by Tom Bower
Brown’s refusal to release money to hire more officials and lawyers for the Home Office ‘fed back into the system,’ in Omand’s experience, ‘and then nothing happened. We just had to plug away to get more money, but Downing Street and the Treasury were not joined up.’ Blair was paralysed by not understanding how to make his government work. ‘Well, you must do what’s necessary,’ he routinely concluded discussions.
‘We were unprepared for the explosion in asylum claims through 1998 and 1999,’ he would write in 2010, claiming to be unaware that IND officials had been warning Straw about the effect of Labour’s policies. ‘We were quickly dubbed the asylum capital of Europe,’ Blair admitted.
His self-portrayal as the victim of unpredictable events is undermined by the telephone call made by Liz Lloyd, a close aide in Downing Street, to Michael Eland in late autumn 1999. ‘What can be done?’ she enquired. Worried about the media headlines, Lloyd emphasised that the government disliked appearing soft. ‘Is the Home Office on top of this?’ she asked, concerned about the looming possibility that the Tories might use the growing numbers in their next election campaign. Since Eland could not give a satisfactory reply, Straw and Boys-Smith were summoned to Downing Street. For thirty minutes, Blair expressed his anger about judges who found loopholes to help the asylum-seekers, and then blamed the Home Office for failing to stop them coming. The improving economy, he said, and the lack of ID cards were the reasons for the upsurge. The government’s policies were not at fault.
The prime minister was soon contradicted. Labour’s new laws, said Boys-Smith, had created ‘a gravy train for lawyers’ who were ‘corrupting the system’. That had been exposed by a test composed by the IND staff. A group of Kosovan applicants were asked to identify well-known landmarks – cafés, schools and streets – in Priština, the capital of Kosovo. On the first day, all the Albanians posing as Kosovans were exposed as liars. On the second day, another group of Albanian suspects passed the test. The lawyers had briefed their clients.
‘You must work on this, Jack,’ Blair told his home secretary, ‘and find ways to stop it.’ He did not, however, ask Omand any questions about the chaos in the IND, nor about the administration of immigration. The prime minister, senior Home Office officials were discovering, did not understand the problems. ‘He just went mad about how long it takes to get things done,’ said Omand. Neither Blair nor Straw mentioned the rising number of lawful immigrants from India and Pakistan, nor did they consider how to provide housing, schools and health care for an additional 300,000 people a year. Nor did they question whether the immigrants would influence the lives of the British working class. Immigration, they both still believed, was a Tory issue.
The final item on the agenda that day was whether Britain would sign the EU’s new asylum law. Straw had arrived at the meeting hoping to discuss the proposed change, which ordered migrants to apply for asylum in the first EU country they reached. Every member state was then compelled to respect that country’s decision. Boys-Smith expected Blair to say, ‘Jack, what are we going to do?’ Instead, the prime minister ignored the issue. ‘I was shocked by Blair’s lack of focus,’ recalled Boys-Smith. ‘He was totally uninterested in a question of principle, which was a loss of sovereignty. He didn’t realise the importance.’ Britain signed the law.
Towards the end of 1999, the Treasury finally agreed to finance the employment of more immigration officers. But the politicians no longer believed that manpower was the problem. Mike O’Brien blamed his officials for providing the wrong information, a criticism that was echoed by Blair. The civil service, the prime minister would write, ‘wasn’t greatly inclined to the radical action the system needed’. They were not closet Tories sabotaging a Labour government, he wrote, but they suffered ‘inertia … They tended to surrender, whether to vested interests, to the status quo or to the safest way to manage things – which all meant: to do nothing.’
NINE
A Government Adrift
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Blaming civil servants for the government’s failures had become popular among Blair’s inner circle. Officials, Blair complained, were slow, begrudging and not so brilliant. The civil service was incapable of reproducing men of the quality of Burke Trend, the legendary Cabinet secretary of the 1960s. Too many current civil servants, he was convinced, disliked politicians and felt that the country would be better managed without their interference.
Echoing Blair’s thoughts, Jonathan Powell blamed civil servants for not offering solutions but instead frustrating his master’s ‘ambition for action’. Radical change, Powell would write, had proved to be ‘extremely difficult’ because civil servants imposed ‘the most effective brakes’. Negativism, cynicism and ‘a culture where the word “brave” is a warning rather than praise’, he believed, was irresistibly piling regulations upon Blair, who ‘found himself banging his head against a brick wall of difficulties’.
To the service itself, Blair appeared the author of his own misfortune. In The Times he had written an article entitled ‘Why Britain Needs a New Welfare State’, in which he outlined ‘the boldest benefits shake-up since Beveridge’, but which raised questions without offering any answers. In his desire for reform, he had entrusted Harriet Harman to work with Frank Field, the former director of Shelter, the charity for the homeless, whose robust experience with those living on welfare would influence his ideas for reforms. Blair’s misgivings about Harman had surfaced soon after her appointment. During a two-hour discussion before the election he had advised her not to oppose her Tory predecessor Peter Lilley’s plan to reorganise state pensions, but the suggestion had been ignored. ‘It’s too good to throw away as an election issue,’ Harman had urged. After his first weeks as prime minister, Blair knew that the chance of sensible reform had been irrevocably lost, effectively stymied by Harman’s raving diatribes against Field.
The task was complicated by further disagreements between Blair and Brown. Blair advocated new ideas to save the ‘vast sums’ being wasted by promoting welfare-to-work. Opposing him, Brown emphasised that the money was not going to the impoverished. Nor could they agree about sickness and disability benefits, and especially payments to single parents, an issue that had already provoked a rebellion by Labour MPs.
Field, a mild character, was drowned out by the hysteria. ‘Blunkett Declares War on Brown’ was one newspaper headline, highlighting the ripple effect of the arguments, as Brown demanded that the Treasury control all welfare policy. Civil servants could only observe that if the politicians disagreed, how could any reforms be implemented? The problem was aggravated, as Richard Wilson discovered, by Blair’s appointments. Field, in Blair’s view, had promised to deliver the ‘unthinkable’ but had supplied the ‘unfathomable’, while Harman was simply ‘no good’. Exasperated by her incompetence, Blair had once got so tired of her ‘interminable complaints’ during a telephone call that he simply handed the receiver to Mandelson. She continued talking, unaware that the prime minister had left the building.
In the end, Blair fired both ministers. Welfare reform, a priority in May 1997, was derailed. He established a Cabinet committee to resolve the problem, but then Brown set up his own committee to assert his supremacy over the domestic agenda. Eventually, Brown and his adviser Ed Balls reluctantly attended Blair’s committee. Balls spent the whole time whispering in Brown’s ear, ‘driving Tony absolutely crazy’, as Powell records. Exasperated by the bickering, Blair agreed that Brown could introduce a complex system of means-tested tax credits to help the poor. He did not understand the seismic implications of importing a welfare scheme developed in America. The Inland Revenue would abandon its historic and sole job of tax collection to become a welfare agency distributing money. Blair did not ask if Brown understood his own revolution; nor did any official across Whitehall. Such was the consequence of Blair’s rejection of traditional Cabinet government. To avoid leaks, he resorted to informal conversations without civil servants, a class he now regarded as pawns
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Instead of blaming himself, he expressed his disappointment to Richard Wilson. ‘I feel like I’m sitting in a Rolls-Royce and I can’t find the key,’ he told the Cabinet secretary.
‘Well, what you shouldn’t try to do is to get out and push it yourself,’ Wilson countered, resenting Blair’s hostility. ‘You need a chauffeur. We’re plagued by the problem, what is government good at?’ he confessed. The Tories had reduced the number of civil servants and started to ‘drain government of its role’. That left Whitehall’s ‘soggy middle’, with too many unenterprising civil servants and poor financial controls. But, complained Wilson, nothing would be achieved by Blair constantly urging civil servants to modernise, or by Jeremy Heywood haranguing everyone that nothing was changing fast enough. Incoherence could not be implemented. Wilson’s request for Blair to explain his message received at best idealistic verbiage – and his reward was exclusion from the policy unit.
‘The problem with the traditional civil servants’, Blair repeated, ‘is not obstruction but inertia.’ To allay Blair’s fears, Wilson began drafting a plan to strengthen the prime minister’s office, unaware that Blair had asked John Birt, the BBC’s former director general, now employed as an unpaid adviser, to do the same.
To reinsert himself into the decision-making process, Wilson would routinely creep into Blair’s office to scrutinise his diary and discover what he was doing hour by hour, day by day, and then offer his help. When Blair refused to involve him, Wilson threatened to resign. Civil servants, he told Blair, performed well for effective ministers. Good government required good politicians. And with that exchange the fault line became unmistakable. Could one man govern Britain without understandable policies, or without caring about his supporters? One Blairite minister complained that ‘Blair no longer appreciates the ambitions of others. Having risen to the top so rapidly, he has become insensitive to the careers of others.’ The direction of the NHS, said Wilson, showed that its latest problems were created by Blair and his ministers rather than by civil servants.
In December 1997, junior health minister Alan Milburn and his special assistant Simon Stevens had published a ninety-two-page White Paper called ‘The NHS: Modern and Dependable’. Blair wrote in the foreword, ‘This White Paper begins a process of modernisation … In my contract with the people of Britain, I promised that we would rebuild the NHS.’ The government rejected the Conservatives’ open market in favour of ‘integrated care based on partnership and driven by performance’. Abolishing competition and choice, he predicted, would save £1 billion from ‘wasted resources’ and the money would flow from ‘red tape to patient care’ since ‘we’ll put doctors and nurses in the driving seat’.
In conversations with his health ministers, Blair revealed little understanding about the counter-revolution he had approved. Nor did the minister for health, Frank Dobson, understand. Both men had relied on Milburn and Stevens to produce the government’s health policy – a policy that the party had failed to compose while in opposition. In the preparatory discussions, Blair had never offered any ideas other than memorably suggesting, ‘Hospitals are too much like unemployment benefit offices. They need to be modernised.’ It was modernisation without meaning.
Blair had launched the White Paper with the promise of an extra £1.5 billion for the NHS. Not to be outdone, Brown rushed to the Commons to announce that he was giving the service an extra £21 billion, a 50 per cent increase over three years. Both men believed that extra money would automatically produce improvements. For once, the chancellor’s headlines outshone the prime minister’s, but Blair was not worried. ‘That £21 billion is real money,’ he told the Commons. But, within a week, NHS chief Alan Langlands heard that Brown’s announcement was a ruse. By triple counting the same sum over three years, the chancellor had inflated the true amount – just £8.6 billion. The public exposure of this trickery by a think tank aroused cynicism about the government’s refined spin machine. Blair remained unconcerned. ‘That £21 billion is real money,’ he repeated in Parliament. Not to be outdone, he also announced an extra £30 million would be spent on A&E. Later, on three separate occasions, he announced that an extra £30 million was being spent on other NHS services, without clarifying that he was always committing the same money.
By then, Brown had seized on a much bigger tool to promote himself as defender of the NHS. The Tories had developed the Private Finance Initiative (PFI), a scheme for building hospitals in partnership with the private sector. Under the plan, a private company financed, built and maintained a hospital. While retaining ownership, it rented the premises to the state for about thirty years, after which the building reverted to the financier. Under Tory health minister Stephen Dorrell’s scheme, the private sector assumed the financial risk. Dorrell had negotiated loans for about ten new hospitals and GP surgeries, but the contracts remained unsigned because the financiers were uncertain about Labour’s attitude.
Brown seized on the idea and allowed Geoffrey Robinson to negotiate more generous deals than the Tories had envisaged. To get their quick support, the financiers were allowed to transfer all the risk onto the state. By deft accounting, Brown excluded the costs from the national debt and presented himself as the godfather of seventy new hospitals.
Among the first to be built was the Princess Royal University Hospital in Bromley. Over the thirty years, the private consortium expected to earn a gross profit of 70.6 per cent. Blair confessed he was unconcerned by complaints of profiteering or accusations that he was mortgaging the future to win popularity. ‘It doesn’t matter how hospitals are funded,’ he told his party, ‘so long as they get built.’ His attitude towards money was as hazy as his attitude towards undesirable ministers.
In the summer of 1998, Blair acknowledged that Dobson was ‘unimpressive’. In the jargon he used, he was ‘not communicating a sense of progress and direction’. Yet he did not consider dismissing him. Elsewhere, greedy hangers-on were generating turbulence. Derek Draper, a friend of Peter Mandelson’s, had offered an undercover journalist access to the ‘seventeen most important people’ in the government for cash; then David Heathcoat-Amory, a Conservative MP, challenged Robinson about a £200,000 payment recorded in the late Robert Maxwell’s accounts. ‘I never asked for the money and wasn’t paid,’ Robinson replied.
In July 1998, Blair appeared to endorse Robinson’s lie when Alastair Campbell’s rebuttal unit was ordered to jump on the story. ‘We can state categorically’, said Campbell, ‘that Geoffrey Robinson did not receive £200,000 [from Maxwell].’ At Blair’s direction, Labour MPs on the parliamentary standards committee rallied to Robinson’s defence, and after a soft reprimand he was embraced once again by his charmed circle.
‘Every time the Conservatives have made an allegation it has been proved to be worthless,’ said Blair. The premature retirement of Terry Burns, who had steadfastly rejected Brown’s bullying to lie on Robinson’s behalf, had annoyed the Tories, but still Robinson stayed. At the same time, Blair inaccurately denied intervening on Rupert Murdoch’s behalf with Romano Prodi, the Italian prime minister, for favoured treatment in a TV deal.
On reflection, Blair realised that using subterfuge to protect his relationships with the rich would lead him towards a cesspit. Murdoch was worth protecting, but not Robinson. As a result, Richard Wilson was dispatched to negotiate the paymaster’s resignation. First, he visited Brown, only to leave swiftly after the chancellor refused to agree to Robinson’s departure. Next, he called on Robinson personally. ‘Rough old game, politics,’ Wilson told the paymaster. However, supported by Brown, Robinson rejected ‘a dignified exit’, and the Cabinet secretary retreated. Blair then agreed to meet Robinson, and after an hour’s conversation withdrew the dismissal. He refused to gamble on Brown’s reaction if he sacked the paymaster.
Blair left for his summer holiday. Since Robinson was tarnished, he accepted an invitation from Prince Girolamo Strozzi, a new friend and the owner of a fifty-room villa in Tuscany. One unr
esolved problem was Jonathan Powell. Despite his title and powers, Powell’s gauche judgement was confusing things rather than helping to solve problems. In July 1998, he faced the sack but was then reprieved with a part-time role in Northern Ireland. Blair was left without a suitable co-ordinator, which undermined his ambition to modernise the NHS.
Too much of the new NHS funding was being spent on structures – buildings and organisations – rather than on patient treatment. The government’s policies were failing to make the NHS either more efficient or more responsive. Alan Langlands blamed Frank Dobson, who in turn, despite lacking any previous managerial experience, cursed his advisers as ‘pointy-heads’ for being ‘too clever’ and trying to outsmart him. In his disdain, he marginalised Christopher Kelly, the new permanent secretary, from any involvement. As a result, Kelly was not invited to a stock-take in late 1998 in the Cabinet room. Dobson’s slide-show presentation to Blair listed a blitz of innovations devised by Robert Hill, Blair’s health adviser, and Alan Milburn.
Milburn believed that tough regulators were the answer. To monitor the NHS’s standards, his department had launched the Commission for Health Improvement, which would later have its name changed to the National Care Standards Commission, which in turn would be replaced by the Care Quality Commission, signalling the repeated failure of executives. In what he would later call ‘the architecture for change’, Milburn also promoted the National Institute for Health and Clinical Excellence (NICE) to control the cost and effectiveness of new treatments, and NHS Direct, a scheme designed during the Tory era to provide the public with easy access to medical advice.
