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A reminder of the underlying strengths in Labour's 1987 manifesto was provided in October 1987. Following the computerisation and expansion of commodity markets, huge profits were being made in the City. This came to an abrupt end in October, when the worldwide stock market crashed, wiping millions of dollars off the value of corporate shares. The newly privatised companies were naturally affected by this, with many of the new small investors badly hit. Labour's promise of exchanging shares in public monopolies for guaranteed stakes now looked like a great idea. But as Britain's economy headed into a massively overheated period, few remembered this offer.

The Labour Party was going through an introspective process following the third consecutive electoral defeat. Many were suggesting that radical changes would have to take place in order for Labour to become electable again. We can see parallels with the late 1950s in the rhetoric used, often from a right-wing perspective.

The leadership of the Labour Party became increasingly isolated from the membership during this period. The majority of activists were still firmly on the Left of the Party and repeatedly returned Left majorities to the NEC, passing Left resolutions at Conference. The leadership group, and many union leaders, arrived at the conclusion that Left policies, even the moderate kind of 1987 ones, would prevent a Labour government being elected.

Essentially, the Kinnock leadership became weak at this point. Neil Kinnock seemed utterly useless at defending policies which Labour members thought were right, but which were not over-popular in the country as a whole.Although he had the strength and sentiment within the party to maintain a grip on power, Kinnock's leadership could only change policy by ignoring Conference resolutions and the wishes of its members. On the other hand, the Right-wing of the Labour Party never fully accepted Neil Kinnock, criticising quietly and persistently from the background. This is ironic, as people like Gerald Kaufman and John Smith, both seemingly born into right-wing Labour fixing, became increasingly influential upon policy.

Strained relations on all sides were evident from this period, with an uneasy relationship between leadership and membership reflected in a new emphasis upon membership without political activism, reducing the membership input into policy. The new "communications" strategy, which basically consisted of producing glossy magazines, heralded the start of a process whereby members became more passive, and actually similar to "donors." This was reflected in the growing use of stage-management at Conference. A growing Americanisation in Britain was to mean that the Labour Party became more like the Democrats in the USA.

However, Neil Kinnock retained his personal popularity within the Party. Now back in Parliament, but a figure now largely deserted by the "soft-left," Tony Benn challenged for the leadership in 1988 and only received 11% of the electoral college. Nobody wanted to return to the outright fighting of 1981 and Benn was becoming associated with a particular type of negativism. Political life had moved on, and arguably Tony Benn, Dennis Skinner and Eric Heffer now represented a kind of "Left Conservatism".

Responsible for many of these changes in perception was Peter Mandelson, Director of Campaigns and Communications. Mandelson effectively directed the Policy Review. He controlled the input. He would discredit Shadow Cabinet members who suggested anything that Peter Mandelson did not think was popular with the electorate. As a confident of Neil Kinnock, Mandelson was in a great position to build up some individuals and discredit others. This he did to great effect, and found small grouping of ambitious new MPs who were prepared to accept his patronage. Among these MPs, of course, were Gordon Brown and Tony Blair.

With these internal manoueverings, there was scarcely energy left to conduct a decent policy review. In fact, it became much easier to find policies which were unpopular than to find policies which were popular. So lots of policies were scrapped, and very little of substance replaced them, because whilst Mandelson was a skilful media operator, as a creative political thinker or intellectual, he often failed dismally.

Meanwhile, a housing boom was proving unsustainable and in 1988 the housing market followed the stock exchange and also crashed, plunging many owner-occupiers into negative equity. The British economic boom, based upon consumption and credit, was soon to boil over, and the high interest rates used to contain this was to bring about a rise in unemployment. The Thatcher miracle was finished. Thatcher had not solved Britain's economic problems and continued to blame public sector workers for being greedy.

The Conservatives were beginning a process of internal explosions which were to make life easier for Labour. Despite having a self-styled media guru directing Labour's strategy, there appeared to be little activity in this time from the Parliamentary Labour Party. By the end of 1988, internal debate had become quieter in the Party. However, apart from a few people, such as Robin Cook and some of the right-wingers such as Kaufman, few individuals could attack the Conservatives as effectively as the Conservatives themselves.

To some extent, there was a changing agenda, as environmental issues became suddenly important in mainstream politics. However, when all parties had attached some "green" policies to their programmes, this soon disappeared from the main political dialogue. More accurately, political instability became more common, as Conservative divisions over Europe started to affect the Thatcher government. To some extent this represented a fundamental contradiction in Thatcherism. Free markets must also mean increased foreign involvement, and whilst Thatcher welcomed the influences and interests of the USA, it would also mean that Britain's destiny was linked to the social-democratic states of Europe.

Whilst the Thatcher government grappled with these contradictions, the Communist bloc began to crumble in early 1989. One by one, eastern European states fell, leaving the discredited state communism behind. Sometimes this would be used to discredit socialism as a whole. Whilst this is spurious, it is certainly true that there now seemed to be no real alternative to market economies by the start of 1990.

The crippling blow to Thatcher in 1989 was the resignation of her Chancellor, Nigel Lawson. He had provided much of the confidence for the administration. The issue was Europe, again, and his desire to peg the pound within the European Exchange Rate Mechanism. Linking the pound to the deutschmark was therefore an awful thing for Mrs Thatcher to comprehend. Unfortunately she then appointed Lawson's successor, John Major, who was equally keen on the idea.

Labour had its own divisions on this issue. It was unable to mount an effective campaign. Now an enthusiastically European party, Labour officially supported all moves towards European integration. The conversion was made genuine after a visit by Jacques Delors who promised Conference a social Europe, and convinced many that this could be an effective bypass around Britain's intransigent employers.

The Policy Review emerged in 1989 as an "all or nothing" document called "Meet the Challenge, Make the Change." This meant that individual Conference resolutions were bypassed. This set a precedent for future leadership-led policy changes. The most significant change was the abandonment of unilateral nuclear disarmament. Faced with a document presented by Kinnock on a "back me or sack me" basis, Conference accepted the Review.

In policy terms, the Review represented a climbdown on a number of issues, but left a large vaccuum behind, in positive policy terms. In the caricature history that has become popular, Labour before this time was committed to massive nationalisation and high taxes. In fact the Review merely filetted much of the substance from the 1987 manifesto, none of which recommended massive nationalisation or high taxes.

Soon, a big storm engulfed Westminster, taking not only the Conservatives, but also the weak Labour leadership and unions by surprise. The community charge was a mad, ideologically driven scheme, designed to tax people regardless of wealth, with the intention to further destroy local government. It was introduced in Scotland one year before England, in line with Mrs Thatcher's use of Scotland as a test-tube for new ideas. Anti-Poll Tax Unions were set up in local communities to organise non-payment. Militant were at the forefront of these, but they also included non-party people and anarchists. They were helped by millions of people, in an economy ravaged by recession, being simply unable to pay.

Desperate councils tried to employ bailiffs to collect the furniture and belongings from peoples houses but were fought off by organised residents groups. Soon the poll tax became uncollectable. In England, hastily organised groups made sure "I'm not paying the poll tax" posters were seen in thousands of windows. Hundreds of supporters swamped courts and council offices. Militant and the APTUs were directly challenging the Conservatives in an extremely effective way, often with the help of Labour members. Now 18 million people were not paying the poll tax and the Tories were very worried.

Labour prepared a Poll Tax Protest Petition, but was fairly taken aback by the scale of events. Some Labour councils, faced with bankruptcy, took fright, and began implementation. A huge rally was scheduled for 31st March 1990. Over 200,000 people converged on London, representing one of the largest anti-Thatcher demonstrations. When the police attacked the mixed crowd of men, women and children, the riots spread around the West End of London, with all the media and world looking on. The political nature of the British police was hard to conceal. It was becoming obvious that, outside of the Southern Tory heartlands, people's patience with the Thatcher government was running low. Polls were predicting a meltdown for the Conservatives.

Despite the divisions, self-preservation still characterised many Tory MPs. A growing number saw Mrs Thatcher as a liability. In August 1990 Geoffrey Howe resigned over her attitude towards Europe. The departure of another senior figure fatally eroded Thatcher's authority. A leadership challenge from Michael Heseltine followed, which was not a convincing win for the failing Prime Minister. Finally a succession of ministers visited Thatcher and urged her to resign and on Thursday 22 Novenber 1990 an old lady ran crying from the steps of Downing Street to a waiting car.

Mrs Thatcher had changed the environment in which politics operated. She opened Britain to foreign influences and ripped open nationalist divides in Ireland and Scotland, with large poor ghettoes emerging in many parts of Britain. The economy was now service-based and labour was increasingly casualised. There was a new middle-class emerging, made wealthy from property and financial services.

Ominously, Neil Kinnock failed to impress even in Mrs Thatcher's last Commons performance as Prime Minister. Relatively wealthy people were not immediately inclined to vote Labour, despite a worsening recession. When John Major became Prime Minister, Labour's poll lead of 20% became a Conservative lead of 8%.

In 1991 the political atmosphere intensified, with the election campaign starting extremely early. Whilst the recession continued to bite, Conservatives highlighted the fact that this was a global problem. Neil Kinnock relaunched himself as a dignified elder statesman, presenting a number of fairly anodyne policies for easy public consumption. Meanwhile, his Shadow Chancellor mounted the "prawn cocktail" offensive in the City of London. John Smith attempted to convince those in the financial sector that Labour was responsible and pro-business, and was fairly well-received by many, being an affable character.

The 1992 election was fought almost entirely on the centre-ground of politics, with the Liberal Democrats now to the left of Labour on some social issues. Following opinion polls to the last percentage point, Labour aimed to neutralise the Conservative's strongest areas. "Tough on crime, tough on the causes of crime" is a classic example of the mixed messages that Labour produced for the 1992 elections. In addition to this, it hoped to capitalise on the strong areas of health and education - after all, even the new middle classes needed good schools and hospitals.

The 1992 campaign was effectively aimed at the narrow band of people within the marginal constituencies that Labour needed to overturn the Conservative majority. Although Labour's appeal had broadened in some ways, in effect, the target audience had narrowed. The manifesto was very broad and unspecific in some areas, and very specific in others, namely tax.

So the parties entered the campaign roughly level in the opinion polls. Once agin, the Conservatives produced a number of scare stories about the tax proposals. Labour's plans to raise National Insurance contributions were the re-distributive mechanisms favoured by John Smith. In fact, they were a fair way of gaining more tax for social programmes. But the Tories described this as a "Tax Bombshell" and the media were quick to describe this as Labour's plans to "get the rich." It was also noted that there were plans for around 20 new ministries in Labour's manifesto, and this was widely regarded as a product of the vaccuum left by the Policy Review.

Despite the scare stories there was still reason to be fairly optimistic in the week before the 1992 Election. No-one thought that Paddy Ashdown would support the Conservatives in the event of a hung parliament. Then the Conservative press notched up a gear. There were so many scare stories that Labour's press team could not keep up with the rebuttals. These were centred around taxes, with trades union horror stories also thrown in. The media also subjected Neil Kinnock to some severe personal abuse, which had not seen since Michael Foot's 1983 campaign.

John Major proved a tougher character than many had realised. Slightly weak in demeanour, he nonetheless proved to be an effective campaigner on the streets, using a soapbox and loudhailer, as opposed to the presidential style of Neil Kinnock in 1992. Actually, the Labour campaign had arguably become over-stylised. The electoral mastermind for the Conservatives, Chris Patten, was simply more effective than Peter Mandelson.

Labour failed to convince. In fact some of the policy changes may have been counter-productive, as Neil Kinnock looked like a man desperate to win at any price. The final result was an appalling shock. Labour only achieved a 2% swing, and a massive 14 million people voted Conservative, the highest total vote for a UK party ever. The strategy of attacking the marginals partly worked, as the Conservative majority was cut to 21.

On the morning of 10th April 1992 Neil Kinnock sombrely announced his resignation. The mood in the Labour Party was funereal. After all the battles and changes it seemed that nothing could unseat the Conservatives. Despite fighting the election on the "centre-ground" the Tories promptly embarked on a series of reforms and changes that spread Thatcherism even further into the national life of Britain.

The trauma of this defeat was to lead to a total crisis in confidence for the Party and truly marks the beginning of the end for the Labour Party as was previously known. In the Party, the Left was ageing and declining in number, now seemingly incapable of providing serious new initiative or energy. Whatever future remained, it seemed to be as part of a broad anti-Conservative coalition which had absorbed many of the aspirations of the Thatcher years...

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