Whatever it Takes: The Real Story of Gordon Brown and New Labour. Steve Richards
big idea is people’s potential. The big idea is that people have big ideas, huge talents, overlooked abilities, and it is by liberating people’s potential that we build the dynamic market economy we need.
A dynamic market economy would provide the cash that would give less wealthy people the chance to fulfil their potential. As they fulfilled potential they would contribute to a booming economy.
This was the Brownite/New Labour accommodation. It would dance with the City in order to achieve left-of-centre goals. The dance came to a shattering end eventually, but in the mid-1990s, with public services in a dire state and much higher taxes close to being a political taboo, there was no other pre-election route available. The context was Labour’s defeat in 1992. Those who voted in the 1992 election are as much to blame as Brown. The voters and those who mediate politics for them are big players in the New Labour story. We are the ones who define how much space political leaders have. It is the only power we possess.
In January 1997 Brown stunned his interviewer, James Naughtie on the Today programme, by declaring that under Labour there would be no changes to the top or basic rate of income tax for an entire parliament and that a newly elected Labour government would stick to the Conservatives’ spending plans for two years. It was an extraordinary moment, so unexpected that the programme’s editor kept to schedule and ended the interview on time instead of giving the obviously startled Naughtie time to explore the implications.
Still there was plenty of time for exploration. Later that day Brown delivered a speech to accompany the announcement:
We want to send the clearest possible signal that we want to encourage employment and work, not penalize it … because we want to encourage work, and after 22 tax rises since 1992 which have hit hard-working families, I want to make clear that a Labour government will not increase the basic rate of income tax. It is because we understand the importance of work that there will be no return to penal marginal rates at the top.
In the build-up to the announcement Brown’s instinct had been to propose a new top rate of tax for very high earners, a policy he finally implemented in very different circumstances when he was Prime Minister. Whelan told journalists this would happen when Labour was first elected: ‘We have got to do something to show we are Labour.’
Neurotically conscious of Labour’s extreme vulnerability in relation to tax, Blair was determined to block Brown. In the autumn of 1996 when they were battling over the issue, Blair’s press officer, Tim Allan, offered an article to the New Statesman under the name of the Labour MP Kim Howells, arguing that a top rate would not raise any additional revenue and would alienate some middle-England voters. Here was an early example of Blair being sometimes willing to challenge Brown over economic policy. He prevailed on this one and later Brown was to concede that Blair had been right. It was a concession rarely made in the years to come.
The publicly declared policy on ‘tax and spend’ was widely hailed at the time as a masterstroke. The newspapers were reassured. The Conservatives were thrown into even more disarray. Labour’s lead in the polls soared. And yet the seemingly bold announcement encapsulated the timid narrowness of Blair/Brown’s short-term ambitions. Like so much else that was projected as bold, it was cautious. By the start of 1997 the Conservative government was falling apart, giving Labour more scope than Blair or Brown had dared to realize.
By accepting spending limits that the Conservative Chancellor, Ken Clarke, had described as ‘eye-wateringly tight’, Brown and Blair had little scope to challenge the Tory government on the funding of public services. They were not planning to invest very much either, so they could make no case about the lack of investment, the great hidden issue of British politics in the 1990s. Instead they conveyed the false impression that with the addition of a few pennies here and there, public services would be transformed. From a practical perspective it meant that desperately needed investment in public services was postponed to a point of even greater crisis at the turn of the century. Such was the euphoria around Blair that voters were convinced: the NHS would be saved and schools rebuilt without having to spend any more money.
When Brown became Chancellor he seemed awesomely powerful, the mighty figure in the Treasurer who was co-leader of the government. He was powerful in relation to the Prime Minister, but in terms of policy he had deliberately made himself the least powerful chancellor in modern history. He had no control over interest rates, no power to put up income tax, and for two years no authority to increase overall public spending. When he became shadow chancellor he chose to become constrained in what he said. As Chancellor he tied himself in chains so that voters, the financial markets and the media knew he could not be recklessly free.
But always with Brown, at least in this phase of his career, the subterranean narrative was the driving force. There was a degree of thought-through purpose behind the extreme prudence. In his revealing book, one of the most important in the bulging New Labour bibliography, the former Treasury Minister Geoffrey Robinson described what motivated Ed Balls in his policy making. Robinson could have as easily been writing about Brown:
Important though his contributions were in economic terms, his deep concern on poverty, redistribution and fairness in society will be seen as more important in due course. Those issues are what motivate him. Getting the economics right is just the means to do something effective about them.
Robinson in the early years was a key policy maker in Brown’s team. He was a great admirer of Brown’s but enthused even more about Balls, recognizing in the youthful adviser an unusual talent for linking strategy to complex detail in ways that could re-establish Labour’s credibility with business leaders while staying rooted firmly in the left of centre. Robinson was pointing towards the big difference between Brown and Blair.
For the remaining years in opposition Brown spent a lot of time on policy detail, an arduous and unglamorous task, but the most important part of the politician’s repertoire. Blair worked on existing ones or got others to do so – devolution was one that demanded considerable work. David Miliband described the process to me as bomb proofing, ensuring that every single policy presented in the forthcoming campaign was credible and part of a coherent narrative. In the build-up to the 2010 election David Cameron and George Osborne showed less interest in policy detail. When Cameron was asked how he planned to implement his tax cuts for married couples he insisted that the details would come later. Blair and Brown were not allowed such lenience.
Brown asked Geoffrey Robinson to work on refining the Private Finance Initiative. Once Brown and Blair had cordoned off their tax-raising options they had to look elsewhere for ways of investing in Britain’s decaying hospitals. The Private Finance Initiative became one option, hugely controversial and expensive but arguably unavoidable. Hospitals were built or improved in the early years of the Labour government through the PFI. They would not have been built otherwise in the timid ‘tax and spend’ climate of the times. Later many columnists on the left and right condemned the use of PFI, but again few among them would have supported a Labour manifesto in 1997 advocating tax rises to pay for new hospitals. Once again, culpability for the extravagantly wasteful PFI is widespread. We wanted new hospitals. We did not want to pay for them.
Later Robinson and Balls worked closely on the details of the one-off windfall tax on the profits of the privatized utilities, Brown’s popular tax. Over time New Labour’s critics saw only spin in virtually everything that Blair and Brown announced. It was always more complicated than that, and the hard grind that prepared for the one-off tax is a good example of the other side of the story.
A former chairman of Jaguar Cars, Robinson was a wealthy Labour MP who, when he was in London, lived in a suite at the Grosvenor House Hotel overlooking Hyde Park. He also owned glamorous homes in Tuscany and the South of France. One evening in October 1994 Robinson bumped into Brown during a vote in the Commons and told him how impressed he was at the way the shadow chancellor had handled the leadership issue. With an uncharacteristic candour Brown admitted he had not had much choice in the matter. The two talked for some time about the political situation. In every campaign since his mid-teens Brown was ruthlessly alert to potential useful allies. He recognized that Robinson’s links with business would be extremely useful. Robinson also understood economics and had practical experience in business. Soon