The End of the Party

by Andrew Rawnsley

  That weekend a ‘really worried’ Chancellor discussed guaranteeing the deposits with the Prime Minister.115 Brown hesitated. He refused to sign off on a guarantee until the Treasury gave him a clearer idea about the extent of the Government’s exposure.116

  A decision was going to be forced upon the procrastinating Prime Minister. The torrent of withdrawals from the Rock continued on Monday: £2 billion flowed out in the space of just four days. ‘This showed that the general public could lose confidence quite quickly and that has obviously coloured everything that’s been done since, here and abroad,’ comments Sir John Gieve.117 On the stock market, there was frenzied dumping of not only shares in the Rock, but those of several other institutions now rumoured to be at risk. The Treasury’s senior officials became ‘hugely concerned about the ramifications for other institutions, potentially much larger ones’.118 At Number 10, Brown also became highly alarmed that it could ‘spread to other institutions’.119 By lunchtime, the Government was seized by the fear that it was about to face runs on several other banks, including ‘the big ones’.120

  After a frantic discussion between Brown and Darling, that afternoon the Chancellor called an emergency news conference at the Treasury at which he announced that the Government was going to ‘guarantee all the existing deposits in the Northern Rock during the current instability in the financial markets’.121 As soon as this was clear, the queues at the Rock began to disappear. The Rock was rescued, but in such a clumping fashion that it did not inspire any confidence in the authorities. John Gieve later lamented that their footwork was so leaden that it was ‘more John Sergeant than Fred Astaire. We did not need two days of queues in the streets.’122

  The flawed and sloppy regulator failed to see the crisis coming. Mervyn King was inflexible and off the pace when the crisis broke. Alistair Darling lacked the experience and clout to take a grip. Gordon Brown dithered. In the aftermath, they all blamed each other. One senior Treasury official at the heart of the crisis comments: ‘We thought it was the end of the world. People were saying that was it for Britain’s international reputation.’123

  Less fortunate than the depositors were the shareholders. Shares valued at more than £12 just seven months earlier when the City was still in love with Applegarth crashed below 50p. The bank, once the pride of Newcastle, was dubbed ‘Northern Crock’. The Chief Executive left three months later, though his disgrace was sweetened by being allowed to leap clear of the wreckage with a pension pot worth £2.6 million and the proceeds from the fabulous salary and bonuses he had enjoyed in his days of glory. Nearly all the discredited board went too. The Government was left holding the corpse of a bank which no-one wanted to buy, along with a large and rising exposure for the taxpayer.

  The ‘Golden Age’ trumpeted by Brown less than three months earlier was turning to dust. The wreck of the Rock was the first dramatic manifestation of the bursting of the financial bubble of Chancellor Brown. Yet its paradoxical consequence was to inflate a temporary political bubble for Prime Minister Brown. He feared, and the Tories hoped, that the run on the Rock would prove to be a fatal blow to his reputation for economic stewardship. Opinion polls indicated the reverse. A poll in mid-September had well over half of voters trusting Brown and Darling on the economy while less than a fifth reposed faith in their Tory rivals.124

  George Bernard Shaw once said: ‘My reputation grows with every failure.’ The same was true of Gordon Brown. In the immediate aftermath of the crisis, the run on the Rock encouraged voters to flee to Brown. They threw themselves into his arms in the belief that he was the helmsman best qualified to steer Britain through a financial storm. ‘With the way Gordon’s star really shot high,’ Cabinet ministers began to think, ‘it was now possible to win an election and win big under Gordon.’125

  There was growing speculation that Britain was heading for the polls.

  29. The Election That Never Was

  The idea of an autumn general election was first put into the Prime Minister’s head at the end of July. The Cabinet were summoned to Chequers just before the summer break to be given what one Minister recalls as ‘a rather saccharine presentation’ by Deborah Mattinson, Brown’s personal pollster.1 Once the Cabinet departed, the Prime Minister’s closest advisers joined him in the downstairs sitting room overlooking the country house’s handsome grounds.

  ‘It looks strong,’ remarked Spencer Livermore. The private polling shown to the Cabinet put Labour eight points ahead of the Tories and suggested that Brown was seen as a superior leader to David Cameron. Douglas Alexander and Sue Nye agreed that results were good. Livermore went on: ‘You should think about going early.’ Brown was pensive. ‘You mean April?’ he said, thinking his aide was suggesting an election in the early spring of next year. ‘No,’ said Livermore. ‘I mean the autumn.’ Brown, Alexander and Nye all laughed at the audacity of the idea.2

  Brown had originally told his team that he ideally wanted to call an election in the early summer of 2008: somewhere around the anniversary of his arrival in Number 10. Alexander, who was in charge of planning campaign strategy, and Ed Miliband, who was supervising manifesto preparation, were working to that timetable. Brown’s calculation was that he would need twelve months to establish himself as Prime Minister, heal the wounds of Iraq and restore trust in the Government. He’d deflected calls for an immediate election by correctly pointing out that there hadn’t been one when John Major took over from Margaret Thatcher. He told me in an interview: ‘I think people want to give their leaders a chance, and they want to give them the opportunity to show what they can do.’3

  Speculation about an election was nevertheless encouraged by Labour’s growing advantage in the opinion polls. In the last six months of Blair, Labour was behind the Tories in all but one poll. Since Brown moved in, Labour was ahead in every single poll. By the second half of July, the Government was hitting or breaking through the psychologically important mark of 40 per cent for the first time in two years.4

  The shine was coming off David Cameron. The Conservatives came third in the Sedgefield by-election triggered when Tony Blair stood down as an MP to spend more time with his money. The poor Tory performance in such a safe Labour seat was not terribly surprising. The bigger blow to Cameron was another wooden spoon in the by-election in the west London seat of Ealing Southall. The Tory leader invested himself heavily in that contest by making five campaign visits only for his candidate to come third.

  The right-wing press turned on him for visiting Rwanda when the summer floods hit his constituency. ‘Where’s the Rt Hon member for washed-out Witney?’ bellowed the Daily Mail.5 During his trip to Africa, a rattled Cameron was overheard telling his adviser Steve Hilton: ‘I should have stayed at fucking home.’6

  Brown had ‘gone round the Cabinet table’ at the Chequers meeting, but ‘most people were still sceptical’ about an early election.7 At this stage, Livermore was alone among the Prime Minister’s inner circle in pushing hard for the autumn. On the aide’s return from his August holiday, he wrote a memo listing the pros and cons. Among the arguments favouring going early, he prophetically listed the potential for the 10p tax issue to blow up next April. Livermore’s memo warned: ‘We will inevitably face this question at conference. If you don’t want to do it, we will have to rule it out before conference because we don’t want it to dominate conference.’8 Brown passed a copy of the note to his allies in the Cabinet. Ed Balls was cool, as was Ed Miliband. Douglas Alexander was growing warmer, telling the Prime Minister: ‘You must look at this seriously.’ But it was not properly discussed by Brown and his team during August, partly because of the distraction of Northern Rock and partly because ‘Gordon didn’t want to think about it because it was such a risk.’9 Brown later told his circle that one of his great regrets was ‘those lost weeks’.10

  It was only in the first week of September that he dug out and re-read the Livermore memo. He discussed with Alexander, Balls and Miliband how they were going to deal with the
subject when the trio, assumed to be privy to Brown’s innermost thoughts, were asked about an early election in pre-conference interviews. They were sanctioned ‘to keep it running’. Not because Brown had decided on an autumn election – he was still far from persuaded – but ‘as a means of toying with the Conservatives. It was tactics not strategy.’11

  Michael Gove and other members of Cameron’s inner circle were aware that ‘He saw it as a way of destabilising the Conservative Party and a way, essentially, of making political mischief.’12 A minister very close to Brown agrees: ‘It started as a tease, then Gordon let it all get out of hand.’13

  As a short-term tactic, it worked. The Conservatives did get panicky. David Cameron was increasingly convinced that his opponent would make an early dash for the country because ‘I can’t see how it gets better for him.’14 He truncated his August holiday and Oliver Letwin, the Tory policy chief, cancelled his altogether to rush together the bones of a Conservative manifesto.15

  Brown executed another stunt to destabilise the Tories in mid-September. Back in 1989, when Margaret Thatcher was Prime Minister and Gordon Brown was a young MP, he published a 182-page attack on her premiership, entitled Where There is Greed: Margaret Thatcher and the Betrayal of Britain’s Future. Eighteen years on, he invited her for tea and posed on the doorstep of Number 10 with the woman he once excoriated. The Conservatives muttered that the Thatcher visit took advantage of an old lady suffering from senile dementia, but they dared not openly complain. Brown hailed the Iron Lady as ‘a conviction politician’ and asserted that he was cast from the same steely mould.16

  He also continued his practice of calling COBRA, convening two meetings of the emergency committee in the space of forty-eight hours when there was a suspected case of foot and mouth at one farm in Surrey.

  By the week before the Labour conference, he was intensely preoccupied with the idea of an early election but no closer to taking a decision. Gamble successfully and he would have his own personal contract with the country, the lack of which he felt quite acutely. Until he won an election in his own right, he would remain in the shadow of Tony Blair, the victor in three. ‘Gordon wants his own mandate,’ one Cabinet minister told me after a conversation with Brown.17 Gamble wrongly and history would remember him as the fool who waited more than a decade to become Prime Minister and then chucked away a perfectly healthy majority after just three months in Number 10. If he lost, he would be the shortest serving premier since George Canning in the early nineteenth century. And Canning had the excuse that he died.

  Divided in his own mind, Brown found that the Cabinet was utterly split when they discussed it again shortly before the Labour conference. ‘Some people were putting forward the argument as a new Prime Minister he should seek a mandate,’ says Harriet Harman. ‘But then others were reminding us that if you have an election late on in the year it gets darker earlier and then fewer people vote.’18

  Jacqui Smith, not only the Home Secretary but a former Chief Whip, was prominent in the camp arguing for an early election. Her West Midlands seat of Redditch was one of the marginals being targeted by the Tories with ‘the Ashcroft money’ – campaign funds from the Conservative peer. The longer they delayed, Smith feared, the more they would be out-spent by the Conservatives.19 Nick Brown was confident that they would win and told his friend in Number 10 that it ‘would be better to have his own mandate’.20 Jack Dromey, the party Treasurer, reassured Brown that, though money was tight, they could scramble together enough funds from the unions and other donors for a campaign.21

  Jack Straw, the most senior member of the Cabinet, was ‘always sceptical about an early election’.22 Straw told Brown that it was not worth the risk: ‘You only get an extra two years.’23 Also hostile were the Health Secretary, Alan Johnson, and the Chancellor, Alistair Darling.24 The Chief Whip, Geoff Hoon, argued that an election would be ‘a disaster’ and held to the view that ‘the Labour vote would have haemorrhaged.’25 They formed an axis which became known as ‘the greybeards’.

  There was another group who didn’t want to decide until they had clearer answers to crucial questions. At the pre-conference Cabinet, some ministers asked whether there was any polling from marginal seats. Peter Hain became alarmed when he realised that they were rushing towards an election without solid evidence.

  When I was asked, by senior people very close to Gordon, what my view was, I asked two questions. I said: ‘What are the polls in the marginal seats?’ and I asked another question: ‘What is the polling in London and the south?’ Because my political antennae told me that it didn’t feel very good.

  The answer left him apprehensive. ‘They didn’t know. So those pressing for an early election, talking it up to journalists at the party conference, did not have an answer to those two crucial questions. That worried me.’26

  Some veteran associates of Brown reflected his innate caution back to him. Murray Elder, the Labour peer, actually had a grey beard. Elder had known Brown since they were at nursery school together. ‘I didn’t see any merit in an early election,’ he says and he told the Prime Minister so. ‘It seemed to me there are some long-term rules in politics: that if you want to win an election, you ought to be ahead in the polls for really quite a long time and two months doesn’t constitute a really long time.’27

  Brown’s inner circle could not make up his mind for him because they were divided and in flux. Spencer Livermore, the hottest advocate, argued with Brown that he should announce an election in his speech to the party conference. Douglas Alexander was growing more bullish. So was Bob Shrum, the American political consultant who had been close to Brown for years. Ed Miliband remained unconvinced. Ed Balls was beginning to change his mind, a shift which was reflected in the spin put out by Damian McBride. Sue Nye was ‘in a frenzy’ about how she would organise a leader’s campaign tour at such short notice.28

  Brown pored over any sign, tea leaf or entrail that might indicate the mood of the voters. In the week before the Labour conference, he became hypnotised by local council by-elections, something normally well below the radar of a Prime Minister. Those who talked to him on the eve of the conference found that he could rattle off the details of council results all over the country. He knew precisely, to decimal points of percentages, how Labour had gained at the expense of the Tories in Birmingham and the Lib Dems in Nuneaton. ‘The Lib Dems lost two seats during their conference week,’ he happily noted. He read great significance into a Labour victory at the expense of the Conservatives in Worcester, the city which produced the iconic electoral figure of Worcester Woman. ‘A 17 per cent swing!’ the Prime Minister triumphantly observed.29

  He commissioned Deborah Mattinson and Stan Greenberg, the American pollster who previously worked for Tony Blair, to do detailed polling in the marginal constituencies which determine election outcomes. The raw results from the fieldwork came in on Saturday, 22 September. The refined data was ready to be presented to Brown by Sunday, the opening day of the conference in Bournemouth. He gathered his inner team at the Highcliff Hotel, overlooking the Dorset resort’s sandy beach. They sat in a suite which had been turned into the Prime Minister’s office for the conference week. Alexander, Livermore, Miliband and Shrum were with him in the room as Stan Greenberg gave the presentation in his New York drawl. He confused some present by ‘using American terminology’. But his headline conclusion was clear enough: Labour would win an autumn election with a probable majority of between thirty-five and forty-five. Brown was taken aback. This was not what he had been anticipating. The press, applying crude extrapolations to their poll results, was suggesting that Labour could do much better than that. ‘Gordon had been reading newspapers saying he’d get a three-figure majority,’ says one present in the room.30 Brown grumpily wrapped up the meeting by telling the pollsters to go away and ‘do more work’.31

  The hot house of the conference became feverish with speculation. Sunder Katwala, the General Secretary of the Fabian Society, recalls: ‘
At a conference, everyone’s in an unreal bubble, everyone’s talking to everyone else and it was the only thing that anybody was talking about. And suddenly, by Wednesday, I thought: “My God, they’re actually going to go for this.” ’32

  Journalists who spoke to members of the Prime Minister’s entourage were encouraged to believe that an autumn election was for real. John Kampfner, the editor of the New Statesman, reports:

  There was a lot of nudge, nudge, wink, wink. We all asked questions in code and we got answers in code. Such as: ‘Will it be safe to go off on our half-term holiday at the end of October?’ ‘Ooh, I’m not sure, especially if you are going abroad. Better stay closer to home.’ Those sorts of conversations were being had all the time.33

  Members of the Cabinet were led to believe that they had most of the media, including the right-wing newspapers, on side. Peter Hain recalls: ‘I remember editors of national newspapers, including the Telegraph and News International [The Times and the Sun], all of them contemptuous of David Cameron and eulogising Gordon’s strength and his capacity as a Prime Minister and really praising him to the roof tops.’34

  The press became increasingly convinced that it was on. ‘Election fever rages as Brown’s lead grows,’ reported The Times.35 The Mirror cried: ‘Go for it Gordon’.36 Michael Portillo, the former Conservative Cabinet minister, admitted that the prospect was ‘frightening the Tories’.37 The electioneering atmosphere was heightened further by the abundant evidence that Labour was road-testing campaign propaganda. Saatchi & Saatchi, who had just been awarded the Labour account, unveiled a new slogan: ‘Not flash – just Gordon’. It was personally approved by the Prime Minister.