5/5/08

'The end game of the New Labor cult'

Voters sent Prime Minister Gordon Brown a stark message when they delivered his Labour Party its worst local election beating in 40 years: Fix the credit crunch gripping Britain or they'll turn out his party, remaking the political landscape it has dominated for more than a decade.

In what was the crowning blow to Mr. Brown, London elected Conservative Boris Johnson as mayor, tossing out Labour incumbent Ken Livingstone and giving the Tories a high-profile platform to goad the government. Mr. Johnson, who has combined life as a media personality with a political career, had been written off as a likable clown when he announced his candidacy in September. He delighted in calling his opponent, "Mayor Leaving-soon" during the campaign.

Labour won 24% of votes cast Thursday in elections for city, town and village councils in parts of England and Wales, putting it in third place behind the Conservatives with 44% and the Liberal Democrats, a party with little power in a country dominated by the two major parties, with 25%, according to polling firm Ipsos MORI.

"Labour voters wanted to give Gordon Brown a kick up the pants," said Margaret Alexander, the Labour leader of the Vale of Glamorgan council in the traditional Labour stronghold of South Wales, which was won by the Conservatives. Ms. Alexander, who kept her seat, said local Labour politicians feel bitter towards Mr. Brown for his "ineptitude."

Mr. Brown, just 10 months after taking over as prime minister from Tony Blair, is in a tight spot. He needs to shore up the United Kingdom's slowing economy to win back voters as the U.K. has been hard hit by the credit crunch, something Mr. Brown has blamed for much of his troubles. The Conservatives have been attacking Mr. Brown's economic record and wooing the banking community, which had been mainly supportive of the Labour government for the past decade. The global financial turmoil is of particular concern in the U.K. where the financial sector accounts for more than one-fifth of all jobs, compared with only 6% of jobs in the U.S., and bank layoffs have begun and are expected to worsen.

The local elections do not affect Mr. Brown's majority in Parliament, and the prime minister has until early 2010 before he must call an election.

But the resounding nature of the defeat will add to the sense of a government in trouble, both within and outside of the Labour Party. Mr. Brown, who is not expected to face a challenge to his leadership at this stage, will want to avoid the fate of former Prime Minister John Major, whose Conservative Party split apart as it lurched from crisis to crisis before being dumped out of power in 1997 by Mr. Blair and the more centrist vision he dubbed New Labour. Now the Conservatives have landed a public-relations coup for a party that had seemed unelectable for a decade, adding to their momentum.

"I think what we are seeing here is the end game of the New Labour cult," exulted Andrew Cumpsty, a Conservative councilor in Reading, west of London, where the Conservatives made gains.

Having always championed himself as the architect of Britain's successful economy as chancellor of the exchequer under Mr. Blair, Mr. Brown now has to guide it through a tricky patch, convincing, among other things, banks to free up capital for the country's businesses and home buyers again. A thaw in mortgages would help prop up house prices.

British banks have been cutting back on lending as they nurse wounds inflicted by the world-wide financial crisis brought on by the subprime-mortgage mess in the U.S. This trickled down to voters as banks stopped giving consumers mortgages and tightened their standards for credit cards. U.K. consumers are the most indebted of any in a developed country.

Mr. Brown has been meeting regularly with banks and is under heightened pressure to find ways to jump start their lending. He has so far been reluctant to spend taxpayer money on efforts to bail out banks, particularly at a time when he faces a growing budget deficit that could put Britain at odds with European Union fiscal rules. But after Labour's trouncing in the polls, a populist approach could be more palatable to Mr. Brown.

He faces tests elsewhere, including extricating the U.K. from the unpopular Iraq war and stemming a tide of immigration which rival politicians have said is uncontrolled. Mr. Brown is also staring down the threat of his first defeat in the House of Commons since taking over as prime minister last June amid widespread opposition among Labour politicians to his plans to detain terror suspects without charge for up to 42 days.

He also needs to persuade voters that he can not only guide the country through a tough economic patch but can give people a sense of what might be coming on the other side of the horizon with a longer-term vision, something he has so far failed to do, said John Curtice, professor of politics at Strathclyde University.

The margin of Labour's loss is similar to losses by Mr. Major, the last Conservative prime minister, in council elections in 1995, two years before he was ejected from Downing Street in a landslide by Mr. Blair.

"We went into it knowing it was never going to be a good night for us, but never considering it was going to be as bad" as it was, said Wayne Campbell, who led the Labour Party at the Bury council in northwestern England, which Conservatives won control of Friday. Bury was one of the high-profile losses for Labour in northern England, its traditional heartland.

While Mr. Brown is pinning his salvation on steering the U.K. away from the worst of the global slowdown, economists say his hands are tied. After many years of increasing public spending when he headed the Treasury under Mr. Blair, the prime minister doesn't have the money to provide a stimulus. Friday, he was guarded about what he would do, saying only that he would show the necessary "courage and conviction."

A tired-looking Mr. Brown said at a news conference Friday it had been a "bad" and "disappointing" night for the party in the local elections and pledged to "learn the lessons." He isn't likely, though, to take the route of shuffling his cabinet in response to the losses, a Downing Street source said.

Of course, Mr. Brown need look no further than his predecessor to see that the results needn't be a death knell: Mr. Blair got a drubbing in local council elections in 2004 as voters expressed their anger at the war in Iraq, yet he went on to win in the 2005 parliamentary election.

The election was a coming out party for David Cameron, the head of the Conservatives, and his resurgent party. At a victory parade around Bury, Mr. Cameron told cheering supporters, "What happened was not just a vote against the Labour prime minister and against the Labour government. I think it was a vote of confidence in the modern Conservative Party.

"People are looking at our party and saying it's changed for the better. They're looking at our party and saying it's unified."

In turning more Conservative, Britain follows shifts across Europe as countries such as France and Italy with the recent election of Silvio Berlusconi have all moved away from the left.

For the Conservatives, it was their first big win since they met their own economic Waterloo in 1992 when they withdrew the pound from a European currency peg and Britain went into recession. And the last time Labour fared this badly in local elections was in the late 1960s when the U.K. economy was in trouble under a Labour administration.

On Friday, data from HBOS PLC showed that house prices suffered their biggest annual fall in 15 years in April. A recent survey showed consumer confidence at its weakest since the economic slump of 1992.

In London, the race was as much about personalities as records. Mr. Livingstone, once known by the nickname "Red Ken" for his leftist views, has called President Bush "the greatest threat to life on this planet" and referred to the U.S. ambassador as "a chiseling little crook" because the American embassy refused to pay the daily congestion charge he instituted for cars driving through central London in a bid to reduce traffic and pollution. Yet he has combined his left-wing principles with pragmatic support of key industries like finance in his eight years as mayor.

Mr. Johnson, who once starred on a comedy TV show called "Have I Got News for You" and was fired as a newspaper reporter for making up a quotation, now provides the Conservatives with a post in the heart of the U.K.'s financial, government and media capital.

Speaking in London's modern helmet-shaped town hall on the banks of the Thames, Mr. Johnson, said that: "London has not been transformed overnight into a Conservative city" but he hoped to show "the Conservative party has changed into a party that can be trusted."

Damien McElvanna, 27, who works in banking, was a first-time London voter and voted for Mr. Johnson. "Ken's done a reasonable job, but people just fancy a change sometimes," he said.

(online.wsj.com)

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