last year when he seemed to be implementing a carefully coordinated plan to alienate all the middle-of-road voters on whose support a Labour victory depends. He has proposed the unilateral abandonment of the British nuclear deterrent, refused to back Britain’s continued membership of the European Single Market and defended his historic association with apologists for terrorism — all items on the curriculum vitae of a Labour leader who might have been invented by Conservative Central Office. No political leader in British history has been so careless about his party’s prospects at the ballot box. But that is only one of the reasons why the threat of defeat will do little to halt the party's leftward gallop.

There is, within the ranks of Corbyn supporters, a substantial number of activists who — since they do not believe that parliamentary democracy can create the socialist Utopia of their dreams — regard the election of a Labour Government as an irrelevance. Indeed they believe that a prolonged period of Tory misrule will bring forward the day when a spontaneous uprising will herald the new dawn. It is near to inconceivable that Corbyn believes in such millenarian nonsense. But he appear to subscribe to the equally fatuous view that the first task is to make Labour a genuinely socialist party and that winning elections can wait until it is accomplished.

That is clearly the view of those correspondents to the New Statesman who complain about Corbyn’s critics obsession with what they call “electablity”. It is easy for their cynics to sneer about putting power before principle, but winning is a matter of principle too. Labour exists to make those changes in society which can only be achieved in power. In 2016 the fight — to quote the former Labour leader Hugh Gaitskell in 1962 — is less about saving “the party we love” than about rescuing the nation from long years of  Tory bigotry. To behave in a way which diminishes — indeed for a time extinguishes — Labour’s chance of fulfilling its historic purpose is worse than self indulgent. It is betrayal.

There are major figures in the current drama of the Labour Party whose attitude towards the prospect of government is both inexcusable and incomprehensible. Chief among them is Len McCluskey, the general secretary of Unite and a man whose every bombastic television appearance is worth thousands of votes to the Tories. The members he represents have the strongest possible vested interest in a Labour victory at the next election. Yet many of his policies and pronouncements — particularly his risibly unsuccessful attempts to bully MPs into supporting Jeremy Corbyn’s leadership — contribute to the Conservatives’ opinion poll lead and increases the danger of massive defeat at the next election turning into total destruction.

Anyone who doubts that Labour could be reduced to the status of the Liberal Democrats or the Greens — struggling for influence without even hoping for power — should be sent to canvas for the party in Scotland. But the near oblivion north of the border is not yet inevitable in the south. Recovery will take time and before Labour can begin effectively to deal with the challenges from outside the party it must struggle back into the mainstream of politics — a process which has to begin with an acceptance that Jeremy Corbyn’s first election was more than a combination of the Peasants’ Revolt and the Children’s Crusade. For many of the men and women who voted for the first time in 2015 his victory represented the end of a decade of disillusion. At first they had felt no more than disappointment at opportunities that successive Blair Governments missed — their delight in the landslide victory of 1997 fading away until it was finally extinguished on the battlefields of Iraq.

The Peak District village in which I live is home to more Labour party members than the tourists may imagine. Two of them  —  a retired bank manager and an emeritus professor of cardiac surgery — voted for Corbyn in 2015. In part they were motivated by a desire to “give socialism a chance for once.” But they also thought that they were drawing a line under the years of “the third way” and triangulation. New Labour, in which they had once devoutly believed, had come to mean private enterprise edging its way into the health service, the surreptitious extension of secondary selection and light regulation of the City of London. Jeremy Corbyn, like the Scottish National Party, has much to thank Tony Blair for.

For some people Jeremy Corbyn was, like Donald Trump and Marine LePen, a welcome alternative to the politics of the establishment. To many more he was, by the very nature of his unelectability, the antidote to the opportunism which they (wrongly) believe characterises life in Westminster. Now, a mainstream candidate for the Labour leadership will have to make clear that they are guided not by opinion polls but by a vision of a new and better society. The next leader must concentrate every nerve and sinew on winning, but they must have faith in their ability to carry the country for reasonable revolution.

Unfortunately the members of the Labour mainstream are notoriously reticent about  discussing first principles. They find talk of “the vision thing” embarrassing and believe that the task which faces them is too obvious to need justification by any “fancy theories.” Yet there is a great body of work — by the likes of TH Green, RH Tawney. Anthony Crosland and John Rawls — which set out the theory of democratic socialism and descriptions of why it is especially relevant today – Joseph E Stiglitz’s The Price of Inequality and The Spirit Level by Richard Wilkinson and Kate Pickett — abound. The recovery of reason has to begin with Chukka Umuuna explaining the virtues of equality, Yvette Cooper describing Britain’s obligations to the developing world and Dan Jarvis defining the role of the state in protecting the weak against the strong. Or any of them talking about what they stand for instead of assuming that their convictions are taken for granted. The Daily Mail might not report their speeches, but moderate party members will treat the related Fabian Society pamphlets like water in the desert.

If, as they must, the reasonable majority of Labour MPs choose to stay and fight, they have to organise — inside the parliamentary party and, more importantly in the constituencies. I have spent much recent time insisting, to sceptical friends that the occupants of the opposition back benches are as competent and committed as were members of any of the governments, or shadow governments, in which I served. But I do not even try to argue that they are as active as my contemporaries once were in reclaiming the party. Success and survival depends on the constant demonstration that reasonable radicals still have a home in the Labour Party.  

One refugee from Corbyn’s original shadow cabinet assured me that like-minded Labour MPs do occasionally meet. When I asked what they discussed, I was told that they “wait for something to turn up.” But, something will only turn up if it is prepared and promoted by the men and women who have the courage and commitment to lead Labour out of the wilderness. The journey will be long and hard and there can be no guarantee of arrival at the desired destination. But those of us who believe that Labour can still provide the best prospect of a more equal society have to begin the trek toward the promised land — and we need to set out straight away.

Roy Hattersley was deputy leader of the Labour Party from 1983 to 1992.