The perils of thinking small

Tony Blair famously modelled new Labour and his 1997 election victory on the success of Bill Clinton and his new Democrats. So, a year away from the earliest likely date for a general election, a week after the biggest electoral setback of his government, this may be a good moment for him to look across the Atlantic and to ponder the extent to which the Clinton presidency can be called a success. In economic terms? Yes; the American economy continues to defy gravity. In law and order? Yes; the crime rate continues to fall, though some may think that locking up a higher proportion of your population than any other country in the world except China is too high a price to pay. In helping the poor and the mass of working people? No; inequalities in wages and wealth have continued to widen and, for anybody earning less than $100,000 a year, the ratio of debt to income has increased. In health reform, arms control and the environment? No, no and no. In electoral terms? No, again; the Democratic Party has dramatically fewer senators, house representatives, state governors and state assemblies than in 1992. A Republican seems most likely to be the next US president.

We can reach those conclusions after eight years of Clintonism; after only three years of Blairism (or, as some would have it, Clintonism, British-style), we cannot be nearly so judgemental. But the American experience suggests that the Third Way is a failure in the profoundest sense. As a style of politics - and, since it eschews ideology and big ideas, it is on style that it must be judged - it has not delivered most of what it promised, nor has it restored faith in government. As the commentator William Greider put it earlier this year in the left-of-centre US magazine the Nation: "Clinton has taught Democrats to think small." Mr Blair, though he occasionally raises the sights of his followers with promises to abolish child poverty or to bring health spending up to Continental levels, has for the most part taught Labour to do the same. Is it now conceivable that a proposal to remove the ceiling on national insurance payments (which is almost as outrageously regressive as the poll tax) will be included in the next election manifesto? Or a proposal for a more progressive income tax? Or a tax on wealth or inheritance? Or a restoration of some link between rises in average earnings and rises in state benefits? Labour supporters, instead, must comfort themselves with modest stealth taxes and assurances (for that, at this stage, is all they can be) that tax credits will drag more working-class families above the poverty line.

Labour governments are caught in a catch-22: less trusted by the financial markets than any right-wing government, their economic success depends on their behaving, when they first come into government, with greater prudence than the Tories. (Kenneth Clarke has mischievously let it be known that he would not have abided by the Tory spending plans to which Gordon Brown so rigorously adhered. Indeed, Mr Clarke, unlike Mr Brown, would have had no need to.) But once they have secured the economy, as Mr Brown has done, their heartland supporters are all the more aggrieved and puzzled that, in a period of apparent prosperity, there are still no cakes and ale for them. Mr Blair, knowing that the rewards of prudence would inevitably be delayed, could have offered small sacrifices to other tribal gods, such as comprehensive education or the Labour preference for public ownership of such services as air traffic control. But even these are lacking; it is as though Mr Blair thinks he can govern only against the grain of the Labour Party.

This is a dangerous game, which leaves new Labour more dependent than ever on the Mail, the Sun and Middle England - hence, the alarm over hostile Sun leaders and the determination not to appear the slightest bit liberal on burglary, refugees and the like. Mr Blair has sacrificed deep support for wide, shallow support. This leaves him specially vulnerable to what Harold Macmillan called "events, dear boy, events". Every government has a defining moment, one that determines its fate, for better or worse: devaluation and the "pound in your pocket", the three-day week, the IMF crisis of 1976, the Falklands war, the poll tax, the ERM debacle and so on. We do not yet know what that defining moment will be for Mr Blair, nor whether the outcome will be favourable or unfavourable. But if it is the latter, the result could be more than a heavily reduced majority for Labour: it could be electoral catastrophe.