by Tom Bower
With about £14 million secured and Labour enjoying a three-point lead over the Tories, Blair’s pollster Philip Gould was predicting victory. Blair intended his surprise coup after the election to be Brown’s exclusion from the Treasury. In retaliation for what he called Brown’s ‘no-holds-barred war of subversion’ and ‘Mafiosi skulduggery to get his way’, his opening salvo was fired while the chancellor was flying to Washington: he revealed the appointment of Milburn as election supremo.
While Blairites cheered that their man had finally faced Brown down, the chancellor’s allies screamed about a ‘kick in the teeth’ and ‘an African coup’. Milburn announced his own coronation, publicly chortling about his return. ‘That was the worst mistake I ever made,’ he would later say.
The result was predictable. ‘Basically Gordon is on strike,’ said Peter Mandelson. ‘Mad, bad and dangerous.’
Brown’s vitriol festered until December. In an outburst, he called Blair a liar, a cheat and a fraud for not resigning. ‘You can’t talk about yourself as a Christian if you don’t honour your word,’ he screamed, until Blair ordered him to leave his office.
The Blairs’ new year holiday in Egypt was tinged by an apocalyptic mood. The couple had travelled to a seaside resort just as the world was coming to understand the huge death toll caused by the tsunami that had swept across the Indian Ocean and killed at least 150,000 people. Preoccupied by his own problems, Blair was isolated from the anguish across Britain. Appalled by harrowing pictures of the destruction, the public quickly raised £70 million. The government’s first gift was £15 million. A journalist visiting the Blairs discovered that they had travelled without any books and that the prime minister was preoccupied with writing out a new year’s message for the British public. The list of Labour’s achievements – schools, NHS and reducing crime – was familiar. The surprise was his aggressive response to gossip that Brown was planning a new bombshell.
Once back in London, Blair called a snap press conference, deliberately timed to clash with a speech the chancellor was delivering on aid to Africa. Brown, he said, would play a full part in the election, but he pointedly refused to guarantee him the chancellorship in the next government.
The supposed bombshell was the publication of Brown’s Britain by Robert Peston, a left-wing journalist, which portrayed Blair as an incompetent leader who had shown no gratitude for Brown’s unwavering devotion. Peston’s narrative, shaped by Brown, described the chancellor’s dismay when he was ‘cheated’ of the premiership in 1994. The overwhelming evidence that he had withdrawn from the leadership contest in order to avoid certain defeat was ignored. But Peston did prominently insert, at Brown’s request, the chancellor’s damning exclamation to Blair in 2004: ‘There is nothing you could ever say to me now that I could ever believe.’
‘You should have worked with me,’ Blair allegedly replied.
Blair was stunned by Brown’s aggression. The media hype would burn itself out, but the venom could not be neutralised.
‘Don’t forget, Gordon’s a paper tiger,’ repeated Charles Clarke. Milburn echoed the same sentiment. Fearful of the damage, Brown summoned the BBC to declare on camera his passionate belief in unity.
The only credible riposte, Blair decided, was to launch a four-month campaign aimed at winning a majority of over seventy seats. With a new mandate, he could dismiss Brown and achieve in the third term what had eluded him during the previous eight years.
Over the next eight weeks, Brown sulked and the Tories’ poll ratings rose. At the beginning of March, after Gould’s warning that victory was only guaranteed if Brown and Blair stood together, Blair surrendered. Milburn, the party’s media briefers whispered, was proving incapable of organising the campaign, so he was ditched and Brown resumed his role as election supremo. ‘Tony’s overriding concern’, Mandelson observed, ‘was to keep Gordon on board. He humoured Gordon and applied massive therapy.’ Their reunion was sealed with a contrived photograph of Blair buying Brown a Mr Whippy ice-cream cone from a street van. Both laughed for the cameras.
Labour’s electoral strength, Blair knew, was its reputation for economic competence. Brown had fashioned himself as the architect of economic stability and the social engineer who used tax credits to relieve poverty among children and pensioners. By 2005, the chancellor was boasting that Britain was booming and an additional 2.1 million people were in employment. Blair needed those headlines.
The truth was rather different. One million jobs had been lost in manufacturing since 1997. Most of the new jobs created by Brown were in the public sector, financed by taxes. As a result, the 2.2 per cent increase in productivity between 1997 and 2005 was 0.3 per cent less than in John Major’s era. Even inequality was unchanged: despite the billions of pounds spent on tax credits, the gap between rich and poor remained static.
Thanks to Labour, Brown claimed, Britain had enjoyed the longest run of continuous economic growth since 1701. He overlooked the fact that a third of the last fifty-one quarters were under Tory rule. The benefits of the growth were not universally shared. The chancellor’s much-vaunted ‘investment’ had cut the average incomes of Britons in 2003 and created a new £11 billion funding deficit because he had exaggerated the amount received from taxes. Thanks to his skewed financing, Britain’s trade gap had risen from near zero in 1997 to a £57 billion deficit in 2004. Worst of all, the debt had risen from 34 per cent of GDP in 2000 – the last year directly influenced by the inheritance from the Tories – to 40 per cent in 2004, and the annual increase thereafter would be steep.
Blessed for introducing flexible labour laws and light-touch regulation for the banks, Brown posed as the master of the new capitalism and the godfather of private enterprise. Certain of his own genius, he had opened up British industry to unbridled competition with the world. Unnoticed, he had removed the statutory protection of British industry provided by the independent Office of Fair Trading. Without that law, Cadbury, ICI and other iconic British manufacturers could now be sold to foreign corporations, stripped and closed down.
Blair’s grasp on the effect of Brown’s policies on British industry, the City or the economy was indiscernible. However, he showed no surprise when Clarke said, ‘We’re spending too much.’
‘I know,’ was his reply. ‘I’ll talk to Gordon about it.’
With limited interest in the financial world, Blair never questioned whether his sharing Bill Clinton’s and Brown’s hero-worship of Alan Greenspan, the chairman of the Federal Reserve, was wise. He didn’t realise how ignorant Brown was of markets and balance sheets. Neither he nor Brown heard the warnings in New York and Washington that Clinton and Greenspan had inflated a property bubble and, by deregulating the trading of commodities, allowed speculators to wreck the markets. Only a few Wall Street insiders spotted the risks of complicated sub-prime loans on property and the speculation in oil prices, which were to cause the crisis in 2008. Just like Clinton and Greenspan, Blair and Brown regarded bankers and fund managers through starry eyes. The master spinners to the electorate could not imagine that the fluent money-men, self-styled as masters of the universe, were peddling false prospectuses and rigging the markets. Unable to see through the self-aggrandisement of Barclays’ Bob Diamond or register the inexperience of Mervyn King, the governor of the Bank of England, neither Blair nor Brown queried whether Britain’s Financial Services Authority was regulating the City adequately.
The illusion went unchallenged by a ragged Tory opposition. The electorate would not understand that Brown’s seemingly healthy economy was built on sand. The Conservatives’ simple battle cry was honesty, the caption of their election poster echoing the nation’s dilemma: ‘If he’s prepared to lie to take us to war, he’s prepared to lie to win an election.’ Britain, the Tories and Blair realised, was split between haters and sympathisers. Facts, Blair knew, would not determine the outcome. In modern politics, he wrote, ‘the mood trumps the policy every time’.
So it was that the prime minister
of Great Britain sat happily on a sofa for daytime TV and let his hosts Ant and Dec proffer a pair of panties as a gift for Cherie and check people’s reaction when he was asked about his ‘ugly smell’ in the bathroom. On other programmes, he exposed himself to hostile mothers who attacked him about the NHS, schools and Iraq. Little was off limits, including Cherie’s boast to a Sun photographer in the Downing Street garden that her husband ‘does it five times a night’, followed by Blair’s confirmation to the photographer and Trevor Kavanagh, who stood near by, ‘At least. I can do it more, depending how I feel.’ Labour’s steady polling advantage showed the efficacy of such an unusual pitch.
The Conservatives panicked. Their negative campaign, directed at 900,000 swing voters and masterminded by Lynton Crosby, an Australian political strategist, rested in part on Labour’s failure to control immigration. ‘It’s not racist to implement limits on immigration,’ hushed the poster’s caption. Blair’s reply that ‘Britain needs strict controls that work’ raised questions about what Michael Howard called Labour’s ‘loss of control of the immigration system’.
Then the Tories made a mistake. They proposed to detain illegal immigrants on what shadow chancellor Oliver Letwin called ‘a faraway island’, although he could not identify its location. Blair seized on the ‘fantasy island’ as ‘absurd, laughable opportunism’ – although Blunkett had proposed a similar scheme two years earlier. Posing as the beacon of decency, he denounced Howard for exploiting people’s fears. In a well-pitched campaign of contrition to rebuild his relationship with the electorate, Blair denounced Howard for appealing to racists, while simultaneously conceding that those who discussed immigration were not racists. Soberly, in a homily headlined ‘firm, fair, fast’, he praised the advantages that immigration had brought to Britain, from which Howard’s own parents, the victims of persecution in Eastern Europe, had benefited. Even the leaked Home Office estimate that there were 570,000 illegal immigrants in Britain was convincingly dismissed as ‘grossly inaccurate’ by Blair’s spokesman. In truth, the figure was an underestimate, because bogus asylum-seekers were not included. The Tories’ best electoral weapon was lost.
Blair was pitching Labour as the architect of an advanced post-industrial economy in a globalised world. The Enron and WorldCom frauds in America, he assured enquirers, could not happen in Britain thanks to the Financial Services Authority. Labour, he said, had created the ideal foundations for his beloved countrymen to prosper. ‘For me, simply,’ he gushed, ‘I believe in you, the British people, as much as ever … I’m still the same person, older, a little wiser I hope, but still with the same commitment.’ Howard could not replicate that performance.
Yet such self-assurance was threatened in the first days of April. After ignoring the warnings that MG Rover was heading towards collapse, Blair was told that a Chinese concern had refused to take over the insolvent company. Three weeks before the election, the employees faced unemployment and no pay, while the four chief executives were certain to walk away with £42 million. Concealing their self-enrichment, the Phoenix Four demanded that the government provide a £100 million loan to save the jobs. The trade unions accused the four of crashing the company to get more money. ‘Give Rover whatever they need,’ Brown shouted in a panic down the telephone at Patricia Hewitt. ‘I’ve spoken to Tony. We have to save the jobs. You’ve got to put the money in. Just do it.’
Hewitt suspected it was throwing cash away and probably unlawful. ‘They can’t decide what to do,’ Mike O’Brien told a friend. ‘There’s no grip.’ Torn between the law and politics, the tearful DTI minister loaned the company enough money to pay the wages for one week.
Blair was grateful for Howard’s failure to capitalise on the government’s embarrassment. Instead, the Tory leader repeatedly accused Blair of being ‘a liar’ about Iraq. This line of attack did not survive after Howard told a TV audience on the eve of the poll that he still supported the invasion.
Blair’s confidence grew. Flying in a helicopter with Alistair Darling at the end of the campaign, he asked, ‘What’s our majority likely to be?’
‘Fifty to sixty,’ replied Darling.
‘Isn’t that pessimistic?’ asked Blair, convinced that the 10 per cent lead in the polls would produce a majority of nearer 130 seats. Relying on his consistent good luck and the bias of constituency boundaries, he expected the electorate’s hostility would be overcome.
On 5 May, election day, his team gathered at his home in Sedgefield. Blair was nervous. ‘We’ve lost,’ groaned Alastair Campbell, a volunteer during the campaign, after hearing pessimistic reports from marginal constituencies. But, at 10 p.m., the BBC’s exit poll forecast a Labour lead of 3 per cent and a majority of sixty-six.
‘A minor miracle,’ Blair would write five years later.
That was not his sentiment at the time. At his own count, Blair looked exhausted. A painful slipped disc and a heavy cold were aggravated by a withering speech by Reg Keys, the father of a soldier killed in Iraq, who had stood as a candidate in the constituency. Blair flew south aware that Labour was predicted to win with the lowest number of votes in history for any government. ‘I have listened and I have learned,’ he said unhappily on the doorstep of No. 10. ‘And I think I have a very clear idea of what the British people expect from the government for the third term.’
Once inside, his misery erupted. On the main table were newspapers with headlines such as ‘Blair Limps Back’ and ‘Time Is Running Out’. Across the country, Labour members were speculating about his early retirement. Beside him were Patricia Hewitt and Sally Morgan. Both saw a disappointed magician who was fearful that his wizardry was exhausted. Since 1997, Labour had lost nearly 4 million votes; worse, it had garnered the lowest share of votes for a winning party since 1832. Blair half doubted whether he had actually won. Party members were already being ‘ungenerous’ and ‘grim’ about the victory, blaming him for the poor result.
‘I’d never seen him so low,’ recalled Hewitt. ‘Mr Calm’, who rarely cried over spilt milk and moved on after a crisis, was distraught. There was no talk of ‘progressive’ politics.
‘Should I get rid of Gordon?’ he asked, starting the familiar hand-wringing, which ended with his voicing all his old fears about Brown on the back benches. The question, all three knew, was meaningless. The previous Friday, he had publicly anointed Brown as his successor. ‘Gordon will make an excellent prime minister,’ he had written in The Times.
Upstairs, Cherie was contemplating her future. In one month, she was due to fly with her husband to Washington. She intended to use that opportunity to be paid £30,000 for a lecture promoting her new book about life inside Downing Street. Also on her list was the chance to earn a fee at the opening of a shopping mall in Malaysia, another for a TV documentary based on her book, and a third for delivering a lecture as ‘Cherie Blair’ rather than ‘Cherie Booth’ in Australia. She had just submitted a bill for £7,700 to the Labour Party for her hair stylist’s daily services during the campaign.
Half a mile away, Brown was waiting in his small Westminster flat.
PART 3
‘NO LEGACY IS SO RICH AS HONESTY’
* * *
JUNE 2005–MAY 2007
THIRTY-NINE
Medical Mayhem
* * *
‘Do health,’ Blair told Patricia Hewitt at the end of their post-mortem following polling day. ‘We’ll talk about it later.’
As usual, he had not considered the appointment with any care, and Hewitt would need a year to understand her department. The ideal choice would have been John Hutton, Alan Milburn’s deputy and former flatmate, but Blair had become disengaged. ‘His door used to be open,’ George Alberti had discovered during a thirty-minute discussion with Blair. ‘It wasn’t any longer. He was totally diverted.’ Blair’s preoccupation with the NHS had been reduced to a longing for headlines.
Hewitt left Blair in Downing Street and crossed Whitehall to her new office in Richmond House. Nigel
Crisp, the permanent secretary and chief of the NHS, had left for home. Ever since being mentioned as a possible candidate to become the next Cabinet secretary, his confidence had grown. Hewitt found his briefing file on her desk. The summary described a super-class of confident administrators who, ever since 1997, had been improving the nation’s health.
On Monday morning, the two met. ‘He told me everything was marvellous,’ recalled Hewitt. During the first weeks, Crisp’s reports, especially after his regular Friday inspection tours across the country, were glowing. Every indicator was positive. Naturally, there were a few grievances. The IT programme was delayed by Accenture’s failure to deliver on their contract, and the NHS needed to recuperate after the bruising employment of private contractors. Hewitt nodded. She was unaware of Ken Anderson’s presence down the corridor, and Crisp did not enlighten her about the commercial section’s mission to shame the NHS dinosaurs.
Hewitt entered Richmond House convinced by the party’s election boast that Blair had transformed the NHS. Her presumption was, in Crisp’s eyes, a blessing. In his briefing he did not mention the raging arguments over markets and choice; nor had Blair or Paul Corrigan, the prime minister’s special adviser on health, forewarned her that those controversies remained unresolved. At least she was told that Milburn had created an excessive number of primary care trusts – 302. Too many were small, badly managed and wasteful in commissioning and providing care. Crisp agreed that the number should be halved. ‘It’s all in hand,’ he told her. Without warning the new minister, Crisp had decided to remove the PCTs’ authority to provide care – a revolutionary change – and to reduce the thirty-one PCTs in London to five. The publication of these proposals in ‘Commissioning a Patient-Led NHS’ provoked an uproar. ‘It came out of the blue,’ Hewitt would say. ‘Crisp cut the PCTs’ powers without any discussion, or telling Downing Street, because that was his policy.’ London’s Labour MPs led the outcry, and their complaints went directly to Blair.
