The New Statesman Interview - Stephen Byers

He doesn't believe in safety first; in the next term, he wants to take on those who resist change in

What future for the Blairites, the committed modernisers, the pro-Europeans, the reformers? The story of the past few weeks, gathering momentum with the departure of Peter Mandelson, has been of the dogged, determined onward march of the Brownites, a return to more traditional Labour ways, a leader-in-waiting who understands his party's grass roots and whose grip on the Labour machine is now vice-like. Which leaves a young, bright, tipped-for-the-top technocrat such as Stephen Byers looking a little exposed.

Along with Alan Milburn and Geoff Hoon, Byers was a Cabinet member marked out for possible future leadership. Of the three, Byers is the one whose relationship with the Chancellor is most uneasy. This is a big moment for him. The great test for politicians who want to play in the premier league is whether, when they find their position weakening, they tack - or whether they show conviction. Today, the government is full of fair-weather Brownites, people who a few months ago were privately dismissive and are now bending the knee. So what about Byers?

One way to judge is to ask about modernisation, still the central belief of the Blairites and often contrasted with the traditionalism, caution and core values of the Brown camp. And, yes, he passes that one. Byers declares an impatience with the pace of reform that most colleagues will mutter about only privately. The first term was all about reassurance, he admits, proving that Labour can run the economy competently. The second term, he believes, should "introduce more far-reaching change" than we have seen so far. He draws on a comparison with Margaret Thatcher: "If we look back at Thatcher, her big changes were all second term, so I think there's an opportunity there."

There has been a fierce private tussle over the tone of Labour's 2001 manifesto. According to Byers, it won't work if it simply promises more of the same: "I'm not a steady-as-she-goes, safety-first person. I do believe we've got to share with people a vision of what a second-term Labour government would do for them."

So just what is this vision - what would Byers like to see in the manifesto? He believes that "quality of life" is the great theme that will enthuse the electorate enough to get them out of their armchairs and down to the polling booths. That means more money for public services, but also an insistence on results. "I believe passionately about public services, but they've got to change, they've got to be accountable, they've got to give people what they want." For Byers, that means taking on the "people who don't want to change", who have been hostile to some of Labour's reforms in health and education.

Yet "quality of life" is about more than just good schools and hospitals. Byers is rare among the all-too-male Cabinet in feeling strongly about the work-life balance: "If you talk to any working parent, they've probably got a better living standard than their parents had - a home, foreign holidays, perhaps two cars - but you ask them, 'What's your quality of life?', and they're pretty desperate; children are being passed round like a relay baton between mum and dad." His green paper on the balance between work and family is out to consultation at the moment: he hopes that at least some of the 50-odd proposals for improving the balance of life will be included in the manifesto. One of the central ideas is to allow flexible working, something at which some employers throw up their hands in horror, but which Byers is convinced can work.

He leads by example on this: his press officer, Jo Moore, a mother of two, works two full days and two or three half-days for him. Byers sums up his attitude thus: "Having three and a half days of someone who's really good and does an excellent job for you is as good as having someone who works five days and you don't have much confidence in."

The big question is whether employers can be persuaded of his point of view, and Byers admits he may be being "terribly optimistic". Yet he is determined there will be change: "This is an area which hasn't really changed for about 25 years, so there has to be change. The status quo is simply not an option."

And if employers won't change voluntarily, will they be made to?

"Legislation always has to be held in reserve," he agrees, before warning: "If we get to the situation where we're not making progress, then we must consider the option of legislation."

Big changes such as this he considers to be "hearts and minds" stuff, which takes time but is feasible. He believes we are now at the same stage on his work-life balance plans as we were five or six years ago on the minimum wage: sceptical but persuadable. "People said then . . . it won't work, you'll destroy a million jobs. We're at that stage in the debate about how you can get this balance between work and family."

He cites the national minimum wage as one of the great successes of Labour's first term - something that has made a real difference to people's quality of life. Byers talks movingly of a security guard who came into his surgery with his payslip, showing how his hourly pay had gone up from £1.80 an hour to £3.70 an hour. "He said, 'This has changed my life', and I think there's something we can take pride in introducing."

Yet it hasn't been a great year for Byers. Last April, he was left looking impotent when BMW decided to wash its hands of Rover without first consulting the government. He was savaged by the trade and industry select committee and the press speculated about how long he would last in government. Then, just a few weeks ago, the steelmaker Corus gave him a similar run-around, leaking stories of significant redundancies to come, and no one bothered to talk to the government about the specifics. Byers was left saying it was difficult to react to the closure plans when he hadn't been told what they were. The government made no attempt to hide its fury at the behaviour of the company, but, in turn, the company was making a point about the new balance of power in a privatised economy. Politicians just don't count so much. All too often, the Department of Trade and Industry has been left looking like the Department for Bad News - closures, threats from abroad - while the Treasury picks up the gold medals for each downward ratchet in overall unemployment. It's almost as bad as being Minister of Agriculture.

Byers admits that "it hasn't been easy", but is insistent that he hasn't been sitting on the sidelines doing nothing. At Longbridge, he says, there are now 7,000 jobs, rather than the 1,000 BMW originally envisaged, because the government stepped in and helped organise a rescue bid. Had Corus been equally happy to talk to him, he believes 6,000 jobs could have been saved.

It is perhaps not surprising that, after a couple of years batting away immediate problems, Byers wants to talk about the longer term. He sees the future in dramatic terms, comparing the hi-tech revolution we are undergoing to the industrial revolution: "I think that in ten or 15 years' time, people will probably look back and say we've moved from an industrial economy to a knowledge economy, and that is as profound as the movement from an agricultural economy to an industrial one was nearly 200 years ago."

Does that leave any role for a department of trade and industry? Byers believes so. He sees a need for an "active industrial policy", looking at issues such as regional differences. With a north-eastern seat, he is keenly aware that unemployment there is two and a half times the national average, and believes that a regional agenda has become "a political priority that you can't ignore".

Yet it's not at the DTI that Byers will make his name. His big issue is Europe. Recently he has been prepared, along with Mandelson, to break the carefully contrived truce over the euro, by proclaiming the benefits of joining. When I meet him, however, he is at his most diplomatic, declaring himself a "euro-pragmatist" rather than a euro-enthusiast. He describes the departure of Mandelson as the loss of a "powerful advocate" for Europe and the single currency, but is not unhappy with the idea of leaving the issue of Europe on the sidelines until after the election. "When the election is out of the way, Europe will be one of the main issues that the media will want to focus on, and then we'll have a debate about a whole raft of issues."

Byers admits that he has become more enthusiastic about the euro during his three years at the DTI because of his regular contact with businesses: "I see on a daily basis companies trading in Europe who feel that joining a single currency would be good for their business."

Whatever happens after the election, it is clear that the second term will make Byers's reputation as a major political figure, or see him discarded. His general positioning is clear - the most naturally Blairite of the second generation, the most pro-European of Cabinet ministers, other than Robin Cook and Tony Blair himself. Classless, affable, English (quite a useful attribute in this heavily Celtic Cabinet) and smart, he has the CV to get to Downing Street, if perhaps only to No 11.

But his caution, his reluctance to stir things up, get angry, inspire or threaten may hold him back. He is very like how the government itself has been in its first term - modest and reassuring, but without the fire that gets political debate really going. He says he wants a more ambitious, far-reaching second term. Perhaps that means a more ambitious Stephen Byers, too. And, perhaps, with Mandelson gone, the real question is how far he is prepared to take a lead on the euro. A Byers who became the number-one hate figure of the Daily Mail would be a Byers who had arrived.