Labour would be faced with a decision on the ERM whether to stay in at the OTL rate or stay in and devalue, IIRC Kinnock privately wanted to devalue although the Labour manifesto stated: 'Labour will maintain the value of the pound within the European Exchange Rate Mechanism.' During the election campaign the £ fell as it looked more likely that Labour would win, so I think it's likely that the £ would face a crisis quite quickly (Black Wednesday was in September) - perhaps after Denmark's rejection of Maastricht a month after the election in June.
If Kinnock devalues and stays in the ERM this would avoid a costly exit but the economic outlook may be just as bad or worse for other reasons - it would be inflationary and this along with a loss of confidence would likely place pressure on interest rates to go up to support £ (particularly if the market expected another devaluation). So no matter what policy Labour pursue it would be a difficult period, at least in the first 1-2 years, and may reduce the likelihood of fulfilling manifesto commitments (reducing unemployment 'National Recovery Programme', generous increases to child benefit and pensions).
Other developments:
- Likely to be no privatisation of British Rail as begun in 1994, at least while Labour remain in government;
- Earlier opt-in to Social Chapter;
- Potentially earlier introduction of national minimum wage;
- Reversal of opted-out schools/City Technology Colleges and more local authority control in education;
- Abolition of the poll tax and introduction of a new property tax as OTL - how far Labour's 'Fair Rates' would differ from Council Tax I don't know;
- 'Department of Health and Community Care' (25 years early) and more grant funding for social care;
- Earlier Department for International Development;
- Earlier devolution in Scotland, Wales, and London - they also proposed consulting on a new tier of elected regional governments and/or unitarisation;
- Potentially an attempt at Lords reform, but probably not a top priority - if they rely on Liberal Democrat votes then could see electoral reform or a referendum at least;
- Earlier Freedom of Information;
- Likely to be a big clash with the press and Murdoch in particular due to plans to tackle concentration of media ownership;
- Earlier repeal of Clause 28;
- A 'Ministry for Women' (Government Equalities Office set up in 2007 OTL).
If Smith as Chancellor passes away during the premiership then Brown would be an obvious successor, but likely inheriting a worse situation than he did in 1997 OTL. This may increase his chances of beating Blair to the Labour leadership.
For the Conservatives, if Major doesn't continue then Heseltine, Baker, Lamont, Clarke or Howard could be potential leaders.