The contours of the Labour Party are changing. Previous Labour conferences since the mid-nineties were largely an elaborately stage-managed cult of the personality where serious policy discussion was stifled or marginalised to fringe events. At Manchester the mood was still supportive of the leadership, but distinctly conditional on demands being met for a major shift in policy direction. And the voice coming through for the first time in more than a decade was that of the radical Left.

Two factors lie behind this. The financial meltdown of the last few months has ended the deregulatory, privatising, free market agenda which has dominated Western capitalism since the 1980s and has starkly re-emphasised the power and relevance of the State in stabilising modern economies. Whatever the new financial architecture turns out to be, it will clearly require a more regulated structure than the simple restoration of free-wheeling neo-liberalism. Some radical demands were already being strongly pressed at Manchester.

As a result, Alistair Darling promised to bring forward quickly new proposals for banking regulation when Parliament returns in a week. What is now being looked for by reformers is a ban on the more toxic elements of securitisation, a statutory separation between commercial and investment banks, rules to enforce the independence of credit rating agencies, and a requirement for much more prudent capital adequacy ratios. Pressure to push these reforms through is likely to be strong.

Paradoxically, President Bush’s nationalisation of some of the central pillars of US capitalism, AIG as well as Freddie Mac and Fannie Mae, has reinforced these demands for State intervention. Of course Wall Street regards this process as a disagreeable but temporary necessity before normal service resumes and the markets roar off again. But the mood is shifting in both North America and Europe, and a more robust supervisory State is likely to play a permanent role. The days of flimsy light-touch regulation and alleged market self-correction are over. All of this tilts the centre of political gravity to the Left.

A second factor behind this shift which was so palpable at Manchester was fear of the Tory return which is now concentrating minds strongly. For Labour to have a fighting chance at the next election, radical demands surfaced for significant policy change. Not just a crackdown on short-selling, but extensive action against speculators in general. Not just providing local authorities with social grant to build 2,500 social housing units, but allowing them to borrow against their housing stock as collateral to launch a major house-building programme for the 1.7 million applicants on Council waiting lists. Not just more money for the fuel poor for energy efficiency in the future, but a windfall tax on enormous oil and gas company profits to help the poorest pay for soaring energy bills now.
For the first time for years at a Labour conference resolutions were carried in favour, not only of the windfall tax, but of a price cap on skyrocketing energy prices and a much tougher regulator. If that didn’t work, calls were made to think again about a public sector role in the energy sector. Radical motions were also carried in several other areas, including removing the UK opt-out of the Working Time Directive limiting working hours to 48 per week. Repudiation of the City bonus culture was vigorously supported as the symbol of the intolerably growing inequality – a demand acknowledged by both Alasdair Darling and Gordon Brown.

The effect of all this should not be exaggerated. It won’t lead to instant changes of Government policy, not least because the labyrinthine procedures devised by the party establishment to slow down or dissipate party initiatives from the conference floor will present significant hurdles. The real point is a different one. The mood and content of the agenda displayed a strong radical edge, in marked contrast to the policy torpor of the last decade. It pervaded most of the key policy areas, and persisted throughout the week. It was made repeatedly clear that the party wanted unity in the face of the Tory threat, but the quid pro quo was a significant shift of policy to the Left.

After the Blairite interregnum the party is clearly now returning to its normal political structures reflecting its Left and Right wings. The media were so focussed on the question of David Miliband’s ambitions that this much more fundamental point about the meaning of what is happening was largely lost. It led to obsession with all the personal nuances of his speech and almost complete neglect of its content – which was far more significant.

On every major point of foreign policy he stuck rigidly to the American line. In Afghanistan he demanded permanent defeat of the Taliban, without seeming to realise that long-term stabilisation of the country is impossible without negotiation with the Taliban. He denounced (rightly) the appalling atrocity at the Marriott in Islamabad, without appearing to accept that it was provoked by President Zardari’s over-close relationship with the US. His condemnation of Russian interference in Georgia neglected the main pressure that gave rise to it – the ever tighter encirclement of Russia through the continuing US-inspired forward movement of NATO bases up to the Russian borders.

And he made no mention of Palestine at all, because the Americans show little interest in resolving the issue.

There are now clear differences of emphasis between Left and Right within the party, not only on foreign policy, but on welfare reform, civil liberties, and housing and energy policy, to name but some. The real meaning of the 2008 conference is that the party manifestly wants a shift to the Left, not as an ideological indulgence, but as a condition for winning back the huge losses of Labour support before the election. For that reason it is likely to be heeded by the leadership.

The re-emergence of the Labour Left can be readily dismissed as a return to the old tunes of the 1980s. It is nothing of the kind. The collapse of the prevailing model of finance capitalism – that markets left to themselves are the best way of solving all problems – calls out for profound fresh thinking which is unlikely to come from the Right since it’s their model. That must now primarily be the role for the Left, and the message from the conference is that the party wants them to get on with it.

This article was first published in the Sunday Times on 28 September 2008.

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