Lord Snooty and his party pals

New Labour began as a clique, and has governed as a clique, excluding those outside a magic circle.

Fans of Millwall Football Club - not renowned for their genteel manners - have a chant: "Nobody likes us, we don't care." Despite tirades from the press and entreaties from the club manager, they carry on smashing and bashing in their own inimitable way.

Surveying the stage strewn with bodies and tattered reputations after the tragi-comic events at the Department for Transport, I am tempted to believe that new Labour has adopted the same slogan. The vast majority of new Labour's troubles result from the absolute determination of the small clique at the top to do things their way. It doesn't matter who they trample on; it doesn't matter that nobody seems to like it - they don't care.

The main thing about the Stephen Byers story is that it is not a Stephen Byers story. It is a new Labour story. The Transport Secretary has been in trouble because he is part of a tiny group of exclusive, private people who infuriate all those who are excluded - civil servants, back-bench MPs, journalists, ordinary party members. His mandarins are frustrated because they think he operates as part of a clique and looks down on them. The truth is that he does. And so does Tony Blair. And so do all the inner circle. It's part of new Labour's culture, and to understand why no one seems to love the party today, we have to return to its roots.

New Labour started as a tiny clique. Way back, it comprised just three people - Blair, Gordon Brown and Peter Mandelson. In those far-off days when they were forever wandering up and down an obscure Commons corridor between a couple of rooms piled with books and newspaper cuttings, not even Alastair Campbell was part of "the project". Inevitably, the clique grew - not only Campbell, but Philip Gould, Jonathan Powell and Derry Irvine joined, then younger MPs such as Byers and Alan Milburn.

As it swelled in influence and power, it acquired a great tail of followers, some genuine, some with their eye on the main chance. Over time, insiders have been expelled and become outsiders - Mandelson, Derek Draper, Charlie Whelan, Mo Mowlam, Robert Harris. Some became disillusioned; others were ruthlessly despatched when they offended. There is no sentimentality here. And new people who once seemed right outside it have been hoisted into the inner circle - John Birt, Charles Clarke, David Blunkett.

But the clique never really changed character. It never became the open, outward-looking mass party or movement that Blair said he wanted. Its defining character was described by Roger Liddle and Derek Draper, during the so-called "Drapergate" influence-peddling affair early in the first Blair government. Draper was one of the first to be accused of a "cash for access" scam, through his lobbying firm. Liddle (a No 10 policy adviser) said of Draper (a Mandelson sidekick): "There is a circle and Draper is part of the circle . . . Derek knows all the right people."

This was an opinion shared by young Derek. He told an undercover journalist: "There are 17 people who count. And to say I am intimate with every one of them is the understatement of the century." More recently, the circle has grown to more than 17 and Draper isn't in it. But the inner core has remained broadly the same: Blair, Campbell, Powell, Irvine. As new Labour has grown in reach and power, it has attracted businessmen, fixers, ambitious politicians and compliant journalists. The circle now extends through rich Asian businessmen, the Murdoch empire, talented rising MPs and young ministers, fast-footwork civil servants and foreign politicians. It certainly includes Byers, Lord Falconer and Patricia Hewitt, and other non-Brownite cabinet ministers.

But the power that keeps the circle growing also repels ordinary political humanity. There is an obscure mathematics at work: for every true believer drawn into the circle, ten or 20 other people are repelled. It is a natural human characteristic to hate cliques you are kept out of. There are now far too many people who have been made to feel excluded. Jo Moore might have expected forgiveness after her apology. But too many people, including scores of civil servants, saw her as a circle-person.

Similarly, as the media came to realise that, despite the flattery, it was outside a charmed circle, it, too, turned angrily against the clique. It is an extraordinary achievement for this supposedly media-savvy government to have turned almost every newspaper, from left to right, into a critical foe. Why did virtually every paper bay for Byers's head? It isn't just nastiness and bloodlust on the part of the journalists. It is new Labour's failure.

New Labour's lack of open- ness and almost conspiratorial atmosphere, its obsession with traitors and its dismissal of the swarming masses of outsiders, is understandable given the scale of change that Blair and the modernisers embarked on in the mid-1990s.

But as the party grew in power and strength, you might have expected these qualities to drop away. They have not. The sense of "we are the masters now" has got worse. Even supportive MPs complain that they are made to feel like members of a lower caste, simply not cool enough, or "in" enough, for their views to count. Ministers outside the inner clique are still running scared, terrified lest they put a foot wrong and incur the wrath of "them". Beyond parliament, the obscure forums under which Labour policy is decided seem designed deliberately to exclude the mass membership. As a result, rather than rising as Blair promised it would, Labour membership has actually fallen - and fairly dramatically, too.

In government, the clique demanded Orders in Council to give Alastair Campbell and Jonathan Powell special powers over civil servants, and drafted in numerous special advisers across Whitehall. The idea, perfectly reasonable at first, was to give Labour control over a civil service regarded by Blair as part of the notorious "forces of conservatism". But there was something Napoleonic about it. It seemed to the bureaucrats more like a putsch than an ordinary change of government. Labour's early years saw a stream of departures from the civil service - Jill Rutter from the Treasury and Andy Wood from the Northern Ireland Office among them. Now civil servants want revenge.

Enter Byers, stage right. He had joined the circle. He was not only a self-described "outrider" for Blairism, and a keen convert to the modernising cause. He was also a calm, ordinary-seeming north-eastern MP from the same region as Blair. Brown took against him early on, so the Blairites reckoned he must be all right. With his chum Alan Milburn, and his political ally David Blunkett, he was given one of the toughest reform projects of the second administration. Blair told him early on that he knew he would get flak for taking tough but essential decisions on Railtrack and planning.

But if Byers had the strengths of those in the inner circle, including a quiet, but utter, self-belief, he shared their repelling weaknesses, too. He is not gregarious. To civil servants, his natural reserve came across as superciliousness. And his essential political aide was the anti-Trot Jo Moore, the cliquey, ruthless insider who had learnt her media morality at the Peter Mandelson Academy. From Byers's point of view, the slippery nuances of language and the tight control of information were merely an ordinary part of political life. These are the sorts of things that cliques do.

Don't be misled by the apparent show of solidarity for Byers in the Commons. The truth is that, despite a three-line whip on ministers to sit alongside him, there were a fair few who conveniently found they had more pressing business. The backbenchers were anxious not to give the press a scalp, but they were privately restive. "He won't get away with this again," said one.

Byers is hardly the first new Labourite to run into trouble, and he won't be the last. It cannot be a coincidence that new Labour, which includes many decent, reasonable and ordinary people - whatever the tabloids say - has been so plagued by scandals and leaks. The weakness is bred in the bone. Blair's big tent has turned out to be merely the camouflage around a heavily fortified and airless hut.

All this comes from new Labour's origins as a brilliant conspiracy, just as the excesses of Lenin came from the conspiratorial habits he and his comrades had learnt in the long years of repression - an irony that Byers, with his early history of hard left politics, might laugh at in private.

Is there a way out? In theory, it would appear to be so easy: the party in government just needs to relax, open up, and start listening to, if not trusting, the millions of well-meaning people outside the inner circle - the diplomats, civil servants, well-disposed journalists and writers, the professionals who want to see reform, the moderate trade unionists. New Labour must realise, at last, that it is a big political party, not just a clique. But this seems much easier to say than to do.

It means accepting blame, and welcoming argument; and what hope is there of that? A decade's habits are hard to unlearn. And anyway, if nobody likes them, they don't seem to care.