From yesterday's Warwick National Policy Forum to the autumn annual conference, the political aftershocks will be felt in the Labour Party and beyond throughout the summer months as Cabinet Ministers, activists and the Prime Minister himself ask the essential question: "Should he stay or should he go?"

The irony will not have been lost on neither Gordon Brown's supporters
nor his opponents that the political coup de grace has been delivered to Gordon Brown by Scottish voters in his own backyard.

Scottish by-election shocks in safe Labour seats were not unknown to Tony Blair. In September 1999, Labour's majority in Falkirk West was slashed from 15,878 to 556, and in December 2000, in Hamilton South, Labour's majority was reduced from 13,783 to a wafer thin 705. But still Labour won.

Political parties exist to win power and deliver change. Blair delivered electoral success, albeit with diminishing support. Brown has delivered consecutive defeats, with support evaporating. If Labour cannot win in its heartlands of Crewe or Glasgow, where can it win with Brown?

The loss of Glasgow East is deeply symbolic of a year of electoral and policy failure under Brown. By comparison, Alex Salmond's devolved minority SNP administration has remained popular, and spoken for Scotland, where Brown has appeared to speak for London.

The champion of the British Way and New Unionism, who feared an English nationalist backlash against Labour's failure to redress both the fiscal iniquities of the Barnett Formula and the democratic deficit of the West Lothian Question, has been undone instead by the fruits of devolution to Scotland, for which he campaigned so ardently. The principal reasons for the defeat go to the very heart of the New Labour project developed by Blair, Brown, Peter Mandelson, Philip Gould and Alastair Campbell in the mid-1990s.

According to New Labour, the Old Labour projects of the Attlee, Wilson and Callaghan governments had ended in devaluation or industrial unrest because of their respective inability to reconcile domestic modernisation priorities with the demands of the City of London's global financial markets.

The central conceit of New Labour in May 1997 was the mistaken belief that it could reconcile globalisation with domestic economic, social and political renewal.

The NHS could be saved; crime and its causes could be redressed; the country's crumbling infrastructure and constitution rebuilt; the United Kingdom could end its isolationism in Europe and beyond; and all this while the City of London's casino capitalists were kept on board to bankroll New Labour's ambitions.

For a decade, the conceit appeared plausible. The City prospered and the economy grew for 40 consecutive quarters. Inflation and unemployment remained low. Public finances appeared to be healthy.

Economic stability and fiscal prudence appeared to have been "locked in", in Chancellor Brown's own words. Short-termism and boom-and-bust economics had been vanquished.

In reality, headline economic growth was the product of rampant consumer spending and £1,400bn of private debt, secured against inflationary property prices. This private imprudence has been accompanied since 2002 by increasing public imprudence.

In March 2002, public sector net debt was £314.1bn or just 30.2 per cent of GDP. By the end of June, the national debt stood at £555.3bn, or 38.3 per cent of GDP. If Northern Rock and the Bank of England's borrowing are included, as they should be, that figure soars to £640.5bn, or 44.2 per cent of GDP.

Tony Blair and Gordon Brown were imprudent for a purpose. It enabled them to secure New Labour's historic third term. That imprudence will likely cost Brown his job and his party the next General Election.

Gordon Brown was one of the most successful Labour Chancellors. He inherited an economy that had already been growing for 19 quarters on the back of rampant consumer demand and rising property prices.

The initial and impressive prudence of New Labour's first term owed much to £22bn of third generation mobile phone licence revenue, and tight public spending settlements.

The economy continued to grow for 10 years, driven by the borrowing made possible by liberalised financial markets. Labour shortages were solved not by training the young unemployed or re-training those on benefits, but by the short-termist solution of 80 per cent of new jobs being taken by migrant labour. Low inflation reflected international commodity markets and cheap Chinese consumer goods. It owed little to the Bank of England's mock "independence", where it simply administered the inflation target set for it by Brown.

Economic success depended upon external factors largely beyond the control of the British government, but the Blair Government claimed responsibility and took the credit.

The onset of recession is equally the product of external factors. However, as Crewe and Glasgow East have shown, voters facing soaring fuel and food prices, and rocketing mortgage costs, will not accept the Treasury's claims that globalisation is to blame for their personal financial distress.

Having failed to reform the funding of political parties, a bankrupt Labour Party is more financially dependent than ever upon the trades unions.

The very "forces of conservatism" that scarred Blair's back could now stab the Brown (or Miliband or Balls) Government through the heart with not just a winter, but a summer, autumn and spring of discontent.

It would be tempting to conclude that Brown was lucky at the Treasury and unlucky in Number 10. That would be wrong. Most of Brown's wounds have been self-inflicted, the product of indecision and strategic failure.

Most importantly, the dithering over and eventual failure to call an autumn General Election, when the limitations of David Cameron's inexperienced Shadow Cabinet team might have been ruthlessly exposed.

The failure to withdraw troops from Iraq, and to redeploy them to Afghanistan with the necessary equipment has left the Armed Forces overstretched and the military covenant in tatters.

The initial complacency over Northern Rock, and the fatally flawed "risk-based" approach to financial regulation, which thought markets could be made to serve the public purpose, but which instead have seen the taxpayer having to bail out private investors for the risks they have taken.

Brown unilaterally chose not to proceed with a super-casino in Manchester, but has expected the taxpayer to bail out the mega casino in the Square Mile and Canary Wharf to the tune of more than £50bn.

On becoming Prime Minister, Brown promised "a government of all the talents", to deliver "a new kind of politics" through "a new style of government". He has failed on all three counts.

The voters of Glasgow East have followed those in Crewe in delivering their verdict on Brown's drift and dithering. He promised to listen and learn. He has done neither, and thereby lost the hearts and minds of
too many voters.


Simon Lee is senior lecturer in politics at Hull University and author of Best for Britain? The Politics and Legacy of Gordon Brown.