Gentlemen, please lower your kites

The departure of Charlie Whelan from the Treasury has not stopped the "leaks" about next month's Budget hitting the front pages. With several weeks to go, we have already had an early reappearance of, for example, environmental taxes and the 10p income tax rate, the most hyped tax change in history. Evidently there are plenty of new Charlies stepping into the old rogue's shoes.

More revealing than the leaks themselves has been the muted reaction to the biggest of those pre-Budget stories and the one which is most likely to prove accurate: the taxation of child benefit for high earners. A few years ago, if such a kite had been flown, there would have been outrage within the Labour Party and beyond. How do I know? Because the kite was indeed flown a few years ago, dismantled, subsequently re-flown and given several new designs. The taxation of child benefit is a case study in how the government chooses to implement controversial policies.

In May 1996 Gordon Brown, as shadow chancellor, raised the idea of ending child benefit for older teenagers, replacing it with an education allowance. Journalists were briefed that the idea would become a manifesto proposal. However, the move proved so unpopular within the Labour Party that the proposal was reduced to an option before the election.

Brown was merely biding his time. In the last Budget he announced a review of child benefit, hinting that it would be taxed. Since then Tony Blair has dropped a bigger hint by asking why he should get the same level of child benefit as those on lower incomes. One way and another, senior ministers have spent three years equivocating, waiting for the moment when people either assumed, after all the publicity, that child benefit reforms had already been implemented or had become so accustomed to the idea that they would not complain too much if they were.

Reform by stealth is this government's distinctive characteristic. Any new set of mildly controversial proposals is announced with a fanfare, glitzy presentation and more kite-flying than the windiest hill in Britain could support. If a cry of protest then goes up from Middle England, a reassuring sequel is hastily wheeled out: "Don't worry, these are only options. No final decision has been taken." In this way, the government keeps the voters on board, while nudging them gently towards more radical destinations.

The taxation of child benefit is one example of this technique. Constitutional reform is another. As I wrote last week, the debate has moved on to such an extent since the election that the Tories are competing with each other to come up with the most radical proposals for the House of Lords. Without ministers ever really having to explain fully what they are up to, politicians from all parties are occupying new terrain. Before the election the Tories were defenders of the status quo. Now William Hague accepts the case for a Scottish parliament, enthuses about the London mayor, and contemplates radical change for Westminster. For a young government following 18 years of Tory rule, reform by osmosis works rather well. Middle England is guided away from its worst prejudices without noticing. There are, however, two dangers.

First, policies can be implemented without their purpose being entirely clear, not just to the voters, but to the ministers themselves. Is the taxation of child benefit an act of redistribution? In which case, when did redistribution come back into fashion and why? How will England be affected by the Scottish Parliament and how will the government of the UK as a whole be affected by Lords reform? The government tends to announce or leak policies, one by one, according to the political needs of the moment, without addressing the bigger questions raised by their implementation. This was the problem with the proposed cut in single parent benefit. Ministers offered no consistent answer as to why it was being done.

The second and bigger drawback of change by stealth is that it doesn't always work. That is the case with the most challenging policy area of all: Europe. The brilliant strategists wave their wands and nothing happens. They have deployed all their tricks. Britain's European presidency was presented as if the country had just won the World Cup. Gordon Brown and Peter Mandelson have been offering warm words on the single currency since the election. When both of them addressed the CBI conference in the autumn the words were so warm it looked like a co-ordinated exercise, although it can have been nothing of the kind as they were hardly on speaking terms at the time.

Yet the focus groups are not convinced. Nor is the media.Whenever a minister puts his head ever so discreetly above the parapet the newspapers wade in. Indeed when Mandelson was at the Department of Trade and Industry, he was sure that gay innuendo in the press peaked whenever he made a pro-European speech.

So on Europe an entirely new strategy is required: reform by open argument rather than by stealth. But do ministers have the courage? I believe that they are at last mustering the strength, although the referendum itself will not be risked before the second term has been won. Indeed, a very senior member of the government gave me the most convincing justification I have heard for its reluctance to lose even a fraction of its extraordinary opinion poll lead. If Labour remains 20 or more points ahead, he said, Blair and others could then fight the Sun over the euro without the risk of losing its support in the election. Even the Sun would not dare turn to the Tories if Labour remained so popular.

This government instinctively seeks consensus for change before openly advocating it. But it will find that opposition to Europe is too great for such subtlety. It will be a new, character-defining experience for Blair and his team.

This article first appeared in the 12 February 1999 issue of the New Statesman, Kick out the image-makers