Gordon 'Prudent' Brown/06-14-98

The UK's chancellor of the exchequer Gordon Brown surprised a lot of people last week when he announced the sale of a series of government assets. But not Phil Mullan

Gordon 'Prudent' Brown once again fails to shock the City

Chancellor Gordon Brown's appearance at the City of London Lord Mayor's banquet at the Mansion House last week at least had the merit this year, compared to last, that more attention was given to his speech than to his dress attire. Unfortunately while most commentators succeeded in not being distracted by his blue suit in a sea of black ties, they were distracted by something that was almost as superficial. Banner headlines declaring 'Gordon Brown sells the state silver' missed the main point of his approach to economic policy: prudence rules over all else.

Most news reports on Brown's speeches last Thursday (he made a warm-up statement in the house of commons too), led with the announcement that he was intending to sell off more government assets including the Royal Mint, the National Air Traffic Services, and the Tote. This is hardly a shocking announcement from a government that came to power over a year ago pledging to maintain Conservative public spending plans. Yet the old left and the old right sought to make out that Brown's speech marked another ideological shift towards Thatcherism worthy of, respectively, condemnation and acclamation. Where have these people been during the past decade?

Long before the 1997 general election the Labour Party, 'old' and then 'new', declared its official adherence to market principles. The Labour Party, alongside almost every social democratic party in the world, long ago admitted that it had lost faith in the state, either to provide public services effectively or to intervene in the economy, especially through fiscal policy. They have all signed up to TINA - their collective claim that There Is No Alternative to the market. Accordingly they have rejected any virtue in nationalisation per se. So, surprise, surprise, the Labour government does the same as its predecessor. It pragmatically sells off public assets to make its financial books look better.

The distinctive, and substantially regressive, aspect of New Labour's economic approach is the strength of its adherence to 'stability', 'discipline', 'caution' and 'prudence' - all themes that featured prominently in Brown's Mansion House speech. The Tories used to talk a lot about rolling back the state and containing public spending. In practice they spent more and more in real money every year. The Tories failed to act on their words. Labour's sad achievement is that its similar rhetoric has been matched by its policies. This is manifest not just in the Treasury figures but also in the continuing decay of public health and education services, and in the restraint in public sector pay awards. So why this difference in outcome between Tory and Labour?

It has nothing to do with any superior or firmer personal qualities of Brown and prime minister Tony Blair versus their predecessors Kenneth Clarke and John Major, or any of the double acts that went before. Rather New Labour reflects and espouses, and is able to play out, a philosophy on life that is today so much more entrenched and lacking in critics than even a couple of years ago. This is the culture of limits and of restraint. These days too much - of anything - is viewed as bad. Holding back is good.

It was symptomatic that the word 'prudence' appeared seven times in Brown's ten minute statement to the Commons. (Indeed one perceptive Sunday newspaper featured a large cartoon of Brown calling out 'tighter, tighter' to a leather-clad woman named Prudence who is tightening his already bursting corset.) New Labour is serious about balancing the nation's books - there is no pre-election war chest - because they embody these fashionable notions that growth and expansion are bad and counter-productive and that stability and caution are good.

Brown's main message came through not in his list of public asset sales, but in a reference to an admired predecessor - Jim Callaghan: 'It was controversial in 1976 when one Labour Prime Minister said we could not spend our way out of a recession. I say tonight, we cannot simply spend our way through a recovery either.'

Over two decades ago Callaghan heralded in his statement to the Labour Party conference the demise of Keynesian, state-financed economic policy. He set the scene for the undisputed revival of market economics in the 1980s. Today Brown is promoting and institutionalising the view that one of the few active roles for government is to preach and practice restraint in all things. Whichever suit he dons, he has a hairshirt on underneath, and recommends one to us all as the essential New Labour fashion garment.