Commentary: It's Time for Tony Blair to Get Tough

By Stanley Reed

Few outside of the Conservative Party are predicting anything but victory for Prime Minister Tony Blair in the June 7 British general election. While a lot can happen in an intense, four-week campaign, Labour's lead, pegged at 18 percentage points by the MORI polling organization, looks close to insurmountable.

Yet there isn't any great enthusiasm for a second Blair term. Blair's strength in the polls owes more to the inadequacies of the Tories and their leader, William Hague, than to any great admiration for the 48-year-old Prime Minister. Blair is viewed as consumed with spin, while lacking in substance and ridiculously overcautious for a Prime Minister with a huge, 179-seat majority in the 659-seat Parliament. Blair's not being "radical" in the first term doesn't augur well for great deeds in the second, notes Frank Field, who served as Blair's minister for welfare reform but left in frustration in 1998. In fact, with the heretofore robust economy slowing and public cynicism on the rise, Blair could find himself paralyzed by fear of alienating this or that constituency and wind up accomplishing very little.

MODERNIZER? Blair's best hope of avoiding such a fate is simply to lead. If his party doesn't like it, tough. His great strength is that he is not a party hack. He is capable of thinking the unthinkable. He may be headed for another big majority. So he should capitalize on it and not worry so much about winning yet another election. Blair hopes to go down in history as a great modernizer who restored Britain's leadership of Europe and secured its place in the 21st century. To do that, the Prime Minister should give the public straight talk about what that will take.

For starters, Blair should get real about what a modern leader can and can't do. To an American, Britain still seems vastly overcentralized. Blair winds up taking responsibility for everything from tackling the foot-and-mouth epidemic across the countryside to making the trains run on time. That's silly. He should back off and focus on a few big issues.

One of those must be Britain's relations with Europe. He would be wise to end the dithering on whether or not Britain should adopt the euro. So far, he has let his aides and the rabidly anti-Europe Murdoch-owned press set the agenda. Blair has promised a review on the euro two years into the next term. He should use the occasion to make Britain's intentions clearer. Yet at the moment, Blair is leaving this crucial matter largely to Chancellor of the Exchequer Gordon Brown. Blair should shrug off the threat of a Brown tantrum and take back the portfolio.

It is not an easy choice. If Blair decides to hold a referendum on joining the euro and wins it, that would subordinate British monetary policy to the much-scorned European Central Bank in Frankfurt. And it would inevitably draw Britain further into the embrace of the Continental economies. But it would give Britain much more negotiating power, including on its terms of entry. Voting "no" will likely mean permanent second-class status for Britain in European councils. And it may mean further decimation of British manufacturing as companies' margins are eroded by the strong pound.

Carmakers such as Ford Motor Co. have already begun cutting down their manufacturing exposure to Britain, and the local British industrialists that still survive are struggling. "There is no point manufacturing here if you can do so in mainland Europe," says Andrew Cook, CEO of Sheffield-based William Cook Ltd., which makes metal castings. Blair has to decide which course makes sense for preserving Britain's status as the leading destination for foreign investment in Europe. There is little doubt about what most multinationals think: "The high valuation of the pound is a danger for the British manufacturing base," says Edward G. Krubasik, member of the management board of Germany's Siemens.

Basic manufacturing's decline in Britain will be tough to arrest. It is more important for Blair to secure the future of industries such as finance, pharmaceuticals, and technology that are Britain's strong suits. Blair should be on guard against European rules that might hurt London--the leading financial center in Europe. Further cuts in capital-gains taxes could strengthen Britain's Europe-leading venture-capital industry and help foster an investor culture. Blair would also be smart to scrap the high taxes on share trading that annoy banks and investors.

Blair and his aides have been strangely silent about some of the most important achievements of his first term. The regional governments he has fostered in Scotland and Wales have enormous potential. The still-shaky peace deal that Blair helped negotiate for Northern Ireland has also given the province control of its own local affairs. Blair has been criticized for risking the breakup of Britain, but in the long run he may be praised for beginning the long overdue process of giving its regions control over investment decisions, health care, and other local matters. "Britain under [Margaret] Thatcher became as centralized as France," says Charles Miller Smith, chairman of Imperial Chemical Industries PLC. "Now it's in the process of becoming more like the U.S. and Germany." Blair should expand the template and parcel out more power.

RED KEN. The results won't always be to his liking. His arranging for London to have a mayor has produced a nemesis in the form of Ken Livingstone, a charter member of the old "loony left." But Blair shouldn't try to compete with Livingstone. Let Red Ken take the heat for London's problems.

That brings up the loudest complaints that Blair hears--about public services. Many of the people who voted for him are disappointed that education, a big Labour issue, hasn't improved much and that the National Health Service, another sacred cow, is going backward. Blair should make clear that these are long-term societal headaches that won't be easy for a government to cure. And he should offer a realistic map toward solutions. For the NHS, that means busting up the vastly overcentralized bureaucracy and giving far more authority to local hospitals to set priorities, raise funds, and enter into profit-making activities. Such changes would violate political taboos, but the alternatives are either monster German-style spending or continued decline.

Much the same goes for education. Teacher pay is too low to attract promising young people into the profession. Underfunding threatens to undermine the world-class status of such fabled universities as Oxford and Cambridge, which, unlike Yale and Harvard, are largely state-supported. Again, creative solutions are needed. The elite universities should be able to hit the offspring of the wealthy, who now pay only minimal fees, with much stiffer tuition bills. And the government probably needs to substantially raise funding for primary and secondary schools and for research. But the schools themselves and their constituencies--not a centralized bureaucracy---should set the priorities.

Such proposals, if implemented, might reduce Blair's own opportunities to claim credit. But they just might lead to the "fresh and radical change" for which Blair, in calling the election on May 7, declared he needed a second term.

Reed is London bureau chief.

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