Francis Elliott's story in The Times this morning is well-sourced and identifies the dangerous faultline that runs through the Labour Party right up to the Cabinet.
Francis reports that Lord Mandelson is (once again) considering ripping up the equality legislation announced inthe Queen's speech because of fears of its effect on small businesses during the recession. He will do so in the face of fierce opposition from Harriet Harman, but surely calculates that the mood of the country (and certainly the business community) will be with him.
The trouble is that this blows a hole in what remains of the New Labour political settlement. During the good times ministers were able to argue that measures such as the minumum wage and enhanced maternity leave rights did not effect the ability of small businesses and entrepreneurs to do their job. This position is now being seriously tested.
Cheerleaders of the militant centre-left such as Jon Cruddas argue that now is the time to hold the line on such matters of principle. His quote in The Times identifies just how dangerous this split is likely to be: “If the most progressive of our policies are the first to go under the hatchet, that will cause deep unease across the party. Genuflecting to the free market got us into this mess and the solution is not more of the same. There is now a deepening ideological divide about what to do next.”