Broken Vows

by Tom Bower

  By 2000, Downing Street advisers had noticed that Blair’s enthusiasm for international summits had overtaken his interest in domestic issues. In anticipation of a G8 or Euro summit, Blair spent a disproportionate amount of time considering how to present himself to the world rather than grapple with his policies on energy, agriculture or housing. The opportunity to appear at the Earth Summit in New York in 2000, a year before the election, was irresistible. Speaking before a huge audience, he praised his own government for being ‘a world leader on protecting the environment’. Britain, he said, would place conservation at the heart of the decision-making process.

  Blair’s commitment was enshrined in the Utilities Act 2000. Renewables, pledged the government, would generate 5 per cent of electricity by 2003 and 10 per cent by 2010. Officials asked ministers to reconcile the new targets with the unquantifiable investment required to generate electricity from renewables. The only source of finance was taxes, and Blair refused to argue with Brown about assigning more money. Accordingly, few took the government’s pledge seriously. After all, the 5 per cent target had first been set in 1997 and could not be met until at least 2008; and no one was sure when the 10 per cent target would be achieved (by 2010, it had reached 7 per cent). The DTI’s energy section appeared to be suffused with unreality.

  As energy prices rose, Blair was persuaded by his special adviser and the few experts at the DTI that oil and gas prices would soon fall by 30 per cent, so he could rely on market forces to reverse the increases. Blair never questioned whether those predictions were reasonably safe. Those were peripheral issues for a man focused on the big challenges. Accustomed to living day by day, he relied on Byers and Liddell and endorsed his ministers’ distrust of their civil servants.

  By chance, DTI officials discovered that Blair, Brown and Byers, together with Byers’s political advisers Dan Corry and Jo Moore, were secretly considering the sale of the Post Office to Deutsche Post. ‘How can they discuss this without someone who knows something about this being present?’ Scholar asked Jeremy Heywood. ‘I’ll see what I can do,’ replied Blair’s principal private secretary. Invited to the next meeting, Scholar further discovered that the politicians had ignored the mechanics of a sale, and never asked how a German-owned Post Office would be regulated. Once the realities were explained, the idea died.

  Next, Byers was offered a substantial briefing paper by his officials outlining how the sale of five licences for the 3G radio spectrum could raise in excess of £500 million. Byers, the officials complained, did not discuss the paper with them or refer it to the Cabinet. Instead, he deliberated with Corry and Moore on how to promote the sale to the media. After an auction arranged by officials, the credit for an unexpected windfall of £22.5 billion was taken by Byers.

  Soon after, he decided that the DTI should encourage four businessmen, self-styled the ‘Phoenix Four’, to take over the Rover factory in Longbridge, near Birmingham. The unprofitable company was ‘sold’ by BMW for £10. To rid themselves of all legal obligations, BMW also gave the Phoenix Four a long-term loan of £427 million. DTI officials complained that Blair and Byers were warned about inadequate consultation across Whitehall and that both politicians ignored the concerns aroused by the deal.

  Blair’s dislike of his DTI officials initially blanked out another of their warnings: not to rescue a bankrupt ship-building company in north-east England by ordering an unwanted luxury liner. ‘It would be illegal,’ he and Byers were told.

  ‘Why do you say that?’ asked Byers.

  ‘Because I’ve looked at the Act,’ replied the official.

  ‘But you’re not a lawyer and I have a degree in law,’ said Byers.

  ‘I’ve taken advice from the department’s seventy lawyers,’ retorted the official.

  ‘But they’re bound to agree with you. And I’ve looked at the Act and I do have the powers.’

  To resolve the stalemate, the official announced the nuclear option: ‘I won’t act unless you formally instruct me, and if you do I will set out in writing the reasons why you cannot do this, and it’ll be sent to the Public Accounts Committee, who will publish it.’

  Appearing undaunted, Byers scoffed, ‘I’ve no problem with that. You’ll look foolish.’ He never issued the instruction.

  Byers’s conduct did not trouble Blair. His advisers preferred not to bring bad news about such remote events. Rather they added to the turmoil in the Queen’s Speech by committing the DTI to produce a bill providing cheap energy for small businesses. When one of Blair’s advisers asked to read the draft bill, the response from the DTI was incredulity. Downing Street had not informed the department about the proposed law.

  In turn, Blair was criticised by civil servants for clogging up the system with too much legislation. He replied that making new laws sent the signals that forced the system to change because, as Jonathan Powell agreed, edicts from departments ‘didn’t do the trick’. In Blair’s opinion, laws were the substitute for management. Eventually, to satisfy the perennial quest for media headlines, the DTI’s badly drafted bill struggled through the Commons with endless amendments and statutory provisions to proclaim regulations in the future, and was then forgotten.

  ‘This is a dysfunctional government,’ concluded Scholar. To Whitehall’s old guard, Blair’s approach lacked intellectual coherence and core beliefs. The DTI was floundering.

  And then the government was stung. In September 2000, crude oil prices hit $33 per barrel, up from $10 in 1998. Petrol prices rose automatically and a slew of government policies crashed. For three years, John Prescott had been urging people to abandon their cars and use public transport. Predictions that his ‘integrated transport’ policy would aggravate road congestion had materialised and yet he still refused to build new roads. Instead, he supported Brown’s idea of an annual 6 per cent increase in fuel duties above inflation to deter motorists and protect the environment. To rescue his reputation, Prescott announced a ‘Ten-Year Transport Plan’ costing £80 billion. When this initiative was greeted with derision, Blair shook his head. ‘There’s nothing a government can do about transport,’ he told Charles Clarke.

  As petrol prices soared, commuters who relied on cars felt unfairly penalised. Unexpectedly, the drivers of fuel-delivery lorries also felt aggrieved and in protest against the fuel taxes began to blockade the oil depots. Within hours, six of the country’s eight refineries were besieged by a thousand protesters, and within two days half the country’s petrol stations were closed. TV pictures of motorists queuing in a panic portrayed a country in chaos.

  Blair was warned by the police in Hull that his plans to celebrate Prescott’s thirtieth year in Parliament in a Chinese restaurant were endangered by protesters. Five days later, he realised the country faced a shutdown. No one had told him that for days the TV news had been showing long queues of cars outside every garage, nor that the daily evening news had been filled with pictures of panic-buyers emptying supermarket shelves. Britain was threatened by paralysis.

  Blair did not blame Prescott, Brown or himself for the emergency, but Alastair Campbell could not find a minister prepared to take public responsibility for the lack of fuel. The first meeting of civil servants in the Cabinet Office had ended after ninety minutes in what David Omand, the chairman, called ‘disaster’. Whitehall had plans to cope with OPEC countries refusing to sell oil, but there was no civil contingency plan for a blockade of Britain’s refineries. Ministers swapped anecdotes and agreed nothing. ‘Why don’t we run this as a counter-terrorism operation?’ asked Omand. ‘Let’s use the Cobra room’ – Cobra being the acronym for ‘Cabinet Office briefing room A’, where government ministers and officials meet during a crisis.

  The walls of that room were covered with maps of Sierra Leone, the focus of a British military operation. Blair was invited to attend. ‘Gosh, I didn’t know this existed,’ he said, as he watched representatives of the military, police, oil companies and government officials running around like scalded cats. Men
and women were racing up three floors to make telephone calls because the Cobra room, set up for a nuclear attack, lacked facilities for video and telephone conference calls. The correct equipment, Blair was told, would take a week to install. On his introductory visit, he hesitated to take charge. For those gathered, the prime minister’s mismanagement of his first domestic crisis left an uncomfortable impression.

  Reports in the press described diminishing petrol stocks and police refusing to confront the truck drivers – a marked contrast to the robustness that served Thatcher against the miners. The spokesman for ACPO, the Association of Chief Police Officers, explained that police were barred by health-and-safety laws from entering lorry drivers’ cabs. Frightened by intimidation, the oil companies were pusillanimous. ‘We’re not far off a crisis,’ murmured a senior official.

  Richard Dearlove, the head of MI6, declared that ‘This is the most serious threat to the country in my career.’ Richard Wilson, embarrassed by the chaos, was missing in action. As for Blair, he asked a few questions and departed. He was not seen in the Cobra room again. Jack Straw took charge.

  As so often, Blair named those he blamed: the Tories, the media who had turned their guns on the government in revenge for Campbell’s distortions, and Wilson. He summoned Omand and Wilson to his office. ‘Your jobs are on the line,’ he warned. ‘If you fail, you’re out.’

  His desperation spread among his ministers. Anna Walker, the DTI’s director of energy, was summoned by Byers. ‘You are my senior energy official,’ he told her. ‘I will hold you to account to get solutions to solve the crisis.’

  Blaming officials was understandable, but it did not solve Blair’s isolation. Brown denied his taxes were to blame and absented himself, wondering whether there would be an opportunity to seize the leadership. Prescott, an excitable liability during a crisis, stayed in Hull. Straw listed problems but offered no immediate solutions. ‘He’s hopeless,’ Blair told a Cabinet colleague. ‘He’s like fighting blancmange.’ Yet it was Straw, together with Blair, who over the next few days pulled the levers to persuade the police, oil companies and trade unions to end the dispute. Finally, with the country on the precipice, Brown agreed to abandon the tax increase. The blockades were lifted.

  Blair declared victory. ‘Why’, he asked David Omand, ‘can’t all government be as successful as settling this crisis?’

  ‘Because, Prime Minister,’ replied Omand, ‘during the fuel crisis we were all on the same side, working together. Your government doesn’t have a common objective. Your government is split in two: between yourself and Brown.’

  In reply, Blair held an ‘off-site’ of Cabinet ministers and their permanent secretaries at the Commonwealth Club near Whitehall to discuss how to run the government as successfully in normal times as it was run during the emergency. ‘He wants to be saved in the same way,’ thought Omand.

  To disprove his officials, Blair dispatched an emissary to the MoD. ‘The prime minister wants 5,000 drivers permanently trained so this cannot happen again.’

  ‘That’s impossible.’

  ‘But the PM wants it,’ the official insisted.

  ‘No,’ he was told.

  Historically, Britain’s energy policies were always created after a crisis. The aftershock of the fuel blockade was compounded four months later by energy blackouts in California. Electricity supplies in the Golden State were provided in a competitive market similar to Britain’s. In the Enron era, Blair and others still assumed there was an irrefutable benefit that came from replacing the monopoly of the nationalised utilities with dynamic competition, but the Californian crisis showed that markets could fail. Overnight, the assumptions on which Britain’s energy policy had been based since 1982 were undermined.

  In the name of an open market, Blair had allowed the purchase of many of the country’s power stations by state-owned German, French and Spanish companies. Those takeovers had terminated any chance of new British businesses challenging the foreign monopolies, and this, combined with the blackouts in California, reinforced the warnings by a few experts that reliance on the market was failing to protect the security of Britain’s energy supplies.

  With neither interest nor urgency, Blair approved the chore of reviewing Britain’s vulnerability to blackouts. Since he had no confidence in the DTI, the review was handed to Downing Street’s policy unit. Those assigned to the task were not scrutinised for their expertise or prejudice. His expectations were low.

  FIFTEEN

  Clutching at Straws

  * * *

  In 2000, Blair was in the midst of yet another argument with Richard Wilson. ‘I want change,’ he repeatedly told his senior civil servant. The Home Office, he complained, was failing to meet targets to reduce crime. Wilson told Blair that his problem was that he had never managed anything.

  ‘I managed the Labour Party,’ said Blair stoutly.

  ‘You didn’t manage them. You led them,’ replied Wilson.

  The chill aggravated the division between the two men. Wilson’s attempt to appease Blair with proposed reforms, written in business jargon, about targets, performance-related pay, benchmarks, minority quotas and ‘appraisals with 360-degree feedback procedures’ had not impressed his ‘client’. The prime minister did not seek his advice. Instead, he commissioned John Birt to deliver some ‘blue-sky thinking’ about Jack Straw’s department.

  ‘Unleashed by Number 10,’ Straw would write, ‘[Birt] began to interfere in the Home Office’s work for no good reason so far as I could see, and even less understanding.’ In reply to Blair’s conviction that Straw ‘had been captured by the department’, Straw thought Birt’s arrival proved that Downing Street had ‘been captured by the fairies’. Birt presented his conclusions to Blair, Straw and David Omand, illustrated by eighty slides. At the end of his presentation there was silence.

  ‘No one had thought what we were meant to do with Birt’s results,’ Omand later recalled. ‘There was no vision. And there was no money to effect change. Blair never understood what went on outside his office.’

  Blair broke the silence by expressing frustration that Birt had not presented a clear set of levers to pull. He was equally annoyed with Straw and Omand, whose reputations were tainted for predicting that crime rates would rise. ‘If the economy is doing badly,’ said Omand, ‘there’ll be more burglaries. If it’s doing well, they’ll steal laptops.’ To his surprise, ‘Blair lost his cool because either way he was losing.’ Both minister and department head had failed to present him with an initiative or good results to publicise. His solution was to insert five anti-crime bills into the Queen’s Speech.

  Blair was also frustrated because ‘nothing’ had been done to reduce the number of bogus asylum-seekers. He blamed Mike O’Brien, the junior immigration minister, for lacking an instinctive interest in the problem. Some would judge that harsh, but just what Blair meant could be seen by his choice of Barbara Roche, a north London MP, as O’Brien’s replacement. In common with so many of his appointments, Blair did not discuss immigration with Roche. Straw was also unaware that Roche was the daughter of a Jewish émigré family brought up in London’s East End and had entrenched opinions. His brief instruction to her about bogus asylum-seekers was, ‘Deport them.’ Immigration was still not a priority for either Straw or Blair.

  In her first conversation with a senior IND official, Roche was candid: ‘I think that the asylum-seekers should be allowed to stay in Britain. Removal takes too long, and it’s emotional.’ She also dismissed Straw’s vouchers as ‘not dignified’. Every asylum-seeker, she believed, should receive full benefits. Thanks to a threatened rebellion by over a hundred Labour MPs, the benefits were 50 per cent higher than Straw had proposed. Roche also openly criticised IND staff as being uniformly white males. ‘I was angry that it was all bound up in race,’ she would say. ‘It was polarised and unpleasant. The immigration policies were racist. The atmosphere was toxic.’ She wanted to see black faces in Croydon. ‘I know our asylum poli
cy,’ she told IND head Stephen Boys-Smith, ‘but what’s our immigration policy? I cannot understand why I cannot say that immigration is a good thing. I want a progressive, non-racist immigration policy.’

  Roche shared her frustration with Sarah Spencer, an academic who specialised in the subject. For years, Spencer had been a lonely voice urging the Labour Party to treat immigration as a benefit to the country. ‘Legal migration’, the softly spoken woman told Roche, ‘is a good thing.’ Like Spencer, Roche believed that keeping the number of migrants down was ‘misguided’ because ‘immigration and multiculturalism brought positive good’. British cities, they agreed, should enjoy large non-European communities.

  Asylum-seekers, Spencer told Straw, were not benefits-hogging fraudsters but people in need of protection. Even the use of the word ‘bogus’, she said, created a negative feeling. Straw’s vouchers, she believed, exposed the government’s intention to use enforced destitution as an unjustified deterrence. ‘The old approach’, she told Straw, ‘of simply keeping people out is no longer tenable.’ Straw rejected her criticisms, but Roche’s objections, he realised, were different. To avoid alienating the party, he did not openly contradict her, although he did not grasp the direction in which she and Spencer were heading.

  In the midst of celebrating ‘Cool Britannia’ in the Dome, Spencer stood among Labour’s progressives, who embraced their own brand of modernisation. They disdained white Britain’s glorification of British history and identity. British society could be transformed, she hoped, by relaxing the Home Office’s immigration controls. Roche offered Spencer the chance to realise that ambition and fortuitously discovered a kindred spirit in Boys-Smith. ‘It was clear that Roche wanted more immigrants to come to Britain,’ he recalled. ‘She didn’t see her job as controlling entry into Britain, but by looking at the wider picture “in a holistic way” she wanted us to see the benefit of a multicultural society.’