Broken Vows (48 page)

‘I know,’ was his reply. ‘I’ll talk to Gordon about it.’

With limited interest in the financial world, Blair never questioned whether his sharing Bill Clinton’s and Brown’s hero-worship of Alan Greenspan, the chairman of the Federal Reserve, was wise. He didn’t realise how ignorant Brown was of markets and balance sheets. Neither he nor Brown heard the warnings in New York and Washington that Clinton and Greenspan had inflated a property bubble and, by deregulating the trading of commodities, allowed speculators to wreck the markets. Only a few Wall Street insiders spotted the risks of complicated sub-prime loans on property and the speculation in oil prices, which were to cause the crisis in 2008. Just like Clinton and Greenspan, Blair and Brown regarded bankers and fund managers through starry eyes. The master spinners to the electorate could not imagine that the fluent money-men, self-styled as masters of the universe, were peddling false prospectuses and rigging the markets. Unable to see through the self-aggrandisement of Barclays’ Bob Diamond or register the inexperience of Mervyn King, the governor of the Bank of England, neither Blair nor Brown queried whether Britain’s Financial Services Authority was regulating the City adequately.

The illusion went unchallenged by a ragged Tory opposition. The electorate would not understand that Brown’s seemingly healthy economy was built on sand. The Conservatives’ simple battle cry was honesty, the caption of their election poster echoing the nation’s dilemma: ‘If he’s prepared to lie to take us to war, he’s prepared to lie to win an election.’ Britain, the Tories and Blair realised, was split between haters and sympathisers. Facts, Blair knew, would not determine the outcome. In modern politics, he wrote, ‘the mood trumps the policy every time’.

So it was that the prime minister of Great Britain sat happily on a sofa for daytime TV and let his hosts Ant and Dec proffer a pair of panties as a gift for Cherie and check people’s reaction when he was asked about his ‘ugly smell’ in the bathroom. On other programmes, he
exposed himself to hostile mothers who attacked him about the NHS, schools and Iraq. Little was off limits, including Cherie’s boast to a
Sun
photographer in the Downing Street garden that her husband ‘does it five times a night’, followed by Blair’s confirmation to the photographer and Trevor Kavanagh, who stood near by, ‘At least. I can do it more, depending how I feel.’ Labour’s steady polling advantage showed the efficacy of such an unusual pitch.

The Conservatives panicked. Their negative campaign, directed at 900,000 swing voters and masterminded by Lynton Crosby, an Australian political strategist, rested in part on Labour’s failure to control immigration. ‘It’s not racist to implement limits on immigration,’ hushed the poster’s caption. Blair’s reply that ‘Britain needs strict controls that work’ raised questions about what Michael Howard called Labour’s ‘loss of control of the immigration system’.

Then the Tories made a mistake. They proposed to detain illegal immigrants on what shadow chancellor Oliver Letwin called ‘a faraway island’, although he could not identify its location. Blair seized on the ‘fantasy island’ as ‘absurd, laughable opportunism’ – although Blunkett had proposed a similar scheme two years earlier. Posing as the beacon of decency, he denounced Howard for exploiting people’s fears. In a well-pitched campaign of contrition to rebuild his relationship with the electorate, Blair denounced Howard for appealing to racists, while simultaneously conceding that those who discussed immigration were not racists. Soberly, in a homily headlined ‘firm, fair, fast’, he praised the advantages that immigration had brought to Britain, from which Howard’s own parents, the victims of persecution in Eastern Europe, had benefited. Even the leaked Home Office estimate that there were 570,000 illegal immigrants in Britain was convincingly dismissed as ‘grossly inaccurate’ by Blair’s spokesman. In truth, the figure was an underestimate, because bogus asylum-seekers were not included. The Tories’ best electoral weapon was lost.

Blair was pitching Labour as the architect of an advanced post-industrial economy in a globalised world. The Enron and WorldCom
frauds in America, he assured enquirers, could not happen in Britain thanks to the Financial Services Authority. Labour, he said, had created the ideal foundations for his beloved countrymen to prosper. ‘For me, simply,’ he gushed, ‘I believe in you, the British people, as much as ever … I’m still the same person, older, a little wiser I hope, but still with the same commitment.’ Howard could not replicate that performance.

Yet such self-assurance was threatened in the first days of April. After ignoring the warnings that MG Rover was heading towards collapse, Blair was told that a Chinese concern had refused to take over the insolvent company. Three weeks before the election, the employees faced unemployment and no pay, while the four chief executives were certain to walk away with £42 million. Concealing their self-enrichment, the Phoenix Four demanded that the government provide a £100 million loan to save the jobs. The trade unions accused the four of crashing the company to get more money. ‘Give Rover whatever they need,’ Brown shouted in a panic down the telephone at Patricia Hewitt. ‘I’ve spoken to Tony. We have to save the jobs. You’ve got to put the money in. Just do it.’

Hewitt suspected it was throwing cash away and probably unlawful. ‘They can’t decide what to do,’ Mike O’Brien told a friend. ‘There’s no grip.’ Torn between the law and politics, the tearful DTI minister loaned the company enough money to pay the wages for one week.

Blair was grateful for Howard’s failure to capitalise on the government’s embarrassment. Instead, the Tory leader repeatedly accused Blair of being ‘a liar’ about Iraq. This line of attack did not survive after Howard told a TV audience on the eve of the poll that he still supported the invasion.

Blair’s confidence grew. Flying in a helicopter with Alistair Darling at the end of the campaign, he asked, ‘What’s our majority likely to be?’

‘Fifty to sixty,’ replied Darling.

‘Isn’t that pessimistic?’ asked Blair, convinced that the 10 per cent lead in the polls would produce a majority of nearer 130 seats. Relying on his consistent good luck and the bias of constituency boundaries, he expected the electorate’s hostility would be overcome.

On 5 May, election day, his team gathered at his home in Sedgefield. Blair was nervous. ‘We’ve lost,’ groaned Alastair Campbell, a volunteer during the campaign, after hearing pessimistic reports from marginal constituencies. But, at 10 p.m., the BBC’s exit poll forecast a Labour lead of 3 per cent and a majority of sixty-six.

‘A minor miracle,’ Blair would write five years later.

That was not his sentiment at the time. At his own count, Blair looked exhausted. A painful slipped disc and a heavy cold were aggravated by a withering speech by Reg Keys, the father of a soldier killed in Iraq, who had stood as a candidate in the constituency. Blair flew south aware that Labour was predicted to win with the lowest number of votes in history for any government. ‘I have listened and I have learned,’ he said unhappily on the doorstep of No. 10. ‘And I think I have a very clear idea of what the British people expect from the government for the third term.’

Once inside, his misery erupted. On the main table were newspapers with headlines such as ‘Blair Limps Back’ and ‘Time Is Running Out’. Across the country, Labour members were speculating about his early retirement. Beside him were Patricia Hewitt and Sally Morgan. Both saw a disappointed magician who was fearful that his wizardry was exhausted. Since 1997, Labour had lost nearly 4 million votes; worse, it had garnered the lowest share of votes for a winning party since 1832. Blair half doubted whether he had actually won. Party members were already being ‘ungenerous’ and ‘grim’ about the victory, blaming him for the poor result.

‘I’d never seen him so low,’ recalled Hewitt. ‘Mr Calm’, who rarely cried over spilt milk and moved on after a crisis, was distraught. There was no talk of ‘progressive’ politics.

‘Should I get rid of Gordon?’ he asked, starting the familiar hand-wringing, which ended with his voicing all his old fears about Brown on the back benches. The question, all three knew, was meaningless. The previous Friday, he had publicly anointed Brown as his successor. ‘Gordon will make an excellent prime minister,’ he had written in
The Times.

Upstairs, Cherie was contemplating her future. In one month, she was due to fly with her husband to Washington. She intended to use that opportunity to be paid £30,000 for a lecture promoting her new book about life inside Downing Street. Also on her list was the chance to earn a fee at the opening of a shopping mall in Malaysia, another for a TV documentary based on her book, and a third for delivering a lecture as ‘Cherie Blair’ rather than ‘Cherie Booth’ in Australia. She had just submitted a bill for £7,700 to the Labour Party for her hair stylist’s daily services during the campaign.

Half a mile away, Brown was waiting in his small Westminster flat.

‘Do health,’ Blair told Patricia Hewitt at the end of their post-mortem following polling day. ‘We’ll talk about it later.’

As usual, he had not considered the appointment with any care, and Hewitt would need a year to understand her department. The ideal choice would have been John Hutton, Alan Milburn’s deputy and former flatmate, but Blair had become disengaged. ‘His door used to be open,’ George Alberti had discovered during a thirty-minute discussion with Blair. ‘It wasn’t any longer. He was totally diverted.’ Blair’s preoccupation with the NHS had been reduced to a longing for headlines.

Hewitt left Blair in Downing Street and crossed Whitehall to her new office in Richmond House. Nigel Crisp, the permanent secretary and chief of the NHS, had left for home. Ever since being mentioned as a possible candidate to become the next Cabinet secretary, his confidence had grown. Hewitt found his briefing file on her desk. The summary described a super-class of confident administrators who, ever since 1997, had been improving the nation’s health.

On Monday morning, the two met. ‘He told me everything was marvellous,’ recalled Hewitt. During the first weeks, Crisp’s reports, especially after his regular Friday inspection tours across the country, were glowing. Every indicator was positive. Naturally, there were a few grievances. The IT programme was delayed by Accenture’s failure to deliver on their contract, and the NHS needed to recuperate after the bruising employment of private contractors. Hewitt nodded. She was unaware of Ken Anderson’s presence down the corridor, and Crisp did
not enlighten her about the commercial section’s mission to shame the NHS dinosaurs.

Hewitt entered Richmond House convinced by the party’s election boast that Blair had transformed the NHS. Her presumption was, in Crisp’s eyes, a blessing. In his briefing he did not mention the raging arguments over markets and choice; nor had Blair or Paul Corrigan, the prime minister’s special adviser on health, forewarned her that those controversies remained unresolved. At least she was told that Milburn had created an excessive number of primary care trusts – 302. Too many were small, badly managed and wasteful in commissioning and providing care. Crisp agreed that the number should be halved. ‘It’s all in hand,’ he told her. Without warning the new minister, Crisp had decided to remove the PCTs’ authority to provide care – a revolutionary change – and to reduce the thirty-one PCTs in London to five. The publication of these proposals in ‘Commissioning a Patient-Led NHS’ provoked an uproar. ‘It came out of the blue,’ Hewitt would say. ‘Crisp cut the PCTs’ powers without any discussion, or telling Downing Street, because that was his policy.’ London’s Labour MPs led the outcry, and their complaints went directly to Blair.

‘Get the MPs off my back,’ he told Hewitt.

Until then, Blair had not mentioned that, despite all the changes, the NHS’s structure remained unsatisfactory. The prime minister, Hewitt knew, ‘did not do detail’, but she was unprepared for his patchy knowledge. In the past, Corrigan, an other-worldly academic, had nudged Blair about ‘strategy’ but had rarely presented any pertinent insights on the NHS’s performance. He was replaced by Ian Dodge, a civil servant. After it was discovered that the latest special adviser had a limited understanding of party politics, Dodge was reassigned and Corrigan recalled. The net result was that Hewitt was bereft of leadership from Downing Street.

‘The PCTs don’t have traction,’ Blair told her. ‘They’re not entrepreneurial enough. Why have they not got enough bite? Why aren’t we doing more with the market?’

Hewitt was bewildered. She was unaware of the hazardous journey since 1997 towards competition, nor had she grasped how Crisp and his lieutenants disparaged Blair’s support for choice. The officials spoke about ‘the difficulty of designing a market in health care’. None admired France’s ‘success’ in providing faster and better health treatment, instead damning the internal markets operating there as ‘wasteful’.

For five years, Blair had bit by bit opened the cage door to encourage NHS independence, but the bird had not moved. So often he would say, ‘The reform programme is not going fast enough,’ or, ‘The department is not committed to the reform agenda.’ Although he blamed civil servants in general for sticking to their traditional obstructive ways, he never identified Crisp and John Bacon, his deputy, as the culprits blocking his desire for modernisation. Accordingly, he did not consider removing them.

Crisp’s proposed changes to the PCTs were instantly revoked, and the baptism of fire prompted Hewitt to reassess her inheritance. Her advisers completed the picture.

‘John Reid did not dislodge the civil service opposition,’ she heard from Norman Warner, the only junior minister with any expertise in health. Reid’s murky legacy was concealed by Blair’s praise for his troubleshooter, a misjudgement that pervaded Downing Street.

Corrigan gave a stark message about Blair’s mindset to Matthew Swindells, Hewitt’s new special adviser: ‘We’re stuck in halfway land on commissioning and choice. The department’s unhelpful.’ Swindells, an experienced NHS executive, was puzzled. Eight years after Labour first came to power, Downing Street still lacked a master plan for the NHS.

Blair did not wholeheartedly believe that ‘choice’ could reduce waiting times. His gospel remained targets and ‘deliverology’ – except there was a problem: Michael Barber, the godfather of the Delivery Unit, had resigned for personal reasons before the election. In Whitehall and beyond, no one could find a successor. There was a good reason: ‘deliverology’ had failed to win converts. Barber’s bullying methods of command and control had, for example, reduced street crime but, once
the unit’s pressure moved on to another target, the old offences had increased again. ‘Smoke and mirrors’, was a familiar judgement. Blair was in an odd situation. He believed in delivery but lacked a deliverer. He drew the obvious conclusion: there was no alternative other than to close the Delivery Unit.

After hitting a brick wall about the NHS, he asked several experts for advice and changed his mind once again. Over a weekend at Chequers, he handwrote a memorandum spelling out the final reorganisation of the NHS. After all the targets and changes, he half understood his error. During the eight years since 1997, he had dismantled, then procrastinated and finally arrived back where he should have started – building on his inheritance from the Tories. He should never have placed his faith in centralised control. Only now did the sterility of his debate about reforming the public services begin to register with him. Naturally, he would not admit responsibility for the costly waste, even to himself.

Delivering his new wisdom required delicacy. To win Gordon Brown’s agreement, he took the unusual step of creating a Cabinet committee, with himself as chairman. Among its members were Brown, Hewitt, John Prescott, Warner and Crisp. After the first meeting, Brown refused to attend and sent Paul Boateng, dubbed ‘the ventriloquist’s puppet’, to oppose everything. Looking at Prescott’s artless face while Blair described his ambitions, Warner contemplated how the NHS was again heading towards the buffers. Reform depended on inserting a team of like-minded supporters into Richmond House to challenge Crisp’s prejudices. Blair’s use of buzzwords like ‘mechanisms’ and ‘organisation’ showed a man talking a foreign language to the NHS staff. ‘Tony doesn’t know what he wants,’ Warner concluded at the end of the first month. ‘He’s just looking around for a silver bullet to say “reform”.’

Hewitt also grasped that ‘Labour didn’t have a road map. Tony hadn’t caught up.’ She turned to Crisp for help. ‘Tell me, Nigel,’ she said, ‘how do you see reform progressing? Explain to me our “change” strategy.’

Crisp spoke, but Hewitt could make no sense of what he was
describing. ‘Would you like to see the department’s work programme?’ he offered.

‘Yes, please,’ replied the minister.

The following day, Hewitt was shown a vast piece of paper – endless sheets of A3 paper sellotaped together – covering the length of a long conference table. ‘This’, said Crisp, ‘shows 112 different work streams which the department is undertaking.’

Hewitt was bemused. The introverted chief executive defied understanding. Behind him stood John Bacon, his chief supporter brazenly showing that nothing had changed since Le Grand had discovered that ‘he didn’t care what ministers wanted’.

‘We have a problem,’ she realised. ‘There’s no narrative which explains what we are doing on foundation hospitals and markets.’ Crisp, she suspected, ‘didn’t understand Tony’s reform programme, politics or politicians’. She said nothing to Blair, who had appointed four new ministers to the department since the election. Other than Warner, none had yet mastered the NHS’s complexities.

‘There were no new ideas, no grip and no pushing forward,’ observed the NHS’s former chief executive Andrew McKeon. ‘It was turgid drift.’ Soon after, Corrigan departed for good. ‘We need to decide what to do,’ Blair told his replacement. The new adviser didn’t take long to conclude what the others had realised – that Blair had no blueprint for the NHS, while ‘Crisp supported his version of the NHS but not the real facts. He didn’t get it.’

Crisp had also decided that Blair’s latest initiative on ‘choice’ was just another of his quick fixes. ‘The problem is always implementation. Real life doesn’t happen in soundbites. It’s hard work,’ he later wrote. There was also institutional sabotage. Foundation hospitals, some NHS chief executives complained, were ‘being strangled by bureaucrats introducing unexpected changes to the original vision’. The executives mentioned new red tape, interference in their finances and ‘the reassertion of the old system of command and control’.

If Blair had heard Crisp’s carping, he would have had good reason to
feel resentment. At the Olympic summit in Singapore, his charm had tipped the balance during individual interviews with each delegation and, on 6 July, in Scotland, he heard that London’s Olympic bid had succeeded. Gordon Brown, everyone knew, could never have achieved such a victory. Blair had flown on from Singapore to chair a meeting of the G8 leaders in Gleneagles. After intensive lobbying by Bob Geldof and Bono, Blair had persuaded the seven other leaders to place African debt relief high on the agenda. The ‘Make Poverty History’ campaign would write off Africa’s debt.

In the early sunshine the following day, he walked with President Bush in the park before formally opening the summit. The forty Labour MPs known as the ‘awkward squad’, who had demanded his resignation after the election, had been silenced by his appeal for the party to unite and aim for a fourth election victory. By sticking by him they benefited not only from a charismatic leader, but also one blessed with luck. A week earlier, voters in Holland and France had rejected a proposed constitution for the EU. Those results saved him from holding a referendum about Europe, and as he walked with Bush back to the hotel he had every reason to expect to remain prime minister for another four years. Minutes later, his life changed.

Just before 9 a.m., three bombs exploded in the London Tube. Soon after, another one destroyed a bus. The opening of the summit was interrupted as Blair was told about the attack. Clearly shaken, he chaired the meeting until midday, made a defiant TV address surrounded by the other leaders, then flew to London to attend a Cobra meeting. By the evening, he had returned to Scotland.

The security services assessed the outrage efficiently. Four Islamic bombers had killed fifty-two commuters and injured about 700 others. Blair was told that the emergency services were performing outstandingly – but those reports to Downing Street were not completely accurate. Incidents of poor leadership, an obsession by a few with health and safety, and lacklustre co-ordination among the services had led to a checkered performance. Nevertheless, Blair’s status momentarily
soared. In the crisis, even his most trenchant critics withdrew, while he dominated the airwaves talking about the dangers of terror. On the streets, Londoners nevertheless soon drew a direct link between the outrage and the invasion of Iraq. Initially, they were ignored by Blair. Later, he would say, ‘What they want us to do is turn round and say, “Oh, it’s our fault.”’ He refused to take the blame. He was back in the spotlight but under pressure.

Fortunately, Brown was similarly harassed to explain what the shadow chancellor George Osborne called ‘the fiddled figures’. Britain’s debts were rising, tax increases were inevitable and the public finances no longer looked so healthy. To maintain his reputation and secure an uncontested inheritance, Brown agreed with Blair a new spending limit for 2007, the date he assumed he would become leader. In anticipation, he did not give up his promotion of what he called ‘Labour values’ in the NHS.

Down the executive corridor in Richmond House, Ken Anderson, the commercial director, still felt ignored by Hewitt and was under pressure from the Treasury. The Texan was repeatedly summoned by Shriti Vadera, Brown’s apostle, to justify the subcontracting of services to private companies.

Reflecting Brown’s desire to undermine Blair, journalists were being tipped off by the chancellor’s spokesman that Anderson’s record in Texas was ‘controversial’ – a wholly unfounded allegation. Brown was also sabotaging the stock-takes organised by Gus O’Donnell, the new Cabinet secretary. ‘A disaster,’ Warner concluded at the end of the first meeting on the NHS after the election. Brown left after twenty minutes and would never return, but Hewitt was untroubled by his absence. Unlike her experience at the DTI, the Treasury was, to her delight, ‘shovelling money’ into the NHS with no questions asked.

Warner, however, had misgivings. Just after the election, he had sent Hewitt and Crisp a memorandum warning that the NHS was heading for an unquantifiable deficit forbidden by the official spending rules. Hewitt accepted Crisp’s assurances that such fears were groundless.

Ever since 1997, Blair had focused on staff numbers and buildings but not on productivity or value for money. Between 1998 and 2005, the NHS had hired an extra 307,000 people, the largest growth by a single employer in any country. Besides more doctors and nurses, it had employed 52,000 more administrators over the previous four years, increasing the managerial payroll by a third. ‘There was overstaffing on a ministerial whim,’ noted Rob Webster, the chief executive of the NHS Confederation. ‘With so much money, they lost the plot and recruited more staff than was planned.’