Merlin Weekly Macro: The art of being both in office and in opposition

As we go to press, a 60-day ceasefire extension in the Gulf is on the cards pending further peace negotiations; as a welcome relief, Brent has tumbled towards $90, a fall of 12% on a week ago. Meanwhile in the UK, hostilities are opening with the first salvoes being fired in the Labour leadership campaign in what has become dubbed the Battle of the Essays.

Wrong time, wrong place: Labour’s soul-searching begins

In this context the usual verb is to “enjoy” but enjoyment being distinctly absent, it is more accurate simply to stick to the facts and say Labour has a working majority of 166 seats at Westminster. You’d never believe it. Today it finds itself intensively investigating its own navel while at the same time determinedly gnawing off its own leg.

Labour under Keir Starmer is a parliamentary paradox: despite that large majority it is a party shot-through with insecurities; it is simultaneously in office and in opposition. Soul-searching of the type to which it is currently subjecting itself is what defeated parties are supposed to do in the wilderness of Opposition: wash their dirty laundry and duff each other up as far away from the public gaze as possible, regroup around a new totem and a secure ideal and move forward; they are not supposed to arrive in office with no idea of how they got there or what to do next, and then make it up as they go along.

Evicted in 2010, Labour wasted the next 14 years. It failed to get its act together; it finally won an election (though in 2024 despite the idiosyncrasies of our first-past-the-post system, with Labour backed by only 20% of the electorate, the reality is that it was much more a case of the Tories having lost dismally than Labour winning convincingly), but it failed to prepare for government. With an ineffective leader, indeed one who neither enjoys politics nor is any good at it, and no plan, the subsequent policy missteps and political pratfalls which have brought Labour to its current predicament were almost inevitable. Starmer is about to pay the price. That Manchester Mayor, Professional Northerner and prospective challenger Andy Burnham, allegedly the most popular politician in Britain, is not even a sitting Westminster MP says much about the self-inflicted predicament in which the 402 Labour members who currently inhabit the government benches find themselves.

Tony Blair: as welcome as Banquo

With that Shakespearean reference to unwelcome ghosts, let’s go retro. Tony Blair is not only Labour’s most successful prime minister with three electoral victories to his name, he is also unique among Labour leaders. In the century since Ramsay MacDonald entered 10 Downing Street in 1924 as Labour’s first prime minister, Tony Blair remains the party’s only leader ever to win back-to-back elections. He did it twice, not just once. On which basis on the subject of leadership you might think he would be worth listening to.

This week he publicly weighed into Labour’s leadership debate in a 5,700 word essay aimed at preventing the party from repeating its self-evident mistakes even when under different prospective management. “Full marks for being unhelpful” shouted the Guardian in response. Starmer (3,000 words on Substack) refuted the charge of not having a plan; blaming his inheritance and admitting mistakes, nevertheless he insists he has one, it is working and he is vindicated by results. His is a minority view. “If you are not rooting analysis in fact that things that were taken for granted are no longer affordable, you are not understanding what’s going on”, was leadership usurper-in-chief Andy Burnham’s laboured denunciation, followed by 1,500 words in the Times likening Blair to Margaret Thatcher.

“Decline cannot be defeated by nostalgia”: that pearl of wisdom from I’ll-run-only-if-there’s-a-leadership-contest challenger Wes Streeting and his dismissive put-down to the 73-year-old revisionist Blair in an Op-ed for the Guardian. The youthful, cherubic Streeting too is obsessed with unfairness and inequality as today’s defining factors.

Reality check…

Assessing Britain’s place in the world as a middling Middle Power and applying refreshingly forthright sentiments we could cheerfully have penned ourselves, Blair takes lumps out of Labour’s leadership and challengers: forget Ed Miliband’s demented energy policy and implement one that gives us complete security and reliability at a competitive price; we have an incoherent and wrong-headed foreign policy; do not alienate America; rejoining the EU is a red-herring and a distraction that will neither empower us nor make our problems go away (addressing Starmer’s “Dynamic Alignment”, “It is true that what is crazy is to be where we’re presently heading – that is, becoming ‘European’ in our practices while being out of Europe”); we need to deregulate; welfare reform is a must; the pension triple lock is unaffordable; do whatever it takes to solve immigration, anything to allow government to focus on other matters; stop dithering and invest heavily in defence and national resilience; embrace AI, don’t kill it with regulation;  have an industrial strategy that delivers real, sustainable growth which leads to lower debt and lower taxes (directly addressing Streeting: “Equalising capital gains and income tax, something rejected by successive governments for good reason”). There is more in the same vein. His is an outward, constructive, positive strategic perspective quite at odds with Labour’s current trajectory.

…and the lived experience

Blair had successes in office and he made mistakes. He has clearly changed his tune on many subjects. Several of his flagship policies, even if implemented with the best of intentions, have had profound unintended consequences whose real cumulative impact in some cases has taken two decades or more to reveal their corrosive effect.

Introducing the Human Rights Act in 1998 under the auspices of the European Convention on Human Rights has dominated and dogged all subsequent aspects of social policy from race to gender to immigration but also law & order and impinging even on defence. The Climate Change Bill of 2007 announced in the last Queen’s Speech before Blair resigned was the launchpad for then Energy Secretary Ed Miliband’s Climate Change Act taken into law in 2008; now on Miliband’s second incarnation in the role it is coming to its final mad climax in his reckless pursuit of a carbon-zero generating grid by 2030. Allowing Gordon Brown to dismantle a gold star pensions system, was that really a good idea? Tertiary education targeting 50% of all school-leavers going to university funded by a misunderstood tuition fees system and the emerging dead hand of a life-shaping debt burden but with no guarantee of a job to go with it, can hardly be called a resounding success.

Blair’s decision to offer variations on devolution to Scotland and Wales (Northern Ireland was different as part of the solution to the Troubles) was pure political cynicism and a great miscalculation: chuck the Celtic dogs a bone and they’ll be so pathetically grateful they’ll remain Labour for ever; Labour has now lost both assemblies to the nationalists. “Cool Britannia” patronising pop stars, celebs and the rich and famous, his informal “sofa” approach to government instead of formal cabinet inclusion, his deliberate acceleration of the use of special advisers, the proliferation of quangos and the abrasive, overbearing influence of his controlling communications czar Alastair Campbell collectively were equally anathema to Westminster traditionalists and hair-shirt socialists; they were approaches which corroded trust in the political system. But it was the Iraq War and the “dodgy dossier” on weapons of mass destruction which were Blair’s undoing and will be his prime ministerial epitaph.

“He’s not one of us”

However penetrating his observations and on point many of his solutions, today’s Labour Party will not take a blind bit of notice; it has little to do with the criticisms above. No, the reason is much simpler: Tony Blair’s besetting sin is that he is not, and never was, one of the tribe.

He might have delivered Labour’s longest period in government in history, but for all his successes, he was never more than a centrist social democrat cuckoo with a time-limited tenancy in the socialist nest. An ideological chasm divides Old and New Labour.

Under the New Labour concept, and after bruising debates, Blair successfully overturned Clause 4. He drove a stake through the very heart of British socialism (Clause 4 related to nationalisation and the equitable distribution of wealth: “To secure for the workers by hand or by brain the full fruits of their industry and the most equitable distribution thereof that may be possible upon the basis of the common ownership of the means of production, distribution and exchange, and the best obtainable system of popular administration and control of each industry or service”). Thatcher-lite; a personal friend and political confederate of Republican US President George W. Bush; today invoking the leadership qualities of Donald Trump, Georgia Meloni and Javier Milei: he is a traitor to the Left’s cause.

La!La!La! I’m not listening!

Rationally, Blair’s essay should be Labour’s lightning rod. It should be required reading. He is urging Labour to break out of its comfort zone, to embrace “Radical Centralism” (is than an oxymoron?) raising a moderate standard half-way between Reform and the Greens. However, “Radical Centralism” or “New Labour”, whatever you want to call it, neither ideology was or is the party’s comfort zone; the Left tolerated it reluctantly and temporarily; now in the majority in the PLP it rejects it entirely. His intervention is having the opposite effect to that intended: Old Labour is doubling down on its own prejudices and preconceptions.

Driven by the powerful motives of class envy, inequality and victimhood, Labour seems determinedly introverted. It remains an angry party. It is prepared to be fiscally vindictive and economically reductive regardless of the cost. Relative or even absolute national decline is not its principal concern. “Change” equates to a significant leftward shift; “progressive” means regression: renationalisation of selected assets (Starmer and steel, Burnham utilities and rail); both Burnham and Streeting actively advocate the redistribution of wealth, Burnham suggesting the imposition of a Land Tax, Streeting through the harmonisation of CGT and Income Tax rates. While not a contender, elder stateswoman Harriet Harman (she of the 2010 Equality Act and Stamer’s new equality czar) demands that every candidate in the leadership race must have a “feminist agenda”; in the morass of gender politics, what exactly does that mean?

In anything other than a Utopian, pure communist society there will always be inequality. Humankind is inherently a competitive animal; it is in our genes. However, there are two ways of addressing economic inequality: levelling up, or levelling down.

Levelling up means building a vibrant, match-fit, competitive economy in which all participate and to which all contribute their labour and effort to the best of their ability and from which all benefit; general standards of living rise, life opportunities improve and hope has a chance of becoming reality. It is a constructive, outward facing optimistic perspective.

Levelling down is inward-facing, negative, reductive and nihilistic: centralisation, the socialisation of assets and the transfer of wealth derived from taxing income and assets from those who have it to those who don’t. Giving short-term satisfaction to its beneficiaries, nevertheless the resulting national impoverishment ends up being depressing for all. As Mrs Thatcher said, “Eventually you run out of everybody else’s money”. The Labour Left will unerringly go for the latter option every time: it is what socialists do.

Well done for trying, Sir Tony. But you’re preaching to those whose minds are closed, their ears are covered. They’re not listening and certainly not to you. You’re part of their problem, not their solution.

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