[A-List] UK state: New Labour origins

["Michael Keaney" <michael.keaney@xxxxxx>]

This is a very timely leak -- and further evidence of why, for some within
the darker recesses of the state, getting rid of Brown is absolutely
essential. That this would involve getting rid of Blair would not be unduly
worrying, given the number of pliable replacements waiting to nourish their
personal ambition. Below, Guardian political editor and New Labour supporter
Michael White takes another shot at Brown, a favourite Guardian pastime.

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Revealed: Brown and Blair's pact

Tom Happold and Kevin Maguire
Friday June 6, 2003
The Guardian

The first written proof of a formal pact between Tony Blair and Gordon Brown
shows that the future chancellor insisted that Mr Blair "guaranteed" that
Labour would follow a Brownite economic and social agenda on taking office.

The six-paragraph note obtained by the Guardian reveals Mr Brown's price for
stepping aside in favour of Mr Blair in the party's 1994 leadership contest:
Mr Brown's personal agenda for power, dubbed a "fairness agenda", would
become the bedrock of a Labour government.

Signalling his determination to protect his authority over a wide swath of
party policy, Mr Brown crossed out words noting that Mr Blair was "in full
agreement with" the chancellor's agenda. In their place he scrawled in his
own heavy hand the uncompromising phrase: "has guaranteed this will be
pursued."

The copy of the document emerged before Monday's Commons statement on the
euro, which is expected to underline the Treasury's continued political
clout under the chancellor.

The briefing paper was apparently drafted by Peter Mandelson the day after
the future prime minister and chancellor famously dined alone in the Granita
restaurant in Islington.

After nearly a fortnight of rancour and jockeying between the two rival
camps after John Smith's unexpected death in May 1994, Mr Brown agreed to
back his onetime junior colleague in the shadow cabinet in return for
assurances on his own position and the government's goals.

The typed draft reads: "In his Wales and Luton speeches, Gordon has spelled
out the fairness agenda - social justice, employment opportunities and
skills - which he believes should be the centre piece of Labour's programme
and Tony is in full agreement with this and that the party's economic and
social policies should be further developed on this basis."

Mr Brown, a consummate politician, altered the text to strengthen his own
position and the political trajectory of new Labour.

At the top of the single sheet of A4 Sue Nye, Mr Brown's political
assistant, who faxed the amended note to Mr Mandelson, wrote: "Peter, ring
me, Sue."

Mr Mandelson had been asked to draw up the background briefing notes at his
Hartlepool constituency home on June 1, drafting and redrafting the briefing
paper as Mr Blair and Mr Brown demanded changes.

The two most important men in the Labour party objected to different words
and phrases as they sought a compromise. At one point the operation was
jeopardised when the overworked fax machine broke down, Mr Mandelson sending
his agent into Hartlepool town centre to buy a replacement.

The note, intended to produce a "line to take" when spin doctors briefed the
media on the Blair-Brown agreement, attempted to present a united front.

The document makes no mention of the euro or any possible agreement on when,
or if, Mr Blair would himself step down as Labour leader and prime minister
in favour of Mr Brown.

The compact set out in the letter remains one of the defining features of
the government even nine years after it was written. The chancellor retains
substantial power and closeness to Mr Blair, regularly meeting the PM for
private one-to-one discussions without civil servants.

Cabinet colleagues, particularly the health secretary Alan Milburn and the
education secretary Charles Clarke, have made their frustration known as the
tentacles of the Treasury have stretched into their departments.

Europhile Labour MPs have bemoaned what they see as the chancellor's veto
over entry into the single currency. Mr Mandelson castigated him recently as
"a political obsessive" who had outmanoeuvred the prime minister on the
issue.

The note attempted to cover disagreements between the pair, insisting that
they shared a common agenda.

"What makes this possible is the strong overlap of their approach to policy
and their shared thinking on the key issues.

"Both recognise the importance of the partnership they have built up and of
the Smith legacy of unifying the party and making use of all its talents,"
the document said.

See http://politics.guardian.co.uk/labour/images/0,9069,971825,00.html

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The guarantee which came to dominate new Labour politics for a decade

Single sheet of A4 tells how deal between the big two was struck

Michael White, political editor
Friday June 6, 2003
The Guardian

It is the unassuming stuff of history. A single sheet of white A4 paper on
which are typed 300 words, marked Background Only, and a few scrawled notes.
There is no author or addressee and no date. Yet it contains one of the most
reverberating facts in Britain's recent political history. "Peter, Ring me -
Sue" is the clue. Peter is Peter Mandelson, Sue is Sue Nye, aide to
successive Labour leaders and - when this note was typed - assistant to
Labour's shadow chancellor, Gordon Brown.

What attracts the eye is what will also attract historians. Most of the
phrase "Tony is in full agreement with this" has been scrawled out by an
impatient hand and different words added with a black felt-tipped pen. The
result reads: "Tony has guaranteed this will be pursued." Whose handwriting?
You do not need to be the recipient of one of the chancellor's brisk notes
or Christmas cards to guess that it must be Mr Brown's.

The crucial paragraph now reads: "In his Wales and Luton speeches, Gordon
has spelled out the fairness agenda - social justice, employment
opportunities and skills - which he believes should be the centrepiece of
Labour's programme and Tony has guaranteed this will be pursued, and that
the party's economic and social policies should be further developed on this
basis."

So now it is clear what the sheet of A4 is. Not the No 10 Downing Street
inheritance agreement many have long speculated about, but the nearest thing
we are likely to see committed to paper in the wake of the deal they struck
at Granita restaurant in Islington, north London, on May 31.

It was used as a briefing note, what politicians call "the line to take"
when dealing with the press. Thus the spin doctor's point lies in the
opening paragraphs where the need for party unity - true enough - is
stressed before the claim is made - not true - that both would-be candidates
had "roughly equal support".

That was not the case. Opinion polls, as well as newspaper leaders, MPs
caucuses and the rest had pointed to Blair's victory almost from the moment
the previous Labour leader, John Smith, dropped dead in his London flat on
May 12. But it was helpful to party unity that Brown be presented as
standing aside for his former protegee from a position of magnanimous
strength.

But what about that "guarantee"? It has come to dominate the politics of the
past decade, the years of Blair-Brown ascendancy, the duumvirate which has
governed from No 10 and No 11 Downing Street in a state of intimate tension
more like a successful power marriage than a mere political friendship.

As Labour MPs and activists, listeners to Radio 4's Today programme, and
conscientious voters know only too well, the deal was that Brown would have
unprecedented control over all aspects of economic policy. And so it has
proved to be, week in, week out since Blair won office on May 1 1997 - and
Brown surprised him by giving operational independence to the Bank of
England on the Tuesday after the election.

Even yesterday the cabinet was struggling to modify Brown's terms for saying
"No, not yet" to sterling's membership of the European single currency, a
policy famously bounced on No 10 via a "Brown rules out single currency in
the lifetime of this parliament" interview with the Times on October 18
1997.

Every chancellor is important across a range of policies because the
department controls the moneybags. But no other chancellor has so
successfully held the sitting prime minister at bay while poking his own
nose into policies and practices throughout Whitehall.

Income tax policy. Welfare reform. The funding of the ambitious plans to get
the long-term jobless into work with a £5bn raid on pension funds. The
series of three-year, rolling, comprehensive spending reviews. Developing
world debt relief. Myriad schemes to tinker with company tax or charitable
giving. Foundation hospitals and NHS funding. Student loans and tuition
fees. Brown's fingers were in all the pies.

Why did it happen this way and why did it come to matter? Blair and Brown
had both been first elected MPs in 1983, but Brown was older and had been a
public figure since his precocious student career in Edinburgh. Blair had
been a pop singer at Oxford. In 1983 he was the last winning candidate to
find a seat.

After the 1992 election defeat, Brown seemed the dominant one of the pair.
Yet Smith's death two years later crystallised what had become obvious to
many insiders - not least to Mandelson, the third element in the
modernisers' matrix. Blair, the voter-friendly family man, was the one to
guarantee Labour's victory, not his intense and brooding mentor.

Aspirations

Still, Brown's leadership hopes remained. In the interval between Smith's
death and Brown's announcement on June 1 that he would not stand he had made
speeches - notably to the Welsh Labour party in Swansea - which exposed his
strengths as an orator who could touch his party's deepest aspirations.

"To everything there is a season and a time to every purpose," he told
activists. "A time to mourn and a time to renew. A time to reflect and a
time to move forward ... For us now more than ever before, this is a time to
unite [applause] because we have travelled too far, too many miles together
for us now to lose sight of our destination. Together we have climbed too
high for us not to achieve the summit. And it is near."

It could be interpreted as a claim of right or an early hint of concession,
Blair's biographer, John Rentoul, rightly noted. But it also showed Brown in
a less appealing light to floating voters, if not in mid-Wales then in
Middle England. Blair's equivalent speech was to an academic seminar in a
London hotel.

Brown was a big figure in the party who needed to be placated in his moment
of sacrifice, as this document shows. So go-between figures like Mandelson -
largely operating in the shadows, codenamed Bobby - and Andrew Smith were
deployed to sooth the Brownites. It only half worked. Mandelson was accused
of rank treachery which would not be forgotten. But the "dark and awful
forces" of Labour atavism - forces worthy of The Lord of the Rings - which
Brown could have invoked to beat Blair were kept in check. The price was the
understanding hammered out in a series of discussions and amended drafts
which circulated among trusted insiders as "the line to take" - and was
taken.

As Donald MacIntyre confirms in his biography of Mandelson, the word
"guaranteed" was much fought over as Blairites battled to limit the
guarantee and Brown to maximise his freedom to roam.

Yet the battleground has constantly been refought. In the early days Brown
was suspected of wanting to restore a symbolic 50% top rate of income tax.
The Blairites prevailed: it would not raise enough money to be worth the
gesture.

The chancellor stuck to what became known as stealth taxes, a technique
which had worked well for the Tories. But usually Brown won. There were
furious rows. The pair shouted and swore at each other. A Blair aide (not
Alastair Campbell as usually assumed) said the chancellor had "psychological
flaws" and Brown allies were moved or sacked from the government team.

Yet the central paradox remains: despite everything, Brown and Blair have
the most intimate and successful political partnership between No 10 and No
11 in living memory. Brown still broods, his body language on the frontbench
and often in cabinet eloquent of his unfulfilled ambition to his claim of
right. But he still works long hard hours at the job in hand and can turn
his formidable mind to the nuts and bolts of an election as he did in
Scotland this spring. "Gordon virtually edited the Daily Record," one
admiring MP claimed.

As for Blair, he grows in confidence and experience. He may look grey and
haggard on bad days, but he is just 50, six years a prime minister and still
looks on top of the job, as shown by his 90 minutes of dispatch box torment
this week. He shows no sign of wanting to fulfil the explicit promise to
hand over before the next election, which some Brownites say he made at
Granita.

The benefits of the partnership are evident. Labour inherited what the
Tories call "a golden economic legacy" in 1997 and managed it cautiously but
well. Activists have been disappointed by Brown's caution, Tories complain
of steadily rising taxes, but the economy has kept on growing. Inflation,
unemployment, the key numbers still look very good. It is the sheet anchor
of Labour's political dominance and, though the shine is starting to come
off the trophy as the economy falters, the credit is chiefly Brown's. Lawyer
Blair rarely sounds convincing on economics.

But the price of Brownite hegemony over the economy - and far beyond in the
domestic policy arena - has not been negligible. The plethora of units and
agencies created in No 10 to prod the public services into better levels of
delivery (in return for all that cash) make decision-making hard. The fact
that No 11 is often monitoring the No 10 monitors - and often has a better
grip on policy - does not make it any easier.

On welfare reform the Department of Works and Pensions (formerly social
security) is regarded as a wholly owned subsidiary of the Treasury and its
complex (overcomplex, say Tories and Lib Dems) welfare-to-work
preoccupation.

Brown and Charles Clarke, one of the few cabinet beasts big enough to take
him on, have rowed on the issue of student loans versus income tax.

For once, with Blair's intervention, Brown was worsted by Clarke, who once
dared say that Brown should have run - and been beaten squarely. "That would
have humiliated him and meant that Tony did not owe him a debt. There was
never the remotest chance that Gordon would be elected leader," he
ventured - with the benefit of hindsight.

Hegemony

NHS reforms have also highlighted the Brown hegemony. He and Blair
quarrelled over the prime minister's impromptu announcement on Breakfast
with Frost that health would get much more money. "You've stolen my fucking
budget," he was reported to have raged.

But Brown managed to head off all attempts to question the historic reliance
on taxes to fund the NHS. As for foundation hospitals, where Blair and the
health secretary Alan Milburn, battled with Brown to win autonomy for
hospitals that would allow them to borrow in the open market, it is too soon
to say with confidence which side will win in the long run.

All of which pales into nothingness compared with the tussle over the euro
which occupied the cabinet - again - yesterday. The smart money says Brown
does want to take Britain into the eurozone one day, certainly when the
European Central Bank has reformed itself (on Brownite lines), preferably
when he is in No 10.

Blair has fewer inhibitions, just as he has a weaker grasp of the economic
subtleties. He wants in, as soon as possible. But the politician in him
knows that even a strong campaign cannot persuade the voters unless he has
Brown on board and the news from Europe is brighter.

Countless trees have been felled to speculate on the deal they must have
reached, the one that will keep the door slightly ajar when Brown addresses
MPs on Monday. But the genesis of this, their latest of so many compromises,
lies on the single sheet on A4 with the felt-tipped amendment.

------

Analysis

How the Treasury's social engineer drove the New Labour machine

Julian Glover
Friday June 6, 2003
The Guardian

Gordon Brown's agenda of social and economic reform has been one of the
consistent themes of the new Labour project.

Born in the agitated atmosphere of 1970s Scottish politics - when the future
chancellor published the radical Red Papers, calling for "society to plan
its own future" - Brown's enthusiasm for using economics to change society
remains undimmed after six years in office. Tax credits, baby bonds and the
minimum wage are all expressions of an activist agenda that seeks to bring
together the market and social equality to create a new social democratic
settlement.

The great enigma of the government, only partially answered by the 1994
background document made public today, is the extent to which this programme
is the chancellor's own, and how much of it is shared with Tony Blair.

The argument can be made both ways. Brown's radical language often appeals
to the left as the prime minister's does not, but as chancellor, Brown has
spearheaded the controversial use of private money in public sector projects
with the approval of Blairites.

On the day in 1994 that he announced he was giving way to Blair in the race
to become Labour leader, Brown wrote in the Mirror: "I believe I can assist
working on a new fairness agenda for Labour.

"It's an agenda that concentrates on building a modern welfare state,
creating new job opportunities for young people, achieving an education
revolution in our country".

Has it happened?

· Tax credits

Labour promised to "think the unthinkable" on welfare reform when it was
elected in 1997.

Six years on much of the radical talk has been ditched but massive reform
has taken place. The chancellor has reshaped the tax system to help the
poor - especially pensioners and working parents on low pay - offering extra
money to those prepared to work.

The chancellor argues this has helped cut poverty and build an enterprise
economy. Critics complain about an ever-shifting, over-complex system that
deters applicants and strains bureaucracy to the limit.

· New Deal

The New Deal was one of the beacons of Labour's first term: a new form of
compulsory training that aimed to cut youth unemployment.

The outcome looks impressive: long-term youth unemployment was 351,000 in
1997, now it has almost vanished. But was economic growth, not government
policy, the cause of this?

· Baby bonds

A radical programme hidden under a simple title, baby bonds are a core
example of the Brownite agenda - the sort of thing the chancellor committed
himself to championing when ceding the leadership in 1997. The aim is to
give young people assets to invest and spend themselves on education,
training - or something less worthy - when they come of age.

Endlessly delayed, the scheme is now on its way but the outcome will not be
known until today's babies are on the brink of adulthood.

· Minimum wage

Labour constantly trumpets the introduction of a minimum wage as proof of
its radical agenda; though introduced against Tory and business opposition,
it is now uncontroversial.

The question is how much it has done to change the lives of the working
poor: critics point out that at £4.20 an hour it is too low.

· Spending

By sticking to Tory spending limits for two years after the 1997 election
Gordon Brown horrified many in the Labour party.

Some feared his bold talk of social change had been abandoned in office in
order to woo former Tory voters. The second term has changed all that: huge
spending increases for key public services and the Wanless report committing
Labour to a tax-funded NHS are evidence the Brownite reforming agenda
remains on track.

· Development aid

Labour's record on overseas aid is impressive: thanks to the chancellor's
close working relationship with the former international development
secretary Clare Short and his own work on debt relief, the government can
claim to have broken ranks with its cautious predecessors.