Guest Blog: New Labour Should Have Copied Madonna

By Greg Leader Cramer

Nobody likes to see 50 year old ladies writhing around in their leotard but somehow Madonna gets away with it. The reason? She has constantly reinvented herself and made herself seem fresh to each new generation of pop culture consumers. Madonna's experience holds a lesson for New Labour - their failure to renew themselves explains how they find themselves in such a hole.

As the twin hurricanes of globalisation and Thatcherism changed the UK landscape irreversibly in the 1980's, the Labour Party (with Blair and Brown in the vanguard) gradually realised and came to accept that the old Labour vision of state socialism was dead. New Labour was born, twinning a pared down version of social democracy (the idea that governments can control economic and social change and thus harness capitalism for a greater good) with an embrace of the free market. In so doing, Blair and Brown had correctly taken the pulse of a population that was ready for a greater emphasis on public services, paid for through taxation, and a tired Conservative administration was shown the door.

As New Labour has now found out, when you climb onto a bucking bronco, it can be extremely hard to tame and you suffer a high risk of being thrown off. This is what the free market has done to Gordon Brown. The New Labour leadership failed to apply, via state imposed regulation, their own social democratic principles sufficiently to the free market and this has led directly to the personal debt crisis and housing bubble that the UK now finds itself in.

Governing could be said to be about finding a healthy balance between three things: the power of free markets to increase incomes, regulation to rein in the excesses of the free market and a good safety net to catch people when the market fails them. Easy to say but less easy to put into practice. Part of that balancing act involves calibrating levels of taxation and expenditure over an economic cycle, always leaving a sufficient margin of error to allow for the unavoidable shortcomings of economic forecasting.

The architects of New Labour have made three fundamental mistakes. Firstly, they have allowed a perception to fester that the welfare state safety net is over generous. We Brits obsess about fairness and if the system (which our taxes pay for) is being abused or is viewed as unfair then disillusionment is inevitable. Combine that with the belt tightening that accompanies an economic downturn and you have a toxic mix.

Secondly, New Labour has allowed itself no margin for error in its sums. Caught out by a deteriorating economy, government borrowing is already too high at the same time as its receipts are falling. Thirdly, and most importantly, Blair, Brown et al failed to understand that the balance between the three pillars of good governance - free markets, regulation and a safety net - needs to be re-assessed and renewed, not constantly, but from time to time.

Gordon Brown is right to say that is the job of government and its leaders to take difficult decisions that are in the long term interests of the country. The implicit adjunct to this statement is that sometimes those long term decisions are unpopular with a general public necessarily more focused on the short term. Just as Blair and Brown successfully took the pulse of the nation when they created the New Labour project, so Brown - now shorn of his colleague who was so adept at it - has failed to judge how far the popular mood has swung away from the same project.

The idea that a state, using the principles of social democracy, has the tools to cure all the ills that might befall a society, has been taken too far, to the point where the public has become alienated from it. New Labour has run on merrily ahead whilst the general population has has been left behind, preoccupied with fuel and grocery bills. The gap between the two has grown too large to be bridged and, as a consequence, the public have ceased to listen to or even care what ministers are saying.

David Cameron and his colleagues have recognised this and are seeking to fill that gap with their own brand of "Compassionate Conservatism". Whether they fare any better at finding the right balance, over the long term, between the state and the free market, only time will tell.

Greg Leader Cramer is an ex-investment banker turned self-made businessman. Having survived all that, he is currently spending time remaking himself as a political commentator via his blog bemoaning the state of Tottenham Hotspur and running around after his baby daughter.