It's a New New Deal

Gordon Brown invokes the spirit of FDR to promote his job creation programme. But is this the real

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Everyone seems to be talking about the New Deal. The Prime Minister's Christmas book recommendation in the Guardian was FDR: the First Hundred Days, written by the Cambridge professor of American history Anthony J Badger. Gordon Brown let it be known, through an interview with the Observer, published on 4 January, that he was planning a job creation programme based on FDR's New Deal. Where Franklin Delano Roosevelt built roads and bridges, James Gordon Brown would build low-carbon technology and broadband connections. An announcement at Rolls-Royce three days later, of a £140m scheme to create 35,000 apprenticeships in 2009-2010, followed by a cabinet meeting in Liverpool the next day and a jobs summit on Monday, are all designed to demonstrate the active approach of the government as the recession begins to bite. As one Brown aide put it: "The economy is changing so fast that we are having to do things in a faster time frame. We cannot leave the British people without the help they need."

According to Downing Street, the Prime Minister's favoured phrase to discuss what the government is doing is: "Building Tomorrow Today". The idea is that the lessons of previous recessions show that cutting government investment left the country unable to take full advantage of the upturn when it came.

The PM is said to be unsettled by the events in Greece in which alienated young people took to the streets

When talking about the New Deal, it is important to make the distinction between two very different and somewhat contradictory projects which just happen to have the same name. The original New Deal was a huge programme of public works devised in the United States during the 1930s to stave off the worst effects of the economic depression which saw (according to some estimates) up to a third of the working population lose their jobs. The second project was named by the incoming Labour government of 1997 to describe its plans to force the young unemployed to take jobs or training rather than receive benefits. Apart from the catchy name, the second New Deal really had nothing to do with the first. Is Brown now embarking on a third manifestation, merging the best elements of both, or is this just political opportunism, designed to put clear blue water between Labour and the "do nothing" Tories?

There is a fascinating passage in Robert Peston's 2005 biography of Gordon Brown, written before the journalist became the BBC's face of the UK recession. It concerns Brown's plans for the unemployed, which symbolised the then chancellor's transition from a fierce critic of the brutality of the Tory years to a de facto neo-Thatcherite. Peston quotes a ministerial source who knew Brown well: "We refused to make spending commitments. We rejected a return to crude Keynesianism, a massive injection into the economy which was being recommended . . . And we made our employment creation dependent on responsibilities through the New Deal, which was very controversial at the time."

The recent benefit reforms announced by the Work and Pensions Secretary, James Purnell, suggest that Brown is still signed up to the "rights and responsibilities" agenda of the New Labour New Deal. Claimants, including single mothers, will now risk having their benefits cut if they are not actively seeking work or training. But in his eagerness to dig himself and the country out of the crisis, Brown has now embraced the Roosevelt version as well.

The adoption of the principles of Roosevelt's New Deal marks the second great ideological conversion of Gordon Brown's political career. The first took place in the mid-1990s, when he shook off the last vestiges of his socialist past to become a cheerleader for the values of the market. That conversion broke with the legacy of John Smith and was crucial to the establishment of new Labour. The second brings Brown almost full circle. During his New Year message, the Prime Minister shamelessly announced that 2009 would be the year when "the old era of unbridled free market dogma was finally ushered out", without mentioning that he was himself one of the great evangelists of late-20th-century super-capitalism.

The government is now seriously worried about the generation of young people leaving school and university into a recession. In striking contrast to the Tories, who have opted for a policy of No Deal rather than New Deal, and launched the New Year with a minor announcement on savings as a sop to its core vote, at least the government looks like it cares about the least well off. Brown is said to be unsettled by the events in Greece, which saw thousands of alienated young people take to the streets in protest at the government's handling of the economy. There are likely to be a series of announcements in the coming weeks to reassure the country's ever-growing body of students that they will not be left in the cold.

But some in government are beginning to voice concerns that whole sections of the working population are not yet accounted for in the government's plans for 2009. As one senior minister with a close involvement in the discussions said: "This is a downturn that will also affect people in the private sector who are middle class and middle aged. I am seriously worried about Joe and Rita Bloggs in their mid-forties or fifties. What will they do if they lose their jobs?"

Ministers were asked to come to the jobs cabinet in Liverpool with recession-busting ideas for 2009. There are problems with this approach. Several ministers have already been told that existing projects in their policy areas will not be funded because of the straitened economic times. Another serious issue is the government's collective failure of imagination. New Labour has never been short on ideas in the form of "eye-catching initiatives", but it has yet to come up with genuine legacy institutions with the conceptual boldness of Aneurin Bevan's National Health Service or Jennie Lee's Open University.

It may not be entirely credible that Gordon Brown now embraces FDR-style job creation with the same zeal as he once embraced the free market. But the niceties of political consistency are hardly the issue at a time of national emergency. The real challenge will be to match the Depression-era rhetoric with practical solutions to help people through the crisis. If the Prime Minister succeeds he will have the legacy he so desperately craves.

This article appears in the 12 January 2009 issue of the New Statesman, The destruction of Gaza