The McBride affair is a portent of the coming struggle for Labour’s soul

One can only imagine what went through Alistair Darling’s mind last weekend, as the scale of the McBride affair became evident. In his Budget next Wednesday, the Chancellor faces a political mission which was already next to impossible before the email story broke. Now his task has become downright laughable in its scale. To produce a budget with the economy in freefall is hard enough. But to do so with the government disintegrating all around you is scarcely worth attempting. In theory, Damian McBride’s resignation was simply the departure of a spin doctor, already relegated to a ‘back-room’ role. But nobody with the slightest knowledge of the Brown court believes that for a second. This is a moment of deadly, perhaps terminal, peril for the Labour government.

The emails that Mr McBride composed — lurid smears against Tories and their families — are devastating precisely because they are not, as Number 10 disingenuously claims, the isolated ravings of a lone special adviser. On the contrary: the messages between this senior adviser to Mr Brown and Derek Draper, the Labour blogger, have for the first time revealed in unvarnished detail how Mr Brown has been operating over the years — and the methods he deployed to secure his path to power. As chancellor, he systematically recruited attack dogs and dispatched them to destroy some of the most able people in the Labour party, with exactly this sort of smear and innuendo. And while it worked for him, it has proved fatal for his party.

As Britain prepares for what may prove to be the most bleak budget in peacetime, it is worth remembering that the same tiny group of people lies behind the current political and economic crisis. Many financial scandals can be traced back to a testosterone-soaked trading room where a bunch of hard-working, hard-drinking young men came to believe a little too much in their prowess.