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23 October 2000

Mandelson must play the game

A minister has to be a team player. And if he won't abide by the team's rules, the captain will do w

By Geoffrey Robinson

As I was compiling my book The Unconventional Minister over the past four months, people persistently asked me why I was doing it. Some, no doubt, were trying, not very subtly, to find out what was in it. Now they know, following the serialisation in the Daily Mail. And, after seeing the hyped-up press reaction, it is very probable that they will have come to completely the wrong conclusions about my motives.

These were not to do down Peter Mandelson (of whom more later) but to give an account of how the Treasury team prepared for office while Labour was in opposition, and how the policies then worked out in great detail laid the basis for our successful management of the economy since May 1997. The Blair administration is the fourth Labour government since the Second World War. The previous three were all wrecked and ultimately doomed by economic crises in their early years: the devaluations of 1947 and 1967 and the bailout by the International Monetary Fund in 1976. The consequences of any such failure by the incoming Labour government in 1997 – the first in 18 years – would be inconceivably damaging. Gordon Brown and the Treasury team were determined to avoid it at all costs.

Contrary to the story that the Tories have peddled, there was no golden inheritance. The outgoing Tory chancellor, Kenneth Clarke, had refused Treasury and Bank of England advice to raise interest rates on four occasions. If he showed great balls, he also showed intellectual inadequacies in his grasp of economic policy.

Inflation was rising when we took office, and had to be curbed. The public sector finances were in bad shape, standing at £26bn even though the economy had been growing steadily for four years. We needed urgent disinflationary measures to deal with both problems. We also had to raise £5bn in new taxes for the youth training programme – the New Deal – and other areas on which we had given specific manifesto commitments.

My book tells the story of the windfall tax and the other reforms to corporate taxes that laid the basis for our economic success and for our claims to be elected to a second term. Hereafter it might even be that the account of our research work in opposition will become required reading for the Tory party. It could certainly stop William Hague and his team from lurching from one half-baked policy idea to another.

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As for the period after we took office, one of the things I most wanted to write about was my single-handed struggle to prevent the closure of the entire coal industry. My editor at Michael Joseph described this as “your least accessible chapter”. I hope that, in its condensed version, “Saving the Heartlands”, it is now more readable. Anyone interested in how the Civil Service works would do well to brave it. The Civil Service plan amounted to no more than euthanasia with a not very human face. The pits should be closed, in the Civil Service view; the grounds for doing so being competition. Yet, in reality, there was no price competition in the industry and, without coal, we would be dependent on gas from overseas within 20 years.

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It was very much my purpose to provide what publishers call “a good read”. Word has it that Michael Heseltine’s much longer autobiography has bombed, which I understand to mean that it will be remaindered in the near, rather than the more distant, future. I am also told that it is written too much as an exercise in self-justification, as are so many political memoirs. I hope I have avoided this lapse, but the cost is that the coverage of events is incomplete. Put another way, I could have written much more.

The episodes I highlight are not all strictly Treasury concerns. But, by virtue of holding the purse strings, a Treasury minister acquires a legitimate interest in other departments’ affairs – especially if the minister from the Treasury is really there to help, and occasionally to say “yes”.

As I have described it so far, the book may seem to have little in common with what has appeared in the Daily Mail. It was inevitable that the paper would concentrate initially on my loan to Peter Mandelson, and that the rest of the media would take it up in a big way. That would have happened wherever the book had been serialised.

But why the Mail? The answer, quite simply, is that, with 4.5 million readers, it provided the best platform for getting my side of the story across.

And, yes, this was another principal reason why I wrote the book. Peter Mandelson, whether intentionally or not, had in his briefings about the loan – notably in the biography of him written by Donald McIntyre – given the impression that the whole idea of the loan, and even the size of it, came from me. The suggestion even got around that I somehow pushed him into the loan. The implication is that I am the sort of person who needs to use his money to exercise influence and to seek advancement for himself. The book and the surrounding publicity gave me the chance to set the record straight. Any public figure, having suffered from the press over as long a period as I have, is entitled to seize the opportunity when it arrives to offer a different front to the world.

Had Mandelson not tried to spin the loan story to his advantage, I would neither have disinterred its origins nor explained my essentially enabling role in it. But I do not think I could have avoided writing about Mandelson in the context of other parts of the book, most importantly the chapter on Europe.

The decision on whether or not to enter EU economic and monetary union (the single currency) will probably be the most important that the government takes. The issue has been live since the earliest days in office. It provoked an enormous crisis in September and October 1997. At that time, the Chancellor issued a statement in which he explained that the test of entry would be the national interest, and set out the five criteria against which it would be evaluated after the next election. This amounted to a rational, balanced policy that could be supported by all strands in the party and could find wider agreement in the country.

So why did Mandelson have to unpick the policy and try to move it towards a “yes” decision? Not only did he cause dissension in the Treasury, he also created havoc in the financial markets.

I understand that he cares deeply about Europe. He wants desperately to join the EMU. It is the only one of his three major projects – the others being alliance with the Liberal Democrats and the introduction of proportional representation – that stands any chance of realisation.

But that does not justify his unilateral efforts to get his own way. He wants to be his own man. Fine. But he has to work in a team. And if he won’t play by the team’s rules, then the team won’t play well, and the captain will in due course do what a captain has to do.

In writing this part of the book, I reflected hard as to whether I should confront this aspect of the Peter problem. In the end, I felt it was right to do so because it would come from someone on the outside who knew the problem from the inside and could, in my case, most people would agree, give an objective assessment unbiased towards any of the camps. Perhaps I presume too much. But I don’t think so.

Many media commentators have called me bitter and self-indulgent. I am neither to the slightest degree. But those who refuse to look the reality I have described in the face certainly are not only self-indulgent, they may be indulging in self-deception, too.

The writer is chairman of the New Statesman. His book The Unconventional Minister is published by Michael Joseph (£16.99)

See Charlie Whelan, page 38