Interested in the failings of British industry, Wills had just completed a series of documentaries revealing the limitations and frustrations of British managers. In particular he had been struck by an interview with a supplier of car components who volunteered that he had resisted borrowing money from the banks in order to build a new production line to manufacture gearboxes for Honda. His reason was depressing. In the early 1980s he had borrowed for a similar venture, but interest rates had soared and he had been financially crippled. Ever since, he had decided to remain small and safe by not borrowing. He spoke eloquently and authoritatively about the Conservative government’s failure to help industry. This was fertile ground for Labour to exploit, Wills told Brown. Wills introduced Brown to the experts consulted by Weekend World, with whom he discussed the essence of Thatcherism and its American counterpart, Reaganism. Reluctantly, he began to recognise the strength of some Tory policies and the disadvantage of Labour’s adherence to Attlee’s consensus. There was reason to acknowledge that the growth of Europe’s and America’s successful economies was not the result of state intervention. Listening and brooding, he agonised over how to balance incentives to entrepreneurs, the restriction of public spending and the financing of social justice. ‘We need a fairer Britain,’ he repeated as he learnt to sympathise with the market economy. ‘We’ve got to work from first principles towards policies,’ he told his confidants, irritated by Kinnock’s ignorance of economics and John Smith’s resistance to change. Under Smith as shadow chancellor, Labour’s economic policies remained rigidly anti-market, against joining the ERM and in favour of controlling exchange rates. ‘We must persuade the rich of the need for fairness,’ Smith had said, apparently without realising the inherent contradiction. Wealth creators, by definition, are not social philanthropists, but ruthlessly ambitious to earn money for themselves.
Three successive election defeats had convinced Brown that simply damning the Tories’ sympathy for the rich would not reverse Labour’s political decline. The party needed new ideas. That summer he spent three weeks in Harvard’s library, studying industrial policy and discussing the cause of America’s economic success with local academics. He returned to Westminster emboldened by his intellectual rejuvenation. His task was to find a compromise between old Labour’s philosophies and Thatcherism. There were many false starts. Essentially, he was searching for ideas to help him write a new Labour epic that could rank with Anthony Crosland’s Future of Socialism, a 500-page analysis of how to create an egalitarian, socialist Britain, published in 1956. Throughout, Brown asserted with evangelical sincerity that social Christianity could provide greater fairness and prosperity through a more efficient economy, all in the cause of socialism.
Nigel Lawson’s budget in 1988 was another ideological challenge. Treasury statistics showed that the reduction in the top rate of tax – from 83 per cent under Labour in 1979 to 60 per cent nine years later – had actually increased the amount of money received by the Treasury, as the rich had less reason to evade and avoid taxes. In his penultimate budget, Lawson announced that the top rate of tax would be reduced from 60 per cent to 40 per cent, and the basic rate cut to 25 per cent from 33 per cent. The Labour benches erupted in uncontrolled protest. The Commons was suspended for ten minutes. Brown joined in the protest. He rejected Lawson’s argument that encouraging enterprise would benefit the poor. Too many millionaires, he raged, were enriching themselves from tax loopholes, not least from share options. Lawson’s budget allowed company directors to buy shares at 1984 prices and take the profits in 1988, paying capital gains tax of 30 per cent rather than 60 per cent. ‘Britain is fast becoming a paradise for top-rate tax dodgers,’ Brown protested, demanding that the ‘share option millionaires’ should be penalised. Instead of rewarding the rich, the government should invest in education and training. Brown was echoing the mantra voiced by Harold Wilson twenty years earlier, although six years of Wilson’s government had ended, at best, in economic paralysis. His unoriginal accusations did not dent Lawson’s claim to have achieved a hat trick – higher spending on public services, lower tax rates and a budget surplus.
Overshadowing Lawson’s self-congratulation was the rising value of sterling and his bitter row with Thatcher about whether Britain should join the Exchange Rate Mechanism (ERM). The growing strain between Lawson and Thatcher, and the prospect of rising inflation and an implosion of the boom, encouraged Brown’s belief that the government’s economic policy was doomed. Neil Kinnock’s misfortune was that his alternative policies were unattractive to Labour’s far left. Their representative, Tony Benn, launched a bid for the leadership, and the old internecine war erupted once again. Benn’s bid was trounced at the 1988 autumn party conference in Blackpool, but all the percentage points gained from the Tories shown by the opinion polls evaporated. Labour remained a party of protest, and not an alternative government.
At the end of the party conference Brown returned to Edinburgh with John Smith. Over the previous week the shadow chancellor had as usual enjoyed himself, living up to his reputation at many parties as a heavy drinker, and smoking cigars after big meals. On reaching home he felt unwell, and was examined in a hospital. While getting dressed afterwards, he suffered a heart attack. Smith’s misfortune was Brown’s opportunity. For twenty years he had prepared himself for the spotlight, and now his chance had arisen at the most favourable moment as, during Smith’s convalescence, he took his place on Labour’s front bench. Nigel Lawson’s strategy appeared to be crumbling. The Tories were becoming the victims of their own mistakes. There were widespread protests in Scotland against the new poll tax, inflation was climbing above 4 per cent, interest rates were rising towards 14 per cent, unemployment was stuck at three million and, with a worsening balance of payments, there was a run on sterling. Lawson’s boast about his ‘sound management of the economy’ was an easy target.
‘This is a boom based on credit,’ mocked Brown, eager to prove his skills during the debate on the autumn financial statement on 1 November 1988. Standing at the dispatch box in a crowded chamber, glancing at a speech printed out in huge letters to compensate for his poor eyesight, Brown relished the occasion. Countless speeches in dank Scottish assembly halls had primed his self-confident, exquisitely timed flourishes, mixing statistics and oratory while displaying his mastery of the dialectic, the rapier of eloquent Marxists. He deployed artful mockery to rile an arrogant chancellor for allowing consumption to spiral out of control and for making consistently wrong forecasts. ‘Most of us would say,’ scoffed Brown at his crestfallen target, ‘that the proper answer is to keep the forecasts and discard the chancellor.’ Each cutting jibe, accompanied by whoops of derision from the Labour benches, rattled Lawson’s pomposity. The chancellor had not anticipated the humiliation or the lukewarm support from the Tory benches. His pained expression was Brown’s reward. The result, Brown would later say, was ‘an unequal dialogue between a chancellor who had not yet made up his mind when to retire and a prime minister who had not yet made up her mind when to sack him’. During those magical minutes, Labour MPs felt a surge of hope. Here, perhaps, was the new hero they had sought so desperately. Brown sat down to roars of approval.
Walking through the arched corridors of Westminster later that afternoon, he was suitably modest, feeling an inner calm about his good fortune. In just two days, Labour MPs would vote for the shadow cabinet. The combination of his Commons performance with his astute handling of a series of leaks had earned him an irreproachable reputation. Once again, he sought the help of Nick Brown to lobby for votes. The result, late on 6 November, was electrifying. As he rushed from Committee Room 14, Brown was laughing. He was top of the poll. Following him out of the room, Tony Blair was seen telephoning his wife Cherie to report his own first appearance on the list, his reward for humiliating Lord Young, the secretary of state for trade and industry, about the government’s misconduct of supervising Barlow Clowes, an investment company which collapsed as a result of dishonesty. The next morning’s newspapers praised Brown as ‘high flying’ and ‘a horse for early investment’. One sage wrote, ‘He appears to possess the ultimate political quality of luck.’ A few, aggressively briefed by Mandelson, speculated that Brown had become a future contender for the party’s leadership. Willie Whitelaw, the Tory elder statesman and former home secretary, said