The truth about John and Neil

Observations on revelations

Since his death in 1994, John Smith has been deified within the Labour movement. He has become the lost leader, the one whom everyone now prays to. It was, however, not like that when he was alive. Then, Smith had plenty of critics. It is well known, for example, that he had a fairly rocky relationship with the man who was to be elected leader after him; Tony Blair's criticisms of Smith's leadership - despair at what Blair saw as complacency and inaction - were common knowledge among political insiders. What is less well known is that Smith's relationship with Neil Kinnock, his predecessor as leader, was equally difficult at times. The tension culminated in Kin-nock going behind Smith's back over crucial aspects of Labour's economic policy - including a deception that Smith died without ever finding out about.

In part, the differences between the two men came from their very different personalities. Kinnock had learned his trade on the stump, and was a brilliant platform speaker; Smith's debating skills worked best within the confines of the House of Commons. Put Smith on a platform at a party conference, and you found that his impromptu style was ill suited to pre-prepared delivery. Kinnock was the great organiser, an NEC man who knew the rules of the party inside out; Smith disliked committees. Kinnock had been a back-bench rebel in the 1970s, whereas Smith had served loyally in government. Indeed, the two had first clashed in the Commons over devolution at that time. And because they had emerged through separate routes in the party, they had nothing to build on when Smith became Kinnock's shadow chancellor in 1987.

Smith respected Kinnock's achievements in making Labour more electable, but those around Kinnock felt that Smith sat back and let him make all the difficult changes to the party, while Smith himself quietly gathered support on the left and right. Partly it was just in Smith's nature to build up allies in this way, but Kinnock also considered him a bit lazy. Shortly after Kinnock stood down from the leadership in 1992, he thought what a rare treat it would be to go to the cinema in the afternoon. As he and Glenys sat down to watch the film, they noticed a man nearby eating an ice cream. It was John Smith.

Kinnock loved to explore ideas; Smith was much more prosaic. Kinnock was always impatient for change, fearing that Labour had not modernised itself sufficiently to get elected; Smith was the self-confessed long-gamer, cautious and measured. A pattern soon developed: Kinnock would suggest a new idea, and Smith would say he would think about it. Rarely did the shadow chancellor act on what the leader had said, and from the autumn of 1991, strong tensions emerged between the leader's office and the shadow chancellor's team about Smith's persistent refusal to make a big speech on taxation.

Smith argued that Labour should hold back its tax plans until the last minute, believing that otherwise the Conservatives would simply present a late Budget and wreck his carefully crafted propo-sals. But Kinnock watched, horrified, as Labour's lead over the Tories shrank alarmingly. The cause, he believed, lay in middle-class fears concerning Labour's plans to abolish the upper earnings limit on National Insurance contributions.

It was this that caused his most famous public spat with Smith. In January 1992, on the morning before a dinner with a group of journalists, Kinnock wrote to Smith suggesting a phasing-in of any National Insurance increases. That night, at Luigi's restaurant, he revealed the plan he had been mulling, and the story blew up in Labour's face. Smith was furious, believing, inaccurately, that Kinnock had done it deliberately. Kinnock apologised, and the uneasy relationship between the two stumbled on until Labour's defeat in April 1992.

But we now know of a much bigger - and deliberate - deception carried out by Kinnock behind Smith's back. The leader planned, without consulting his shadow chancellor, that if Labour were elected, there should be an immediate realignment of the pound within the Exchange Rate Mechanism, worth about 8-10 per cent of sterling's value. Only Charles Clarke, then Kinnock's chief of staff, and John Eatwell, his economic adviser, knew about the secret conversations that took place with Bank of England officials. All the members of Smith's Treasury team were kept in the dark.

Eatwell now admits that he wasn't looking forward to telling Smith about the plan after the election - not surprising given that Smith's reaction would have been unprintable. Kinnock defends his decision not to tell Smith on the grounds that the shadow chancellor had to sound convincing when Labour said before the election it would not devalue the pound. Kinnock argues that had Smith been told the truth, but been forced to give public assurances to the contrary, this would have damaged his credentials as chancellor from the outset. Perhaps. But could not John Smith, the brilliant advocate, have been told in advance about the plan, and still have sounded convincing? The consequences of Kinnock's plans might - just might - have meant that Labour would have avoided the withdrawal from the ERM forced on the Tories in September 1992. But the consequences for Smith as chancellor might have been disastrous.

Mark Stuart's authorised biography John Smith: a life is just out, published by Methuen

This article first appeared in the 20 June 2005 issue of the New Statesman, Latin America rises up