Industry | 2010.01.05
Mandelson re-enters the fray
Business secretary re-enters fray despite doubts over leadership and strategy
Lord Mandelson, the first secretary of state and business secretary, will tomorrow re-enter British politics after a period of disillusionment with Gordon Brown by praising last month\'s pre-budget report, despite his private concerns about its failure to be more candid on the need for spending cuts.
But Mandelson will admit that the government had allowed itself to become too dependent on the City and the financial services industry for growth and revenues.
Privately he has become increasingly frustrated with Brown\'s leadership and the prime minister\'s reluctance to admit that spending must be constrained to halve the budget by 2010. Mandelson told friends over the last month that Labour was in danger of resorting to a core vote strategy.
But in his speech tomorrow to the Work Foundation he will seek to build bridges by focusing on the role the government can play in the challenges of building growth which, he will argue, is the best antidote to the deficit and unemployment.
"The global crunch has exposed structural problems in developed economies, including Britain, that we did not entirely foresee or deal with in the years of world growth," he will say. "For the past decade we allowed ourselves to become over-dependent on the City and financial services for growth and our tax revenues."
New sectors of the economy, he will argue, need to grow faster. He will also warn that the centre left "cannot and must not confine itself to the politics of distribution". We need a new and renewed politics of production."
HeMandelson has fears that some members of the cabinet, the children\'s secretary Ed Balls among them, have been pointing the party in this direction. But the business secretary will mount a defence of the overall stance of the fiercely fought pre-budget report, by saying that, at a time of low private-sector activity, government spending stokes demand. "Pull away that prop from the economy and you reduce the tax take, push up unemployment, and make the deficit worse." This lesson from the 1930s seems to be totally lost on the present-day Conservative party, he will say.
Mandelson\'s reappearance today will help the prime minister after rumours circulated yesterday afternoon that one of his cabinet members was so disillusioned they were preparing to resign. Tessa Jowell, the cabinet office minister, was wrongly named on a website, and forced to ring No 10 to deny she was leaving the government.
Today\'s speech marks an important moment for Mandelson and has followed private discussions with Brown over electoral strategy after weeks of being in the shadows. Since the morning of the PBR on 9 December he has adopted a Garbo-esque silence – all the more noticeable because he is normally ubiquitous in the media, whether on the airwaves, in GQ magazine, or in the business sections of newspapers.
After a near-euphoric year in which he returned from the European commission to take the lead role in re-energising Brown, healing Labour\'s divisions, and even heading off potential summer cabinet coups against the leader he once reviled, he was coming close to becoming a darling of the party – and even a minor national treasure. But his mood turned sour before Christmas. Those who spoke to him in that period heard a man frustrated by the prime minister\'s lack of focus, decision-making capacity, and strategic guile.
Even though Mandelson oversaw the early morning media and strategy call with key No 10 officials, he was finding it increasingly difficult to ensure that the decisions taken that morning were implemented. Few in No 10 seemed capable of telling the prime minister when he was wrong. On Afghanistan, for instance, Brown had finally got his act together but for long periods seemed unable to focus in a sustained way.
At one point Mandelson seemed exasperated by Brown\'s ability to communicate. The problem was that Brown simply could not communicate with the electorate. The comparison with Tony Blair was left unsaid.
There was then the strange, albeit brief, period when Mandelson toyed with returning to Europe in the new role of the EU\'s foreign policy supremo. Brown had initially given his blessing to David Miliband, the foreign secretary, taking the job when the offer came. But when Miliband declined, Brown barred Mandelson from putting himself forward. The thinking appeared to be that it would not reflect well on the Brownite ship if rats deserted a vessel so soon after rejoining it.
The crystallising moment came with the pre-budget report a fortnight later. His friends said Mandelson felt he had fought and lost a major internal battle on strategy, economics and communications. His strategic aim had been to ensure that Labour sounded credible and detailed enough about how to tackle the £175bn deficit. He and his allies fought to ensure that specific cuts were agreed, but then few were spelled out by Alistair Darling in the PBR.
Mandelson thought the party would have gained credit for leadership and courage by telling the electorate the unpalatable news of what was necessary in straitened times. Instead, the focus was on spending rises in health, schools and police, dwelling on the good news rather than the bad. Ed Balls and Yvette Cooper might have been seen off in their efforts to lower the new 50p top rate of tax to those earning £100,000 or more rather than £150,000. But Brown had sided with Balls in deciding to rule out a deferred rise in VAT supported by the Treasury.
Although the policy differences between Balls and Mandelson can be exaggerated, Balls was the overall winner from the internal battle that in turn may yet set the battle lines for the election. In his Tribune column just before Christmas, Balls was the man writing with gusto about the dividing lines with the Tories on tax and spend successfully outlined by the PBR. In his darker moments Mandelson feared Balls was leading the party to a core vote strategy.
The issue subsequently has been what would the business secretary do about all this. He probably senses that many in the cabinet harbour severe doubts about Brown\'s electability. Unlikely figures such as Harriet Harman and even Balls have privately voiced their concerns, but in the case of Harman regard the mayhem of replacing Brown worse than battling on as now. Miliband has not shown, in the words of one cabinet minister, that he has the lead in his pencil to act decisively against the prime minister.
Owing to the Tolstoyesque psychodrama that formed New Labour, and his personal determination not to betray Brown, Mandelson will not join any last-minute deputation to ask him to stand aside for the good of the party. So it is likely that nothing will happen.
As he likes to remind people, Mandelson regards himself as a fighter not a quitter. It is not his instinct to give up, and those who suggested he had, or was, becoming disengaged from Downing Street only served to anger him.
No decisions have been announced, but he is still likely to head the election campaign, aided by Douglas Alexander and David Muir.
But it is perilously late for the party to finalise its election strategy.
For more information, please visit
http://www.guardian.co.uk/politics/2010/[...]andelson-gordon-brown-tensions
