John Smith's son steps out of the shadows

Eeeh, it fair warms the cockles of yer heart. Old Labour is back. Admittedly, Gordon Brown wouldn't be seen dead in a duffel coat (too trendy), nor would he be spotted at a unilateralist demo, but his pre-Budget statement was surely the most leftish, traditionalist speech we have heard from anyone at the top of government since the 1970s. He finally addressed head-on the subject that Labour has been skating around for nearly a decade: are we, as a nation, prepared to pay more taxes for better public services?

After five years and two general election victories, the party is finally showing signs of real intellectual confidence. Perhaps this November will be remembered as the moment when Labour realised it was actually in power again - really in power, able to be itself.

It's a tale of two Treasury teams. Back in 1992, old Labour's John Smith was blown a big fat raspberry for staking his economic case on (modestly) higher taxes. After that, they simply became unmentionable. Now Gordon Brown and his team have won admiring headlines for talking the talk. Granted, they had to get a former banking chief executive, Derek Wanless, to give them cover. And even then, Andrew Smith, the bland chief secretary to the Treasury, appearing on the BBC's Newsnight for a post-Budget interview, nearly had a coronary on camera trying to say the word "tax".

Yet the change is real. Talk to any Labour strategist and the "story" they draw from the last election result is that a sea change has taken place in British public opinion. The electorate has realised that you can't have something for nothing. The people want better public services, and now are prepared to pay for them. But we need to be specific about this. Middle England - all those swing voters who decide elections - may well be prepared to pay more for better public services; what they are not prepared to do is pay more for redistribution.

Yet redistribution is what Brown had been so quietly, determinedly good at, helping poor families here, low-paid workers there, with his stream of tax credits. Their number and their names may seem confusing, but that is not, to be fair, to discourage the potential beneficiaries. Part of the point of the tax credits is that they are complex and boring - so that Middle England doesn't notice what has been going on. But that has probably been taken as far as it can be. You can't go into an election promising higher taxes for the many to fund an increase in the working families tax credit. Sorry, desirable though it may seem to you or me, it just ain't a catchy slogan.

That is the limit of the sea change: better, costlier public services, yes; further redistribution, no. I am still struck by the memory of a conversation with a friend after Labour's unexpected (by some) defeat in 1992. She was a lifelong Labour supporter, who had done more than her fair share of envelope-licking and door-knocking. Her partner is a trade union activist. It was inconceivable to me that she would ever vote anything but Labour. Yet, she confessed, she had gone into the polling booth and her hand had wavered; she had put her cross by the name of the Conservative candidate.

At the end of the day, despite her idealism, she just couldn't bring herself to vote for higher taxes. She had a mortgage and two small kids and, well, times were hard. She didn't want them any harder.

Times have changed. If my friend wouldn't pay more taxes to line the pockets of the poor, she would now pay more to improve public services.

It is no longer even that radical an idea. There is a leftish shift happening across British politics. The Liberal Democrats have openly advocated higher taxes, and did not seem to do too badly out of it at the last election. Even the Conservatives have officially put better services ahead of hopes for tax-cutting.

Michael Howard's reincarnation as a self-confident, pro-welfare-state shadow chancellor is at least as dramatic as the shift from the macho Michael Portillo to the caring Michael Portillo, and perhaps rather more deft. The Tories' abandonment of their tax-cutting ideology is on a par with Labour's ditching of Clause Four - an ideological Rubicon that had to be crossed to show the voters that the party really is modernising.

Yet Gordon Brown, in calling for a world-class health service, funded by taxation, is taking a huge gamble. Labour is raising expectations again, and we have become a cynical nation. Most obviously, there is no guarantee that pouring ever-larger sums of money into the NHS will definitely improve services. Part of the problem with the NHS is staffing - if enough staff of high enough quality can be trained quickly enough.

And what about education, education, education (not to mention transport, transport, transport)? All this concentration on health may simply anger those who depend more immediately on other public services.

Perhaps Brown has taken that gamble because he feels his own political mortality, a cold wind in No 11. One of the big unanswered questions of the past five years is what would have happened if John Smith had lived. Could the Scottish traditionalist have swung it? Did Labour really need to go through the agonising process of full modernisation under Tony Blair?

But in some respects, John Smith's spirit lives on. Smith's political son is Gordon Brown. No, he is neither leader of the Labour Party nor prime minister - and, as I argued last week, there are many people determined to stop him becoming either. But he is the leader of an important swathe of "real Labour" thinking and now, it seems, of wider political opinion in the country.

Perhaps it has taken all those rivals circling for the kill to convince Brown just how powerful he really can be.

This article first appeared in the 03 December 2001 issue of the New Statesman, Who needs 12 when one will do?