12

Government

‘It all breaks down at the first rehearsal’

ERIC: Take it from me, mate. White lies have a habit of turning into seething, bubbling red-hot lies that pour down mountains.

Tim Firth, All Quiet on the Preston Front (1994)

 

We’ll sell you down the river

Just remember that we said we’d deliver you.

Mansun, ‘Taxloss’ (1997)

 

I think you’d prefer to have us than the others.

Tony Blair at the TUC conference (1999)

The Labour government that came to power in 1997 was the least experienced in living memory. A handful of members – Jack Cunningham, Margaret Beckett, Ann Taylor, Michael Meacher, Gavin Strang – had served as junior ministers in the 1970s, and attorney general John Morris was a solitary former cabinet minister (he had been Welsh secretary under James Callaghan). Beyond those few, the leader of the House of Lords, Ivor Richard, had been British ambassador to the United Nations and then a European commissioner, and Derek Scott, an economics adviser under Denis Healey when Labour was last in government, returned to Downing Street in the same capacity.

But that was about the sum total. More typical was Tony Blair, who hadn’t even been a member of the party the last time that Labour won an election. One had to go back to Ramsay MacDonald in 1924 to find a prime minister who similarly had no experience of government, and MacDonald had been at the head of a minority administration in a hung parliament, very obviously a brief trial period that wasn’t destined to last a year. It was in no way comparable to the situation in which Labour now found itself. As Merlyn Rees, a former home secretary, observed: ‘None of them know how to do it. None of them have been there before.’

It was perhaps this lack of experience that prompted such suspicion of the existing structures of government. There seemed to be a belief in New Labour circles that the civil service was inherently untrustworthy, corrupted by long exposure to a Conservative administration, with which it was assumed to be in agreement. Much anecdotal evidence suggested that the reverse was true – that familiarity had bred a level of contempt for what some saw as Tory arrogance – but nonetheless it appeared that a clean sweep was required, particularly when it came to presentation. Of the nineteen directors of communication in Whitehall departments at the time of the election, all but two had been replaced within a couple of years, and the new incumbents were aware that they relied on the patronage of the Downing Street press office.

Meanwhile, the numbers swelled of those employed to deliver their masters’ message, until by the end of the decade there were 1,100 press officers in Whitehall. This was the new powerhouse of government, where Alastair Campbell held sway. He was the first prime ministerial press officer to be a political appointee, rather than coming from within the civil service, and amongst the first acts of the new government was a change in the regulations to give Campbell and chief of staff Jonathan Powell the status and authority, though not the responsibilities, of civil servants.

The blurring of the boundaries between political advisers and the civil service was new – John Major’s press secretary had played no part in the 1992 election – and it caused considerable distress in the latter camp. Richard Wilson, who served as cabinet secretary through most of Blair’s first term, ended his time in office with a speech as thunderous as a civil servant could be: ‘It is fundamental to the working of our constitution that governments should use the resources entrusted to them, including the civil service, for the benefit of the country as a whole and not for the benefit of their political party.’

Such concerns initially fell on deaf ears, particularly within the Labour Party. For it was a longstanding demand of the left that the civil service be brought to heel under democratic control. The television comedy Yes, Minister had been based on the experience of the Callaghan government, and the party retained strong folk memories of policy conflicts between elected ministers and unelected officials. The changes under Blair, however, were not a noticeable gain for democracy: Campbell was even less accountable for his actions than was a permanent secretary.

As Campbell spread his wings, he became the first press secretary to sit in on cabinet meetings, and he effectively took over much of the disciplinary power of the whips’ office as well. The newly elected MP Oona King, planning to vote against her government’s support for the bombing of Iraq in 1998, recorded in her diary a summons to see the whips, where she found that she could stall and laugh her way out of a serious confrontation. A subsequent encounter with Campbell, on the other hand, when she refused to do his bidding, ended on much less jovial terms. ‘I know it’s the end of my political career,’ she said, and he replied: ‘Just the next five years.’ As she left the room, she reflected: ‘Alastair was sort of joking, and sort of not.’ There was certainly no question which episode inspired more fear. Just to make the point explicit, in 2001 the chief whip’s office was moved out of 12 Downing Street, to be replaced by the prime minister’s press team.

By then the impressionist Rory Bremner was regularly airing a routine in which Blair himself was seen to be bullied mercilessly by Campbell. ‘The press are the country. There isn’t anything else,’ the Campbell character says. ‘I tell you; you tell the great unwashed. That’s why we’re never wrong. And you’re just Little Miss Echo Tony, just a spokesperson.’ Blair was said to detest the sketches, while Jack Straw thought they were ‘genuinely damaging’, and Bremner was banned from travelling on the prime minister’s tour bus in the 2001 election. But a documentary made by Michael Cockerell in 2000, News from Number 10, seemed only to confirm how very closely the routines reflected the actual nature of the relationship. In particular, a scene in which Blair wanders into Campbell’s room, without realising that the camera crew are there, was much cited as evidence of the press officer’s power. It was ‘like the schoolboy coming into the headmaster’s study’, said Cockerell, while Hugo Young detected ‘no respect, no authority. Just two lads together. Serious lads. But, as it seemed, equal lads.’

Campbell did, however, have the advantage of competence. His accumulation of power might be a source of concern, as was his centrality to policymaking, but when it came to understanding and controlling the media, he was undeniably effective. For, unlike the rest of the cabinet, he had the benefit of many years’ experience in his field. Others simply floundered. When Chris Mullin was appointed as a minister to John Prescott’s Department of Environment, Transport and the Regions, he found that the deputy prime minister had failed to make a positive impact: ‘there is a barely concealed contempt among both civil servants and ministers for his absolute lack of management skills, his inability to see wood for trees and his flat refusal to listen to anything anyone is telling him.’ He added, with a note of sorrow: ‘Deep down I am sure he, too, realises that he is out of his depth.’

‘Of course we want to use the media,’ Peter Mandelson had said in the post-Michael Foot days of the 1980s, ‘but the media will be our tools, our servants; we are no longer content to let them be our persecutors.’ This attitude now became central to the conduct of government. Statements were made not to Parliament, but to the press, a practice hinted at back in 1989 when Blair was to be found advising a Conservative minister that ‘if he is going to say something, he should make sure it is said in the form of a press release’. Even announcements concerning Parliament itself received this treatment, as when Blair – immediately after the 1997 election – revealed that the existing format of two fifteen-minute sessions of prime minister’s questions each week would now be replaced by a single thirty-minute session, so as not to disrupt his schedule quite so much.

The apparent marginalisation of Parliament was one of the most notable features of the early Blair government, and it drew the attention of commentators from the start. Blair himself had the worst voting record of any modern prime minister, and was seldom seen in the House. His vote was scarcely necessary, of course, but for a politician obsessed with ‘sending out signals’, it suggested a lack of faith or interest in the parliamentary process. In his absence, analysis of new legislation was actively discouraged, just as it was in cabinet. During the eleven years of Margaret Thatcher’s premiership, the government had used a parliamentary guillotine to curtail debates in the Commons on forty occasions; Blair’s government used the tactic sixty times in its first three years.

Meanwhile the parliamentary term was substantially reduced, so that the summer recess of 1997 was the longest for decades. Even when the House was sitting, there were plenty of absentees, since the majority was so huge that Labour backbenchers were urged to spend more time with their electorates; some were away from Westminster for as much as one week a month. A new perception grew that the chief function of a Labour MP was to represent the government in his or her constituency. Harold Macmillan had once instructed Julian Critchley that his ‘task was to be the Member for Aldershot in Westminster and not the Member for Westminster in Aldershot’; that was now turned on its head, with the result that government policy was subjected to less scrutiny than it might otherwise have faced. There was also a knock-on effect on local democracy: why bother contacting a local councillor with a problem when there was so often an MP on hand? As Francis Pym had observed in 1987: ‘Landslides, on the whole, do not produce successful governments.’

Anthony Barnett argued in 1997 that the downgrading of Parliament was a consequence of eighteen years of futile opposition: ‘Current contempt reproduces Labour’s real experience. They know that the House of Commons is not a modern, democratic institution.’ This might have been a more convincing argument had New Labour’s approach not been consistent throughout, replicating in government what it had practised in opposition. In 1996 Clare Short, chairing that year’s party conference, was shocked to discover how much manipulation was employed to remove dissent, as she was given a list of delegates who were to be invited to speak from the floor. ‘Those who are called to speak at conference are pre-chosen and “helped” with their speeches,’ she wrote later. ‘Similarly “clappers” are placed around the hall, to lead a storm of applause for platform speakers whom there is a wish to favour.’

The same year, Blair attempted to suspend the annual elections to the shadow cabinet, fearing that Harriet Harman would be punished by MPs for the choices she had made regarding her son’s education. He was persuaded by John Prescott that suspension was unacceptable, but the result was still manipulated; frontbench spokespeople who hadn’t previously been elected to the shadow cabinet were warned not to put themselves forward as candidates if they valued their jobs. Consequently the existing members were returned effectively unopposed. It was, said Ken Livingstone, ‘like the old Soviet Union, where everybody got reelected by near-unanimous votes’.

With Parliament now of little consequence, both the media and the public lost what scant interest they had in the proceedings. Radio broadcasts of the Commons had started in 1978 and for the first two decades of their existence were most frequently consumed as ‘Yesterday in Parliament’, a strand within Radio 4’s Today programme. In 1998 it was announced that the broadcast would lose its FM slot and – although increased from fourteen to twenty-three minutes a day – would henceforth be confined to the ghetto of long wave. There were protests from MPs, but significantly none from Blair’s inner circle, who weren’t themselves much interested in the subject. Anyway, there was by now little appetite for the show; 350,000 listeners were said to switch off or switch over the moment that the broadcast began. Already The Times had given up the page it had previously devoted to parliamentary coverage on the grounds, as editor Simon Jenkins put it, that he ‘couldn’t find anyone who read it except MPs’. The only regular press coverage that survived was in the form of parliamentary sketches; more weighty consideration was reserved for big set-pieces, preferably those involving the prime minister or the leader of the opposition. This only increased the perception that the cabinet, let alone the Commons, was of limited concern.

The power of patronage exercised by the new government shaded over into what became termed cronyism. The expression pre-dated the 1997 election, when the Conservatives accused Blair of bribing veteran Labour MPs with the offer of peerages if they would step down from their constituencies to make way for more modernising members. Amongst those being pushed forward, it was said, was Yvette Cooper, who took over the Pontefract and Castleford seat formerly held by Geoffrey Lofthouse (Baron Lofthouse of Pontefract, as he became immediately after the election). ‘Tony’s cronies are being parachuted into the House of Commons,’ declared Michael Heseltine, and the phrase was picked up by Conservative Central Office: ‘These are jobs in the Lords for Tony’s cronies. And jobs in the Commons for Tony’s boys and girls. It is Labour sleaze.’ Not until 1998, however, did the matter really gain traction in the media.

Similarly the phrase ‘control freak’, first applied to Blair in 1995 by Matthew Parris (‘the little shit Parris’, as Alastair Campbell referred to him), became commonplace only in 1998. Steadily, however, the impression grew of, in the words of Drop the Dead Donkey, ‘The paranoid control-freak tendency that lies at the heart of this government.’ Even Harold Wilson’s former political secretary Marcia Williams thought Blair went too far, saying that he was ‘a control freak, he is so determined to have total control that he’s really taking out everything altogether’.

Like New Labour’s obsession with the media, the wish to exert centralised control was understandable, its roots lying in the 1980s when the deep splits in the party had damaged its public standing. It was hard to forget, however, that more recently Blair had been amongst those vainly urging John Smith to lead a mutiny against Neil Kinnock, and that Blair and Peter Mandelson were then chiefly blamed for trying to undermine Smith once he became leader. Loyalty to the party, never Blair’s most obvious characteristic, was equally lacking in most of New Labour’s officer class, who showed little inclination to abide by the iron discipline imposed upon the foot soldiers.

The insistence that MPs had to hold whatever line had been determined by the prime minister’s office didn’t augur well for the future of the party or of the country more widely. As the 1992 Convention on Biological Diversity, adopted by a United Nations conference in Rio, made clear, variety is the central feature of life, its greatest asset when faced with a hostile, changing environment. It was a concept in which New Labour professed to believe when it came to public services – ‘Diversity must become the norm, not the exception,’ Blair said of education – yet was unwilling to tolerate within its own ranks. Dissent was stifled wherever possible, even though the creation of New Labour itself had relied on the availability of space within the party to examine new ideas. As Clare Short argued, ‘for parties to be able to renew themselves and be open to new thinking and policy’ there needed to be room for unpopular minority opinions to develop. ‘I fear that New Labour’s party-management style allows for little such diversity.’

The pattern had been set at a very early stage. ‘Opposition is meant to be a time for thinking,’ observed Hugo Young, after a meeting in 1993 with Gordon Brown, but concluded that he had found no evidence of it. Instead, ‘the longer these people stay in opposition the more they are driven to mimic the hyperactivity of the ministers they may never be’. The danger was that there would be little time for such reflection when confronted with the pressures of office, that the opportunity was being missed to create a coherent set of policies to see a government through the unforeseen events that would inevitably occur. It could be argued that this had been a problem for the Conservative administration of John Major, a man who had spent no time at all in opposition, and had barely a chance to stop and reflect on how to bring his dream of a classless society to reality, before being buffeted by the storms of Europe and sleaze.

But New Labour behaved in opposition as though they were in government, brushing aside any attempt to discuss new thought, and restricting themselves to ideas that had originated in the offices of Blair or Brown, or those recycled from the Tories. The party took over the reins of power almost bereft of serious policy in such major areas as the NHS and social security, to the extent that the 1997 manifesto’s summary of health policy was reduced to banalities: ‘The key is to root out unnecessary administrative cost, and to spend money on the right things – frontline care.’ Even with its courting of think tanks and sympathetic intellectuals, it had trodden so carefully that few radical thoughts were aired. ‘We are asked to think the unthinkable without rocking the boat,’ shrugged one senior think-tank figure in the run-up to the election.

Instead New Labour insisted that it would prove itself through competence. Asked in 1996 to outline where he disagreed with Michael Howard’s strong law and order agenda, Jack Straw simply replied: ‘We have an approach that is more likely to work, whereas his has failed.’ In the same year Roy Hattersley was invited to share with a group of Labour MPs and candidates what he had learnt as a minister. He tried to explain that they needed to be guided by principles and philosophy, and was met with heckles demanding ‘What’s wrong with managerialism?’ With so little experience of government between them, it seemed a tall order for incoming ministers that they should prove quite as capable as they believed themselves to be.

It wasn’t long before the problems began to appear. A fortnight after the election victory, the Queen’s Speech outlined the government’s priorities for its first Parliament, including a Bill to ban completely the advertising of cigarettes and tobacco. Briefing the press after the announcement, Tessa Jowell, the public health minister, explained that a white paper would be published in the summer, which would also address the question of how to end sponsorship of sporting events by tobacco companies. This was a little more tricky, since some sports were heavily dependent on cigarette money, had contracts in place for the next few years and might struggle to find new deals. But still the intention was clear, as the health secretary, Frank Dobson, spelt out: the Bill would cover ‘all forms of tobacco advertising, including sponsorship’.

As the date for the proposed white paper began to drift, first to the autumn and then to the following year, there were reports in the press of heavy lobbying by tobacco firms and sports bodies, and of disagreements within the government, with the sports minister, Tony Banks, said to be deeply opposed to a sponsorship ban. Then in November 1997 The Times revealed that ‘after long negotiations with the Fédération Internationale de l’Automobile (FIA)’, Tessa Jowell ‘has concluded that it would be counterproductive to bring in the ban for Formula One’.

The news was greeted with some dismay by health campaigners, and by defenders of other sports that were going to struggle to find replacement sponsors. The likes of snooker, darts and cricket were in for a considerably tougher time than the cash-rich glamour world of Formula One, and within Labour ranks there was concern that working-class pastimes were to be penalised while motor racing was to escape.

There was some speculation that Jowell had been unduly influenced by the fact that her husband, David Mills, had until a few months ago been a non-executive director of Benetton Formula, one of the Formula One teams. This, it soon transpired, was a red herring – though who had thrown it to the press remained obscure – for Jowell’s anti-smoking credentials were impeccable, as Bernie Ecclestone, the head of Formula One, had already discovered. He had lobbied her and, getting no joy, had gone over her head to the prime minister; in October he and Max Mosley, president of the FIA, went to a meeting in Downing Street to plead their case with Tony Blair himself. They explained that if Formula One packed its bags and decamped from Britain, it would cost tens of thousands of jobs, as well as millions of pounds in exports, an assertion that seemed to convince the prime minister. In his memoirs, Blair recounted the situation as he saw it: ‘Europe was looking to ban tobacco advertising in sport, and because Formula One was so heavily dependent on it, Bernie wanted time to have it phased in.’

Apart from the characteristically slack grammar, this description of the government’s predicament was, at best, only a partial recollection; at worst, it was a little disingenuous. For it wasn’t merely a looming European directive that was at issue, but the implications of Labour Party policy, outlined by Dobson and Jowell earlier in the year as they tried to make a reality of the manifesto’s tough stance: ‘Smoking is the greatest single cause of preventable illness and premature death in the UK. We will therefore ban tobacco advertising.’ There was a European dimension, for the EU had become increasingly keen on anti-smoking measures, having already banned television advertising in 1991 (albeit at a time when the Common Agricultural Policy was pumping £900 million into subsidising tobacco production), but the real question was why Blair had been so easily persuaded at that meeting.

One possible answer was not long in emerging. It turned out that Ecclestone, once a major donor to the Conservative Party, had switched his financial allegiance to Labour, and earlier in the year, before the election, had given the party £1 million. It required something of a leap of faith not to question whether there might be some connection between the donation, the meeting and the decision.

Dobson and Jowell were in the clear, for they only now learned of the donation (‘Cor, fuck me!’ was the former’s response to the news). Rather, this was a Downing Street issue, and Blair’s inner circle rushed to counter the impression of scandal. Patrick Neill – Lord Nolan’s successor as chairman of the Committee on Standards in Public Life – received a letter informing him of Ecclestone’s donation, telling him there was the possibility of a second gift, and asking his advice on how to deal with any further money ‘to avoid any possible appearance of a conflict of interest’. The letter was sent in the name of Labour’s general secretary, Tom Sawyer (who didn’t actually write it), and failed to make clear either the sum involved or the fact that it was Labour who were soliciting the second donation, rather than it being volunteered by Ecclestone. To the horror of Downing Street, Neill’s response dealt also with the first donation and recommended that the money should be sent back whence it had come. ‘Who the hell was he to decide?’ raged Alastair Campbell, to which the response was presumably that he was the man recently appointed by the Labour government, and the man to whom it had turned for advice. Nonetheless, the £1 million was duly returned.

Meanwhile Gordon Brown was appearing on Radio 4’s Today programme, denying any personal knowledge that Ecclestone was a donor to the party. According to allegations published in the book Servants of the People, by the Observer journalist Andrew Rawnsley, in 2000, this was untrue. The same accusation was also levelled against Blair’s subsequent claims in a television interview that he had refused any further gifts from Ecclestone when in office, and that Labour had approached Neill for his advice on what to do with the original donation. More significantly, Blair’s statement to the House of Commons on 12 November 1997 contained another falsehood: that the decision to exempt Formula One was only taken ‘at the beginning of last week’, thus seeking to put a distance of more than two weeks between the meeting with Ecclestone and the decision to exempt Formula One from any sponsorship ban. The truth was that Jonathan Powell had been instructed to phone Jowell on the day of the meeting, and that the following day a memo had been sent to her, making the situation explicit: ‘The prime minister would like your ministers to look for ways of finding a permanent derogation for sport in particular, F1.’

Documentary evidence was thin on the ground, as no minute had been taken of the meeting, but for some the conclusion was inescapable: the decision on Formula One was taken by Blair and his closest advisers in direct response to representations by Ecclestone, and when the story of the original donation threatened to break, they engaged in a clumsy and incompetent cover-up, misleading the public and Parliament. On the more substantive issue of whether government policy had been influenced by the donation, no conclusive proof was ever going to be produced. For his part, Blair consistently denied that the money had been a factor, but in the eyes of many onlookers it strained credibility to suggest that the very substantial gift had played no part in subsequent deliberations.

The story was instructive in several respects. First, it demonstrated that the new government was no better than the last. Indeed it was considerably worse. Nothing in the sorry saga of Tory sleaze had come close to a suspicion that the prime minister had changed policy as a favour to a very rich man; this was in a new league entirely. ‘Have we slain one dragon only to have another take its place with a red rose in its mouth?’ asked the independent MP Martin Bell, warning that ‘the perception of wrongdoing was as damaging to public confidence as the wrongdoing itself’. As John Major was quick to point out, this was ‘hypocrisy on a grand scale’.

It further revealed that the public was not yet ready to abandon its hope that things had changed. Blair went on the BBC television show On the Record to be interviewed by John Humphrys and insisted that he was still to be trusted: ‘I think most people who have dealt with me think I’m a pretty straight guy and I am.’ It was an extraordinary display of chutzpah, but it worked. Barely seven months on from the election, he was given the benefit of the doubt.

And finally it showed that, for all its pre-election talk about fat cats, New Labour had a dangerous attraction to affluence. Most famously this was expressed in Peter Mandelson’s much-quoted comment: ‘We are intensely relaxed about people getting filthy rich.’ (His attitude wasn’t entirely altruistic, as he later made clear: ‘I saw what others enjoyed and I wanted to share it.’) Some felt that Blair too displayed a personal fascination with wealth. The film producer and Labour donor David Puttnam, recently ennobled as Baron Puttnam, noted of the prime minister that ‘he is very interested in money’, while the union leader John Edmonds heard him muse that ‘Most of the people I went to school with are now millionaires.’ Mandelson’s former assistant, Derek Draper, was once quoted as saying that ‘Peter goes gaga in the presence of rich people’, and Chris Mullin commented: ‘Not only Peter’s problem. New Labour’s, too.’

But since Ecclestone ended up keeping his money and gaining the exemption he sought for Formula One, there was also a suggestion that this was not a government likely to come out on top in its encounters with the wealthy. Adair Turner, director general of the CBI, marvelled that the new government was ‘so craven’ in its dealings with big business. Meanwhile, those within New Labour circles who did have some money were keen to hold on to it; another story that broke in November 1997 concerned Geoffrey Robinson, the paymaster general, and the millions of pounds he kept in a trust in an offshore tax haven.

Most notable in retrospect, though, was the way that the Ecclestone affair suggested New Labour’s tendency to regard falsehood as a weapon of first resort. A cavalier approach to fact was evident elsewhere, often in the most trivial of stories. There was Blair’s claim, for example, to have watched Jackie Milburn playing for Newcastle. Or there was the invented story that he saved a Danish tourist from drowning while on holiday in the Seychelles in January 1998. Or the appearance on Des O’Connor’s television show, when he related an anecdote about how, at the age of fourteen, he had stowed away on an aeroplane that he thought was going to take him from Newcastle Airport to the Bahamas. ‘I snuck onto the plane and we were about to take off when the stewardess came up to me and said: “I don’t think I actually saw your boarding pass.”’ Blair claimed this to be ‘one of the craziest things I have ever done’. It was subsequently discovered that the furthest scheduled flight from Newcastle at the time went only as far as Jersey, while his father admitted that the stewardess was fantasy: ‘He made it only to the airport.’

None of this was of great significance, it was just a little odd. Meanwhile the constant, and deceitful, denials of any rift between Blair and Brown were understandable as a political tactic. But the mendacity displayed in the Ecclestone case suggested a dangerous ease with dishonesty.

The same trait seemed to be evident in yet another story from November 1997, that of Lord Irvine’s wallpaper. A barrister in whose chambers both Tony Blair and his future wife Cherie Booth had been pupils, Derry Irvine was consequently a familiar figure in Blair’s intimate circle, though his influence pre-dated New Labour; he had been at university with John Smith and had expected to be appointed lord chancellor in the event that Labour won the 1992 election. In good New Labour fashion, he also had a long-running feud with a senior colleague; three decades earlier, Donald Dewar’s wife had left him for Irvine, and the two men had been enemies ever since, their relationship described by Jack Straw as ‘excruciating’ to witness.

In 1997 Irvine did finally become lord chancellor, and he made it his first priority to get his official apartments in Parliament refurbished. When it became known that this would end up costing the nation some £650,000, with nearly a tenth of that going on wallpaper alone, some concern was expressed at the expense of the project. (A subsidiary complaint came from the design critic Stephen Bayley, who objected to the ‘garish demonstration of camp sensibility’ in slavishly recreating nineteenth-century style.)

Irvine’s response was to insist that this was all part of an already planned programme of restoration by parliamentary officials and had nothing to do with him. The previous incumbent, Lord Mackay, however, was unconvinced that any work needed doing: ‘The residence is quite beautiful, sumptuous and palatial and, in my view, in very good order.’ And he had no doubt that it was ‘all being done at the whim of the lord chancellor, who is a whimsical sort of man’. The controversy rumbled on for weeks, losing the lord chancellor a great deal of sympathy, particularly on the part of Ivor Richard, the leader of the Lords. ‘I’m ashamed of Derry,’ he said in private. ‘He has behaved dishonourably. He has tried to shift the blame on to the officers of the House. He shouldn’t get away with it. He’s supposed to be head of the judiciary.’

Again, had this story emerged in the John Major years, it would have been unforgivable. There was a perfectly reasonable claim to be made that, if paper was to be hung in the Gothic Revival splendour of an apartment designed by Augustus Pugin, then clearly it had to be a step up from the stuff one might buy in Homebase, but much of the electorate were unconvinced by wallpaper at £350 a roll, and concluded that Irvine was engaging in self-aggrandisement at their expense. When Irvine later appeared in front of a Commons select committee, his disdainful manner provoked even Blair to fury as he contemplated the popular response: ‘They think we got rid of the Tories because they were out of touch, pompous, up themselves and couldn’t care less about ordinary people, and then we have this and they think what’s different?’ It looked even worse than Geoffrey Robinson’s trust funds. ‘They say a man is judged by his friends,’ remarked the Sun, giving Blair the benefit of its thoughts. ‘With friends like Robinson and Irvine, who needs the Tories?’

Such indulgences sat very uneasily with the most controversial government initiative of that first winter. Gordon Brown’s pledge to stay within the spending limits previously announced by Kenneth Clarke had to be observed, even though Clarke himself was later to say that he wouldn’t have done so. To meet those targets, Brown decided to implement a proposal made by Peter Lilley to remove a benefit paid to single parents, mostly to single mothers. It was a comparatively small sum in terms of government expenditure, but at £6 a week made a considerable difference to the lives of some of the poorest in the country.

More than a hundred Labour MPs signed a letter urging him to reconsider, and polls showed the public to be against the cut, but Blair and Brown and their advisers assessed that it would look like ‘weakness’ if they gave in, deciding that their image was more important than any other consideration. It became a test of New Labour’s toughness, a rerun of Harriet Harman’s choice of school for her child, though this time – as the social security secretary and minister for women – she was cast in the role of fall guy, and sent to the Commons to push the measure through.

Forty-seven Labour MPs rebelled against their government, and many of those who voted in favour did so with deep uneasiness. ‘For the first time, I voted for something I strongly disapproved of,’ wrote Clare Short, several years later. There was though no question of defeat, since it had been a Conservative idea in the first place and opposition support was therefore available. Peter Lilley stood in the voting lobby, cheerfully welcoming in Labour MPs with a call of ‘This way for the cuts.’ When Brown appeared in front of the Commons treasury committee to talk about welfare reform, noted Michael Spicer, it was not a particularly lively session. Tory members were ‘reticent to ask questions because we like what he is doing’, while Labour members were ‘silent because they don’t like what they think he is doing’.

Not present for the Commons vote was Tony Blair. He was busy hosting a showbiz party in Downing Street, where the guest list included the radio disc jockey Zoë Ball, actors John Thaw and Kevin Whateley, and actress Liz Dawn, who played Vera Duckworth in Coronation Street. Another to attend was the broadcaster Chris Evans, who had that morning signed a contract with Channel 4, worth £3 million a year, that made him Britain’s highest paid television star. The reception was no one-off event; the government had recently been revealed to be spending £1.5 million a month on hospitality.

Buried deep under the benefits cut had been an awareness that there was a particular issue in Britain with lone parents. ‘A quarter of all mothers under twenty-four in the United Kingdom are single, and have never been married,’ John Patten had noted the previous year. ‘This is compared with only about ten per cent on average over the rest of the European Union.’ A connection had been made between this fact and the supposedly high level of available benefits, and over the last few years the expression ‘single-parent family’ – originally coined as a euphemistic alternative to ‘broken home’ – came to be seen in political circles as a term of abuse. The reform was intended by the Tories to be a first step towards rectifying the situation. In Labour hands, however, it came across as simple penny-pinching, and on that criterion it was singularly unsuccessful. The outrage that greeted the measure forced a rethink and a rejigging of other benefits that ended up costing more than the original system. But at least it was all sufficiently complicated that it generated no headlines.

Meanwhile, Brown was calling on Harriet Harman to make £1 billion worth of cuts to disability benefits. This time there was a definite policy objective. The numbers claiming disability benefit had increased sharply over the last decade, partly – it was suspected – as a way of reducing the headline rate of unemployment, and there was a belief that people were being encouraged to rely on state support even when it wasn’t necessary. David Blunkett reported an occasion when he was a guest on a radio phone-in in 1998 and spoke to a 42-year-old caller who had had a heart bypass operation; having now recovered, the man objected strongly to having his disability benefits threatened. ‘The fact that we had enabled him to become independent,’ marvelled Blunkett, ‘to take responsibility for his life and to contribute to his own well-being for the rest of his life – when hopefully he had as much of his life before him as behind – seemed to have passed him by.’

Even so, Blunkett, who was both blind and the child of a single-parent family, objected to Brown’s proposed cuts, saying that they would ‘make a mockery of our professions on social exclusion and the construction of a more just society’. Others too made their voices heard. ‘It is no use being tough with the poor,’ insisted Michael Cashman. ‘Be tough with the people who are breaking the rules, close up the tax loopholes, and then you will be able to balance the books.’ Most damaging of all, a group of disabled protestors overturned their wheelchairs outside Downing Street and threw red paint on the railings, in an uncomfortable echo of the demonstrations in 1994 against Nicholas Scott.

Tony Blair continued to insist, in a characteristic attempt to play to popular culture, that he was prepared to ‘go the full monty’ on welfare reform, but he wasn’t proof against that kind of negative publicity. Having come into office with the determination to transform for ever the British attitude to the welfare state, he now discovered that it was a much tougher challenge than he had been expecting.

The immediate casualty was Harman, who had taken most of the flak over single parents and, never loved in the Labour movement, was plumbing new depths of unpopularity. Janet Jones, wife of Ivor Richard, recorded a joke then circulating in which Sleeping Beauty, Tom Thumb and Saddam Hussein boast about their claims to be respectively the most beautiful, the smallest and the most hated people in the world. Consulting the Guinness Book of Records to check their claims, Sleeping Beauty finds herself listed as the most beautiful, and Tom Thumb as the smallest, but Saddam is disappointed: ‘Who’s Harriet Harman?’

No one was much surprised when Harman lost her job in a cabinet reshuffle in July 1998, her cabinet career assumed to be finished. Also leaving office, though, was Frank Field, the minister for welfare reform and supposedly Harman’s junior.

One of the most awkward of Labour MPs, Field had twice served on the opposition front bench since his election to Parliament in 1979, lasting for no more than a year in either instance; he now repeated the feat in government. He could also boast of having been ‘booted out of the young Tories’ for organising an anti-apartheid boycott, of having lost his seat on the General Synod of the Church of England for supporting the ordination of women, and of having only narrowly defeated an attempt by Militant members to deselect him in his Birkenhead constituency. Unmarried, teetotal, owning neither a car nor a television set, he was constitutionally incapable of fitting in, with a persona somewhere between a nineteenth-century social reformer and a saint. The fact that the resolutely nonconformist Margaret Thatcher was a friend of his (she referred to him as ‘a good man’) vouched for his outsider credentials. He was also a curiously old-fashioned politician, harking back to a time when voluntary societies, trade unions, cooperatives, churches and workers’ education groups created a sense of community and shared values.

Yet he was precisely the kind of figure that Blair needed around him if New Labour’s claim to be a radical government was ever to hold water. Field had spent the 1970s working for the Child Poverty Action Group and the Low Pay Unit, and had argued longer than anyone else in politics about issues of poverty and of the underclass that, in his eyes, had emerged during the 1980s: the millions left exposed and stranded, cut off from society in the wake of the two great recessions. Much of this came from the experience of living in and representing a constituency that had once been dominated by the Cammell Laird shipyard and was now scarred by unemployment, drugs and crime.

Initially a keen supporter of Blair, he celebrated the way that the new leader was breaking fresh ground. ‘For fifteen years we’ve done nothing but follow the Tory agenda,’ he said in 1994. ‘Now we can leapfrog the Tories and make them follow our agenda.’ A couple of months later, he was to be found making an even more controversial claim for a Labour politician: ‘We are leapfrogging over the old social democracy.’ And some of the message he had been espousing for years undoubtedly chimed with Blair’s vision, particularly his emphasis on individual morality, responsibility and self-improvement. There was also, however, a fervent belief that the stability of society could only be secured by a return to full employment, exactly the kind of ambitious objective that New Labour was keen to avoid.

Blair brought him into government, charged with ‘thinking the unthinkable’, with reframing Labour’s traditional position on the welfare system. Field proceeded to do just that, outlining a massive programme that centred on a reinvention of National Insurance, an end to means-testing, an attack on benefit fraud, tighter controls on who should receive incapacity benefit, and the encouragement of private pensions – in short, a rolling back of dependence upon the state combined with a focus on collective insurance. The estimated cost of his proposals, around £8 billion, would, he argued, be recouped once the programme was fully implemented, but it scared the life out of both Blair and Brown and ensured that his ideas stood no chance of making progress, particularly since he had few supporters in government. For Field hadn’t shaken off his reputation as a maverick to whom the newly fashionable expression ‘team player’ meant nothing, and his abrasive relationship with Harman, his immediate boss, was marvelled at even in a government riven with such conflicts (‘she wanted Frank hung, drawn and quartered’, according to Peter Mandelson).

His departure from office in 1998, when he refused to serve in any other capacity than as secretary of state, relieved Blair of the need to find a round hole capable of taking this square peg. ‘Some are made for office, some aren’t,’ wrote Blair. ‘He wasn’t.’ But Field’s return to the back benches also suggested that the entire project of welfare reform had been quietly abandoned, leaving behind only cost-cutting attacks on benefits that hit the poorest without providing a broader philosophy in justification. The new government was looking very much like its Conservative predecessor.

Other events in that first year of New Labour merely confirmed the impression that little had changed save news management. In August 1997 the News of the World discovered that Robin Cook had been having an affair with a member of his staff, precisely the kind of story that had periodically rocked the Major government. This time, it was dealt with at a speed which ensured that the account actually came out quite positively. ‘It barely read like a News of the World exposé at all,’ remarked Alastair Campbell approvingly. Conservative scandals, on the other hand, were treated far less favourably. ‘The upper-crust daughter of a top Tory MP is today exposed as a £500-a-time hooker,’ splashed the News of the World six months later, though the ‘top Tory’ in question turned out to be Tim Boswell, a former whip and now the party’s trade and industry spokesperson; hardly a household name.

On a more serious level, New Labour’s eagerness to change policy in order to protect jobs in Formula One was not matched by its commitment to more traditional industries. Even as the Ecclestone story broke, the government was explaining that it couldn’t intervene in UK Coal’s decision to make somewhere between 5,000 and 8,000 miners redundant, with a massive knock-on effect on other jobs. A leader in The Times warned that, without political action, ‘we will see the once unthinkable situation of a Labour government presiding over the ultimate death of the mining industry’. A temporary deal was hurriedly put together, and Peter Mandelson staged a photo-opportunity at Kellingley colliery in order to show that this wasn’t like the days of Michael Heseltine. Nonetheless, pits continued to close under Labour.

If a certain shame was apparent here in pursuing what had been Conservative policies, such an emotion didn’t linger. At the last conference before the election, Labour’s transport spokesperson, Andrew Smith, had railed against the Tory proposal to privatise the national air traffic control system, promising: ‘Labour will do everything it can to block this sell-off. Our air is not for sale.’ In June 1998 Gordon Brown announced that a majority stake in air traffic control would indeed be sold, along with the Tote bookmaker and the Royal Mint. ‘There is no great principle at stake,’ shrugged Chris Mullin, ‘unless you believe that state ownership is by definition safer than the private sector. In which case presumably you would prefer to travel Aeroflot than British Airways.’

It was a fair point, but one that presumably could have been made with equal force in opposition. Similar reversals were seen elsewhere, from the involvement of the private sector in prisons through the introduction of tuition fees for higher education to an attempt to privatise the Post Office. Policies thunderously denounced in opposition were adopted with enthusiasm in government.

The same was true of the two big areas of public service that had so long preoccupied the Labour Party: health and education. ‘I am, all said and done, a public service guy at heart,’ wrote Blair in his memoirs, and Jonathan Powell was later to explain the new government’s objectives: ‘Our strategic aim was to shift from producer-driven public services to health and education services driven by the patient, the parent and the pupil.’ There was little to distinguish this vision from that of John Major, save that, thanks to the growing economy, the new government had greater funds at its disposal (though as a share of GDP, government spending fell during Labour’s first term).

But Blair’s ‘essentially middle class view of public services’ came into conflict with Labour’s traditional role of representing service-providers rather than users, and initially it was the latter that took precedence. Consequently, the first actions of the New Labour government were to wipe out many of the programmes they had inherited. Some were to disappear for ever, including the assisted places scheme, which had sent some 85,000 academically gifted children on state scholarships to independent schools. Others were simply to resurface, so that although more than a thousand grant-maintained schools had their status abolished in 1998, Blair was to be found later that year worrying that perhaps they had been a good thing after all: ‘we need to be more radical to improve standards more quickly. Maybe even abolish all LEAs.’ And in due course the same concept came back in 2000, this time rebranded as city academies. Somewhat belatedly, Blair had come to the conclusion that initiatives like the grant-maintained school or GP commissioning in the health service were not quite so misguided as first imagined: ‘their essential direction was one that was in fact nothing to do with being “Tory”, but to do with the modern world.’

In the process of learning that lesson, and accepting the idea that public services should have a customer-first ethos, a great deal of impetus had been lost and goodwill squandered. In the meantime there arose instead a series of government-driven projects intended to address such issues as the reported 40 per cent of children leaving primary school still functionally illiterate. More often than not these schemes were accompanied by celebrities and populist gimmicks, so that when a ‘year of reading’ was launched in September 1998, Blair went on Radio 4’s Woman’s Hour to promote a ‘dads and lads’ initiative, intended to encourage fathers to read with their sons. He nominated his suggested texts for the enterprise, giving every indication of having been carefully briefed beforehand: Lord of the Rings, the Narnia and Sherlock Holmes books, Roald Dahl, Brian Jacques, Paul Jennings and Robin Jarvis.

Similarly, when in March 1999 Blair and his education secretary, David Blunkett, staged a conference to launch Maths 2000, ‘a campaign to make next year the year of maths in schools’, they were accompanied by Carol Vorderman from Channel 4’s game show Countdown. When the year eventually got under way (the pre-announcement was a familiar routine), it featured as a support act Johnny Ball, a children’s television presenter who had hosted maths and science shows like Think of a Number in the 1970s and ’80s, though it was hard not to conclude that his appeal for New Labour had something to do with the celebrity status of his daughter, Zoë Ball.

Some of the actual proposals behind ‘all the usual razzmatazz’ (as Blunkett put it) also seemed more geared towards headlines than education. There was to be an hour of maths every day in primary schools, with mental arithmetic and recitations of the multiplication tables, there were to be summer schools and family numeracy classes and – in case this all seemed a bit serious – lessons in fantasy football to encourage numeracy in boys. The reality was, as ever, a little more modest than the surrounding hype; for example, just 3,000 places were available in those family numeracy classes.

Positive news stories were duly garnered, though the sense that there was a publicity stunt at the heart of such initiatives also meant that the media seized gleefully upon any minor mistake. In a radio interview Stephen Byers, the minister for school standards, was asked to multiply eight by seven and came up with the answer ‘fifty-four’, while posters promoting literacy were sent to all 24,000 primary schools in the country and then had to be recalled when it was discovered that they contained the word ‘vocabluary’. Whether any of this noisy activity worked or not would, of course, take some time to evaluate, as future generations left school. On the pledge card issued during the election, Labour had been careful not to specify any outcomes on education policy, just that limit on class sizes for the youngest pupils. The NHS promise, on the other hand, was more specific – a reduction of 100,000 patients on the waiting list – and could therefore be evaluated; a year on from the election, and the numbers had actually grown by 150,000.

And therein lay a problem for the government. New Labour picked up the concept of the Citizens’ Charter, with its emphasis on setting targets, and took it to extraordinary levels, making a bundle of rods for its own back. ‘To bridge the gap between reform and aspiration,’ explained Blair, the government set ‘a swathe of performance targets to eliminate the longest hospital waiting times, raise school literacy and numeracy and GCSE scores, etc’.

That simple ‘etc’ barely hinted at the resulting culture in Whitehall, as good intentions came gushing out of every department. ‘Tony was seduced by the idea of targets,’ wrote Peter Mandelson. ‘We all were.’ So there were central targets for the quantity of cars, cycles and pedestrians on the road, as well as for traffic casualties and dog mess; for the numbers of smokers, heroin addicts and pregnant teenagers; for the incidence of robberies and building-fires; for how many children visited museums and galleries, and for the proportion of school-leavers going on to higher education. (The latter was set at 50 per cent, an increase on the Major government’s ambition, which had been for a third.) In June 2001 John Hutton, a minister in the Department of Health, enquired of a civil servant how many targets had been set by the department since the 1997 election and was shocked to discover that the answer was somewhere around eight hundred.

In the 1960s Harold Wilson’s administration had prided itself on issuing a National Plan for the economy; New Labour seemed determined to repeat the experiment, this time for everything but the economy. There was even a target for the number of otters to be found in the wild, a project which broke new ground by bringing in funds from the water companies and from Biffa Waste Services, enabling newspapers to report that ‘the otter has secured the largest corporate sponsorship for an endangered British species’. The micromanagement of everyday life, as wish-lists became a substitute for action, created a danger that was spelt out by Chris Mullin: ‘We are getting a reputation as a party of busybodies.’

Much of this derived from the days of Conservative rule, and the desire to measure productivity in services that didn’t necessarily lend themselves to such analysis. Funding to universities, for example, became dependent on the quantity of published material, sparking a boom in academic journals, the value of which was not always apparent; in the early years of the new century, research showed that the average readership of an article in such a journal amounted to just five people. The result was the creation of a new layer of bureaucracy to monitor performance, which was answerable to a centralised authority, further damaging local accountability and the independence and authority of professionals working in the field, whether they were lecturers, police officers or hospital consultants. The same thinking was also applied to government itself, so that the setting of targets and the passing of ever greater numbers of laws came to be a substitute for governance. Output meant more than results.

As environment secretary, Michael Heseltine had decided to issue a white paper every year, the equivalent of an annual report, ‘to set targets and to report systematically against them’. He was able to boast proudly: ‘Our first-year report detailed over 400 measures already taken towards the White Paper’s goals and listed over 400 commitments to further action.’ The attitude underlying this approach was that government was somehow analogous to a group of companies, that business practice could be imported wholesale. It was replicated in New Labour’s announcement that there would be an annual government report, though few showed any enthusiasm for the initiative (‘God knows who invented this idea,’ grumbled David Blunkett) and it was soon dropped, without anyone really noticing.

Key to this way of thinking was an awareness of the language to be employed. Again the seeds were there in John Major’s charters – which had turned rail passengers into ‘customers’ and introduced such verbiage as ‘the next station stop’ – but came to fruition under a Labour government full of people who had cut their political teeth in the 1980s, when language had been the ground on which was fought the battle to shape thought and behaviour.

Few were as excited as Tony Blair. ‘It’s the signals that matter. Not the policy,’ he remarked at the time, and even on mature reflection, he remained convinced that changing the language was a prerequisite for changing attitudes: ‘the whole terminology – booked appointments, minimum guarantees of service, freedoms to innovate – spoke of a coming culture of change, oriented to treating the NHS like a business with customers.’ If improving the delivery of services was a hard nut to crack, then the vocabulary was the soft option, and New Labour came to specialise in management jargon, forever talking about accessing, passporting and rolling out. It was a development noticed and mocked by many, including the always semi-detached Chris Mullin: ‘Keith Hill and I amused ourselves over lunch compiling a New Labour lexicon. We came up with the following: pathfinders, beacons, win-win, stakeholders, opportunities as well as challenges, partnership, best value.’

The one major development in public services was the extension of the private finance initiative (PFI), which had grown out of John Prescott’s thoughts on transport while in opposition, and had been adopted by the Conservative government of John Major and Norman Lamont. Under John Smith, Labour had accepted that this was the way forward, but the scale of New Labour’s embrace was still something of a surprise.

It was argued that the private sector was more competent in its management and delivery, but no one doubted that the real reason for the popularity of PFI in Westminster and Whitehall was the way that it enabled large capital projects – particularly schools and hospitals – to be undertaken at no immediate cost to the public purse. The bill was spread over a number of years, a privilege that enabled the companies involved to charge more. It was, in effect, a government version of credit card debt and would, wrote Nick Cohen in the Observer, ‘result in the public paying a fortune for the services of corporations for decades to come’.

Notwithstanding the good intentions to reform welfare, health and education, however, there was one overriding political issue as the new government took over. John Major’s opt-out at Maastricht had meant that Britain was unlikely to be in the first wave of countries – some eleven of them – launching the single European currency, which was now scheduled for 1 January 1999, barely eighteen months away. Nonetheless the project then known as EMU (economic and monetary union) could hardly be ignored by a government that prided itself on its European credentials. It would be, said David Blunkett in February 1997, ‘the biggest decision of the next parliament’.

Tony Blair’s position on the currency, which was to be called the euro after much argument, was ambivalent. In 1986, before the Labour Party became enthusiasts for the ERM, he had urged caution, saying that it was ‘important that our choice is informed and not a careless embrace of anything with the word “European” in it’, and that it was ‘not an ideological argument but a practical one’. More than a decade later, he stood by that latter position, saying that when it came to the euro, ‘it is economics not politics that will decide’. In this respect, he was at one with John Major, who had fallen out with those in his party who insisted on seeing the issue as one of principle.

Both men were likewise unconvinced that the programme set down was achievable. The ‘single currency will not come about before the end of the century’, Major said, as early as 1994, since ‘the economic circumstances will not be right’. ‘I still retain a very strong doubt that it will happen at all,’ Blair told Paddy Ashdown two years later. ‘I have no doubt about the commitment of other European leaders to it, but I am not at all sure they can withstand the pressures from their populations brought about by the austerity which will be necessary to meet the Maastricht conditions.’ It was a perceptive analysis, though it underestimated the EU’s willingness to fudge the entry requirements, thereby postponing the problem of austerity to the next generation of leaders.

Blair was broadly sympathetic to Britain’s adoption of the euro but, despite his protestations, it was unavoidably a political decision. Those driving the project were clear about this, as Wim Duisenberg, president of the European Central Bank, explained: ‘EMU is and was always meant to be a stepping stone on the way to a united Europe.’ It was also true of the domestic argument. When Major in 1996 had committed the Conservatives to a referendum before entry into the single currency, it had forced Labour’s hand, and the election manifesto had been explicit that there would be a triple-lock: ‘first, the cabinet would have to agree; then Parliament; and finally the people would have to say “Yes” in a referendum.’

Even the first of those stages seemed unlikely, given the vanishing rarity of cabinet debate on such serious questions. The real problem was the third stage, referred to by Blair as ‘the wretched referendum’. Giles Radice had been one of seven Labour MPs to sign a letter to the Independent in 1996 calling for Britain to be part of the first wave of entrants, but even he could see the problem. ‘The real obstacle is not economic but political,’ he wrote. ‘Tony and Gordon, especially Tony, are “shit-scared” of the Murdoch press. This is the real weakness of this government.’ The reality of that concern was manifest in June 1998, when the Sun gave its front page over to an editorial illustrated with a picture of Blair and the headline: IS THIS THE MOST DANGEROUS MAN IN BRITAIN?

That the Sun could still be driven to such hyperbole was an indication of how confused the government’s message had become. Robin Cook was openly expressing doubts about British involvement in the euro in the short to medium term, while Gordon Brown was said also to be sceptical. In October 1997 an attempt to clarify the position was concocted by Brown and his advisers, in conjunction with Alastair Campbell, and resulted in an article in The Times under the headline BROWN RULES OUT SINGLE CURRENCY FOR LIFETIME OF THIS PARLIAMENT. The Euro-friendly Peter Mandelson had not been informed of the briefings and phoned Blair in a fury, demanding to know what was going on, only to discover that Blair had also not been consulted and was equally unhappy.

A panicked weekend of retractions, re-briefings and repositioning ensued, and the confusion and conflicts became the story. The headlines were unequivocally bad: LABOUR SPINS INTO A CRISIS (Guardian), EMU POLICY IN A SPIN (Financial Times), BROWN IN A SPIN OVER EURO POLICY (Daily Telegraph). Some £20 billion was lost on the stock market that morning, just as Brown arrived in the City for a prearranged photo-opportunity. Only the Daily Mirror, doggedly loyal despite New Labour’s open flirtations with the Sun, stayed onside: EU CAN TRUST LABOUR TO GET IT RIGHT, reassured the headline, explaining that the government’s position ‘is quite simple. It knows Britain has to be part of monetary union. The question is not IF but WHEN. Naturally enough, that will depend on when the time is right for this country.’

To answer the question of when it would be right, Brown and Ed Balls came up with five tests to determine whether Britain was ready to enter the euro. It was a largely cosmetic exercise, designed to save face in the midst of a self-induced squall of bad publicity, but for the next few years, the five tests were constantly referred to as though they had some objective meaning, even if few government ministers or spokespeople could ever remember when asked quite what they were. The tests were framed so loosely that they could mean almost anything, and could be interpreted in almost any way one wished. The only one that revealed anything much was the question of whether joining the euro would be good for the City of London, which at least demonstrated how large the City loomed in Brown’s thinking. Derek Scott, then Blair’s economic adviser, was later to observe that ‘making a decision on one industry is like making a view on the Gold Standard based on what was good for the textiles business’. He concluded: ‘The five tests on the euro are economically illiterate.’

Nonetheless, the invention of the five tests was politically shrewd on the part of Brown. The decision on whether and when to adopt the euro had now been taken out of the prime minister’s hands and left entirely at the discretion of the chancellor. Blair’s refusal to admit that the issue was one of politics had allowed him to be written out of the equation.

Meanwhile William Hague had pledged that there would be no application to join the currency over the course of the next parliament, in the unlikely event that a Tory government were elected. ‘For the first time Conservatives sounding clearer than Labour on this matter,’ rejoiced Eurosceptic Michael Spicer, though there was little domestic benefit to be found. Rather, Hague’s position served to shore up Britain’s credit within the EU for not having a Conservative government. When the European Central Bank was officially launched in June 1998, Blair was invited to the ceremony. The Maastricht male voice choir dignified the occasion by singing songs from the various European nations, including ‘Land of Hope and Glory’, which, thought Blair, struck ‘an appropriate note’. The choir’s final choice, however, a rendition of ‘Money Makes the World Go Round’ from the musical Cabaret, was perhaps less encouraging – evoking the spirit of Weimar Germany was not entirely auspicious.

Back home the mixed messages continued. In February 1999, with the euro now a fact, Tony Blair made a statement to the House of Commons, explaining the logistics of how Britain would move to abolish sterling and adopt the new currency. But there was no indication of when the process outlined would actually begin; it was just another holding exercise, making gestures in the absence of a real policy. ‘Our intention is clear,’ protested Blair. ‘Britain should join a successful single currency, provided the economic conditions are met. It is conditional. It is not inevitable. Both intention and conditions are genuine.’ By this stage, though, Britain had long since been excluded from the decision-making process that brought the euro into being, and once again stood isolated in European Union circles.

Derek Scott later identified the real underlying flaw, beyond even the fear of the media: ‘One of the problems for the Blair government has been that in opposition Labour never worked out what being pro-European meant; it was simply part of rebranding and repositioning the party.’ And, he noted sadly, ‘In government the focus on positioning has continued.’ That was written in 2007, a full decade on from New Labour’s accession to power, and still no decision had been taken, no definite policy adopted. With every passing month, it had become more difficult to commit to the course that Blair would have liked to follow. In that first flush of enthusiasm, when he had sufficient support that he could be forgiven for the Bernie Ecclestone scandal, it might have been possible to win a referendum on the single currency, but the moment passed. ‘Blair is mad not to have already made a clear sign that he wants to go into the euro,’ observed former chancellor Geoffrey Howe in 1999. ‘He is wasting his big majority. After the election, it may be even more difficult.’

Blunkett was right that the question of whether to join the euro was the biggest decision of the parliament. When the eurozone plunged into a sovereign debt crisis in 2009, and Blair’s forebodings about the austerity measures implicit in EMU proved all too real, many expressed their relief that Britain had not signed up to the single currency. The reality, though, was that a prime minister who boasted of his ability to make tough choices had flunked this one, and that he had ultimately adopted little more than the policy referred to by John Major as ‘procrastinating on principle’.

Blair’s hesitancy was in large part due to his awareness that this was the one issue on which clear blue water separated the two main parties. William Hague’s Conservatives had made opposition to the euro the central and most effective plank of their political positioning. The big Europhile beasts of the party were no longer significant players; Michael Heseltine and Kenneth Clarke had retreated to the back benches while Chris Patten, returned from Hong Kong, was busy chairing a commission on policing in Northern Ireland and was soon to become a European commissioner, courtesy of Tony Blair. In their absence, the Eurosceptics now had the party pretty much to themselves and the defence of sterling was the one issue on which they could garner some public support.

Beyond that, however, things continued to look bleak for the Tories. In January 1998 the Friday Night Armistice team ran a stunt in which they offered cash prizes to members of the studio audience if they could identify pictures of various members of the shadow cabinet and what portfolio they held. The sums started at £10 for Michael Ancram (devolution) and rose through £150 for Francis Maude (culture), £1,000 for Andrew Mackay (Northern Ireland), all the way up to £30,000 for John Maples (health). Only the prize for Ancram was successfully claimed. It was an eye-catching gimmick, even if a little unfair, for there were some better-known faces surrounding Hague, principally that of Ann Widdecombe who was rapidly emerging as the star of the party.

Following her character assassination of Michael Howard, Widdecombe became shadow health spokesperson and took the 1998 party conference by storm. Speaking without notes, and roaming the stage in a manner that would one day become associated with David Cameron, she earned a huge standing ovation with a speech that combined passion and humour in a way not seen since the great days of Heseltine. Mocking the Labour health minister Tessa Jowell, whose picture appeared thirty-two times in an eighteen-page booklet designed to promote public health policies, Widdecombe shrugged: ‘Now I could understand it if she had my good looks . . .’ She became the Conservative equivalent of John Prescott – the butt of media jokes, but seen by the rank-and-file membership as their plain-speaking representative at high table.

What the media really wanted, however, was the return of Michael Portillo, so that stories of leadership challenges could be dusted off. But Portillo had changed during his time out of office as he took stock of his first professional setback. Denied the comfort of a berth in the Commons, he seemed to think more clearly and rapidly than did others about the state the Tories had got themselves into, and he resolved to make a genuinely fresh start. Still Eurosceptic, he softened his positions on social issues, recognising that times had moved on, as Hugo Young discovered in an interview: ‘He notes the fact that even old people are liberal, through being forced by circumstance to have to come to terms with the children and grandchildren who are single parents, drug-takers or whatever. They have come to terms with a social reality.’ He also engaged in some media work that did wonders for his image, making various television documentaries and going to work as a porter at St Thomas’s Hospital in London for a series of articles published in the Mail on Sunday.

Through it all, he came across as a slightly tortured man, as though he were engaged in a process not only of political reinvention but of personal discovery. It would have taken the hide of a rhinoceros to emerge unscathed from the humiliation of election night, but even so Portillo gave the impression of having seen himself for the first time as others saw him, and of not caring much for the sight. His speech at the post-defeat party conference in 1997 struck a very different note from his SAS days. He decried ‘a grabbing and inhumane society made up of greedy and selfish people’, claimed that ‘tolerance is part of the Tory tradition’, and even spoke out for single-parent families: ‘We admire those many people who are doing an excellent job raising children on their own.’

Having paid some sort of penance and demonstrated his repentance, Portillo was soon offered a chance to re-enter the political arena. In September 1999 Alan Clark died of a brain tumour, leaving behind a safe Tory seat in Kensington and Chelsea that proved irresistible to high-profile candidates. (Even Geri Halliwell had once suggested that she’d be prepared to stand for the constituency: ‘If the people want me, I could not refuse,’ she said, with all the mock humility of a real politician. ‘I’d be like Glenda Jackson, but better.’) Portillo was the front runner from the outset, but more than a hundred other hopefuls put themselves forward to be the Conservative candidate, amongst them a clutch of ex-MPs including Angela Rumbold, Rupert Allason and Phillip Oppenheim.

There was also the self-promoting challenge of Peter Hitchens, an Express columnist who had been in the International Socialists as a young man and who still displayed the self-righteous fervour of a teenage Trotskyist, even though he had now become a self-proclaimed reactionary. He had taken against Portillo for not being nearly right wing enough. ‘Is he really a Tory at all?’ demanded Hitchens crossly, in what was to become almost a catchphrase. ‘As defence secretary he did nothing to halt the crazed policy of bringing women into almost all branches of the forces.’ Hitchens himself was described by his rival Oppenheim as ‘a sort of Ann Widdecombe in trousers’. Meanwhile the actor Alan Rickman, fresh from his triumph as the Sheriff of Nottingham in Robin Hood: Prince of Thieves, was being touted as a possible Labour candidate, though regrettably that didn’t come to pass.

Portillo’s candidature had one major obstacle to overcome. For years there had been rumours in Westminster and beyond that he was homosexual, even – absurdly – that he was having an affair with Peter Lilley. In a 1999 interview with The Times, the publication of which fortunately turned out to coincide with the death of Alan Clark, he took the opportunity to set the record straight. He had never had a relationship with Lilley and the two had only ever talked about the rumours ‘to discuss whether to conduct libel proceedings’, but there was some truth in the stories about his student days at Cambridge: ‘I had some homosexual experiences as a young man.’

It was a revelation that excited the media, and gave them licence to track down fellow students. ‘There was this louche community which you had to be part of if you wanted to make it to the top in politics,’ a former colleague, who was on the executive of the Oxford University Conservative Association, told the News of the World of the Cambridge Tories. ‘It was like a rogues’ gallery of high camp. And Portillo, with his long hair and big lips, was right in the middle of it.’ But in the wake of Stephen Twigg and Ben Bradshaw, the interview made little political impact. Even Norman Tebbit, whose interest in such matters had long been noted, professed himself unconcerned. ‘We live in a world where we are going to have to write off the indiscretions of youth,’ he shrugged, until he discovered the full extent of Portillo’s past activities and exclaimed in horror: ‘We now know his deviance continued for almost a decade.’ In a sign of the times, however, Tebbit also admitted: ‘My views have not changed but society has.’

Portillo was duly adopted as Conservative candidate for the constituency and in November 1999 went on to achieve a swing towards the Tories in a by-election packed with fringe candidates, ranging from the Earl of Burford all the way up to Lisa Lovebucket. Within three months of returning to the Commons, he was back on the front bench as the shadow chancellor in a reshuffle and, on his first day, he stamped his authority on the party by reversing Tory policy to accept not only the independence of the Bank of England – which had been opposed pretty much for the sake of opposition – but also the minimum wage, which was complete anathema to the Thatcherite tradition.

Even with those concessions to Labour, coupled with the limited profile and resources of the parliamentary party, the Conservatives did at least try to provide some form of opposition. It was hard to say the same of the Liberal Democrats, whose role in the early days of New Labour government seemed largely surplus to requirements.

In the 1980s its forebear, the SDP/Liberal Alliance, had proclaimed its intention of supplanting Labour as the chief opposition to the Tories. That hadn’t happened and, under the leadership of Paddy Ashdown, the merged party had, in the early 1990s, steered a course of ‘equidistance’, favouring neither of the main parties. It had, for example, largely backed John Major in the Maastricht debates, acting on pro-European principle rather than pursuing the opportunistic option of defeating the government with whatever weapon came to hand. But Ashdown felt that they had received little in return for this support, and by the middle of 1993 he was writing in his diary that ‘there is real animosity between me and Major now’. From here on, the likelihood was that the party would move ever closer to Labour. The discussions about coalitions, hung parliaments and cross-party cooperation that had surfaced during the last week of the 1992 election campaign came back to mind and the idea of an anti-Tory alliance was floated in various quarters.

There was, however, a stumbling-block in the shape of John Smith, who had no interest in such speculation. He talked instead of ‘the importance of party, of tribal loyalties, of the need to be fighting for a cause and a group’, and concluded: ‘All this makes the idea of deals quite impossible.’ Ashdown found a more ready welcome at the door of the shadow home secretary, with whom he had dinner at the end of 1993, recording that Tony Blair ‘believes there is a desperate need to reformulate the politics of the left and that he and I could prepare the ground for this’.

That early contact was followed by increasingly serious discussions after Blair became Labour leader, the two men plotting how they might drive the Conservatives out of office and keep them in opposition for a decade to come. Ashdown was keen on the idea of a joint project whereby issues of electoral reform and policies on health and education could be explored, without the requirement of a formal pact. Moreover, he recognised that ‘I have more in common with Blair than he has with his left wing’, and was prepared to make the next leap, believing that the existing party structure was outdated. Far more logical than the present arrangement – so long as one ignored history – would be a reconfiguration that saw both Labour and the Conservatives split, so that a new, pro-European centre party could emerge, positioned between a Eurosceptic right and an old Labour left.

Blair understood the concept perfectly. ‘Except on law and order, I am by instinct a liberal,’ he was later to write, and although he used a small ‘l’, it could just as easily have been a capital. There was no tribalism in his membership of the Labour Party, no family ties to the movement, and from his perspective, there was no reason why the New Labour project shouldn’t be extended in the way that Ashdown sought. Indeed, many of those around him had previously been members of the SDP, including his advisers on Europe and economics – Roger Liddle and Derek Scott – and he had struck up a particularly close relationship with Roy Jenkins, the founder of that party, who became something akin to a mentor.

But in terms of the Labour leadership, Blair was effectively on his own. Gordon Brown had a deep dislike of the Liberal Democrats, who he tended to refer to as ‘the Liberals’, implying that he couldn’t be bothered to keep up with their name changes. So too did John Prescott, another with no enthusiasm for close ties with the third party. ‘No way, I’m not going down that road,’ he declared, to which Blair nervously replied, ‘So can I take that as a tentative yes, then?’

The other obstacle was that, despite Ashdown’s talk of turning ‘a Conservative defeat into a Conservative rout’ through cooperation between the two parties, Labour went ahead and won a massive landslide on its own. After the election, there was no possibility of, or need for, any kind of coalition. A joint committee of senior Liberal Democrats and Labour ministers was formed, discussing the perennial subject of electoral reform amongst other items, but it amounted to no more than a half-hearted talking shop; the fact that it met in the cabinet room – where no serious decisions were now made – indicated its lowly standing. Long gone were the days of opposition when Blair could vaguely intimate that he was willing to appoint a couple of Lib Dems to the cabinet. Not even his authority over the Labour Party extended that far, though he was to be heard a year after the election reflecting: ‘I still wish I had put Ashdown in the cabinet.’

In 1999, after eleven years in office, Paddy Ashdown announced that he was stepping down as leader of the Liberal Democrats. From the messy wreckage left behind by the 1988 merger of the Liberals and the SDP, he had managed to salvage a workable third party, and build its representation substantially in the Commons. His association with Blair had yielded some fruit – legislation on human rights and freedom of information were partly due to Lib Dem campaigning – but the ultimate goal remained as elusive as ever. The party, in its various guises, had been waiting to achieve a share of power longer than Britain had been waiting for a men’s singles champion at Wimbledon, and still it hadn’t materialised.

Perhaps his successor, the much younger Charles Kennedy, might be the one to make the breakthrough, though Ashdown didn’t seem very convinced. Kennedy was ‘a very attractive personality but he could be lazy and foolhardy’, was the verdict he delivered to Blair, who was later to come to the same conclusion: ‘All that talent. Why is he so idle?’ On the day he was elected leader, Kennedy received a phone call from Blair with an invitation to a private dinner that evening. His casually unimpressed response set the tone of his new style: ‘Terribly sorry; I’m already fixed up.’ When he did finally meet Blair in Downing Street, his first question was, ‘Do you mind if I smoke?’, deliberately breaking the ban on cigarettes imposed by Cherie. He subsequently began to pull away from Labour, opening the possibility that the Lib Dems might return to being a party of opposition.

There was a need for such opposition. A MORI poll in April 1999 showed Labour on 56 per cent, the Conservatives on 25 per cent and the Lib Dems on 13 per cent, almost exactly the same results as a Gallup poll had found in August 1994. If that suggested that no mid-term slump was in prospect for the government, Labour’s performance at the ballot box was less impressive. In local elections that month the Conservatives gained control of forty-eight councils, adding over 1,300 councillors to their ranks at the expense of both other parties, and a couple of months later they took 36 per cent to Labour’s 28 per cent as a share of the vote in elections to the European Parliament. Meanwhile the UK Independence Party won its first seats, its three new MEPs including future leader Nigel Farage.

But the real story of those Euro-elections was the appalling turnout of only 23 per cent. This meant that just 6.5 per cent of the registered electorate had shown their support for a government that had won a landslide two years earlier. Turnout was particularly low in the Labour heartlands: 14 per cent in Sheffield Brightside, 12 per cent in Barnsley and barely 10 per cent in Liverpool Riverside. In all these constituencies, Labour historically achieved a share of over 70 per cent in parliamentary elections. One polling station in Sunderland reported turnout of 1.5 per cent. ‘Mind you, does it really matter?’ reflected Lance Price. ‘So what if we do badly today? Victory at the next general election is all but certain.’

He was undoubtedly correct. These were, after all, merely European elections, which never attracted a great deal of support and were frequently used to register a protest vote. The same day, however, there was a by-election in the safe Labour seat of Leeds Central, and although it ensured the arrival in Parliament of a fourth generation of Benn, in the form of Tony’s son Hilary, turnout had again slumped, down from 55 per cent at the general election to only 20 per cent.

Despite John Prescott’s claim that the low voting figures reflected ‘a culture of contentment’, something more unnerving was happening here, and it reflected badly not only on the Labour Party but also on the democratic process. The leader of Sunderland council, Colin Anderson, was elected on a turnout of 17 per cent. ‘The fact that 83 per cent did not vote says something about the legitimacy of the overall political system,’ he commented, ‘but I do not blame the people who have not voted. This is one of the country’s poorest wards. If your daily life is struggling to survive, voting is not a top priority.’

Tony Blair was later to claim that he knew all along how disenchanted the Guardian-reading liberal element of his cross-class coalition would become, and professed himself unconcerned: ‘I was sure that although in north London and elsewhere a certain type of Labour voter was going to defect, the more aspiring lower-middle-class voter – the core of New Labour – were sticking with us.’ The reality, though, was that it was not merely in his adopted homeland of Islington that a decline of hope was evident, but also in places like the North-East of England, the region that included his own constituency. And even if those Labour seats were secure enough to withstand mass absenteeism, there was less certainty about their equivalents in Scotland, where a viable left alternative existed in the Scottish National Party. It was noticeable that the next Labour-held seat to enjoy a by-election – Hamilton South in September 1999 – saw a much more respectable turnout and a huge 23 per cent swing to the SNP, reducing a Labour majority from nearly 16,000 to barely five hundred.

The disillusion of traditional Labour supporters had been noted even as Blair was taking over the party. ‘We have had three elections of warm words,’ observed John Prescott during the 1994 leadership election. ‘I’m not convinced it did us a great deal of good. It does not convince enough of those who want to switch over and it knocks the heart out of our own people.’ New Labour had calculated that ‘our own people’ could be taken for granted, allowing the emphasis to be placed entirely on winning over the southern suburbs, and in the electoral short term, the strategy had undoubtedly been a success. In the longer term, however, there was a very real danger that the base of the Labour movement was being so heavily eroded that the party itself might cease to exist in any recognisable form. By the end of the decade, the pursuit of the affluent voter had left the committed activist feeling neglected and alienated. ‘There are five people in my household and we all voted Plaid. Including me,’ admitted a Labour councillor in Wales in 1999. ‘I can’t see the past anywhere’, lamented the Manic Street Preachers in their song ‘Socialist Serenade’, released the same year; it ended with a contemptuous: ‘Change your name to New; forget the fucking Labour’.

Again, the warnings had been issued. Peter Hain, formerly a leading light in the Young Liberals but now one of the more left-wing figures towards the top of Labour, argued in 1994 that the process of modernisation was creating ‘an empty shell of a party’, saying: ‘It is hardly surprising that activity rates have fallen sharply, that branch meetings are badly attended and general committees barely quorate.’ There was nothing for members to do, now that campaigning was dominated by the mass media and policy-making lay entirely in the hands of Blair, Brown and their inner circles; increasingly, the route into power started and ended at Westminster.

The effects of this development were concealed for a while as membership of the Labour Party rose in the early days of Blair’s leadership, reversing what had been a long-term decline. But the nature of those members was changing, and a study in 1996 showed that 57 per cent earned more than £20,000 a year, and 30 per cent more than £30,000; the equivalent figures for the Conservative Party were 45 and 25 per cent. (At the time, someone working on, say, a supermarket checkout might expect to earn around £8,000 a year, while a backbench MP was on £43,000, following a 26 per cent rise.)

The new member was likely to be middle-aged, middle class and not particularly committed to the party, its history or its practice, a development that worried Robin Cook at least. ‘A number of us on the moderate left of the party are becoming increasingly concerned that we are abandoning the underclass and our historic mission to work for the poor, in favour of the middle class,’ he observed, adding that the new members weren’t very useful: ‘when we started mentioning delivering leaflets and knocking on doors, their eyes glazed and they all said they had Rotary meetings to go to. I am not sure there is enough substance here on which to build a sustainable political movement.’ In 1992, Tony Benn had identified another danger when he noted ‘the disappearance of the working class from the Labour Party; that’s a real tragedy because many of them may be attracted to the fascists, where there’s a high class consciousness and a low ideological consciousness, and racism’.

As the membership figures began to fall with the fading of election fever, the reality of Hain’s ‘empty shell’ became ever more exposed. The election agent in Chris Mullin’s Sunderland South constituency noted that there was an ageing process amongst the membership: ‘I joined the party when I was nineteen or twenty, and now I am forty-one and I am still one of the youngest people in the party in Sunderland.’

A parallel process in the post-Thatcher Conservative Party was one of the main factors driving the party inwards in ever decreasing circles. ‘More anti-European and right-wing views mean fewer party activists, and fewer party activists mean more anti-European and right-wing views,’ wrote Chris Patten. ‘By the mid-to-late 1990s, it was tough being a moderate pro-European Tory MP in any constituency, and well-nigh impossible for anyone with such declared views to get selected as a parliamentary candidate.’ The same phenomenon had already been noted by Edwina Currie. ‘The nice people will drift away to run their businesses,’ she speculated, in 1995, ‘and the nasties will remain, with Portillo at their head.’ Within Labour, however, the effect was rather to shore up the power of the leadership.

By now, the traditional forces of old Labour were all but silenced. Having no time for the historic links between the party and the union movement, Blair was infuriated in 1995 when the TGWU issued a statement emphasising those links. ‘These people are stupid and they are malevolent,’ he raged. ‘They complain that we want to distance ourselves and then give us all the evidence why we should distance ourselves.’ He subsequently met with the leaders of the TUC in an Indian restaurant, accompanied by John Prescott. ‘What amazed me was their timidity. It was obvious to me that he was challenging them, expecting them to complain or argue, but the response was muted,’ remembered Prescott of the union men. ‘I felt that evening that Tony had got the measure of the trade union movement, which I regretted.’

But by this stage, the unions had been battered more than most by the long period of Tory rule, and – despite a membership of nearly seven million – were little more than a shadow of their former selves. There had been a time in the 1960s and 1970s when the general secretary of the TUC was more famous than most cabinet ministers, when men such as George Woodcock, Vic Feather and Len Murray were household names. Even Norman Willis, who served in the job for nine years from 1984, during which time the movement suffered a series of setbacks, was a recognisable face on television. His successor, John Monks, spent a decade in office and went largely unremarked by the public.

The unions’ acquiescence to the New Labour project was matched by much of the parliamentary left. The desire to win was so great that it overcame ideological considerations. And there was too the tribal factor. For all his obvious lack of sympathy with Labour history, Blair was a member of the party and had been elected in its dark days. ‘I still had the feeling he was an SDP type,’ remarked Prescott. ‘But at least he had never left the Party, so I’d always rated him.’ The visceral hatred of the Tories was sufficient even to persuade Dennis Skinner, who had long been a thorn in the side of the leadership, to swallow his much-vaunted principles and come to the party’s aid. During the 1997 election campaign, he was called upon to telephone wavering trade unionists: ‘I’d be frank with them and say we could argue all evening about Blair. But I’d warn them that if the Conservatives got back in, then another Tory government would have a licence to do what they liked with the health service and the old age pension.’

After the election, Skinner remained loyal to the leadership and established a friendly relationship with Blair, who listened to his advice. (‘Blair’s a piece of cake,’ he had reportedly said in 1996; ‘he stands for nothing so you can push him over with ease.’) As Tony Benn noted sadly in his diaries: ‘It isn’t that Dennis is moving to the right, but as you get older you want to be respected and he hasn’t been keen on the recent revolts.’ So toothless had the parliamentary left become that in 2000 Benn was offered his own column in the Sun by that paper’s political editor, Trevor Kavanagh.

In those first couple of years of New Labour government, the project to reassure the party’s longstanding enemies seemed to have been a complete success. ‘I am very strongly in favour of the current government. I don’t regard it as left wing,’ remarked Madsen Pirie, founder of the right-wing think tank the Adam Smith Institute. ‘Gordon Brown is definitely to the right of Kenneth Clarke on markets.’ The core of old Labour – not so much the remnants of the left as the working-class centre – was less impressed. ‘It seems that what we fought for is now just running the status quo, and running it on whichever flavour of the month the voters will buy,’ wrote MP Joe Ashton, the very incarnation of mainstream Labour traditionalism.

The tension apparent here was not sustainable. Perhaps Paddy Ashdown had been right to think about a complete realignment of the political parties, but the moment had passed, and Britain was left with two main parties that appealed to diminishing constituencies. Tony Blair boasted that the New Labour machine was ‘close to unbeatable, like Manchester United at their best’, but if a football analogy was sought, a more accurate comparison might be with Newcastle United. Blair’s own professed club promised so much under the management of Kevin Keegan, only to fall at the final hurdle, unable to translate potential into real achievement. Or possibly the party was closer to Blackburn Rovers, the sleeping giants who, having enjoyed a massive infusion of cash (courtesy of businessman Jack Walker’s astute management of tax regulations), came back in 1995 to win their first League championship for eighty-one years, but were unfortunately relegated just four seasons later.

The problems of that first flush of government – the Bernie Ecclestone affair, Derry Irvine’s wallpaper, the failures to reform social security and public services, the U-turns on privatisation, the bottling of a decision on the euro – came to a head in December 1998 with the downfall of New Labour’s original talisman, Peter Mandelson.

The issue was relatively straightforward, and related to the purchase of a house in the fashionable Notting Hill area of London. ‘Peter Mandelson had been given a loan by Geoffrey Robinson, the paymaster general, to buy a house,’ explained Blair in his memoirs. ‘The sum was large, certainly in those days: £373,000.’ (It was an indication of how far Blair had drifted from those who Prescott called ‘our own people’ that he failed to realise that, even after the tripling of average house prices during his premiership, this was still a large sum of money to most of the population in 2010.)

The loan was, insisted Mandelson, ‘private rather than secret’, and there was nothing illegal, or even necessarily improper, about the arrangement, though he had failed to mention it either to his mortgage company or, on being appointed trade and industry secretary, to the permanent secretary in his department. The former omission was sloppy, the latter had the potential to be deeply awkward, for Robinson was at the time under investigation by the Department of Trade and Industry in relation to his links with the late Robert Maxwell. The DTI’s subsequent report found no wrongdoing by Robinson, but the affair raised again the Labour ghost of Maxwell and risked creating the impression that Robinson had bought his way into office. More importantly it reinforced the appearance of a Labour government hypnotised by wealth. As David Blunkett put it, ‘it all feels wrong’.

The main issue for Blair – who also hadn’t been told of the loan – seemed to be how the story had ever reached the media. He was convinced that it had been passed to them by members of Gordon Brown’s camp as an act of spite: ‘it was a political assassination, done to destroy Peter; but it was done also to damage me and damage me badly,’ he wrote. ‘What is the mentality of such a person? Determined, vengeful, verging on wicked.’ Cherie Blair was similarly incandescent. ‘You have been the victim of a vicious and selfish campaign,’ she wrote to Mandelson, making it clear that she blamed Brown personally. ‘My only consolation is that I believe that a person who causes evil to another will in the end suffer his returns.’

For everyone else, however, it seemed like a catastrophe that had long been waiting to happen. Even before the general election Andy McSmith had observed the discrepancy between the media skills of the spin doctor and his own apparent recklessness: ‘Mandelson’s acute judgement of political realities sometimes deserts him when he tries to judge his own situation.’ John Prescott put it all down to what he saw as Mandelson’s ‘vanity and arrogance’ and Alastair Campbell largely agreed: ‘How many times had I warned him that what I called his “lifestyle ambitions” would do for him?’ Mandelson was, concluded Rupert Murdoch, ‘a star-fucker’. In private, Campbell was more direct still, telling the trade secretary that he was a ‘stupid cunt’.

In contrast to the lingering political deaths of John Major’s ministers, the execution was swift. Mandelson was prevailed upon to resign, as were both Geoffrey Robinson and Charlie Whelan, Brown’s spin doctor who, despite his repeated denials to the contrary, Blair suspected had spread the story (‘Tony had never liked or trusted him,’ according to Mandelson). But there was no pretence that this was the end of Mandelson’s career. ‘We’ve briefed that Peter can expect to return to high office after a reasonable interval,’ recorded Lance Price, and the headline-writers duly obliged: GOODBYE . . . FOR NOW, said the Guardian.

Notwithstanding the awareness that Whitehall was probably yet to see the last of Peter Mandelson, his departure nonetheless suggested the end of an era, as the first really high-profile cabinet resignation took down the architect of the Blairite revolution. Blair himself admitted to feeling ‘a sense of doom’ at his departure, but there were others who simply rejoiced. ‘I think it is the end of New Labour,’ wrote the ever-hopeful Tony Benn, ‘because Blair without Mandelson is lost.’