Authors: Tom Bower
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.
‘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 artificially 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.
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.’