Afternoon:
9°c
The sheer wellbeing of the Brown camp was palpable when I encountered it en masse last week. The gaggle of young ministers and aides looked well-settled into the post-Blair era, newly suited and booted and fresh from a summer of plaudits and bouncy polls.
As one disappointed Tory approached to offer stories of how awful things were in Camp Cameron, the only question in the air was how many more triumphs they could register and defectors' scalps could be collected before a dash to the polls became unavoidable.
Stuff happens. A week later, the Northern Rock crisis has given the PM the first serious setback of his leadership. His Chancellor has suffered a sharp whack to his reputation for sound management. Subjected to a sudden stress test, the Brown machine that had been purring along so contentedly spluttered and juddered.
There has been criticism of the Government for breaking the understanding that banks, not the Government, are responsible for their depositors. The final guarantee that any customer losses at Northern Rock will be wholly underwritten is a potentially serious liability, should similar cases arise in future.
Politically, though, this was an absolute necessity. Gordon Brown surely knows, having cleverly maximised Labour's advantage from the ERM exit, how quickly authority can flood away and a local bank drama become a crisis of confidence.
Pictures of worried-looking people queuing outside branches to rescue their cash are as powerful an image of a serious malfunction as it would be possible to paint. If Saatchi's was still working for the Tories rather than burnishing Mr Brown's image these days, they might have been tempted to slap the classic slogan "Labour isn't working" over it.
The Government is shell-shocked. Even the boon of a clutch of polls today highlighting Mr Cameron's problems cannot erase the impact. Mr Brown can take due pleasure in the robustness of
his lead: he has quickly built up a more solid reputation as the "right man for the job" which is giving him protection from its buffetings. Meanwhile, Mr Cameron's strategic weaknesses and deepening confusion around the party's policy direction and readiness for government continue to hold him back.
Team Brown must, however, also act quickly to address the fissures the past days have opened up. For Alistair Darling this has been an unpleasant introduction to that part of the Chancellor's job which comes least naturally to him: the role of projecting public reassurance. It is still unclear why the Northern Rock crisis was allowed to unfurl as far
as it did, given the combined responsibility of the Financial Services Authority, the Bank of England and, ultimately, the Treasury to manage such situations. One senior former Treasury minister observes that: "The Ken [Clarke] and Eddie [George] show would have sorted this all out by locking the big players in a room to do a takeover deal and not let them out till it happened. By the time it was all public, a panic was inevitable."
Mr Brown has not had that complementary double-act relationship with Mervyn King, Mr George's successor, an economist rather than a markets man. But one senior Treasury insider also thinks he would have handled it differ-
ently: "Gordon would have steamrollered his way through it, putting his authority on the line. What really damaged Alistair was a tone and body language of uncertainty."
Added to which, Mr Darling suffered from unfamiliarity when the going got rough. We rarely grow to love chancellors but we do get used to them. Many Northern Rock savers would not know who the man on the television telling them not to panic was. As the old joke goes, he is not even a household name in his own household, having carefully avoided public confrontation at Trade and Transport and kept a low media profile.
His Today programme interview was a classic example of never going on the air as a politician unless you know what effect you want your words to have and how you propose to achieve it. It failed to stop the run on the banks until a full guarantee was offered later in the day.
The Chancellor was unlucky in facing such a major hiccup so early - but that's politics. He has also yet to establish a close working relationship with his permanent secretary, Nick Macpherson, who is young (in senior civil service terms). His aides are also freshly imported - and Mr Brown has shipped out his own favourites to No 10. The whole operation felt rattled and inexperienced.
For Mr Brown, a truly difficult dilemma beckoned. Had he emerged and started speaking on the crisis (he could hardly have changed the subject to wind turbine tax relief), Mr Darling's authority would have been destroyed - probably irreparably - by having to be bailed out by the ex-Chancellor. The emergency was ended just in time - on Mr Brown's direct orders.
Now the Government and the financial giants need to hammer out a more reliable regulatory system fast - and
increase the levels of protection offered to bank depositors. Whether the Government has "got away with it" in the bigger picture is harder to diagnose. The attempt by the Tories to turn this into a debate on Labour's economic record has not quite taken off despite a fervent desire that it should do so. The debt-fuelled consumer boon is not - so far - unpopular with the public. Indeed, Conservative voters are likely to have profited most from rising house prices and a buoyant economy - the upside of incurring debt and spending at high levels. Look at Angela Merkel in Germany, trying to stimulate her reluctant spenders to increase consumption at home. Caution does not always reap dividends.
It all depends how a boom comes to an end, at what cost to voters and on the general mood surrounding the parties. Rising mortgages and falling consumer confidence are likely consequences of this week - but not necessarily fatal ones. Governments do get re-elected even in the midst of economic chill - as the Conservatives did amid the high interest rates and jitters of 1992. They can also lose the initiative in a boom - Al Gore in 2000.
What has gone is the Prime Minister's entitlement to proclaim with his old relish: "No more return to boom and bust!" He must argue now as the great damage-limiter, a less magisterial claim.
"Change" was the early mantra of Mr Brown on his first morning as leader. What is striking is how little the fundamentals really do change. Foot and mouth one minute, mortgages the next: it could be any government on the rack any time in my lifespan. What counts is who we come to trust more to get us out of the messes. That is shaping up to be a decisive theme at the next election - whenever it comes.
