Is New Labour Finished?

I still think we will have a hung Parliament next time around (and another prediction is that the next General Election will be held in June 2009, the same day as the European Elections) and the Cons will be the biggest party, though they will fall well short of an overall majority. I also think neither of the two main parties will get 40% of the vote. A coalition "National Government" pledged to "reform" & "modernisation" will take over.

However, such a "National Government" will see its main challenges as being based around questions of identity. That is, the threat to the UK from Scottish (and Welsh...and English) Nationalism; opposition to greater EU integration; and divisions along ethnic, religious and racial lines.

In the meantime...one wonders how New Labour will get out of this one. The best commentary piece I've seen so far is this:

Another fiasco, but Brown is forever a sucker for business: The funding scandal has a familiar reek for a party infatuated with finance at the expense of the ethos of public service
Simon Jenkins, The Guardian, Wednesday November 28, 2007

For the Tories it is sex, for Labour it is money. Financial scandal sticks to the latter like political napalm. From formula one to ministerial mortgages, privatisation contracts and cash-for-honours, the sign of a £50 note waving in the wind sends Labour politicians weak at the knees. Their only moral is don't get caught, yet they get caught all the time.

Last July a Tyneside jobbing builder, Ray Ruddick, and a secretary, Janet Kidd, were jointly seized by the urge to give £80,000 each to Gordon Brown. This startling summertime generosity was in addition to some £400,000 they had given since 2003. Along with two others, they had contributed a total of £600,000. "Mrs Kidd of Lindale Avenue, Whickham, Gateshead" was out-donated only by Lord Sainsbury and Mahmoud Khayami. No hair turned.

Walk into a high street bank with that amount of cash and men in dark suits will gather round and demand in no uncertain terms how you came by it, usually just before the arrival of the police. Walk into the Labour party and you get an invitation to dinner with the prime minister and talk of "a K or a big P". Murmur that you are "from Mr Big" and the general secretary hurries to the door. You whisper in his ear, he puts his finger to his nose and congratulates you on winning the pools. He of course will keep the good news to himself.

The whole thing is preposterous. Gordon Brown's explanation yesterday was like a Lord Gnome editorial in Private Eye. Not since the print unions signed on in Fleet Street as "Mickey Mouse" and "Lord Beaverbrook" has the system been taken for such a ride. Brown may have been rueful about a prime facie breach of election law, but he could not help hinting that the fault lay variously with Tony Blair, under whom these things "were going on for some time", and Sir Hayden Phillips, for not giving Labour more taxpayers' cash. He could add that Blair's fiendish Geordie allies have now cost him a general secretary and given him Northern Rock and the Inland Revenue fiasco, all inside 10 days.

Labour's third biggest donor of the year has turned out to be a David Abrahams, known to Durham planning officers as David Martin. He was selected to fight William Hague in the Yorkshire seat of Richmond but was deselected when his curriculum vitae, including a reference to a non-existent wife and son, proved less than authentic. Yet he was close enough to Blair to attend his farewell in Sedgefield earlier this year.

Abrahams has rightly threatened to sue anyone who links his donations with a controversial planning application by his Durham Green Developments for a business park in prime land off the A1. This was at first refused by Durham planners, then approved after intervention from Douglas Alexander's transport department. A second application is now under way. For those who suggest that owt is never done for nowt, Abrahams has gone to some lengths to ensure that the general public knows nothing of any link between his one hand and his other.

What is astonishing is that, with cash-for-favours going nuclear on all sides, Labour's finance department did not ascertain any risk that might lie behind the source of its largesse, especially when the general secretary, Peter Watt, must have given them at least a wink and a nod.

The truth is that New Labour has been a sucker for "business" from the moment in the early 1990s when Blair and Brown decided to curry favour with the City. Eager to seem business-friendly, Brown abandoned his pledge to reverse Thatcher's union legislation and privatisation. He decided never to raise income or business taxes, and bizarrely chose Geoffrey Robinson as his buddy. His only act of delegation, ever, was to the one profession he trusted, the financiers of the Bank of England.

The word business still mesmerises Brown. To most people the occupation is about making money. To Brown it is a mysterious priesthood of infinite competence. To build a school or hospital, run a prison or plan an urban renewal, you must pledge partnership with a "businessman". Private money is always good, public bad.

If business wants a new runway at Heathrow, Brown orders one. If business wants the planning regime collapsed, he will collapse it. If business worries over capital gains tax, it will be heard. Never was the maxim, what is good for General Motors is good for the nation, so enshrined in one man. Any theory that Brown is not a real Thatcherite is rubbish.

In Brown's Britain there is no longer a public service ethos, only a business ethos applied to public services. No longer do Presbyterians render unto Caesar the things that are Caesar's and unto God the things that are God's. Everything goes to Caesar under a private finance initiative.

After a decade of getting their fingers burned by business links to politics, Brown and his colleagues should surely have been streetwise. Apparently not. Despite reforms requiring openness in donations in 1997, despite the Political Parties, Elections and Referendums Act 2000, and despite the trauma of cash-for-honours, nothing was learned.

As Brown thrashed about yesterday he decided there was no rescue from within. He showed the depths of his despair when, as if on his deathbed, he summoned a lawyer and a priest, Judge McCluskey and the former Bishop of Oxford, Lord Harries, hoping for the umpteenth time to "restore trust in the political process". They may save his party from the courts and his soul from damnation. But what do they know of business?

Brown has been woefully served by his infatuation with high finance. Men and women whose sole skill is the pursuit of money have been corralled into the public sector and given tasks way beyond their vocation. They have been honoured with jobs, gongs and contracts. Their money has been taken under the counter. Civil servants have been demeaned and demoralised, and public service has rotted in the process.

One outcome of this fiasco must be stamped out without delay. Brown implied yesterday that the taxpayer should buck up and rescue politicians from their own sins by giving them a thumping great subsidy. This is outrageous blackmail. The public should not give these people a penny, other than in direct and accountable local subscriptions and open donations. How can Brown claim to run the country when each week he fails the whelk-stall test?

simon.jenkins@guardian.co.uk

Greg Palast also shows that some of the leading people in the saga have previous, to use police parlance...

Brown’s Fixer Explains How It’s Done: Jon Mendelsohn and the Secret Tape
Boasted £11 million donated by Tesco cut tax bill by £20 million
Greg Palast, November 29th, 2007

It was a stunning admission. Prime Minister Gordon Brown’s crony explained to the U.S. businessman, in evil detail, exactly how the fix is done in Britain.

Unfortunately, for Jon Mendelsohn and his partners, the “businessman” was, in fact, an undercover reporter for The Observer of London.

Today, Brown’s foes are calling for Mendelsohn’s resignation as chief fundraiser of the Labour Party for his admitted knowledge of £630,000 ($1.2 million) in dodgy, possibly illegal, campaign contributions to Labour.

What’s odd here are the protestations of shock at the behavior of Mendelsohn, described in the Guardian as an “ethical” lobbyist. “Ethical” my arse.

It was exactly nine years ago that Mendelsohn and his lobby firm partners were caught trading cash for access. How this Mendelsohn character ended up heading Labour Party fundraising and how he obtained the sobriquet ‘ethical’ is the real shocker.

I know a few things about this Mendelsohn. The “businessman” with the hidden microphone was me. In June 1998, joined by my recorder and a real US businessman, Mark Swedlund, who designed my elaborate corporate front, I met Mr. Mendelsohn at his tony Soho London office. There Mendelsohn confirmed what was already on tape from his partners in the lobby firm he founded, LLM.

I explained my corporate needs: some environmental rules needed bending. I hinted I was with Enron. Mendelsohn’s partner Neil Lawson told my recorder that, if I paid LLM £5,000 to £20,000 per month, “We can go to anyone. We can go to Gordon Brown if we have to.” Brown was at the time Chancellor of the Exchequer. Could the lobbyist provide concrete examples of a fix?

Easily. Here is a short list of LLM claimed accomplishments:

- Inside information on then-Chancellor Gordon Brown’s budgets.
- Tax avoided by a supermarket chain following millions donated to a New Labour pet project.
- A pass on anti-trust action against client Rupert Murdoch’s media empire.
- And for Gordon Brown, a favor that the Mendelsohn team expected to redeem.

Tesco Goes Tax-Free

LLM, which stands for the founders Lucas, Neil Lawson and Mendelsohn, were about to derail Brown’s plan for a tax on car parks (”parking lots” as we say in the States). This would cost Tesco, the supermarket chain, an LLM client, £20 million annually. LLM was holding secret meetings that week in June 1998 with Tony Blair’s Downing Street Policy Unit to get Tesco exempted from the proposed tax.

The tax threat went away after LLM advised Tesco to drop £11 million into funding for Blair’s odd Millennium Dome project.

[To my US readers: The Dome is a gargantuan tent costing $100 million - no kidding.]

“This government likes to do deals,” Lucas told me.

But this deal was complex, Mendelsohn said, not so simple as cash paid for a tax break. “Tony is very anxious to be seen as ‘green’,” Mendelsohn explained to me and my confederate. “Everything has to be couched in environmental language - even if it’s slightly Orwellian.” So LLM devised a set of cockamamie gimmicks for Tesco, like offering bus services to the elderly, which would paint the retailer green.

It worked. Tesco was spared the tax - though the company denies categorically that its cash dumped into the Dome bought any favors.

Message for Murdoch

The year of my paper’s original investigation (dubbed, “Lobbygate”), anti-trust authorities were looking into Rupert Murdoch’s companies’ alleged predatory pricing practices. LLM carried the word from Downing Street, according to Lucas, that, if Murdoch’s tabloids toned down criticism of new antitrust legislation, the law’s final language would reflect the government’s appreciation. On the other hand, harsh coverage in Murdoch’s papers could provoke problems for the media group in Parliament’s union-recognition bill.

The message to muzzle journalists was not, said Lucas, “an easy one in their culture” - journalists being a trying lot. However, the outcome pleased LLM clientele.

A Peek at the Budget

It also happened that on one of the days I recorded Mendelsohn’s partners, they boasted of informing an LLM client about details of Gordon Brown’s budget plans before the Chancellor’s announcement went public.

A lobbyist competing for my “business,” when asked to match the offer of inside information and deal-making held out by LLM and another New Labour firm said, “It’s appalling. It’s disturbing,” and added that he would refuse to match LLM’s services at any price.

If LLM appeared favored by Brown’s operation, Brown himself received favors from LLM. “Gordon Brown asked us to have our client KPMG [the consultancy] host a breakfast for him where it was pre-arranged that they would praise him for his prudent budgets.” Brown basked in this Potemkin praise-fest - a favor that would be returned with special access (for my own clients, if I paid the retainer).

Whether Mendelsohn, Lawson and Lucas actually pulled off all they claimed, I can’t say. Though just kids in their twenties, LLM had garnered millions in revenue, a lot of loot if for mere advice. No one seriously investigated; no one asked uncomfortable questions of Mr. Brown, Mr. Blair or the man at the center of several of these supposed “deals,” Mr. Peter Mandelson, now an EU Commissioner.

However, that Mendelsohn made these tawdry claims (or grinned at me while his partner made them), and that they were published on page one of every newspaper in the realm - part of an LLM tape broadcast on BBC’s Newsnight - one would think that the perspicacious Mr. Brown would have avoided Mendelsohn like the plague.

But the PM embraced Mr. Let’s-Make-A-Deal. The reason was made clear to me by Mendelsohn himself, a man as brainy as he is cynical and wealthy. Those many years ago, at the dawn of the Blair regime, Mendelsohn handed me a confidential manifesto he’d penned for LLM clients only. It was a map of the soul of New Labour.

Here was a chilling combination of Mendelsohn, Mandelson and Nietzsche. “AN OLD WORLD IS DISAPPEARING AND A NEW ONE EMERGING,” he announced in upper case. In the “Passing World” were “ideology” and “conviction” - which would now be replaced by “Pragmatism” and “Consumption.” “Buying” would replace “Belief.”

And ultimately, in this Brave New Labour World, style was all: “WHAT YOU DO,” wrote Mendelsohn, was passé, replaced by, “HOW YOU DO IT.”

So why demand Mendelsohn’s head now? Gordon Brown is a prudent man whom, I suspect, reads a newspaper or two - and knew exactly whom he had positioned to fill his party’s coin sacks. Mendelsohn is just a gun for hire, a forgettable factotum. I wouldn’t place the blame on the hired gun, but on the man whose finger is on the trigger.

The series “Lobbygate: Cash for Access” was originally published by The Observer (UK) in July 1998 by Greg Palast and Antony Barnett. For a complete history of the scandal, read, “Blair and the Sale of Britain” in The Best Democracy Money Can Buy (Penguin/Constable & Robinson 2004).

My own feeling is that although quite a few Labour MPs would willingly join a National Government, careerists as they are, the Labour Party itself will not survive being out of office. I've read stuff by "think-tanks" like the Fabians, Compass and Catalyst. None of it is very inspiring, coming across as happy-clappy managerialism at best. Not the sort of stuff to make one fight on the barricades, or even write out a cheque for...