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31 July 2000

Still panicking after all these years

Stakeholding, VAT on school fees, transport, the euro: almost anything induces panic in new Labour's

By Steve Richards

Whatever happened to Tony Blair’s vision of a “stake- holding society”? In January 1996, Blair unveiled his new political philosophy to an audience in Singapore. The speech unleashed a barrage of excitable front-page news stories back in Britain: we idolised the leader, now we could worship at the altar of his new ideology. The philosophy’s evangelist, Will Hutton, toured the broadcasting studios. Hutton’s moment had come. His bestselling book had become Blair’s guide.

The philosophy lasted three days. By the time Blair appeared on Breakfast with Frost, shortly after flying back from the Far East, stakeholding had been reduced to this: “Everyone should have a stake in society. That is what I meant. You can call it a slogan if you like.” Hutton’s words of wisdom had turned into a slogan; he had been touring the broadcasting studios in vain.

The reduction of a guiding philosophy to a slogan is an early example of panic breaking out among new Labour’s inner circle. The recent focus on the Blairites’ capacity to panic in the face of William Hague’s mini revival has created its own mythology, greatly distorting the recent past. The question being asked at the moment – being asked even by Peter Mandelson, according to one of Philip Gould’s memos – is “Where are we going wrong?” The question implies that everything was going right before. This is the myth, that in the golden years the Blairites bestrode the stage, chests outs, philosophy clear, marching confidently towards the Promised Land.

It was never like that. Yes, for many years they were miles ahead in the polls. Yes, others in the media mistakenly heralded their arrival as a “revolution”, greeting the blandest of statements as declarations from new philosopher kings. But that is never how the small group that founded new Labour saw themselves. They were a group used to losing elections, not winning them. They had discarded policies they once espoused, but, with the partial exception of Gordon Brown, had not found many new ones to replace them. From the beginning, they had a tendency to panic.

Hutton can remember vividly the moment he thought that Blair had embraced stakeholding. The two men met fairly regularly for coffee at Blair’s house in the early months when Blair was leader of the opposition. Hutton recalls that, while making coffee in his kitchen, Blair pushed down the top of his cafetiere and declared that stakeholding would be the principle underpinning the activities of every Whitehall department under a Labour government.

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But after his Singapore speech, the Conservatives claimed that this would mean new powers for trade unions. Some newspapers raised a few mildly critical questions. Peter Mandelson was alarmed. So was Philip Gould. The focus groups were not impressed. Nor was Gordon Brown. Separately, the trio told Blair that he had to scrap the idea, without appearing to scrap it. So stakeholding became a slogan, in the way that the recent proposal to troop louts off to cash machines became a metaphor.

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In spite of record-breaking poll leads – at the time of the “stakeholding panic”, Labour was 26 points ahead of the Conservatives in the polls – the Blairites’ “panicometer” was often in the red zone during the opposition years.

In January 1995, David Blunkett had the nerve to restate the party’s existing policy about VAT on private school fees. “We have not ruled it in or out” Blunkett told the Sunday Times. The right-wing newspaper predictably led with the story on New Year’s Day: “Labour to tax private schools.” While most of the nation were nursing hangovers, the Blairite bleepers vibrated furiously. In the early hours of New Year’s Day, the policy was dropped.

Let us note in passing how the mood of the media has changed. Then, when a policy changed in a matter of hours, the newspapers hounded Blunkett, not Blair and Brown who were the main duo involved in the change. Now more questions would be asked. How was the policy changed? Who was consulted? Are they panicking again? In January 1995, there was only one response in the media: can Blunkett be trusted? Or will he let down those at the top who walk on water?

But the inner circle never felt they could walk on water. The seas were far choppier in their eyes.They have never been arrogant. In some policy areas, they have been nowhere near arrogant enough.

As John Major resigned to stand in a leadership contest, as the Cabinet fell apart over the euro and Tory MPs took cash for questions, the Blairites still thought they could lose the next election. Policies were adopted and dropped as quickly as the stakeholder philosophy. In May 1996, Brown announced that child benefit for late teenagers was going to be dumped and replaced by an allowance for those who stayed in full-time education. No, said Mandelson and Gould, horrified at the headlines implying that Labour was no fan of child benefit. The “policy” got lost in a “review”.

Clare Short gave an interview to me in August 1996. Rather prophetically as it has turned out, she attacked the “people in the dark” around Tony Blair. Again, it caused mayhem. Blair’s holiday in Tuscany was interrupted. So was Alastair Campbell’s in France. Back in London, Mandelson and John Prescott fell out badly over damage limitation tactics. During those sunny summer days, Labour was more than 30 points ahead in the polls. The inner circle behaved as if they were 30 points behind.

A euphoric atmosphere greeted the Blairites when they arrived in government and, for the first year, the good will was such that they could have done anything. What did they do? They panicked.

They panicked in August (opinion poll lead: 28 per cent, a record for a governing party) when Robin Cook was told by Campbell that he had to decide on the future of his marriage at Heathrow airport as he and his family were heading for their summer holiday. A Sunday paper had revelations of his affair.

By the autumn, the poll lead had reached such stratospheric heights that a rise in income tax to 98 pence in the pound would have been greeted with cheers. It was at this point that the panicometer almost exploded. Some newspapers had been making mild mischief over the euro, claiming differences between the Prime Minister and the Chancellor. Help! A frenzied panic culminated in botched briefings to the Times, partly made from the Red Lion pub.

At one meeting, Blair despaired that he had got it all wrong on the euro. Mandelson wanted the door left open for entry in this parliament. In the end, Brown prevailed, as Chancellors tend to do on matters relating to Europe.

There was more, much more to come. Panic when the inner circle realised that Frank Field meant what he had written about welfare reform in the past. This would cost votes, they feared. Field’s green paper became a vacuous document.

There was more panic when it emerged that Prescott meant what he said about an integrated transport system. Help: what about the motorist? Prescott’s white paper was watered down, so that the main headline became a plea for parents to reduce the number of school runs.

The blood has boiled; hair has been torn out, or fallen out of its own accord. Yet there has been no real crisis. There has been no equivalent to the ERM or IMF humiliation.

Equally revealing, the panicometer has remained steady at times when it might justifiably have moved into red. Blair and Brown remained calm when there was a serious prospect of an economic downturn, possibly even a recession. Nor did Blair panic during the Kosovo war. When the inner circle know what they want to do, they tend to do it with steely panache.

When they do not, there is always a danger of panic, of chasing headlines as a substitute for real policy. That is the common theme with the panicometer. They were not sure what they wanted to do with the euro, welfare, transport. There is another factor. It is always the same people panicking, the inner core. No one else, not even the Cabinet, is consulted.

It has become fashionable to mock the panic-stricken headline-chasers just at the moment when substance is prevailing. The comprehensive spending review is an immense, substantial package. There is the beef. The economy is performing well. More beef there, too. As the brickbats fly the government is becoming more effective. The Blairites have nothing to worry about. As long as they do not panic.