GERMAN SPD IN POLE POSITION

New Times, 28 August 1998

The German Social Democratic Party (SPD) has learned from bitter experience never to underestimate the powers of recovery of chancellor Helmut Kohl.

Since the liberal Free Democratic Party abandoned Helmut Schmidt's SPD-led West German government in 1982 to become the junior partner in a coalition with Kohl's Christian Democratic Union and its Bavarian sister party, the Christian Social Union, the Social Democrats have lost four general elections in a row to him. In three of those elections, moreover, the SPD lost after holding what seemed to be impregnable leads in mid-term opinion polls.

Will this time be different? Until recently, it seemed inconceivable that Kohl could win the general election on 27 September. In May, the polls showed the SPD, led by the business-friendly populist Gerhard Schröder, supported by some 43 per cent of voters, with the CDU-CSU on 35 per cent. Just about every pundit agreed that even Kohl's campaigning virtuosity could not possibly close the gap.

Now, however, the crystal ball is cloudier. Polls published in August suggest that the SPD will take around 42 per cent of the vote, with the CDU-CSU between three and five percentage points behind. A quarter of voters are still undecided, and it is unclear from the polls which of the smaller parties – the FDP, the Greens, the former-communist Party of Democratic Socialism and the small parties of the far right – will clear the threshold to win seats in the Bundestag. In short, although Schröder is still the favourite to head the biggest party, Kohl appears to be catching up and there is everything to play for.

The most important reason for the revival of Kohl's fortunes is Germany's economic recovery this year, which has led to a sharp drop in unemployment from 4.8 million in January to 4.1 million today. But the chancellor has also been able to exploit controversy inside the SPD over Schröder's choice as candidate finance minister, Jost Stollman, a millionaire businessman who is not a party member – controversy that Kohl claims shows the SPD remains at heart anti-business. In similar vein, he has made great play of the dangers of SPD tax increases and of the prospects of an SPD coalition with the Greens or the PDS.

Against this, the SPD has promised tax cuts and much more vigorous action to reduce unemployment, along with a reversal of the Kohl government's unpopular cuts in pension and sickness benefit entitlements. On the vexed question of coalition, Schröder has made it clear that he wants nothing to do with the PDS but has otherwise kept his options open, merely hinting that he would prefer a 'grand coalition' with the CDU-CSU to a deal with the Greens.

Kohl has ruled out participation in a "grand coalition", and so have most other leading figures in the CDU-CSU – the aim being to maximise centrist voters' worries about the Greens. The gambit might just come off. But if it doesn't, Kohl's stance could ironically help bring on the outcome he says he doesn't want by leaving the SPD with no option but a coalition with the Greens. Then again, the CDU-CSU might change its mind after the election.

All of which makes it hazardous in the extreme to predict the political complexion of the government that will be ruling Germany at the end of this year. Like most of the social democratic left in Europe, I'm hoping for an SPD-Green coalition, which would give the centre-left a predominance in the European Union that it has never enjoyed before. But I shall not be too surprised if my hopes are cruelly dashed.

FIELD OF BROKEN DREAMS

Paul Anderson, Tribune column, 3 August 1998

I can’t be the only cynical old leftist who thought Frank Field’s complaint this week that he’d been done over by spin-doctors was just a bit ripe.

There’s no doubt that the usual suspects told journalists some extremely nasty things about him last weekend. But I remember only too well his own enthusiasm for slagging off members of his constituency party who had the temerity, in 1990-91, to try to replace him as their Labour candidate. Of course, then as now, he adopted the pose of St Frank the Martyr, the innocent victim of satanic forces, but the viciousness of his smear campaign against his opponents was remarkable. There are plenty of people in Birkenhead who are no doubt currently feeling pleased that Field has at long last tasted some of his own medicine.

What’s important about his sacking as welfare reform minister, however, is not the spin-doctors’ vulgar abuse but what it says about the government’s social security policy. And here it is possible to have some sympathy for him.

When Field was appointed last year, it was universally taken as a sign that Tony Blair favoured a radical restructuring of social security. Field had a reputation as an innovative thinker on social security, and in the years before the 1997 election had developed a coherent case for replacing the existing mess of pensions and benefits provision with a new system of universal social insurance.

Shorn of a lot of moralistic rhetoric about the importance of self-reliance, the evils of single-parent families and the like, Field’s argument came down to this. The main problem with the social security system as it had evolved under the Tories was that it left a vast number of people reliant on means-tested benefits. Means-testing — which he described as “the cancer within the welfare state” — by its very nature encouraged claimants to lie about their means, discouraged saving and created an unmotivated underclass of welfare-dependents. The solution was to replace means-tested benefits with benefits received as of right. And the only way to do this, given the general unwillingness to pay more taxes, was to make sure everyone contributed to social insurance funds.

Field made a particular point of the applicability of social insurance to pensions, which were a thorny problem for Labour. The Tories had allowed the real value of the basic state pension to decline and had done everything in their power to shift people out of the State Earnings Related Pension Scheme introduced by the 1974-79 Labour government.

Labour was committed to reducing poverty among pensioners — but it would take big tax increases to raise state pensions sufficiently to ensure a comfortable standard of living for all pensioners. And raising tax was one thing that Labour had set its heart against. Field’s scheme to replace SERPS with fully funded compulsory second pensions for everyone, which he costed in detail soon before the 1997 election, seemed to the Labour leadership to be the solution to Labour’s dilemma: better pensions for all, but no new taxes.

Or rather, that’s how it appeared when Blair gave Field his government job. Once it came down to thrashing out the detail of welfare reform, however, it was a different story. Within six months of Labour taking office, it was clear that there was an unbridgeable gulf between Chancellor Gordon Brown and Field over what should be done.

For Brown, the priorities were simple: no tax increases and reduction by any means possible of the £100 billion social security bill. He had no quarrel with means testing in principle — indeed, he thought that “targeting” was the best way to get value for money in social security spending. The Chancellor was shocked by the transition costs involved in changing to a wholly insurance-based system. Field’s proposals for compulsory savings sounded to him dangerously like new taxes.

So Brown held up publication of Field’s Green Paper on welfare reform for months while they haggled over its contents — and when it eventually emerged in March this year, six months after Field submitted the first draft, it was clear that the Chancellor had won a crucial political battle. All that remained of Field’s grand scheme was a vague statement of principles.

There was plenty wrong with Field’s original proposals. Any social insurance scheme leaves people without cover, and in an era of endemic employment insecurity the goal of abolishing means testing and providing universal benefits and pensions would be achieved more easily by introducing a citizen’s income and reviving SERPS, all paid for through by raising taxes. Nevertheless, Field’s ideas were better than sticking to the Tory policy of relying on cuts and means-testing to keep social security costs to a minimum. Now he has gone, it’s an open question whether Labour has any alternative to business as usual.

SO THEY DIDN'T MATTER?

Paul Anderson, Red Pepper, August 1998

Tony Blair and Peter Mandelson were quick to disparage Derek Draper and the other lobbyists caught boasting of their government contacts by the Observer last month. Draper and the rest were conceited young men of little importance in New Labour’s scheme of things, they assured us.

But the truth is rather different. Draper is certainly a braggart – but he has played a significant part in Labour politics in recent years, most importantly as controller of the glossy Blairite propaganda magazine Progress and its associated organisation. Two of the other main characters in the Observer story, Neal Lawson and Ben Lucas of the lobbying company LLM, have had major roles in sustaining a Blairite intellectual current inside Labour, through the journal Renewal and the ‘ideas network’ Nexus.

Draper set up Progress in late 1995 while working for Mandelson, just before the publication of The Blair Revolution, a dreary book-length account of New Labour’s politics supposedly authored by Mandelson and Roger Liddle but actually written largely by Draper. (Liddle subsequently hired Draper as a lobbyist at Prima Europe, and it was Liddle, by now a government adviser, who was caught by the Observer promising favours to what he thought was an American utilities company but was in fact the investigative journalist Greg Palast.)

Progress was intended as a magazine that would never contradict Labour’s official line, and from the start it enjoyed the support of the party’s most powerful figures. Eight issues have appeared so far, all but the first full colour throughout, the latest at the end of June this year. Mandelson, Blair, Gordon Brown and Blair aide Philip Gould have been regular contributors since the beginning. Other contributors have included Liddle and a host of other government advisers, most members of Blair’s first cabinet (including Robin Cook, Margaret Beckett, David Blunkett, Harriet Harman, Clare Short, Donald Dewar, George Robertson and David Clarke) and a welter of other Labour politicians, many of them first elected as MPs in the 1997 election.

Progress’s patrons include Gerald Kaufman and Baroness Jay. It has had substantial financial backing from David Sainsbury, the supermarket magnate who once bankrolled the SDP; he was put in touch with Draper by Blair himself.

Progress also organises ‘political education’ events at which Labour activists can meet senior government figures. This summer, speakers at its weekend schools include ministers Chris Smith, George Foulkes, John Spellar, John Reid, Joyce Quin, George Howarth, Derek Fatchett and Peter Hain, members of the Number Ten policy unit (including Liddle) and various party officials. The goal of these events is simple: to build up a cadre of Blairite activists in local Labour parties who can be called upon to organise in support of the leadership in internal party elections and on policy.

The efforts of Lawson and Lucas, at least in recent years, have been less visible but no less important. Even though they are only in their thirties, they are both political veterans who in the late 1980s were stalwarts of the Labour Co-ordinating Committee, the once hard-left internal Labour pressure group that in the mid-1980s transformed itself into a pro-leadership faction.

After the 1992 election, the LCC put most of its efforts into producing a quarterly journal, Renewal, of which Lawson became business manager. Renewal in turn spawned Nexus, an electronic ‘ideas network’ largely composed of academics, in 1996. Lawson and Lucas, both by then working as lobbyists after spells as aides for Gordon Brown and Jack Straw respectively, played a decisive role in getting Nexus off the ground as the key members of its ‘core working group’.

Renewal was the nearest thing to an intellectual forum that Labour’s modernisers had between its launch and the New Labour take-over of the New Statesman in 1996; and Nexus has provided the Labour leadership with a useful platform for developing big ideas. It was at a Nexus event last month, for example, that Jack Straw gave his much-hyped speech on the ‘third way’; there has also been a Nexus seminar with Blair at Number Ten Downing Street. 

Add the role of their lobby firm LLM as a conduit between business and government, and it is clear that Lawson and Lucas were, until exposed by Palast, just as useful to New Labour as Draper. The disgrace of all three cannot be lightly dismissed.