Authors: Tom Bower
In discussions with his senior officers, Jackson suggested that the government needed to define how the army could withdraw with integrity. That required an approach to Blair. Walker refused to comment on Jackson's proposal, while Hoon resisted adopting any position, not least because there was no will or money to send reinforcements, nor to set a timetable for withdrawal. Paralysis hung over Northwood.
‘Tony is very gloomy. He’s very miserable,’ noticed Charles Clarke some months before the general election of May 2005. He followed Alan Milburn, David Blunkett and others into No. 10 to boost Blair’s morale. ‘You’re tremendous,’ Clarke told his leader. ‘You’re very important. You must stay. I’ll support you all the way.’
‘I’m grateful,’ Blair replied unemotionally. Even at his lowest, he would conceal his true feelings from his Cabinet supporters. To serve his own interest, he toyed with their loyalty. ‘Tony played footsie with me for nine months to get me back,’ recalled Milburn, while Blunkett was assured of his return to the government after Blair pointedly presented his resignation as a charade by declaring that the former home secretary was ‘a man without a stain on his character’. He needed his dwindling band of loyalists.
In the days before the party conference in Brighton, Blair was confident of victory in the election, with the polls showing a Labour lead of between 3 and 10 per cent. Yet he showed no excitement about the prospect of a third term. Gordon Brown’s constant presentation of himself as the ‘consolidator’ offering ‘stability and prudence’ versus the Blairite ‘transformers’ was wearisome, but more troubling still for Blair was defining the reason for his re-election. Simply depriving Brown of the crown was hardly a rallying cry. Iraq hung over everything, especially during the conference, which coincided with the kidnapping in Iraq of Ken Bigley, a civil engineer, by Islamic terrorists. Following his capture, Bigley pleaded unsuccessfully in mournful videos for his life.
To insiders, Blair spoke about ‘securing my legacy’; to the electorate he promised to ‘serve a full third term’, or at least bid a very long farewell, for the stock market was soaring.
After eight years, Blair listed his achievements: a more tolerant society, a minimum wage, multiple new schools and hospitals, a safer rail network, a Human Rights Act, a Civil Partnership Act to rid the country of institutionalised homophobia, laws to liberalise drinking, the encouragement of the arts and the embedment of the attitude that ‘what you did in your personal life was your choice but what you did to others was not’. The hole was the absence of the enduring substance of Thatcherism or the Gladstone era. The former was symbolised by the transformation of Canary Wharf from derelict dockland into a global financial centre for over 100,000 professionals. It was not just the cynics who pointed to the appropriate symbol of Blair’s legacy: the Dome.
Blair’s solution was to get John Birt to solicit five-year plans from each government department. Similarly, Andrew Turnbull was tasked to deliver twenty targets for the public services. These would be distilled into ‘A Fair Future for All’, a paper written by Matthew Taylor, recently hired from a left-wing think tank. Taylor concocted six snappy election pledges, which, while hardly a legacy, did at least offer ideas for those scrambling to draft the new manifesto. With a few tweaks, they could also rely on the manifestos of 1997 and 2001, including the familiar pledge to ‘unremittingly’ reform the public services. The result was refashioned New Labour. Inevitably, selling the brand for a third term was difficult. The party’s finances were also in dire shape: in early 2002, its debts were over £10 million.
In previous times, Blair would have automatically turned to Michael Levy, but his principal fund-raiser had upset many in the Foreign Office and the Middle East while acting as an intermediary between the Israeli and Arab leaders. Blair had been mistaken to entrust a former music agent with the task. The fault once more was his own naivety about the region, not least in thinking that the Arabs were likely to trust an Orthodox Jew as the prime minister’s representative. Even Ariel Sharon,
when prime minister, had shouted, ‘No Levy!’ and ordered the envoy to be thrown out of his office.
General Charles Guthrie was one of many who had found it ‘odd that Blair trusted him as his envoy, because the Arab rulers hated his touchy-feely embraces and his kissing, and he had no merit because he didn’t know anything’. Guthrie recalled some early advice from George Robertson: ‘Get close to Michael Levy because he’s very influential.’ Accordingly, the general had invited Levy to visit Bosnia. ‘He asked questions showing he didn’t know the difference between Serbs and Bosnians,’ he would report. During that trip, an army chef offered Levy a bacon sandwich.
Without telling Levy, Blair decided to rely on Ronnie Cohen, a private-equity investor based offshore, as the party’s new principal fundraiser. Cohen, a former parliamentary candidate for the Liberals, had switched to support Gordon Brown in the mid-1990s. Over the next decade, he had shown no particular flair for politics, nor did he prove able to entice previous donors to pledge £1 million each for the election campaign. Cohen’s legacy, Levy complained, was a deficit of £12 million.
Blair needed an experienced hand to rescue the party’s finances, but his old friend, he discovered, was incandescent. ‘Tony had gone behind my back,’ raged Levy. ‘What I found so difficult to accept or forgive was that he hadn’t been straight with me.’ Nevertheless, against his better judgement that ‘TB really was sometimes just in it for himself’, Levy agreed to swallow his anger and resume raising millions.
The atmosphere among the donors, he discovered, had changed. Established friends of Labour were unwilling to be publicly associated with the party. Complicating the fund-raising was Labour’s new law requiring the declaration of all donations over £5,000. However, an unintended omission did allow the legal concealment of loans. Knowing that the Tories were raising millions of pounds in this way, Blair urged Levy to follow suit.
Levy approached a series of businessmen and, deploying his talent, persuaded them to lend the party a total of £14 million, without
receving any publicity. Among those who agreed to lend over £1 million were Sir David Garrard, a property developer, Barry Townsley, a stockbroker, and Chai Patel, the founder of the Priory clinic. Sir Gulam Noon, known as the ‘curry king’, lent £250,000. Levy told Blair and the party’s treasurer about those arrangements. In October 2004, showing little sensitivity, Blair nominated seven of the twelve who had given loans for peerages. They included Garrard, Noon, Townsley and Patel. The nominations were submitted to the scrutiny committee, which was under the chairmanship of Dennis Stevenson, a well-known corporate chairman. To vet whether the individuals would be suitable legislators, the committee’s staff sought out any damaging information by circulating the names to the Inland Revenue, the police, the intelligence services and other state agencies. Blair and members of his staff who had compiled the nominations – principally Jonathan Powell and Ruth Turner, his trusted political adviser and close friend – did not expect any blowback despite the unusual desperation to raise money.
At the same time, Blair had also nominated Paul Drayson, the chief executive of PowderJect Pharmaceuticals. Within six months, Lord Drayson had contributed £1 million to the Labour Party and become a junior minister. Soon after, news emerged that, following his first donation of £100,000 in 2002, Drayson’s company had been awarded a £32 million contract by the government for a smallpox vaccine. The relationship was denounced by a Tory MP as ‘pretty corrupt. To describe Paul Drayson as a captain of industry is far from accurate. He is a young man in a hurry.’ Drayson was forty-four. Unknown to his critics, the new minister had previously saved £3 million in tax by setting up offshore trusts before floating his company. After that saving was discovered, Drayson asserted that at all times he and his company had acted within the law, and there was no evidence to the contrary. Later, surveying Blair’s record, a parliamentary scrutiny committee realised that twenty-five of the 292 peers Blair had created were donors to the party. They had given about £25 million.
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.’