by Tom Bower
Over the previous months, twelve different organisations had combined to produce a questionnaire that would help assign junior doctors to a new training scheme. The intention was to prevent consultants selecting their own juniors and, in so doing, discriminating against students lacking social advantages. The questionnaire went further and omitted to ask candidates about their exam results or medical experience. Instead, that year’s 28,000 applicants were required to describe their lifestyle ‘attitudes’. After nine years of Labour government, no one had noticed how political correctness had infected the Department of Health’s staff. The dam broke after the applicants discovered they were competing for only 15,500 jobs. In the uproar, Hewitt could find no one in the department or the BMA who would admit responsibility. The consultants demanded that the new system be abandoned.
Blair hated the derogatory media headlines. ‘I’ve been talking to a friend,’ he said to Hewitt unsympathetically, ‘and I think we should give the consultants what they want.’
‘That’s unacceptable,’ she replied. ‘That’s the whole point. The system must be based on merit, not relationships.’
Blair shrugged. This was not the finale he wanted.
FORTY-FIVE
More Heat Than Light
* * *
Over those last months, the special advisers close to the prime minister watched as his diminishing attention to domestic politics was replaced by a growing enthusiasm for global travel. With gusto, he regularly flew off to meet world leaders at summits or for fireside chats. In hindsight, some of those journeys were influenced by his ambitions for a career after Downing Street. In particular, he was seeking to maximise his relationships with Europe’s leaders. The negotiations to finalise an agreement for the union’s energy market in March 2007 were an ideal opportunity to prove his European idealism.
Blair had convened an energy summit at Chequers soon after the 2005 election. It was his chance to repair eight years of indifference. While in 1997 Britain had been a net gas exporter, in 2006 the country would import 80 per cent of its gas. Within a year, the energy prices for British consumers would quadruple and rank among the highest in Europe. In the countdown to his departure, Blair sought to rectify his failed attempts in 1998 and 2003 to fashion a coherent energy policy. Liberated from antagonistic ministers, he wanted openly to advocate nuclear energy.
Alan Johnson, the DTI’s new secretary of state, arrived with a briefing paper prepared by Joan MacNaughton. At the end of his presentation, Blair was unimpressed by what he believed was yet another attempt to thwart his ambitions. Next, he listened to John Birt and Geoff Norris. Both believed in the market but could not explain how the government could build nuclear plants if private corporations refused to risk their own money. Although Norris mentioned how Blair was ‘eager to bite the nuclear option and embrace a love that does not dare speak its name’, the representatives of the industry expressed their doubts over whether the prime minister and his advisers understood either the costs or the complications. The meeting ended with platitudes.
As usual, Blair fought back with a speech. In November 2005, he unfurled his ideas to the CBI. ‘The issue back on the agenda with a vengeance’, he told his audience, ‘is energy policy. Around the world you can sense feverish rethinking. Energy prices have risen. Energy supply is under threat. Climate change is producing a sense of urgency.’ Hence the need to look again at nuclear energy. Even so, few in his audience understood precisely where Blair was leading Britain. Indeed, even he was uncertain. Margaret Beckett may have said on TV, ‘I’ve always accepted we can’t afford to close the door on nuclear,’ but Blair did not trust her. ‘You need to persuade my Cabinet to sign up to nuclear energy,’ he told a senior Downing Street adviser.
His enthusiasm was spoiled soon after by British Nuclear Fuels’ sale of its stake in Westinghouse Electric Company to Toshiba for about $1.8 billion (£1 billion). With the break-up of the group, Britain lost its last source of expertise in building power stations that produced smaller amounts of radioactive waste. For those corporations being enticed by Blair to risk over £10 billion, Gordon Brown’s encouragement of the sale cast doubt on Britain’s commitment. To douse the uncertainty, Downing Street’s spokesman explained that British ownership of a nuclear manufacturer would have complicated the open competition to find a contractor. Few were convinced, least of all Blair himself.
Despite spending £2.5 billion on consultants in 2004, 42 per cent more than the previous year, the government had received no worthwhile ideas regarding Britain’s energy policy. Blair’s weapon of last resort was yet another White Paper. Since he did not trust the existing DTI energy section to promote nuclear power, he appointed William Rickett, Whitehall’s one remaining energy expert, as the new director. Rickett was surprised by his new estate. One hundred people in the DTI’s energy section were employed on weapons reduction and arms control, and the remaining 150 knew little about energy. Most would be reassigned, and the section rebuilt from scratch.
Rickett inherited the outlines of a review drafted by Norris and Vicky Pryce, the economist, to entice private investors. Their continuing faith in the market puzzled him. During the winter, energy prices had been lower in ‘non-market’ Europe than in ‘competitive’ Britain. Pryce blamed the irrationality of the market, although the circumstances causing the discrepancy were quite mundane. Responding to Europe’s gas shortage, and to satisfy their own customers, Germany had held back supplies destined for Britain. In turn, Britain, without sufficient storage tanks, was forced to pay high prices on the open market – making it the only European country without secure supplies at stable prices. The result of Blair’s latest slogan – a ‘transformational energy policy’ – was uncertainty.
Looking back over the previous nine years, Rickett understood the futility of Michael Barber-style stock-takes. As each successive DTI minister had proposed a new ten-year strategy, each ‘plan’ had replaced another ‘plan’, but nothing had happened except for Blair hankering for Europe to adopt liberal rules, without him understanding that any EU agreements on renewable energy and carbon emissions would sabotage the free market. Britain’s target of producing 10 per cent of its energy from renewables by 2010 had been missed. So far, only 2.4 per cent of the country’s energy was being produced in this way, while the cost of electricity for consumers had been increased by 5 per cent. Even higher prices would follow once Britain imported 90 per cent of its gas, as it would do by 2025. Despite all the obstacles, Rickett began composing a new policy.
Alan Johnson was baffled by the energy jigsaw, and Malcolm Wicks, the energy minister, could offer no help after Downing Street ordered him not to make any decisions. In May 2006, Johnson was replaced by Alistair Darling. During one of his early meetings in Downing Street, Darling heard John Birt volunteer to review government energy policy. In that artless scenario, Birt said he could produce a plan to circumvent the chancellor by giving the DTI greater powers. Too embarrassed to decline the offer by his unpaid ‘blue-skies thinker’, Blair agreed. Others in the room were sceptical. Having experienced Birt’s 150-slide presentation at transport – characterised by Rickett as ‘a regurgitation of what was economically rational rather than politically realistic’ – Darling decided that he would commission his own review.
Eleven days after the May reshuffle ( Johnson became education minister and would languish there ineffectually until Brown became prime minister), Blair again addressed a CBI dinner. Five days earlier, he had finally persuaded Brown to accept Turner’s pension reforms. With that success, he wanted to commit the chancellor to nuclear energy. His starting point to the CBI was that Britain’s coal and nuclear power stations were ‘coming to the end of their lives’. Without action, he warned, the country faced ‘a dramatic shortfall in our energy capacity and risks to our energy security’. His short-term solution was the building of new gas plants – the same initiative that he had halted in 1997 – and he reannounced the construction of a new generation of n
uclear power stations. Amid the predictable protests from the Greens, his nuclear ambitions were also criticised by Malcolm Keay, a British energy expert, as a ‘fantasy-land’ that was sure to flounder.
To head off criticism, Blair presented ‘Meeting the Energy Challenge’, a consultation White Paper, to Parliament on 11 July 2006. Inevitably, he ignored any responsibility for his past inactivity and the randomness of throwing nuclear, gas and renewables into the same pot. ‘The government’s preliminary view’, he wrote in the introduction, ‘is that it is in the public interest to give the private sector the option of investing in new nuclear stations.’ He was assured, he wrote, of ‘compelling’ support for nuclear power – concealing the fact that for nearly a decade the uncertainty had left the government scrambling to find a suitable contractor, even with the offer of stratospheric price guarantees. But he did admit that too few new power stations had been constructed and, with the closure of old coal and nuclear stations, there was ‘the (very small) risk of supply interruptions’. In truth, not a single station had been built. Steep price rises and possible blackouts were the reality. Even the government’s initiatives to subsidise heating costs for the poor had been halted. The number of those suffering from the cold was rising and would nearly quadruple by 2010.
Blair’s mind had strayed from such mundane matters. Noticeably, he began going for dinner with those who could help his career after Downing Street. Richard Desmond was no longer a member of that chosen elite. True to form, since Blair could offer him no further advantages, the controversial businessman had switched his allegiance back to the Tories. But there were others Blair had in his sights, in particular an even bigger newspaper proprietor: Rupert Murdoch.
In his preparations for his new life, Blair accepted, to the bemusement of Murdoch’s executives, an invitation to News Corporation’s weekend conference on 22 July in Pebble Beach, California. Until then, his relationship with the Australian had been professional rather than friendly, and was often conducted through Murdoch’s employees. Their first introduction had come in 1995, when Blair was invited to deliver a speech to News Corp. executives in Australia. He flew there and back within three days. Thereafter, Murdoch’s British newspapers switched their support from the Conservatives to Labour. The two men’s communications centred on the Sun’s attitude towards the government. Blair had been delighted that David Yelland, his first Sun editor, had been influenced by Alastair Campbell’s directives. Unfortunately for Blair, Yelland’s successors were more abrasive. Throughout the decade, the dominant theme of their conversations with Blair was Britain’s membership of the euro. As a Europhobe, Murdoch refused to support Blair’s ambitions during his visits to Downing Street, but those differences were forgotten when Blair arrived for a night at Pebble Beach, along with Bill Clinton, Al Gore, Arnold Schwarzenegger and Nicole Kidman. In an interview conducted in front of his fellow guests, Blair spoke warmly about his host and was noticeably friendly in his conversation with Murdoch. That day, Murdoch’s lieutenants noted, was the beginning of a deeper relationship, and the Australian’s support became an important building block for Blair’s future career.
Another, surprisingly, was Britain’s energy policy. Ever since Blair had openly come out in support of nuclear power, William Rickett had been rebuilding the DTI’s energy directorate and had begun composing another White Paper. Blair’s waning interest in energy was momentarily revived by Birt’s familiar slide-show presentation of his review. Darling and others in the audience were left disappointed. He offered no original insights and just repeated the DTI’s own opinions. At the end of the presentation, Darling told Blair to restore energy policy to his department. Blair disagreed. Everything, he said, would be controlled from Downing Street. Although no investors in nuclear energy could be found, he would not trust the DTI at that late stage. And there Britain’s energy policy languished.
In early March 2007, The Economist concluded that ‘The UK is faced with a power crisis as a result of an almost criminal … planning failure.’ The magazine’s judgement was drawn partly from Blair’s inactivity since his speech to the CBI, and partly by an apparently mundane EU summit. Unnoticed by The Economist, Blair arrived at the meeting pondering a critical concession that would destroy the very energy market he had championed for ten years.
On 8 March, eight weeks before Rickett’s White Paper was published, Blair flew to Brussels for his penultimate meeting with the Council of Europe. In preparing briefs for what was billed as ‘an energy summit’, Rickett called around Europe’s capitals to anticipate what might be discussed. He assumed that Angela Merkel, who had become the German chancellor in 2005, would as usual denounce Blair’s championing of the market and deride Britain’s notional 5 per cent carbon cap based on the trading scheme. Rickett knew that, as chairman of the summit, Merkel would push Germany’s preference for paying subsidies to its coal industry and further subsidies to promote wind and solar energy. But instead of receiving confirmation of the traditional disagreement, he heard alarming news.
Merkel intended to propose that every European country should pledge to generate 20 per cent of all its energy from renewable sources – wind, solar and biomass – by 2020. In the world of subsidies for green energy, Rickett knew that for Britain such a pledge would be intolerably expensive. ‘All its energy’ meant taking into account the gas that heated most of Britain’s homes, all the fuel used by vehicles, and nuclear power. Since the source of that energy was unalterable, the 20 per cent renewables target would require Britain to change the source of the remainder of its electricity. To reach that goal, more than 30 per cent of Britain’s electricity would need to be generated by wind, solar and biomass, yet in 2007 only 1.6 per cent of Britain’s energy needs was being generated by renewables. Engineering such a massive change would cost Britain’s consumers billions of pounds every year and would wreck its energy market. To increase wind-generated power to the degree required would also disfigure Britain’s countryside alarmingly. Rickett initially assumed that the German proposal would be rejected, but to his horror he heard from Downing Street that Blair intended to bow to Merkel’s demands. He alerted Darling.
The minister approached Blair after a Cabinet meeting. ‘Don’t sign up to the European renewables targets in Brussels,’ he said. ‘It’ll cost us an arm and a leg.’
‘Right,’ said Blair. ‘I won’t.’
‘It’s quite important.’
‘I know that,’ replied Blair.
On reflection, Darling was not sure whether Blair was even listening. As so often, although their conversation lasted only a few seconds, his eyes wandered. Later that day, Darling’s officials regretted that their minister had rejected Gordon Brown’s suggestion of sending Blair a joint formal letter.
‘He won’t be so stupid as to agree to it,’ Darling told Rickett.
Blair’s thoughts were clearly on Europe – and his chance to become the first president of the union. For years, he had scoffed at Britain’s anti-European prejudice as ‘hopelessly, absurdly out of date and unrealistic … a product of dangerous insularity … a kind of post-empire delusion’. Euroscepticism, he jibed at Cameron during a Commons exchange, was ‘a virus’ infecting the Tory party. During his premiership, he believed, he had put Britain at the centre of the EU, not least by preventing the appointment of Guy Verhofstadt, a federalist, as its president. In 2005, he had been applauded by the European parliament after urging the continent to adopt Third Way politics; and later, to prove his European credentials, he had agreed to forgo £1 billion of the annual rebate Margaret Thatcher had obtained from the EU. Notionally, he had given away £1 billion in return for France’s agreement to reduce its receipts from the European agricultural support scheme. ‘We got a good deal,’ was his view. He was untroubled by France’s subsequent reneging on the agreement. In that one-way traffic, Blair justified the sacrifice of £1 billion as necessary for building better relations in Europe. Rickett feared he was about to do the same over renewab
les.
Early in the morning of 9 March, Rickett telephoned Kim Darroch, Britain’s representative to the EU, who was travelling with Blair. ‘The 20 per cent renewable target’, said Rickett, ‘is inconsistent with the 5 per cent of energy from renewables which is the basis of the new policy in the White Paper to be published next month.’ The cost to the consumer, he continued, of generating 20 per cent of Britain’s energy from renewables by 2020 would be an extra £7.6 billion every year in subsidies. The issue was not the principle but the speed of the change. The amount of money involved was enormous. ‘Britain’s reliance on the market to produce the cheapest energy would be wrecked,’ he explained. As an afterthought, he added, ‘It will also crowd out much cheaper ways of reducing carbon emissions.’
‘There’s no danger of that happening,’ Darroch replied. Rickett would never discover whether Darroch briefed Blair about the danger.
Blair arrived at the summit knowing his presence would count as a farewell appearance. By then, he had decided to resign on 27 June. Here was his last opportunity to seal his reputation as a good European. In that cause, Blair’s self-interest triumphed over that of Britain. Oblivious as usual to money, he made no move to sidle his way out of the commitment and fully agreed to Merkel’s demand. The British energy consumer would be paying £7.6 billion extra every year in subsidies to the power-generating companies.
‘You’re mad,’ Darling told Blair on his return to London.
‘Oh,’ replied Blair, ‘I got confused. I thought it was 20 per cent of all our electricity, not 20 per cent of all our energy.’
No one believed him. The briefing papers were absolutely clear. In the aftermath, Rickett and the DTI’s economists calculated that Blair’s giveaway meant that the cost to Britain of meeting its environmental obligations would be ‘around three times higher’ than the previous estimate.
