George Kerevan: Still king of the castle, but watch the dirty rascals

Published on Wednesday 10 June 2009 21:48

THERE is silence on the battlefield, except for a few whimpers from the wounded.

The latest spasm of Labour's civil war has ended for the moment. King Gordon is still titular leader of the party and nominal Prime Minister. But his Cabinet barons are now the real power in the land, content to rest, strengthen the castle walls of their departments and plot which of them will get the battered crown after King Gordon finally has his head cut off.

It is hard to remember a time in modern British politics when Cabinet ministers have been so powerful in respect to whoever was playing president in Downing Street.

The chief baron is, of course, Lord Mandelson. Actually, his official title is Baron Mandelson of Foy and Hartlepool. Mandelson was instrumental in heading off last week's prospective coup against Mr Brown. His reward has been a vast expansion in his departmental fiefdom and the title of Lord Protector… sorry, First Secretary of State and Lord President of the Council. His Department for Business, Innovation and Skills has swallowed a number of other ministries and now has responsibility for universities and outer space.

The baron now has 11 ministers reporting directly to him. This is possibly the biggest Whitehall department ever seen and has already been christened "Mandelson's Raj".

This is not just about ego. The Baron is now in charge of a de facto ministry of economic planning, giving him control over the entire British economy. It has been 45 years since Labour's George Brown tried to set up such a ministry and break the Treasury's monopoly over economic policy-making. That Mr Brown was defeated by the Treasury mandarins and his Ministry of Economic Affairs scrapped.

But the Baron is the grandson of that great Labour gladiator Herbert Morrison, who was deputy prime minister and the power behind the throne in the post-war Attlee government. Lord Mandelson has every intention of using his new power base to restructure British industry. Next week will see the publication of a draft "national plan", complete with Union Flag logo. Old Herbert, looking down from some socialist heaven, must be smiling at the gall of the lad.

How does this affect Alistair Darling at the Treasury? The Chancellor clung on to his department last week despite Mr Brown's initial intention of replacing him with his protg, Ed Balls – as in Michael Heseltine's wonderful quip: "It's not Brown, it's Balls." From one perspective, this leaves Mr Darling his own man and able at last to run the Treasury free of interference from Downing Street. A rejuvenated Mr Darling jetted off to Luxembourg on Tuesday to tell other finance ministers where they could stick the European Commission's blueprint for a centralised EU system of bank regulation run from Brussels.

On the other hand, by demanding to stay at the Treasury, Mr Darling may have chosen a poisoned chalice. First, there is Baron Mandelson creating his own economic empire in another part of Whitehall. In any fire fight, expect the Baron to win. And don't think we have heard the last of Ed Balls.

Then there is the little matter of the next Budget. If Labour does hang on to office until June, the Chancellor will need to produce a spring Budget as an election launch-pad. His last one, in April, was laughed out of court because of its insanely optimistic growth forecasts and patent refusal to say how the UK could pay for doubling its national debt.

Labour's election strategy is to accuse Conservative leader David Cameron of wanting to make swingeing spending cuts in public spending, while persuading gullible voters Labour would do no such thing – despite the collapse in tax revenues and a massive need to borrow. Such disingenuous nonsense will not fool the money markets. They will not lend the Treasury money without a clear plan to get public finances back under control.

If Mr Darling produces a "give-away" Budget in March designed to buy the election, the markets will react by refusing to buy Treasury bonds. There will also be a flight of money from the UK; interest and mortgage rates will skyrocket, choking any recovery; and Britain's credit rating will be reduced, which will do bad things to your pension fund. I can't wait to see how Alistair is going to get out of this one.

And what of brooding Gordon Brown in his Downing Street bunker? On Monday, Mr Brown promised his backbenchers he would change. As we all know, no-one ever changes beyond the age of 25.

The Prime Minister lacks strategic vision. Under pressure, his default position is to announce a raft of unconnected, short-term measures designed to distract attention from his troubles and (hopefully) wrong-foot the Tories. Hence his infamous and ill-conceived decision to scrap the 10p income tax band for low-earners, so he could announce a cut in the basic rate and upstage Mr Cameron.

So what did Mr Brown announce yesterday? Suddenly, he is talking about a debate on proportional representation for Westminster, reform of the House of Lords and – wonderful thought – giving voters the power to recall inefficient or corrupt MPs. It got headlines, but a closer look at the fine print shows he is only "consulting".

This is another of the Prime Minister's red herrings, and we all know he has no intention of pursuing this agenda, and certainly not before any general election. At the same time as he was talking about the need for "an open, transparent democracy", Mr Brown refused point-blank to publish the report by Sir Christopher Kelly, chairman of the committee on standards in public life, into allegations that former justice minister Shahid Malik had abused his parliamentary expenses. The leopard has not changed his political spots.

Not that I'm against electoral reform. Perhaps we could add a referendum on Scottish independence and the Calman proposals for Holyrood, due out next Monday, to Mr Brown's consultation list.