by Tom Bower
To Blair’s frustration, while Milburn sat composing, Brown established his own review of the NHS’s future. To counter that challenge, Blair asked Richard Branson, a favoured supporter, to investigate. Virgin would report that the NHS was badly managed, offered abysmal patient care and should use the private sector. Although none of this could have surprised him, Blair was unsure about the suggestions. More money, he remained convinced, was the answer, and that was now due.
To Blair’s relief, Brown finally agreed to announce in his Budget speech on 21 March that the government would spend £63.5 billion on the NHS in 2003/4, nearly double the amount spent in 1997. Downing Street buzzed with genuine excitement at the commitment. At the last moment, Milburn’s office invited the leaders of England’s health professions to watch Brown in the House of Commons. Among those telephoned that morning was George Alberti. ‘I’m at my investiture at Buckingham Palace,’ he replied. ‘I’ll come over afterwards.’
Brown delivered a virtuoso performance. Billions of pounds were promised as the reward for ‘prudence with a purpose’, a winning slogan that pushed the Tories further to the right. Like the other NHS leaders looking down from the Commons gallery, Alberti was thrilled. ‘It’s the opportunity of a lifetime,’ he told Milburn, as they walked along Whitehall to celebrate with a cream tea in the minister’s office.
Later, to cap their euphoria, they crossed the road to meet Blair. ‘I’ll be in charge,’ Blair told his visitors, before repeating the mantra, ‘This is real money’ – unlike, he implied, the triple counting and other phoney cash announced in the past. In exchange, he wanted all NHS staff to commit to significant changes that would cure the list of woes.
‘What you’re saying is, no more excuses,’ said Alberti.
Blair nodded. The changes, he speculated, could be driven by contracting private providers, setting targets to monitor performance and paying incentives. But, he insisted, all those present would be expected to sign their agreement to reform on the document he flourished.
Blair’s reassurances were undermined by Milburn. In his haste to change the NHS, the minister argued with several officials, including Alan Langlands, who resigned. Neil McKay, his temporary successor, was ‘disappointed’ by Langlands’s departure. The NHS’s performance, he told Milburn at their next monthly meeting, was ‘getting worse’, not better. Julian Le Grand added to Milburn’s grief. The NHS, said the professor, had experienced decentralisation, recentralisation, internal markets and inquiries by management consultants, but none had cured poor-quality care by staff and unnecessarily long waiting times. ‘The only clear explanation’, said Le Grand, ‘is that more money is not the only answer.’
Nor was the spin. In the days since the Budget, Jeremy Heywood, Blair’s high-flying principal private secretary, had scrutinised the small print of the Treasury’s Red Book, the bible of the Budget, and discovered more examples of Brown’s exaggerated claims. An ITV programme had revealed how the chancellor had double counted the number of new nurses. Rather than admitting shame on Brown’s behalf, Alastair Campbell complained that the revelation was ‘all part of an effort to poison the well of debate and make it look like we couldn’t be trusted’.
The issue, Blair agreed, was indeed trust. Why, he wondered, did the public distrust the government about the NHS? In his mind, the answer was New Labour’s image. Instead of the party appearing classless and representing everyone, Brown was championing the poor against the middle class. He had, for instance, made a catastrophic attack against Oxford elitism based on the university’s rejection of the comprehensive-educated Laura Spence, who had applied to study medicine at Magdalen College. Not only were Brown’s facts about Spence wrong, but his tirade also echoed provincial old Labour’s hatred of excellence. By championing the poor, overtaxing the middle class and deriding those who aspired to be wealthier, the resentful Scotsman was dividing the nation.
On the eve of the election, Blair feared that, in a conservative country, Labour was portraying itself as anti-family, anti-tax cuts and anti-strong defence, while being weak on crime and promoting all rights and no responsibilities. The idealism of that sunny morning on 2 May 1997 had been dented by derision, isolation and a lust for laudatory headlines. That was electoral folly. Burying the Tories for ever depended on New Labour being all-inclusive and sticking to the centre.
Brown believed the opposite. Endlessly tinkering with taxes, he planned to continue raising billions of pounds to spend on welfare. ‘Community, not individualism,’ was his slogan to entrap the nation in universal dependence on the welfare state. That, in his eyes, would secure permanent electoral support. He had even signed up with Europe’s left-wing politicians to integrate the continent’s economy according to socialist principles. However, his passion for ‘community’ did not extend to Blair and Robin Cook. For personal reasons, and to set himself apart from their support for Britain joining the euro, he loathed them both. In that poisonous atmosphere, on 23 March the three politicians flew on three separate planes to the EU summit in Lisbon, destined to sign a treaty to end Europe’s stagnation and endorse a ten-year plan to make the community ‘the most competitive and dynamic knowledge-based economy in the world’. The political leaders’ optimism was infectious.
Blair returned to London determined to resolve his dispute with Brown and decide the fate of the NHS. In his lexicon, that required a speech to redefine New Labour as a ‘radical’ political movement advancing ‘new, modern patriotism’, and to present a threatening image of Tory Britain. Ken Livingstone’s overwhelming victory in the London mayoral contest – an embarrassment for Blair – and other bad results in the local government elections in May made a ‘mission message’ relaunch vital. The ideal moment appeared to be an address to 10,000 members of the Women’s Institute in Wembley Arena, fixed for 7 June, fortuitously close to the birth on 20 May of Leo, the Blairs’ fourth child. The prime minister’s appearance was billed as a major event – an opportunity to spell out his philosophy of ‘equal worth, responsibility, community’, and his ambition to soothe the anxious middle class by renewing old values. He had been warned to steer clear of politics. That message was forgotten.
The result was torturous. Blair’s audience wanted to hear about Leo, not Labour. His polemic was interrupted by jeering and slow handclaps. Deflated, the ‘strong’ leader hurried from the hall, a loser with a bloody nose. Over the following days, he felt isolated – then furious about a note from Philip Gould saying that ‘he wasn’t believed’ because ‘he is pandering, lacking conviction, unable to hold a position for more than a few weeks and lacking the guts to be able to tough it out. He is all things to all men, he’s all spin, TB has not delivered. He is out of touch.’
Recriminations, loathing, humiliation and more poison were shared between Blair, Brown and Mandelson. Matthew Taylor, the director of IPPA, a left-wing think tank, wrote, ‘Yes, Labour’s love affair with the electorate is definitely over,’ but that it could be saved by refining its message and dropping ‘naked gesture politics’. Blair responded by announcing that delinquent teenagers should be marched by the police to a cashpoint to pay an instant fine. Six days later, his drunk son Euan was arrested in Leicester Square after celebrating the end of his exams. Cherie was enjoying a subsidised holiday in Portugal as the guest of John Holmes, the British ambassador who became a friend of the Blairs while serving in Downing Street. Cherie’s critics noted that she had been visiting America while Euan was sitting his exams. Parental delinquency plus cronyism: nothing was working.
Battered, Blair called a press conference. ‘I feel fine,’ he smiled, before being humiliated by Campbell’s decision to admit the BBC into Downing Street. Michael Cockerell’s film portrayed Blair as an out-of-touch prime minister without a credible voice, especially among his own MPs. Later, in a memorandum to his inner circle headed ‘Touchstone Issues’, Blair lamented that he was ‘out of touch with gut British instincts’ and ordered that he should be ‘personally associated with
the action taken to remedy the problem’.
One of the key complaints highlighted by Gould was that Labour ‘were too late with the NHS’. Milburn offered some relief. On 11 July, he and Simon Stevens completed their draft NHS Plan 2000. Three years after ravaging their inheritance, Milburn quietly restored the scheme set out by Stephen Dorrell in 1996 to devolve health services to a hundred primary care centres. Even Dorrell’s language was resuscitated. The scorn heaped on John Major’s government had blinded Blair to its achievements. Labour supporters would be shocked by Milburn’s mention of ‘choice’ and ‘competition’, but after the disastrous winter and the indignity suffered by Robert Winston’s mother, the politician had reconsidered the Tories’ ideas.
‘The existing system is unsustainable,’ he told Blair. Finding the answer had required endless conversations. Among the experts were Don Berwick, an academic, and Alain Enthoven, an American health expert who had advised Margaret Thatcher to introduce the internal market. Over the following months, Milburn had been persuaded that choice would help the poor to get the same treatment as the middle classes. The private sector would be contracted to reduce waiting times and challenge the NHS staff and trade unions. In targeting cancer, Milburn realised, the lack of money to buy better equipment was only part of the reason for the NHS’s poor record. Another was the doctors’ failure to recognise many illnesses’ symptoms early enough. The errors were due not to a lack of money but to the profession being resistant to studying developments in other countries. The NHS’s inflexibility would be best challenged by the state subcontracting some services to private doctors. All the care provided by the service would be free, but the NHS would cease being the monopoly provider. That was Milburn’s wish list for the future but it was impolitic to include it in his draft plan. Rather, the headlines would be dominated by the pledge to rebuild a hundred hospitals and recruit an additional 9,500 doctors and 20,000 nurses.
‘What do you think, Peter?’ Blair asked Mandelson after reading out parts of the draft.
‘It has the appearance of an untidy washing line,’ replied Mandelson, putting aside his BlackBerry.
‘Right,’ said Blair, ‘there’s still work to do.’
Introducing private treatment centres into the NHS along with competition and ‘patient choice’ was unacceptable to most Labour supporters, not least the 1.3 million employees of the NHS. To blame those staff for the service ranking among Europe’s worst, Blair knew, risked jeopardising over 2 million votes. He directed that the White Paper should be rewritten to explain that in France ‘choice’ had proved to be ‘wasteful’.
He read the revised draft with unusual care while flying to a summit meeting in Japan on 19 July. Combining command, control and partnership with passing mention of ‘choice and competition’ riddled the White Paper with confusion. Milburn had satisfied Blair’s demand for headlines of ‘reform’ and ‘modernisation’, but how much could the prime minister accept?
Blair’s annotated copy, faxed back to London, revealed his indecision. He could not digest the idea of a private company providing a public service. Accordingly, a patient’s ‘choice’ would be limited to selecting a GP, the time of an appointment and the food offered in hospital. Providing real choice was beyond his prerogative, as was any ‘partnership’. Whitehall would still control everything. To enforce better standards, new modernisation action teams would scour the NHS to subject hospitals to more regulation, more targets and more inspection.
On 27 July 2000, Blair presented the plan to the Commons. To defuse any criticism that the Labour Party was embracing the market, he condemned the Tories’ internal market system as ‘a weak lever for improvement’. He spoke of wanting to ‘redesign the NHS around the patient’ but, as Milburn said, without noting the Orwellian irony, ‘devolving power depends on command and control from Whitehall’.
With the exception of the BMA, NHS employees and the trade unions were ecstatic about this apparent rejection of the Tories’ plans. Finally, they cheered, the NHS would be rescued. None of them knew that Brown was still refusing to release the billions of pounds promised both by himself and by Blair.
The agent who would mastermind the revolution, Milburn decided, was Allan Leighton, the chief executive of Asda supermarkets. However, after researching the realities of management in Whitehall, Leighton rejected the move. The next stage was to compile a shortlist of six candidates, a chore that was entrusted to the civil servant responsible for Scottish affairs. George Alberti saw his list. ‘They’re all deadbeats,’ declared the doctor to Milburn and promptly added Nigel Crisp, the manager of NHS hospitals in London. Crisp was duly selected.
The burden of revolutionising the NHS was thus handed to an impassive former charity manager known to revere the NHS’s traditions – the exact opposite of what Milburn was seeking.
FOURTEEN
Everything Is PR
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‘I’m sending you Stephen Byers,’ Jonathan Powell told Michael Scholar, the permanent secretary at the DTI, after Peter Mandelson’s resignation. ‘I think you’ll like him. He’s a first-rate Blairite.’ In Blair’s opinion, Byers ranked among his most trusted and talented ministers.
Scholar did not interpret the appointment in similar terms: ‘I nearly fell off my chair. Byers was not recommended because he was good and honest but because he got on with the prime minister and not the chancellor.’
The third secretary of state at the DTI within nineteen months was even more resentful of his civil servants than Margaret Beckett. The feelings were mutual after Byers appointed Jo Moore, an undisguised Labour activist, and Dan Corry, an unexceptional economist, as special advisers. ‘Outrageous,’ complained one DTI official. ‘He’s giving power to low-calibre, unqualified people who are unreliable. It’s more like the government of a banana republic.’
As if to prove their own disdain for the ‘lazy’ civil servants, Nigel Griffiths, a newly appointed junior minister, left a message on Scholar’s desk at 6 a.m. that his printer had run out of ink. Byers’s department, predicted a Labour MP, would mirror himself – ‘rude, self-obsessed and not clever’.
Byers did not trouble himself with the problems besetting Helen Liddell, the new minister responsible for energy. She inherited from John Battle the department’s assumption that prices would remain low and that the benefits of cheap energy were permanent. The market was assumed to be working.
Unnoticed by Blair’s team, Labour had effectively abandoned the simplicity of competition. With the prime minister’s support, Battle had protected coal mines and banned the construction of more gas-powered electricity generators. ‘There’s too much gas in the world,’ he had insisted. Neither Battle nor Blair had listened to experts warning about the world’s increasingly complicated energy market. Taxes to protect coal and reduce carbon emissions – and soon a climate-change tax to encourage industry to use less energy – were distorting the market, and the complications intensified as world oil prices unexpectedly began to double during 1999.
Britain suffered a further shock. Because of the country’s open market for energy, prices rose just as supplies from the North Sea began permanently to decline. British consumers became the victims of Europe’s state-controlled, subsidised schemes. On a tilted playing field, Britain was paying more for gas and electricity than the Europeans.
Soon after taking over, Liddell mentioned that the security of Britain’s energy supplies was threatened. ‘Eyes glazed over,’ she observed. She watched Derek Scott, Blair’s special adviser, allude to energy, only to be dismissed as ‘too geeky’. There was, she realised, ‘a national malaise leading by default to a lack of strategy’. Without leadership from Downing Street, she found ‘so many subplots going on about gas, coal, nuclear’. Then Brown began disparaging Blair’s interest in climate change. ‘No one’, she discovered, ‘was considering the possibility of interruption of supply.’ Instead of planning for the future, Liddell was firefighting to prevent European countries artifi
cially fixing high prices.
Britain’s plight was aggravated by Labour’s decision to merge all the energy regulators into one, Ofgem. Staffed by fanatical pro-marketeers, the new regulator focused solely on the consumers’ immediate interests, opposed ‘the green crap’ and refused to consider whether Britain’s supply of energy was secure. ‘After Ofgem was created,’ a Blair adviser would later reflect, ‘the DTI had a lobotomy on energy. They deferred to Ofgem.’ Downing Street did not reprimand the DTI for abandoning any original thinking about the issue. Blair was uninterested. In his big picture, he favoured commissioning the next generation of nuclear power stations, but he was uncertain how to consummate his idea and was also reluctant to pursue his argument.
Forever anticipating the next election, he seized on climate change as the issue. The weather had become political during the 1980s. In a lecture to the Royal Society in 1990, Margaret Thatcher had offered her government’s White Paper, ‘This Common Inheritance’, as an endorsement of using economic instruments to deal with atmospheric pollution. Seven years later, John Prescott had arrived at the Kyoto conference on climate change with an ambitious brief prepared by his Conservative predecessor that alerted the world to danger.
