Clarke's intervention backfires

Charles Clarke's criticisms of Gordon Brown leadership seem to have backfired, simply confirming his reputation as a maverick who has little broader support in the party. Even those in the party who are critical of Gordon Brown feel that the time is not yet ripe for a challenge, not least when a political re-launch is being attempetd.

The political re-launch seems to have faltered already. Hopes of some sort of payout to help with energy bills have been dropped, either because the energy companies won't provide the funds or because increasing the cost of their carbon permits would be incompatible with European Union rules.

Margaret Beckett appeared on Radio 5 this morning to steady the troops (she said at her own behest) and, typically, did an effective job. She should be brought back into the Cabinet in some kind of non-portfolio role.

Gordon Brown will have to get through the Labour conference and deliver an effective conference speech, although communication to a large audience is his greatest deficiency. Then there is the Glenrothes by-election, although Alex Salmond may have made his first error with his advocacy of a local income tax. He admitted that those in a household with a joint income of £64,000 would have to pay more under his scheme, but he seemed to think that someone on 32k a year was super rich, whereas two teachers living together could easily be earning that amount. People like that not be pleased about paying an extra 3p in the pound in income tax.

Talking of hapless, Harriet Harman has caused a storm by demanding that prostitution be criminalised. Given that there are already a number of measures dealing with the subject on the statute book, I think that what she had in mind was prosecuting men who purchase sexual services. Sex trafficking in women is clearly a serious problem, but in general the subject of prostitution attracts more hyprocrisy than almost any other in politics: indeed, it is an issue which only the Women's Institute has sought to tackle in a sensible and balanced way.

Oh dear, Darling

Alastair Darling's gloomy prognostications have apparently led to 'robust exchanges' between him and his patron Gordon Brown: in other words, there has been an almighty row. The Chancellor's position is said to be in question. The pound slumped against the euro and august bodies like the CBI rushed to say that things were not as bad as the Chancellor claimed while usually they are willing to pile on the gloom as a means of criticising government policy.

What the Chancellor said in an interview with The Guardian is that the present economic times - the combination of the global credit crunch and soaring international commodity prices - were as bad as they had been for more than half a century. Mervyn King said as much earlier in the summer, and it's not quite the same as saying as the economy is on the brink of a major recession.

However, these subtleties have been lost in the media row. It has overshadowed the Government's latest re-launch in terms of a package to help the housing market. These measures are open to criticism from a number of directions. On the one hand, they could be portrayed as insufficient, which is not surprising given the Government's fiscal position. On the other hand, they can be portrayed as using taxpayers' money to subsidise those have been feckless. Rather than tinkering with stamp duty, and then only for a year, there is a case for letting the market correct house prices until they are once again affordable.

Attention has now turned to who might replace the Chancellor and it is clear that, as with the prime minister, there is no leading candidate. Choosing David Miliband would give him a boost, making him look less like a sixth former on work experience and more of a serious candidate for prime minister. His brother, Ed, might actually be a better choice but that would mean too much Miliband at the top of government.

Ed Balls would seem like a case of favouritism. Alan Johnson would be a safe pair of hands, as would Jack Straw. One of the best choices would be John Hutton who is competent and would reassure business and the City whose confidence in Labour has been badly dented.

But then Hutton is against the windfall tax on energy companies which is gaining ground in popularity on the Labour backbenches. No doubt it would also be popular with the electorate, but it would also be a piece of economic illiteracy which shows little understanding of how a market economy works.

The relationship between the prime minister and the chancellor lies at the heart of government, particularly in difficult times. When prime ministers lose or sack their chancellors, it reflects badly on them: recall Harold Macmillan (Selwyn Lloyd) and Margaret Thatcher (Nigel Lawson). Alastair Darling has not been involved in the equivalent of a 1992 crisis and I think that he will survive.

Not much hope for New Labour

The 'Year in British Politics' meeting at the British Politics Group of the American Political Science Association is always good value and this year's event in Boston Ma. was no exception. The reviewers were Sir Ivor Crewe, about to take up his duties as master of University College, Oxford and Phil Cowley, who will shortly be joining the Treasury on a secondment.

Both speakers saw little hope for a New Labour recovery. Sir Ivor saw an analogy with the situation John Major faced in 1995-7, although Major was more popular than his party while the contrary is the case for Brown. The economy did well in this period, and the economy could well experience a recovery by the next election, but it would be a voteless recovery for New Labour.

Phil Cowley suggested that if the plane was heading for the ground and the pilot seemed to have lost control, one might as well give the air hostess a chance (I do not think this was a reference to Harriet Harman). However, Phil went on to point out, this would mean a contest in which all New Labour's divisions would be exposed to public view, followed by strong political pressure for an early election.

Sir Ivor pointed out that Dave Cameron had accepted most of the New Labour settlement - well funded public services, the minimum wage and tax credits etc. - and in practice policies would differ little from those under New Labour. There would be changes in stamp duty and inheritance tax, and no doubt other changes in personal taxation.

One of the most difficult issues for Dave to handle will be relations with the European Union with Phil Cowley pointing out that Europhiles have virtually disappeared from the Conservative Party (there may be five left). The party is now divided between Euroscpetics who want to re-negotiate the relationship and 'better off outers'. Dave will be under pressure to get a better deal from Brussels for Britain and that will not be easy.

The Conservatives are unlikely to take many more seats in Scotland and will in effect have the English Parliament some of them call for. But wily operator Alex Salmond would no doubt make use of this situation to claim that the Conservatives had no legtimate mandate north of the border in an effort to boost support for his independence referendum.

A feel good factor?

Will Britain's success in the Olympics do anything to create a feel good factor that will offset the Government's recent misfortunes? Harold Wilson's campaign in the 1970 general election for a 'doctor's mandate' was arguably derailed when England exited from the World Cup.

It could be argued that government policy has assisted the successes achieved with the Department of Media, Culture and Sport ensuring that National Lottery money was made available for training facilities and coaching.

However, reasonably enough, the general public will give the credit to the sportsmen and women involved, although no doubt Gordon Brown will try to milk his appearance at the closing ceremony for favourable publicity.

Compared with inflation and a depressed housing market, Olympic success will probably only provide a short-lived glow in what has been a cool and wet summer.

Getting it wrong again

One rule in politics is that you should not arouse expectations that you cannot meet, particularly if they have damaging side effects. This is what the Government has managed to do by dangling the possibility of some kind of action on stamp duty on house purchases.

Of course, given the fiscal hole they are in, the most they could offer is a suspension, or more likely a deferral, of this lucrative tax and then only for first time buyers. However, their hints have frozen the housing market with purchasers delaying transactions in the hope of cutting their tax liability.

This is once again evidence of a government having lost its touch. Pressured to produce some good news, they manage to make a mess of things again.

Vince Cable, always a sound judge of economic matters, has raised the question of why the Government are intervening in the housing market at all. Credit crunch or no credit crunch, a big correction was long overdue. The ratio between average earnings and housing prices had risen to unsustainable levels.

Of course, as the wily Vince well knows, the reason the Goverment has tried to intervene is that the whole British economy is far too reliant on the state of the housing market and in turn this has a big influence on the electoral 'feel good' factor.

An even deeper problem is an under supply of housing in Britain. The Government has tried to do something about the planning system, but has run into fierce opposition from a coalition of highly influential conservationist organisations. The 'eco towns' initiative has run into fierce NIMBY opposition and in any case was badly conceived from the start. There's little point in having carbon neutral houses (which you can build anywhere) if you have to drive miles to work.

He Who Wields the Knife ...

David Miliband should remember that he who wields the knife rarely gains the crown. Remember the example of Michael Heseltine?

His friends have been out briefing the press about a series of speeches and articles they intend to give which will turn up the heat on Gordon Brown. Blairite Stephen Byers set the erudite and innovative tone yesterday when he said that Gordon Brown's policy prescriptions were more appropriate to a 'Sunday afternoon stroll' rather than an electoral mountain.

Expect more bon mots from the likes of Charles Clarke and Alan Milburn.

Dave 2 Is Policy Lite

Despite the sight of David Miliband signing autographs, the 'Millibandwagon' does not seem to be gathering much pace. He lacks much support among the grass roots of the Labour Party - indeed his brother Ed is more popular as he comes across as less of a policy wonk who can talk with feeling about issues like growing inequality. Many see Dave 2 as a Blair clone with having him as a leader being a step back.

Moreover, the article he published last week is remarkably policy lite. The fashionable idea of localism is at the centre of his agenda, but it is unclear how he would resolve the clash between handing power to regions over health policy and the geographical inequalities in standards of care that would inevitably result.

Devolving power and tackling global warming are sound progressive goals, but they are hardly the issues that are concerning the voters. Miliband has no ideas on tackling the economic downturn which is not surprising given that he has never held a Treasury post in government.