Across the pond

Gordon Brown is floundering not just, or even primarily, because of sleaze. He is sinking because of the fundamental contradictions of New Labour, of which he was, along with Tony Blair, the principal architect. New Labour was an attempt to make Labour electable by courting big business and the tabloid press. To some extent both men became the victims of their own success. They adapted so successfully to the thinking and behaviours of their new friends that they neglected the interests and beliefs of their own core supporters.

When Brown took power he made a serious attempt to differentiate himself from Blair, not least by projecting himself as Mr Clean, the honest man who was, and is different in personality and beliefs, from Blair, who is quick witted and gifted with agile footwork so that he can position himself with the appearance of speaking for both sides at once.

The balls up over party funding has its origins in New Labour’s attempt to distance itself from its links with the trade union movement, which historically has been the main funders of Labour. They felt they had to demonstrate that they were not the prisoners of the trade union bosses. This led them into courting contributions from businessmen, who, as Lloyd George knew only too well, tend to want something for their money.

Blair got away with it in the cash for honours fracas, because the police were unable to find enough evidence to prove a direct link between the honours and the donations. Brown is not so lucky. Thanks to the efforts of the Mail on Sunday‘s investigation he was forced to admit that contributions totalling more than £600,000 were clearly illegal and must be returned. All came from one rather flaky businessman called David Abrahams, who gave some of his money via blank cheques from his employees and friends.

Thus far only one Labour Party figure has admitted that he knew where these donations came from at the time they were donated. Peter Watt, the general secretary of the Labour Party has admitted he knew and duly fell on his sword on Monday. Jon Mendelsohn, a businessman friend of Brown’s who was appointed head of fund raising in September, has admitted he did discover the illegalities. But he did nothing about it until the Mail on Sunday journalists started asking their questions. Even then he did not tell the police or the electoral commission, he wrote a warm letter to Abrahams asking for a meeting.

All the other senior figures, from Gordon Brown downwards, say they knew nothing. Maybe they are speaking literal truth. And since there is nothing wrong with their sight the only explanation is that they guilty of looking the other way.

Take Jack Dromey, who as well as being the husband of Harriett Harman, is also Treasurer of the Labour Party. In the cash for honours enquiry he insisted he was told nothing, and he is saying the same thing this time. Again, possibly literally true. But surely it was his job to ask questions and insist on answers as to where big donations came from. Particularly after what had happened over cash for honours.

What we do know already is that some people did know. What the police will have to discover is the different behaviour of senior figures. Gordon Brown himself rejected Abrahams money for his leadership campaign. Hilary Benn rejected it for his deputy leadership campaign on the advice of Baroness Jay, who was involved in Labour’s own inquiry into cash for honours. Harriett Harman accepted the tainted money and was actually routed towards it by Gordon Brown’s leadership campaign organiser, Chris Leslie. And yesterday another minister, Peter Hain, revealed that he had accepted Abrahams money but had failed to declare it because of an ‘administrative error’.

The most charitable view can take of all this is to assume that these decisions were made on the basis of nods and winks rather than clear statements and some people misinterpreted the nods and winks.

But the real lesson for the Labour Party, and the one it should take to heart when choosing a new leader to replace Brown, is that it should look after the interests of its traditional friends and deal with the rest with a very long spoon. And it needs to decide its policies with the same priorities.

The real scandal of Northern Rock, which still has to be addressed, is that the company was able to prosper because the Government, and notably Brown as chancellor, went along with a massive volume of lending to people who could not afford the mortgages they were taking on. Most of these were poor and ignorant, the people whom Labour should be caring for. Northern Rock was different from the rest simply because it riskily put more of its mortgage book onto sandy foundations. The others were more prudent with their shareholders’ money but the people they lent to who are now being caught by the fall in house prices will suffer just as much as those who took mortgages from Northern Rock, if the Government does not bail them out.

New Labour was famously conceived at a posh restaurant in Islington by Blair and Brown. Candidates for the Labour leadership, before they make their bid, should check on a meeting in nearby Farringdon Street on February 27, 1900. That meeting led to the founding of the Labour Party. It was called by the Trade Union Congress and attended by a mixture of full-blooded Marxist-orientated Socialists as well as the representatives of the workers. It established Labour as a broad church embracing middle class intellectuals and workers, and Christians and atheists. The enemy was un-regulated capitalism. It was a stormy meeting. But many of the issues are as real today as they were then.

Labour, old or new, is nothing if it fails to listen the voice of the trade unions.