My Life, Our Times

by Gordon Brown

  I could understand the calculation that Neil’s pollsters were making, even though I did not agree with it. Their view was that people would come to us if Labour looked fresh, modern and free of extremists. By announcing Neil’s support for constitutional change and his open mind on proportional representation, it was felt that we could show Labour represented the future and the Tories were now the past.

  Labour had worked hard since 1987 to counteract its image as a party of high tax-and-spend. As shadow Chief Secretary, I had set up a system to ensure all policy commitments were vetted to prove we could be trusted with the nation’s finances. Margaret Beckett then took over the role, determined to prevent the Tories frightening voters with claims we would be profligate. Yet in the summer of 1991, Conservative Central Office launched their usual attack on Labour’s spending plans, this time falsely costing our proposals at £35 billion. And when John Smith published Made in Britain – which proposed to abolish the upper limit on National Insurance contributions – the Tories unveiled their ‘Tax Bombshell’ poster, falsely charging that Labour’s plans would mean tax rises of more than £1,000 for the average family.

  Perhaps most damaging of all, a few days before the start of the campaign, the party was caught out by Norman Lamont’s pre-election Budget. He dramatically introduced a new 20p tax rate which took 4 million lower-paid workers out of the 25p tax band. The ingenuity of the Lamont plan was that, in effect, Labour now favoured higher taxes on the low-paid than the Conservatives did: our plans cut far less ice than the Lamont proposal.

  John believed we had to neutralise Tory attempts to magnify fears in voters’ minds about hidden Labour tax rises. Just six days into the campaign, and with all the pomp of a Budget day, John delivered a ‘shadow Budget’, publishing a host of figures as if he were already chancellor. He assumed that if we were upfront about the gains from a Labour government – rising pensions, increased child benefit, more for the NHS – then the public would accept tax rises to pay for them. But any talk of fairness got lost in the instantaneous Tory bombardment alleging that his shadow Budget hit ordinary families.

  Months before, I had argued to John and Neil, who was also worried about John’s tax plans, that we should recognise that we were in a recession, talk about the issues we were studiously ignoring – jobs and the economy – and sideline all talk of tax rises. I wanted us to argue that the economic problems of the country were now so severe that they would be our first priority, and an anti-recession programme – scrapping all previous unfunded commitments and all tax increases – was by far the best way to deal with the downturn. The Conservatives, I said, were finally vulnerable on the economy.

  The American consultant Bob Shrum, hidden away in a London hotel, shared my apprehension. Bob and his wife Marylouise were later to become close friends of our family. But at that time, I didn’t even know he was there and he had contact only with Labour’s pollster and strategy adviser Philip Gould and the team around him. Party officials were afraid that the presence of an American would provoke a media storm about a foreign takeover. It was absurd; in 1997, 2001 and beyond, Americans including Bob were sitting in the middle of our election war room. It simply wasn’t an issue.

  Bob’s view, like mine, was that day after day we should be hammering on the Tories’ economic record. All this time, I kept asking to do national events highlighting unemployment. To illustrate the parlous state of the economy, I devised a clock that showed we were losing a job every seven seconds. I did unveil the clock, but spent most of my time travelling the regions.

  And as we focused on the constitution and our spending plans but not on the economy, the Tories went for the jugular on tax. They plastered the country with two posters – ‘THE PRICE OF LABOUR: £1,250 A YEAR FOR EVERY FAMILY’ and ‘LABOUR’S DOUBLE WHAMMY: MORE TAXES, HIGHER PRICES’. The calculations were crude and simplistic, but they were effective. Despite all our work, Labour was less trusted on tax than a Conservative Party that had recently tried, and failed, to impose a poll tax and had already more than doubled VAT. I was frustrated: the Tories had made the shadow Budget and tax-and-spend the issue.

  For me, two images stand out from the last few days of the campaign: on the one hand, John Major on a simple wooden soapbox making his final campaign speeches; on the other, Labour’s big-budget, triumphalist Sheffield rally that resembled a US-style political convention. With 10,000 party members in attendance, Neil’s human and emotional response to the adoring crowd – ‘We’re alright! We’re alright! We’re alright!’ – came under fire from the right-wing press. And when Roy Hattersley exulted that the result was a forgone conclusion, the press had another field day. It was a classic political error: you can’t tell the voters you have won; they have to tell you.

  The polls continued to show a marginal Labour victory – or at worst a hung parliament. By chance, on election night, my older brother was producing the TV coverage from Scotland and had linked me into a three-way interview with Kenneth Clarke and the Liberal Democrat, Alan Beith. Just as we were about to go on air, the programme dramatically switched to the count at the marginal seat in Basildon, where Labour had achieved only a 1 per cent swing and the Conservatives had held on. It was a bellwether outcome. As the camera turned to me, I dutifully retreated to the standard holding line that it was ‘still too early to say’. But my worst fears had been confirmed.

  CHAPTER 4

  THE ROAD TO GRANITA – AND GOVERNMENT

  John Smith was the obvious successor when, after the 1992 general election, Neil Kinnock decided to step down as Labour leader. He was also my close friend. I had worked side by side with him in his team for many years. And I admired his abilities.

  For nearly a decade, with courage and unstinting determination, Neil had taken the party into the modern world. He had confronted Militant entryism, transformed our policies from defence to the economy, and given the party back a belief in itself. Both Tony Blair and I believed it was urgent for us to build on what Neil had achieved, to push ahead with Labour’s reform process and to move without delay. Once it was clear that Neil would resign, I told John that I would support him. And when Neil phoned asking if I would consider Bryan Gould, I politely declined to do so.

  Not only was John Smith head and shoulders above his colleagues, my personal friendship with him was long-standing. It did not occur to me that I would be anything other than loyal to him and I wanted to give him all the help I could. I had not agreed with him over the shadow Budget, and I would push him to move more quickly on Labour’s modernisation, but he had immense credibility born out of a natural integrity and years of public service. I had no doubt that he had the strength, ability and desire to take on John Major and win the next election.

  On the day after the election, I travelled to County Durham to meet Tony at the Blairs’ home in Sedgefield. I’m not sure Tony was serious when he said to me in his living room that I should stand for leader – and I did not take it seriously. He and others would later suggest that by ‘hesitating’ at this moment, I missed my chance. In fact, it was a contest I never had any intention of being drawn into, would not have won, and could not have entered out of loyalty to John.

  For his part, Tony told me he wanted to run for deputy leader. His argument for standing was not without merit. As deputy, Tony could act as a powerful advocate for reform. If he ran, I would – I immediately said – support him. But I had to tell him honestly that I did not think he had any chance of success against Margaret Beckett and John Prescott, and that he would be accused of jumping the gun. Nick Brown, who was a former union official with unsurpassed knowledge of the unions, as well as the parliamentary party, offered the same advice, telling Tony bluntly that he could not win the trade union vote, then a third of the electoral college. A Smith endorsement of his candidacy could have given Tony support among his parliamentary colleagues, and I agreed to check this out with a phone call to John. But when I put Tony’s case to him, John was unequivocal in his response. H
e did not want him to stand and preferred Margaret.

  It quickly became clear that John was the overwhelming choice for leader in the minds of most MPs, party members and trade unionists. Such was his status that, at first, many suspected there would not even be a leadership contest. In the event, John’s challenger, Bryan Gould, won only 9 per cent of the vote. And in the deputy leadership contest, John’s preferred candidate, Margaret Beckett, won an outright majority over John Prescott.

  At the shadow Cabinet election afterwards, I finished in first place while Tony ended up second. New recruits to the shadow Cabinet, like David Blunkett, Harriet Harman, Tom Clarke and Mo Mowlam, signalled a sweeping changing of the guard. John Smith named me shadow chancellor. I had expected Tony to want the post of trade and industry spokesman but, to his credit, Tony saw the opportunity as shadow Home Secretary to present a modern view of Labour on law and order. I pushed John to give him this post.

  We were still in the post-mortem phase after our election defeat. That July, I delivered the annual Tribune lecture setting out my own view on how Labour could reshape itself and win the next general election. I emphasised that we had yet to persuade potential supporters that Labour reflected their values in a way that was relevant to their everyday lives. I pointed out that Labour’s constitution was written in 1918 in response to the very different challenges of that time. The implication was that reform of the party’s constitution, including its blanket commitment to public ownership in Clause IV, was an issue we had to take up. My point was that the party now had to break with a one-dimensional centralist view of state power. If there was a public interest at stake, it did not require public ownership and a public bureaucracy directly overseeing provision – governments could be sponsor, partner, catalyst and coordinator of services or industries: they did not always need to be owners.

  Four months after becoming shadow chancellor, I was elected by the party membership to the National Executive Committee for the first time. This was a breakthrough – the places had been monopolised for years by Tony Benn, Dennis Skinner and others on the far left – and it provided me, and Tony too, with the platform we wanted to push for more and faster change. And when John took up the case, which Neil had first advocated, for ‘one member, one vote’ in the selection of parliamentary candidates – a long overdue reform – I backed him to the hilt.

  John knew ‘one member, one vote’ was totemic as a demonstration that Labour was changing. But in private, as he told me, he wished it was something he did not have to deal with. It quickly became a test of his leadership. So adamantly against this reform was John Edmonds, the general secretary of John Smith’s own union, that he announced he was not inviting him to address their 1993 conference. But over the summer months John manoeuvred with exquisite subtlety to persuade other unions, most of them previously hostile, to go along with him. At the TUC conference in September 1993, John did not promise to repeal all Conservative trade union legislation, but he won many unions over by offering them a new Charter of Rights on the first day of a Labour government, and implied – to my dismay – that he would be prepared to tax, spend and borrow more. Even then it was still touch and go as to whether, a few weeks later, John would have enough votes to push ‘one member, one vote’ through; but so committed to winning this test of leadership was he that, as he told me, he would call for a vote of confidence and if necessary resign if he lost.

  His last move was a masterstroke – and I witnessed his manoeuvres at first hand. Even as lunchtime delegation meetings were being held at the Labour conference on the day of the vote, John and his chief of staff, Murray Elder, had figures showing they might lose. John and Murray considered asking me to make the final appeal to wavering delegates but they were right to instead call on John’s erstwhile rival, John Prescott, to sum up the debate. A trade union negotiator to his fingertips, John Prescott could assure them that Labour had no intention of breaking its links with the unions. And so it was that with great passion he convinced delegates that John had ‘put his head on the block’ and that the conference must trust him. Not all speeches matter. But this one did. While lunchtime meetings had delivered further union support and Murray now calculated we had won, not for the first time a Prescott speech gave delegates the confidence to be positive about change. John Smith carried the day by the thinnest of margins, a little over 3 per cent.

  While John was reforming Labour’s constitution, I was reforming our economic policies. First, I persuaded him we had to ditch his own shadow Budget. Having convinced him, I bluntly announced we had got it wrong. This had to be awkward for John, but he understood that the defining mistake of the last campaign was not the one on which to fight the next. When a Labour MP demanded to know why I had dropped our tax pledges so brutally, I replied simply: ‘Because we did not win the election.’

  The change was officially announced in a document entitled Campaign for Recovery, which, of course, had a double meaning: not just the recovery of the economy but the recovery of the party. In it, I didn’t avoid the issue of tax. For once, I had been able to find a popular tax. I now set out a plan for a one-off levy on the excess profits of the privatised utilities. It was an initiative that, unlike some others, stood the test of time and was eventually enacted five years later as the windfall tax to finance the New Deal for unemployed workers. We were able to offer something more. I launched an attack which made headlines about what I called the ‘undeserving rich’ – the privatised-utility bosses, tax avoiders and ‘something for nothing’ executives, who paid themselves far too much at the expense of the public. But in the detail of my attack and my justification of the windfall tax, I was careful to distinguish between those who made money because of the monopoly that they enjoyed – who ought to pay more tax – and those who did well competing successfully in a harshly competitive marketplace.

  My proposal had an added advantage that tax increases rarely do: it was difficult for the Tories to successfully attack this policy. Not only were the profit levels and remuneration systems of the privatised utilities deeply unpopular – with many chief executives awarding themselves lavish salaries and share options – but the Conservatives had created a precedent by introducing a similar one-off tax on the banks in the early 1980s. While many of my shadow Cabinet colleagues were sceptical, John backed me and I stepped up the public pressure on the government.

  I also took a tough line with colleagues announcing unfunded spending commitments. That was the only way to overcome the perception that Labour would be reckless with the public finances. It was a long, hard fight. In my early years as shadow chancellor, it seemed that every interview I did, from the usual politics programmes to Radio 4’s Today and breakfast TV, focused on the allegation that taxes would inevitably go up under Labour, and for a simple reason: we planned to spend more, they claimed, on public services and almost everything else. Our plan was to avoid willy-nilly spending commitments, and to deter them the Treasury team set up a private contest among members of the shadow Cabinet: who could spend the most for the least publicity? Michael Meacher won hands down, when he called for billions of extra spending and secured only one column inch. The lesson was being learned – but I suspect because of my uncompromising stand on tax-and-spend, I never did as well again in shadow Cabinet elections as I had in 1992.

  I was working hand in hand with Tony. We seemed to be of one mind and, at times, we could each anticipate what the other was thinking. It was almost as if we still shared the same office. In January 1993, Tony launched a new counteroffensive on crime using a phrase I had suggested: ‘Tough on crime and tough on the causes of crime’. For the first time in years we had a position on law and order around which the whole party could unite, and this rewriting of Labour’s approach, focusing both on the victims of crime and the causes of crime, rightly earned him great plaudits.

  I think it is fair to say that I was the reformer who at that time felt the most heat from within the party. My hard-line stance on public expendi
ture provoked continuing divisions. For example, in March 1993 Peter Hain, later a good friend, published a demand from the Tribune Group, of which I was a member, for a £20 billion boost to public expenditure. That would have required a huge increase in income tax or a resort to old-style borrowing. I rejected the proposal unceremoniously, and in unvarnished terms I told party conferences that our New Jerusalem could not be built on a mountain of debt. Our approach was to be ‘prudence for a purpose’.

  An economic issue as important as tax, devaluation – one that had haunted Labour in the past – came to the fore early in my shadow chancellorship. This time it would haunt the Conservatives for years to come. My first two months as shadow chancellor coincided with the last two months of Britain’s unhappy membership of the European Exchange Rate Mechanism.

  The recession demanded interest rates be brought down which would have put downward pressure on the pound. But trapped within the ERM this was impossible: the whole point of the ERM was that you had to maintain the value of your currency relative to other members. The initial purpose of the ERM had been to create stability between European countries in order to pave the way for the eventual adoption of a common currency, but it had increasingly become a straitjacket stifling the British economy.

  Labour had gone along with the principle of a managed currency within Europe. In October 1989, John Smith and I had visited European capitals and developed a fourfold strategy: entry to the ERM at an effective rate; adequate central-bank arrangements to ward off speculation; a pro-growth initiative; and increased support for regions left behind. It was part of our effort to reassure the country of Labour’s economic competence.