Nagging doubts about Labour 100 days on

Labour reaches the end of its first 100 days in power in an unfamiliar position. On the defensive. The loss of the Uxbridge by-election, Robin Cook's marital break-up, the Gordon McMaster suicide and the mishandled affair of Lord Simon's BP shareholding have conspired to present a picture of a Government less in control than it likes to be. To top it all, interest rates have just gone up for the fourth time since Tony Blair took office, increasing the payment on the average mortgage by pounds 40 a month.

Harold MacMillan had an explanation for the sort of quicksand Labour has suddenly run into. Asked once what was hardest thing to handle in government, he replied: "Events, dear boy, events."

Well, the events of the last 10 days bear out that adage. If they make Labour appear more human as a party, more fallible as a government, perhaps that is no bad thing. The stage-managed, news-managed, Mandelsonised way Labour has conducted itself since 1 May has begun to wear a little thin. It has encouraged those who argue Labour is more about style than substance, that it prefers slogans to policies. The critics think they have exposed a "rhetoric gap" between its words and actions.

Labour's response, unfortunately, has been to come up with another gimmick wrapped in a slogan. Mr Blair, we were told yesterday, is going to produce an annual report so that the "shareholders of Britain plc" can see how well Labour's performance is measuring up to its promises.

This is an irrelevance. Worse still, it distracts attention from the real substantive progress Labour has made, notably in economic management, but also in the regulation of the City, the implementation of competition policy and its commitment to tackle unemployment.

No one could seriously accuse Gordon Brown of not having had a seismic impact since taking over as Chancellor. The decision to give the Bank of England operational independence to set interest rates ranks as one of the most significant constitutional changes since the War.

The jury is still out on how well the policy is working and will remain so until well into next year. It will take until then to reach a judgment on whether the strategy of gently nudging up interest rates a quarter point at a time has succeeded in keeping the cost of borrowing lower than it otherwise might have been, while still delivering a soft landing for the economy.

There is a legitimate fear that it will produce a stand-off between monetary and fiscal policy, encouraging expectations of higher rates and thereby pushing the pound to unsustainable levels. That concern was fuelled by the very modest personal tax increases announced in the Budget at the expense of higher taxes on business. Until this week, the ammunition was mounting. But the Bank's latest tactic of combining another rise in rates with a broad hint that there would be no more for the foreseeable future seems to have done the trick in bringing sterling back down to earth for now.

Similarly, the decision to strip away the Bank's responsibility for banking supervision and bring it under one roof along with all the other City regulatory bodies marks a sea-change. The creation of super-SIB is certainly the most significant regulatory change since the 1986 Financial Services Act.

There are questions about how this new overarching body will work. There is a worry that the advantages gained from bringing separate regulatory functions together will be negated by the unwieldy and bureaucratic animal that emerges.

There will be ample scope for power battles and there will be plenty of room for empire building, especially given the size of the new headquarters the super-SIB is hunting for. But no one can argue with the boldness of the strategy.

As far as competition policy is concerned, the reassurance, initially at least, came in what the President of the Board of Trade, Margaret Beckett, promised not to do. There would, she said, be no change in the burden of proof in takeover cases nor any change in the policy of vetting mergers on the basis of their impact on competition.

The decision to replace the Monopolies and Mergers Commission with a more broadly based Competition Commission and grant the Office of Fair Trading new powers to fine companies engaged in cartels or anti-competitive agreement are also a step forward. The previous government pledged to do much the same but never quite found the Parliamentary time.

Similarly, there can be few grumbles with the reform of the Private Finance Initiative, while Labour has made enough noises to suggest that neither the Social Chapter nor the national minimum wage will prove quite the bogeymen business once feared.

So far, so good. The equity markets have taken New Labour in their stride, the FTSE 100 index rising by 10 per cent since the election, even though the performance of gilts has been less impressive.

The nagging doubts about Labour concern not the broad sweep of its changes but whether, for all Mr Blair's words, it really is a pro-business government. On the one hand Mr Blair has gathered to his breast a small coterie of "can do" business leaders whose endorsement he touchingly believes will cement Labour's credentials with the rest of the business community. Step forward Sir Peter Davis of the Pru, Martin Taylor of Barclays, Gerry Robinson, Alan Sugar and, until he blotted his copybook by being beastly to his cabin crew, Bob Ayling.

On the other, the savage treatment meted out to Railtrack, for a set of profits that were hardly exceptional, and Camelot, for executive bonuses that merely reflected its money-raising success, suggests that Old Labour, red in tooth and claw in a different way, lurks not far beneath the surface.

Raging against such so-called excess might make good copy but at what point does it spill over into a more general antipathy towards business as a whole and the pursuit of profit? Despite her policy statements, Mrs Beckett seems to be intent on referring or blocking every merger that lands on her desk, not always with the backing of her competition experts. Is this to protect consumers or is it really because she dislikes corporate activity?

The Chancellor has spoken often and at length about how New Labour will foster enterprise and sweep away barriers to growth and productivity. But in his attempt to be more "businesslike" by dressing down both for the Mansion House speech and the annual CBI dinner, was he really betraying his latent distrust, even dislike of the City?

The one consolation is that the Conservatives have scarcely won any more business friends during Labour's first 100 days. The attack on such a distinguished businessman as Lord Simon may have drawn blood. But in doing so the Tories seem to have completely forgotten which side their bread is buttered on.