by Tom Bower
‘It’s clear from the manifesto’, Langlands now told Blair, ‘that your policy is to abolish GP fund-holders.’
‘Should we be getting rid of them?’ asked Blair uncertainly.
He had forgotten his approval of Smith’s plan for an amended GP fund-holding scheme. Although he instinctively accepted Thatcher’s idea that monopolies should be broken up, New Labour’s ideology provided no obvious alternative to central control of the NHS. ‘Save the NHS’ was only a slogan, behind which lay no new ideology, values or policy.
Any doubts were silenced by Dobson. ‘I’m taking control,’ said the new minister. Although the manifesto had pledged not to return to the top-down management of the 1970s, Blair did not object as Dobson went on to explain how the NHS would revert to the command-and-control system first developed in 1948. Over the following weeks, Dobson’s officials did not dare ask how one man in Whitehall could supervise 520 executives running the NHS’s 100 health authorities and 420 hospital trusts. With their jobs at stake, silence was advisable.
‘We’re not going to close St Bart’s, are we?’ Blair asked Langlands next. Closing the famous London hospital was part of Tory ‘rationalisation’ to improve community care. Concentrating medical expertise and new technology across a larger area provided better treatment than relying on an unplanned network of hospitals developed over the past century.
‘That’s in the plan,’ replied Langlands.
‘I don’t understand community care,’ said Blair. ‘I don’t want St Bart’s to close.’
Langlands made no comment. After a brief pause, Blair mentioned the huge discrepancies in treatment across the country. ‘How can they get it right in Newcastle and not Newquay?’ he asked.
‘There are some good ones and some tail-enders,’ Langlands replied, ‘just like in your Cabinet.’
Blair appeared to agree. ‘Good,’ he said, bringing the meeting to a close despite the unanswered questions.
Dobson returned to his department. Under the orders of his deputy Alan Milburn, everything inherited from the Tories would be reversed, echoing his wishes. ‘I’ll come down like a ton of bricks’, Milburn threatened a group of NHS managers, ‘if anyone uses the private sector.’ He further told Langlands, ‘We’ll abolish the NHS trusts.’
‘That’s the one thing that is working,’ replied Langlands.
‘Right, we’ll keep them,’ said Milburn, ‘but GP fund-holding, the internal market and the idea of independent hospitals must go.’ In his understanding, Labour had settled on a policy of ending any independence of hospitals from Whitehall’s total control and restoring what he called his ministry’s ‘care and maintenance’ of the NHS.
Dobson and Milburn’s demand for a complete reversal of previous government policy exposed their misunderstanding of the internal market. Among the NHS’s weaknesses was its inability to price good-quality treatment. Since the 1980s, the Tories had accused the medical profession of obstructing improvements to the NHS. Doctors were interested in more cash – when it became their income – but caring for money that was to help the taxpayer caused discord. Like all NHS staff, GPs and consultants were unwilling to be constrained by budgets. ‘My job’, the doctors incanted to ministers, ‘is to treat my patients. Your job is to provide the money.’ The Tory answer was to set up an internal market between providers – the hospitals – and purchasers – the GPs. Being empowered to choose between different services provided by different hospitals would force NHS staff to consider costs and pricing, a normal procedure in the private market. By introducing a tariff, the NHS would get value for money and at the same time challenge vested interests.
The plan’s introduction in 1991, forcing GPs to make choices when treating their patients, had caused grief for the NHS’s ideological purists. The only solution, agreed Labour’s supporters, was more money. Blair joined the chorus trumpeting that the internal market was a curse and should be abolished.
Graham Hart, the permanent secretary in the health department, was dismayed. Over half Britain’s GPs had signed up to the fund-holders scheme. Research showed that the patients of those GPs incentivised by payments and preferential access were being treated faster and better in hospitals. And that was precisely Dobson’s complaint: patients served by GPs opposed to fund-holding were noticeably worse off. Dobson and Milburn were adamant: ‘We’re not having a two-tier service.’ The alternative scenario seems not to have occurred to them: namely, if all patients were served by GP fund-holders, all would benefit. Hart resisted explaining that to Dobson, reasoning, ‘He would suspect that I was a Tory.’
Persuaded by the medical professionals that competition undermined the public-service ethos, Dobson and Milburn believed that Britain should rely upon the altruism of the NHS staff, who, to their mind, were wholly motivated by their social conscience to help patients. Blair agreed. Choice, he believed, entrenched inequality because only the middle class possessed the ability to make effective use of it. ‘Cream-skimming’ was unacceptable because choice led to unequal life expectancy and, owing to duplication, waste. With his blessing, the system of fund-holders was abolished, but Dobson agreed to keep a watered-down scheme that still incorporated the internal market’s ‘providers and purchasers’. No one was quite sure whether Dobson understood the resulting confusion, and Blair was not told about the muddle in the NHS, nor did he seem aware of it in government policy.
At 10 a.m. on the Wednesday after the election, Blair bounced into the regular weekly meeting of Whitehall’s permanent secretaries. Radiating idealism and energy, and dressed in his shirtsleeves, he conveyed missionary zeal. ‘My motives’, he said, ‘are the same as yours. Public service. You all have a huge wealth of experience, and we will rely on you.’ Some officials would depart enthused, but Graham Hart was disappointed by the answers he received to particular questions. Labour’s plan, Blair had said, was to ‘reintegrate the NHS without reorganisation’. Hart was ready to implement the new government’s policies by abolishing trust hospitals and GP fund-holders, but Blair’s refusal to set up a Cabinet committee for the NHS was puzzling. He appeared unaware of the fiendish complications of running the world’s second-largest business. ‘He doesn’t have the faintest idea about the NHS,’ Hart concluded.
Blair left the meeting with misgivings of his own. The top civil servants, he complained on his return to his office, were not as impressive as generally assumed by politicians. They were only good for supplying raw data, and their advice was best ignored. He would rely on his confidants to change Britain.
Dobson was not a member of the inner clique but he stood in the vanguard. Embraced by Blair as a signal of reassurance to the trade unions and to the NHS staff that they had Labour’s support, Dobson could silence fractious nurses. ‘I’m the heart and soul of the NHS,’ he told one of their conferences, ‘so trust me. The NHS is the envy of the world.’ He never reflected that no other country had adopted the British model, not least because it made no sense to manage the health of nearly 60 million people from Whitehall. ‘The NHS is a secret garden,’ Dobson told his officials. ‘It moves like a giant ocean tanker. It only becomes political when it goes wrong.’
The first tremors of trouble, from either garden or tanker, were felt one week after the election. ‘The NHS is running on empty,’ Hart told Dobson. Treasury officials had not replied to any of Hart’s previous warnings. In the months before the election, Gordon Brown had expressly forbidden any additional spending on the NHS because the economy he was inheriting, he said, was in crisis. He spoke about ‘sticking to Tory spending plans’ but intended to spend 0.6 per cent less on the NHS than the Tories, while increasing taxes. In truth, as Hart knew, the economy was growing, with a low debt of 37.6 per cent of GDP.
‘There will be a winter crisis,’ Langlands told Dobson. Waiting times would grow unless more staff were hired.
‘No, there won’t,’ replied Dobson. ‘We’re in charge now and it won’t happen.’
‘It will unless w
e get more money.’
Dobson was obdurate, so Langlands passed his warning on to Blair, who in turn protested to Brown. ‘It’s all very difficult,’ replied his chancellor in what would become a familiar routine. ‘We’re not going to solve this today.’
Blair persisted. More money and improving morale thanks to Labour, he said, would solve all the problems.
In early July, Dobson was telephoned by a Treasury official. ‘The chancellor would like to see you, but come alone,’ he was told. One hour later, Dobson returned and summoned Hart. ‘Gordon wants to give us a lot of money,’ he announced.
‘How much?’
‘One billion quid.’
‘How did he arrive at that?’
‘It wasn’t explained.’
‘It can’t be a final settlement,’ said Hart. ‘We need discussions and a plan. When can we talk about it?’
‘He said there could be no discussion. Take it or leave it by 10 p.m.’
Dobson was clearly in awe of Brown and the insiders around Blair. Hart said nothing. Brown was reverting to the old ways of throwing money at a problem rather than attempting to understand it. In particular, he had not understood that the publication of waiting lists had been invented by the Tories to shame bad NHS managers, but then the hospitals with the longest lists received government money. Paying hospitals to reduce such lists had been condemned for rewarding the worst. Brown ignored that discovery. Dobson said nothing further, took the money and distributed it to hospitals around the country.
Two months later, newspapers reported an increase in premature deaths, cancelled operations and what they called ‘Third World hospital wards’. The NHS was still short of money. Blair was angry. Brown agreed to a further infusion of cash but insisted that he should broadcast the announcement to demonstrate his control over the economy. If Blair refused, he said, no more money would be released. Blair protested again, saying the NHS was being sabotaged, but he didn’t dare overrule his chancellor. Their argument raged for two months, while the size of the waiting lists rose until they were 14 per cent higher than in 1996. It was impossible for Brown to sit on his hands any longer.
‘Go and see Gordon,’ Dobson told Langlands in early December. ‘I’ve been told that I’m not required.’ Brown’s attitude towards his colleagues, many were discovering, was peculiar.
Langlands made his way to the chancellor’s office. After reminiscing that Brown’s father, the minister of Kirkcaldy’s largest church, had married Langlands’s parents, the two engaged in a bitter argument. ‘Give me the answers to these nine questions tomorrow,’ snapped Brown, ending their dispute by handing over a list drawn up by his department.
The following day, Langlands returned with the required sheet of responses. ‘I can’t give these to the chancellor,’ a Treasury civil servant told him. ‘It’s too hard-hitting. You cannot talk to the chancellor like this.’ The stand-off was resolved by Brown agreeing to pledge more money, but without a public announcement.
Blair did not ask Dobson how waiting lists would be reduced, he just willed him to do so. By then, Dobson had discovered that the number of available hospital beds had, as part of a deliberate policy, declined since 1948 from 480,000 to 190,000. He rejected the advice that modern medicine did not require them. To prove that the NHS was once again safe under Labour, he ordered an immediate increase to 246,000. Blair did not ask how such an increase matched New Labour’s agenda. Millions were spent on extra beds, money that could have gone towards patient care. Jonathan Powell would be candid about the folly of unrealisable ambitions: ‘We had prepared a hundred-day plan on coming into government but not an overall strategy for what we were trying to achieve.’
This early episode involving the NHS suggested that Blair was ambivalent about the requirements for governing. A telltale sign was the fate of the red box left outside Blair’s flat in Downing Street every night. The case contained important memoranda from across Whitehall that Blair needed to read and annotate to guide civil servants and ministers. Officials recalled that by 7 a.m. Margaret Thatcher had written comments on every paper in her box. Blair rarely completed even half the work.
Those problems had been anticipated by Robin Butler, who had persuaded Blair to use Alex Allan as his private secretary for three months. To his surprise, Blair discovered Allan’s value, telling Butler at the end of the period, ‘He’s very good. I want to keep him.’
‘Too late,’ replied Butler. ‘He’s going to Australia.’ To his surprise, Blair appeared to have no recollection of their earlier discussion. The official resisted offering a solution. ‘He’s left with Jonathan Powell and the problem,’ he decided.
On the eve of Butler’s retirement, one final task for the loyal civil servant was to guide Blair in the selection of his successor. At Blair’s request, he hosted a dinner at his home for the prime minister, Peter Mandelson and the Lord Chancellor Derry Irvine, who had admitted the young Blair to his chambers to practise at the bar and ever since had been a trusted adviser. Aware of his own inexperience, Blair relied on Mandelson’s and Irvine’s judgements to make the critical appointment. Butler was asked by Blair to debate with Irvine whether the combined post of Cabinet secretary and head of the civil service should be split. In the end, Blair was convinced by Butler’s argument that they should remain together.
A few days later, Blair asked his closest confidants to select what Mandelson would call ‘a reforming Cabinet secretary’. Their choice was Richard Wilson, the permanent secretary at the Home Office. With little thought, Blair directed that the Old Radleian be presented to the press as a moderniser. Powell scoffed. Wilson, he said, was a classic Establishment appointment. ‘Very odd-looking,’ agreed Campbell disparagingly. ‘With huge great ears and a face that didn’t quite map together. He didn’t seem naturally on our wavelength.’
The selection of Wilson revealed Blair’s indifference to the machinery of government. Whoever had been appointed would be excluded from his den, especially by Powell. In Butler’s words, the Cabinet had been quickly reduced to ‘a weekly meeting of political friends’.
Musing later with an official, Blair offered his understanding about the future: ‘Our job is to have the vision. Your job is to carry it out.’
‘It’s not as simple as that,’ replied the official. ‘There’s the money too.’
‘That’s Gordon’s job. I don’t get on with him. We’re like an unhappy marriage. But he’s the details man, and I’m the front man.’
The conversation trailed off.
Blair’s candour revealed both his strengths and his weaknesses. ‘You could take Jonathan away from me,’ he added, ‘but not Alastair.’
Blair acknowledged that he relied on his scriptwriter more than on anyone else. Politicians, it is said, should be judged by their choice of their closest associates.
FOUR
The Gospel
* * *
Unlike Frank Dobson, David Blunkett arrived at his department with a detailed plan. Over the previous two years, the new secretary of state for education had spent many hours with Blair discussing the fate of working-class children. Just after the first Cabinet meeting, Blair invited Blunkett to Downing Street. He arrived with Michael Bichard, the permanent secretary of what Blunkett dismissed as a dysfunctional department focused on administration rather than education.
Blunkett had already clashed with Robin Butler about his senior aides. ‘If you rock the boat too much,’ Blair warned Blunkett, ‘they’ll get you.’
Until Bichard’s appointment in 1995, only one of Blunkett’s officials had taught in a school. ‘Education was the Tories’ biggest failure,’ Blair told Bichard, ‘and education is Labour’s number-one priority.’ To emphasise his commitment, days after the election he stood on the ground floor of the department’s eighth-floor atrium, looking up at hundreds of officials crammed onto balconies. ‘Building a modern society depends on education,’ he exhorted his audience with passion. ‘My job depends on what you’re doi
ng.’ The wild applause was encouraging.
Blunkett was never quite sure what Blair’s ‘modernisation’ meant. He assumed that it involved ridding Britain of the old politics, empowering people to embrace ‘citizenship’ and join the knowledge economy. The fuzziness was intentional. Blairites had banned the word ‘ideology’. In its place, Blunkett acknowledged, ‘Tony didn’t have one set of values to drive across the board.’ Unlike the old socialists, Blair offered a concoction of intentions rather than a set of principles. Within the first weeks, the absence of a firm ideological base was causing confusion for John Prescott at transport and Harriet Harman at welfare. Both politicians, limited by their intellect and lack of new policies to inspire their departments to produce realistic improvements, were struggling. Jack Cunningham at agriculture was also adrift. He disliked his civil servants, and the sentiment was returned towards a wayward minister ostentatiously enjoying the perks of his office. Education was the exception. Blunkett arrived with a clear route map agreed with Blair and based on a fundamental change from old Labour.
The transformation had begun in the early 1990s, during dinner parties among Blair’s friends in Hackney and Islington. As with so many young parents across Britain, their conversation would return to a familiar topic: the disappointing standard of local state schools. The Blairs knew that using private education could be a fatal handicap for an ambitious Labour politician. Nevertheless, they refused to entrust their children to failing schools. They heaped the blame for their dilemma on Thatcher’s indifference to state resources. John Major had been little better. Since 1995, the education budget had been cut to its lowest level since the mid-1950s and the department was relegated to middle-ranking ministers. The Conservatives, Blair believed, were deliberately undermining state schools in order to champion private education. While only 7 per cent of Britain’s children were privately educated, 20 per cent of university entrants came from private schools, and half of all Oxbridge students were from public schools.
