Broken Vows (52 page)

All that research was irrelevant to the Labour MPs opposed to Blair’s education bill. In the debates, none of them mentioned falling standards or the misery of poorly educated sixteen-year-olds. They cared about political control of education and, more importantly, Blair’s departure.

To enact his bill, Blair could rely on the Tories for support, but first, to reduce the rebellion, he half surrendered, withdrawing most of the freedoms he had originally granted to schools. In a quip favoured by City slickers, he chose his moment to ‘amend and pretend’. ‘He would rather sacrifice his leadership than back down,’ noted Powell. The media was unrelenting, glorifying Labour MPs for deserting their prime minister.

On the night, to opposition taunts that ‘This is a Tory bill’, fifty-two Labour MPs voted against the government, but with the Tories’ support Blair won with a majority of 343. The circle was complete, and he had restored the grant-maintained schools abolished in 1997. His success appeared to be trumped by Brown’s snap promise to match the funding of state schools with the high income that supported private ones. Enquiries revealed that no money had been set aside for that expensive pledge, which was quickly relabelled by the Treasury as an ‘aspiration’. A month later, Kelly silently resigned from the education department and became the new minister for equalities.

In 2007, the Rowntree Foundation reported that the opportunities for the poorest children – the targets of Labour’s ambitions – had worsened. A paper by Robert Cassen blamed teachers in deprived areas for ignoring discipline and excellence. Other researchers recorded that the attainment of disadvantaged pupils had fallen because they were being supervised by unqualified assistants and ignored by the full-time teachers.

Despite the huge expenditure, some inequalities, while not worsening, barely changed. Forty-six per cent of school-leavers were going to university, nearly matching Blair’s ambition of 50 per cent, but since 1997 the number of working-class students had risen by just 3 per cent. The number of state-school pupils going to the Russell Group universities, the best in the land, had not changed. Although Blair would
say that ‘primary schools in the poorest areas have improved at double the rate of schools in the more affluent areas’, the gap between rich and poor had widened. ‘The bad news’, admitted David Miliband, the schools minister, ‘is that when it comes to the link between educational achievement and social class, Britain is at the bottom of the league for industrialised countries.’ The only children whose standards had improved were those educated in private schools.

Blair clung to academies as his lifebelt. ‘You are the true change-makers in our country today,’ he told the leaders of the thirty existing academies in 2006. ‘You are lifting the sights of our young people, teaching them better, educating them more profoundly and to a higher standard than ever before.’

As so often, a series of reports, especially those by the National Audit Office, contradicted him. The exam results of academy pupils, reported the NAO, were below average and some academies were wasteful, weak and financially irresponsible. Blair would ignore such findings. In praising his own achievements, he would use inaccurate 2005 statistics, passing over poorer results published in later years.

In spring 2006, he promised to build 200 academies by 2010. Later that year, he upped his target to 400. In 2007, there were would be forty-six academies, costing on average £24 million each and educating less than 3 per cent of all secondary pupils. One had cost £40.4 million to build. The bill for refurbishing a normal secondary school was about £14 million.

Bringing the curtain down on a decade pledged to revolutionising education was the appointment of Christine Gilbert as head of Ofsted. The former director of education at Tower Hamlets believed in ‘personalised learning’. She advocated that pupils should determine their own curriculum, mark their own work and rate their teachers, while traditional exam grades should be replaced by ‘feedback’. From Woodhead to Gilbert, Blair had been defeated on his chosen battlefield.

On 26 April 2006, while enjoying the cheers of thousands of Hindus during a visit to a temple in north-west London, Blair was told about a new immigration crisis: the Home Office had failed to consider 1,023 foreign prisoners for deportation after their imprisonment. As a result, criminals convicted of violent and sexual offences had been released to continue living in Britain.

Charles Clarke was the vulnerable minister. In September 2005, he had discovered that 10,000 prisoners – one-eighth of Britain’s prison population – were foreign nationals. He started discussions on how the number could be reduced. Two months later, he learned that John Gieve, the permanent secretary, did not know how many asylum-seekers had been released from prison without being deported. Relying on Gieve, Clarke had told a parliamentary committee that none of those allowed to stay in Britain was guilty of serious offences. But, as Gieve would admit, he had briefed the minister without knowing all the facts. The civil servants’ excuse for the disaster was that they had followed the government’s policy of being soft on immigration. In December, Clarke removed Gieve from the Home Office and told Blair that a number of foreign prisoners were being released without being considered for deportation. He reminded Blair of his earlier warning that clearing up the Home Office would take five years.

The bungle was forgotten about until April 2006, when, informed by hostile IND officials, David Davis, the Tory shadow home secretary, asked in the Commons for statistics about foreign prisoners.
Clarke could not provide them. To some, he appeared evasive and incompetent. There was uproar, but Blair hoped that Clarke could survive. In a meeting at the end of April, Clarke offered Blair his resignation, adding, ‘Don’t accept it, because my departure won’t solve anything.’ Blair agreed. Believing they were ‘sticking together’, Clarke revealed his exchange with Blair in a radio interview the next morning. He overestimated Blair’s support because he misjudged the prime minister’s own vulnerability.

Believing that he could still embed the reform programme before his resignation – planned, as he would later write, for summer 2008 – Blair was engaged in daily combat against Gordon Brown and his supporters, particularly Ed Balls and Ed Miliband. ‘I was cornered,’ he admitted, ‘so it was either go down or fight … and I would not go unless Brown continued the reform programme.’

‘What is to be gained by you staying on for another six months?’ Miliband asked. His insults were encouraged by Brown, who would regularly walk past Blair’s staff at 8 a.m., enter the prime minister’s study and start screaming.

The battle reached a new climax on Wednesday 15 March 2006. Brown was due to meet Blair and Adair Turner to discuss pension reforms. For some days, newspapers, after receiving accurate information from a civil servant, had been reporting that eleven businessmen had been nominated for peerages, but four had been rejected by Dennis Stevenson’s committee on the grounds that their financial activities while managing their businesses would bring the House of Lords into disrepute. Subsequently, however, the
Sunday Times
had interviewed one candidate, Sir David Garrard, a property developer, who admitted that he had loaned the Labour Party £2 million. Others would not deny their own loans. On 12 March, the same newspaper’s front page led with a report about Chai Patel, who by then was attracting controversy over the deaths of residents at his old people’s homes. Patel had earlier admitted to having made a donation of just £100,000. Now, he explained that Michael Levy had asked him to convert a donation of
£1.5 million into a loan, which could be changed back into a donation in the future. Patel’s loan had coincided with his nomination for a peerage. Levy vehemently denied Patel’s version of events.

The ‘loans for peerages’ storm erupted just as Tessa Jowell, Blair’s closest supporter and the leader of a campaign to build super-casinos, was cleared by the prime minister of breaching the ministerial code. She had failed to reveal a ‘gift’ of £350,000 to her husband from his client Silvio Berlusconi, the Italian prime minister, money which was used to pay off their joint mortgage. Jowell claimed that, while signing the legal documents, she was unaware of the source of the money. To save her political career, she announced her separation from her husband. (Within months they would be seen together at Covent Garden.) Her exoneration attracted headlines about ‘sleaze’.

Cash for peerages brought the same headlines. Levy had been asked by Jonathan Powell and Blair’s special adviser Ruth Turner about those who had loaned the party over £1 million. Without knowing about the loans, Dennis Stevenson had decided that several of the donors were unsuitable for the Lords, despite their nomination by Blair. The revelation that the party had received £14 million from those same controversial businessmen aroused new suspicions. ‘There were very good reasons for all of them being on the list,’ Blair would write. Supporting the party with cash, he believed, qualified the donor to become a peer. He criticised the media for nurturing a scandal and refusing to debate government policies.

The day after the newspapers’ revelations, John Hutton, the pensions minister, was waiting in No. 10 when he saw Brown enter Blair’s office, ostensibly to discuss the proposed pension reforms. Ninety minutes later, Hutton was still outside, as Brown screamed that Turner’s plan should be shelved and Blair should resign. ‘You haven’t heard the last about those peerages,’ shouted the chancellor as he stormed off. Brown had threatened that the party’s national executive would enquire into the loans. Since they had all been legally transferred to the party’s treasurer, Blair was shell-shocked. ‘For the first time, I’m scared,’ he
told Sally Morgan, his political adviser. ‘He’s going to bring me down.’ Later, he told Gus O’Donnell, ‘Gordon is going to do something very unconstitutional.’

That night, Jack Dromey, a trade union leader and the party’s treasurer, toured the TV studios. Pleading that he had been unaware of the loans, he criticised the ability of the rich to buy peerages. ‘No. 10’, he said accusingly, ‘must have known about the loans.’ That, Michael Levy knew, was true. Not only did Blair know but, Levy believed, Dromey must have read the accounts (Dromey denied having done any such thing). However, Stevenson’s committee, which had been responsible for vetting the nominations for the peerages, had not known about the loans, which had been arranged to protect the secret transfer of money by men who were simultaneously nominated. ‘Cash for peerages’ also generated acres of newsprint for Blair’s earlier dodgy financial dealings, starting with Bernie Ecclestone’s £1 million donation for changing the tobacco sponsorship law.

Dromey’s posturing, complained Blair, reflected Brown’s ‘mafia-style politics’. The grim trade unionist was the husband of Harriet Harman, who had shifted allegiance to Brown in anticipation of his leadership. Dromey’s accusations were a gift to the Scottish Nationalists. To boost their campaign against a corrupt Scottish Labour Party, Alex Salmond asked one of his MPs to lodge a complaint with Scotland Yard. The impression seeping out of Westminster portrayed Blair as hanging on.

Big Ken Anderson gave it to Blair straight. ‘There’s been a lot of pushback by the civil service,’ he said during a dinner at Chequers in 2006. ‘Ultimately, however you measure it, it’s all been a failure.’

Blair flashed silent dismay. Hearing the truth was unpleasant. With Elton John, another guest, seated near by, there was no opportunity for a proper discussion, but Anderson’s views on the NHS were no secret. Blair’s reforms were grinding to a halt.

Blair had taken his eye off the ball after the success of the private contract to treat cataracts in 2004. Ever since the Nigel Crisp debacle, he knew that his opportunity to limit Whitehall’s control and empower patients was evaporating. ‘We need to entrench the reforms to make it hard to reverse,’ he told Patricia Hewitt.

Signs of lethargy in the reform programme were noticeable during the search for Crisp’s successor. Blair, Hewitt and Anderson knew that there was no credible candidate among the NHS’s board of executives. All those employed in Richmond House ‘thought like Crisp’. Indeed, most were temporary appointments while headhunters searched for replacements. For the same reason, the chief executives of the strategic health authorities were unsuitable.

‘It’s a nightmare,’ said Hewitt.

‘We need an outsider,’ agreed Blair. Headhunters produced two well-qualified Americans, but both were squeezed out by Whitehall’s customary machinations against outsiders. Four months into the search, Blair failed to persuade Ian Carruthers, the temporary chief
executive, to stay. Then, David Nicholson, the executive supervising the Mid-Staffs hospital, contacted Anderson.

Previously, Nicholson, a former member of the Communist Party, had been deemed unsuitable because, like Crisp, he opposed change. Nevertheless, over a drink, he sold himself as a reformer. ‘He begged on his knees,’ recalled Anderson, who finally recommended his appointment to Blair. ‘Boy, do I regret that,’ he would later say. ‘He pushed the NHS further back.’

Eight months after her appointment, Hewitt had more reason to doubt her prime minister rather than the untested Nicholson. She finally understood Blair’s irreconcilable ideologies: targets versus the market. He liked headline-grabbing targets to drive change from Downing Street; the downside was that such goals had never produced an efficient Russian economy under Stalin, and nor did they work for the NHS. Blair liked ‘choice’ but cautioned Hewitt not to mention ‘markets’, which he feared suggested to alarmed voters that his destination was America’s system of payment for health. To avoid the problem of presentation, she was encouraged to say that ‘The government is moving towards a self-improving NHS responding to patients’ needs.’ The snag, as she herself observed, was that ‘He’s been saying the same since 2000.’ The prime minister’s predicament was not that he couldn’t raise his game but that he couldn’t change it. Reassured by Matthew Taylor that the strategy developed since 2000 was ‘in theory’ right, he only half understood that in practice his ideas were malfunctioning.

At that late hour, Blair summoned a meeting at Chequers for ministers, advisers and permanent secretaries at the health and education departments to discuss their experiences. At the end of the day, all agreed the event had been enjoyable but somewhat odd coming in the twilight of his premiership. ‘Are we basically on the right track?’ Blair later asked Hewitt. He speculated about designing a scheme to monitor the progress of reform. The truth, he feared, was that the ‘forces of conservatism’ in the NHS had not been dislodged.

Traditional NHS administrators were still resisting. Economists in
the Department of Health were able to show that competition had not improved efficiency. Even Chris Ham, a pioneer of choice in 2001, was unconvinced. Researchers, he wrote, had reported that doubling the budget and making the increased workforce subject to targets were the principal reasons for the NHS’s improvement. Those researchers who reported the opposite – that markets were more important than managers – were derided. In the same vein, statistics showing how mortality rates were lower when two hospitals were in competition – because the incentivised managers demanded higher-quality care – were dismissed. Ever more money, the NHS establishment still believed, was the only route to improvement. Blair’s revolution was teetering, the victim of what he called a ‘vast network of special interests that have every incentive to defend the status quo vigorously, and virtually none to alter it or even adjust it’. He would make one last attempt to conquer their citadel, reverting back to something he had abolished in 1997: Hewitt was directed to resurrect the idea of GPs as fund-holders. Blair gave no hint that his renewed meddling would madden the medical profession, or that he feared Hewitt lacked the political nous to outwit the critics; nor did he give an explanation for his circular journey.

In ‘Our Health, Our Care, Our Say’, a White Paper about community care drafted by Hewitt, GPs were given control of over 70 per cent of the NHS budget to purchase treatment for their patients from the hospital they chose. Fifteen per cent of non-emergency care would be supplied by the private sector.

‘We’re not undermining choice and competition, are we?’ Blair asked just before publication.

‘No,’ replied Hewitt.

On the eve of him announcing that the NHS would be spending more than ever in 2007 – £108 billion, or 9.3 per cent of the country’s GDP – Blair was presented with a stark truth. The additional hundreds of billions of pounds spent on the NHS over the previous ten years had produced improvements, but the cost was disproportionate to the results. Attendances at A&E departments had increased by a third since
2002 because only 60 per cent of GPs were working full-time for the NHS, although GPs’ wages had cost the NHS an additional £1.8 billion between 2003 and 2005. That unforeseen cost would contribute to the NHS’s predicted deficit by 2010 of £8 billion. In addition, the cost of the IT project had escalated to £6.2 billion, with a final estimated price tag of £18 billion, eight times the original figure.

Although there were some positive statistics, Derek Wanless had reported that there was still no proof that all the extra money had markedly improved the nation’s health, as the data, he discovered, was so imperfect. Health inequalities among the population had either remained the same or even increased. Without competition, the gap between the best- and worst-performing hospitals had not narrowed. In the former, operating theatres were used for 75 per cent of the time, while in the latter it was 35 per cent. Despite the NHS’s interminable planning, Wanless wrote, everything had been for ‘short-term imperatives [and] significant opportunities have been lost’.

Targets had distorted everything. The most damning statistics were the opinion polls. Although the NHS budget had grown from £34 billion in 1997 to a projected £127 billion in 2012, the electorate told pollsters they trusted the Tories and not Labour to care for the service. Powell’s self-eulogy – ‘No one will reverse Tony Blair’s public service reforms’ – looked as threadbare as his assertion that ‘We succeeded in strategy but failed in spin.’

The love born in 1997 between Labour and, by then, 1.6 million NHS employees had truly ended. At the 2006 BMA conference, not only the nurses but also the doctors damned Labour for causing ‘a real and imminent danger to the NHS’. That mischievous hyperbole revealed the doctors’ hatred of the market for exposing their selfishness over income and work.

Powell’s enthusiasm over ‘Tony’s fascination with technology’ aggravated Hewitt’s inheritance of a financial meltdown. To her alarm, no one in the department was planning cuts or controlling the public’s insatiable demand for health services. To start getting value for money,
Hewitt froze recruitment and cut the number of new doctors. Contrary to Blair’s promise that ‘We’ll put doctors and nurses in the driving seat,’ the strategic health authorities were directing doctors to save money by either not seeing patients or by making them wait longer.

On 24 April 2006, Hewitt was the guest speaker at a conference of Unison health workers in Bournemouth. By then, the trade unions had spread familiar stories about Britain’s health care system being endangered by mass redundancies and widespread privatisation. Newspapers were reporting that some GPs were earning £250,000 a year. The audience ignored that year’s generous pay increase for nurses and instead, preoccupied by the NHS deficits, sleaze, Iraq and the Blair–Brown feud, were impatient with a speaker who represented a leader delaying his departure. In silence they listened to Hewitt deliver an incendiary message: ‘The money isn’t unlimited. It’s not a blank cheque and we’ve recruited too many people.’ To forestall angry interruptions, she added, ‘2006 is the NHS’s best year ever.’

Two days later, she repeated her claim at the annual conference of the Royal College of Nursing. Orchestrated by the unions, the audience jeered until Hewitt was forced to quit the podium. In the aftermath, Blair said nothing to her. There was no opportunity. On the same day, Charles Clarke was under renewed pressure to resign from the Home Office over the failure to deport foreign prisoners, and John Prescott was exposed for having an affair with Tracey Temple, his diary secretary. Considering his costly failures as transport minister, including his waste of £600 million building unused regional fire stations and his expensive failure to create regional assemblies, Prescott should have been fired, but Blair resisted. The weakened deputy prime minister, Blair hoped, would be fodder to protect himself from Brown. Under their oral agreement, Prescott gave up most of his government tasks, although he retained his perks, including a flat in Whitehall and Dorneywood, a twenty-one-room country house in Buckinghamshire.

Three weeks later, during Blair’s absence abroad, Prescott, the acting prime minister, was photographed playing croquet on the Dorneywood
lawn in the middle of the week. The public anger reflected Blair’s miscalculation. Back from his travels, he faced roaring Tories in the Commons, while Labour MPs sat glumly behind him. Just a year after his re-election, Black Wednesday was a battle for survival. ‘A soap opera which you couldn’t make up,’ quipped critics after Tracey Temple sold her story to a Sunday newspaper allegedly for £250,000 and photographers snapped the delivery of a new porcelain lavatory to Prescott’s home in Hull. ‘We consciously decided’, wrote Powell, ‘to adopt a Micawber strategy of hanging on, hoping that something would turn up.’ Survival meant no longer focusing on managing improvements in the NHS and education, but ensuring that Labour remained an electable party. ‘Locking in the reform programme’ was Blair’s priority as he sought to secure Brown’s understanding about the importance of Labour continuing to appeal to the middle ground. If he refused, Labour’s fortunes would be threatened by the trade unions.

Blair’s venom was directed at trade union leaders like Derek Simpson, who spoke about ‘disinfecting the party of the Tory agenda dressed up in Labour clothes’. Any hope of preventing old Labour regaining control started with the local government elections in May 2006, and, with Labour trailing by about 10 per cent in the polls, the outlook was grim. Without speaking to each other, prime minister and chancellor travelled together to launch the election campaign. Over the following weeks, Blair ignored Brown’s insults, including the chancellor’s repeated denials on television that the two men had ever discussed a departure date.

Their division, Blair expected, would aggravate the party’s defeat. Instead, although the Tories won key seats in the south, disaster was averted. The Tories were so disliked that the chance of rescuing his government and helping the party gain a fourth election victory was real. The weakness was not him but Brown. Sullen and unfriendly towards the aspiring English, the chancellor had to know that his chances of winning a fourth term for his party depended on him re-embracing New Labour. But, if Blair was going to box Brown into
the ‘renewal of New Labour’, he would need to give his government a makeover.

His response to the election defeat was described by one newspaper as a ‘bloodbath reshuffle’. In theory, he intended to promote Blairites and dismiss Brownites in what Brown called ‘an act of war’. Inevitably, and true to form, the fallen included Blair loyalists. The first casualty on Thursday night, even before the polls closed at 10 p.m., was at the Home Office.

‘I have to make a change,’ Blair told Charles Clarke only forty-eight hours after steadfastly defending him in the Commons. ‘It’s just something I have to do.’

‘I don’t think I should go,’ replied Clarke. ‘I won’t take the hit for the elections.’

‘I think you should,’ said Blair, knowing that Clarke was disliked for his authoritarianism.

‘Do you realise sacking one of your senior supporters will make Gordon’s putsch easier?’ said Clarke.

Blair retreated. ‘Well, have defence or another job,’ he suggested. ‘Anything other than the Foreign Office or the Treasury.’

Clarke’s pride blocked the compromise. Over the following hours, Blair was advised by Mandelson to offer the Foreign Office. He demurred. Clarke would be too independent, he knew. Instead, that night, he summoned Clarke to his flat. ‘Go to defence,’ he said.

‘No,’ replied Clarke, as the tension rose. ‘I won’t be publicly scapegoated for the local election results and to please Gordon. I’ll go to the Foreign Office.’

‘You’ll have to go altogether,’ said Blair unemotionally.

He was a man in a hurry. He had campaigned to serve a full third term, yet now he was under pressure to resign within a year. To protect himself from a coup, others would be humiliated. As usual in such circumstances, he coolly detached himself from his decision.

The following morning, Blair called Clarke. ‘Will you reconsider?’

‘No,’ replied Clarke. ‘I’ll only go to the Foreign Office.’

‘No,’ said Blair.

Clarke refused to send a resignation letter. ‘I’ve been fired,’ he told Blair’s private secretary. A few hours later, he was ‘shocked’ by the news that Margaret Beckett had been appointed foreign secretary. By her own account, Beckett was even more surprised than Clarke. The minister for the environment had arrived in Downing Street expecting to be dismissed. Tens of thousands of farmers faced financial devastation because the Rural Payments Agency had collapsed, and she would be officially criticised for contributing to a blunder that cost over £1 billion in compensation.