Brown washes whiter?

How does he do it? How can a Chancellor present a Budget that wins approval from the Institute of Directors as well as the Child Poverty Action Group, leaving the Tory leader in lonely opposition with the Tobacco Alliance? How can he be acclaimed simultaneously for helping the poor while also protecting new Labour's constituency among the middle classes? Can Gordon Brown carry on doing this for ever? New Labour's ultimate fate hinges on the answers.

In one sense, the answers are simple. In his squaring of circles, Mr Brown has been helped most by the fall in interest rates. For the middle classes, the lower cost of mortgages has more than compensated for the higher sums paid in stealthy taxes. For the government, the reduction in debt interest payments has created unexpected elbow-room in the Treasury's accounts. Further, one of the Chancellor's biggest revenue-raising measures - the abolition of tax credits on pension funds - has hardly been noticed because nobody will feel any effect whatever until retirement. Since most people's grasp of their pension arrangements is extremely frail and since they rarely have much idea of what retirement income they can expect in any case, that makes it the perfect tax increase: a complex and invisible one, difficult to grasp, for which nobody is ever likely to blame the government. By the same token, the perfect tax cut is one that is simple, highly visible and easy to grasp. And that takes us to the heart of the matter.

As ministers freely admit in private, this government, much to the shock of many civil servants, regards policy formation and presentation as inseparable. In other words, it doesn't waste its time developing ideas in a form which can't readily be sold to the public. This is not as cynical as it sounds. No private sector company would now dream of investing in a new product without first consulting its marketing people. Why should democratic political parties be so very different? Why should the insights of this wondrous modern science (anybody who thinks sociology is dead should understand that it has migrated to the marketing departments) be confined to the sale of washing powders and motor cars and be denied to those who would improve public services and create a more just society? So we have a 10p starting rate of income tax not because it will help the poor more than a higher tax threshold (it won't) but because the message is easier for the public to grasp and therefore easier to sell. Likewise, we can look forward to a basic rate of 22p in 2000-01 not because it makes any economic sense for a Chancellor so to commit himself in advance but because it allows ministers immediately to trump the Tory claim that this is a tax-happy government, and to go on trumping it almost until the next general election.

Labour's approach is not so very new, merely more systematic and sophisticated. It is, after all, a Blair government that has abolished mortgage interest tax relief, not one led by Margaret Thatcher, who thought that this most indefensible of market distortions was unsellable. Again, it was Tory governments that dithered over the introduction of student loans and student fees; it was Labour that acted decisively, and risked considerable unpopularity in so doing. But the danger for Labour is that it remains trapped permanently in a Thatcherite culture (or paradigm, as the academics would say), for ever packaging its policies to meet aspirations and assumptions quite different from its own. Lady Thatcher's rhetoric famously ran ahead of her practice - she never succeeded in controlling public expenditure, for example, only in piling the bills on to the poor - but nobody can doubt that, for better or worse, she succeeded in altering the national culture and changing the terms of public debate.

Far better a government that achieves something than one that simply shouts about it. But both the Prime Minister and the Chancellor have staked almost everything on the idea of the working or "deserving" poor who will be helped to find jobs, fairly rewarded for so doing and thus socially included. Perhaps they are right to do so; perhaps, as some economists argue, new technology will allow indefinite growth. Equally, the likes of Ulrich Beck and Ralf Dahrendorf argue that work, in the traditional sense, has gone for ever. If the pessimists are right, and if the world indeed suffers the slump that all previous experience suggests it is heading for, that will indeed be a true test of new Labour's approach. Will it then command the popular support needed to take a compassionate approach to the millions who will then be socially excluded?

This article first appeared in the 12 March 1999 issue of the New Statesman, Yanks go home . . . but not just yet