Brown's Freudian slip

Published on Saturday 14 February 2009 18:43

TWO days ago, Lloyds Banking Group revealed that its recently acquired HBOS arm – including the Bank of Scotland – would post a £10bn loss for 2008.

It was Friday 13th, but this was no rare piece of bad economic news on the unluckiest day. Rather, the blows have been coming thick and fast for all of us of late. For Gordon Brown, especially, Black Friday must have seemed like just another gloomy day in his own, personal annus horribilis.

The initial lift the economic downturn gave to both the Prime Minister's mood and reputation has been well and truly lost. Daily announcements of redundancies and yet more public cash needed for failing banks have flattened not just the national spirit but also any remaining faith in the Government.

Last week alone Brown lost key adviser Sir James Crosby when it was revealed the former HBOS boss had sacked a whistleblower who criticised the bank's mortgage market exposure; Glen Moreno then stood down as acting director of UK Financial Investments over allegations linking his bank, LGT, to tax evasion. At a more meaningful level for most of us, the Royal Bank of Scotland announced 2,300 jobs would go, while the number of people buying houses fell to its lowest level since 1974. By the weekend, both Brown and Chancellor Alistair Darling were fending off suggestions that further expensive bank bailouts and even outright nationalisation might be necessary.

Most people in Britain had never heard of David Freud before today, but in this febrile atmosphere his defection becomes very significant. Freud is not an MP or a peer – not yet, anyway – so he does not have to "cross the floor" to leave Labour and join the Conservatives. He is also no friend of the Prime Minister, who was unimpressed by his report on welfare reform, commissioned by Tony Blair and which recommended large-scale privatisation. But this did not stop Freud being appointed as an adviser to James Purnell, the Work and Pensions Secretary, last year.

It is no coincidence that Purnell is the most Blairite of Brown's Cabinet and the most right wing of potential future Labour leaders – and Freud's defection will be seen in that context: David Cameron will claim Freud is "coming home" and that he, the Tory leader, is the true heir of Blair and holder of the centre ground in British politics. As such, the loss of Freud, while not a killer blow in itself, is another cut towards the thousand which could bring down Brown.

And the latest polls put the Tories in such a comfort zone that pundits are no longer asking if Cameron can win a general election, but how big his majority might be. Cabinet ministers are quietly positioning themselves to lead Labour in opposition, while apparatchiks seek more secure employment outside government. Meanwhile, more than 100 backbenchers are rebelling over the part-privatisation of the Royal Mail – a blow not just to Brown but to New Labour's returning prodigal Lord Mandelson.

Brown's admirers speak of his resilience and point to a fearsome campaigning record. With an increasingly volatile electorate, he could still turn things around. But that is looking like an increasingly big task, especially with a general election to be called by next summer.

The Prime Minister's top priority must be to fix the economy (and with it his own economic reputation). Yet just last week former Treasury Permanent Secretary Lord Burns told peers that financial regulations overseen by Brown when Chancellor had contributed to the current travails. Brown's biggest problem now is that the downturn is global and recovery is therefore largely out of his control. What few weapons he has have already been fired.

Having entered Number 10 as the worst recession in 70 years descended, Brown may go down in history as Britain's unluckiest Prime Minister: unluckier than Jim Callaghan, evicted after an earlier downturn; less fortunate than Neville Chamberlain, a decent man undone by appeasement; unluckier, even, than the Earl of Wilmington, who died in office in 1743 after just five months in which he was pushed around by other ministers. Gordon Brown is running out of time if he wants to escape the ignominy of joining that list of political losers.