The Third Man: Life at the Heart of New Labour

The word ‘arguably’ disappeared from the quotes picked up by other newspapers and broadcasters when Alistair’s interview appeared. George Osborne had a field day, launching an assault on Gordon’s legacy as Chancellor and his ‘truthfulness’ as Prime Minister. Gordon was furious, because he felt Alistair’s comments were yet one more distraction from his hoped-for September recovery. When he called me, he was seething. I probably didn’t help things by questioning how he had allowed his media briefers to leak his plans to ‘go personal’ at the party conference – a bizarre theft of his own headlines that risked detracting from the impact of his speech when he made it. ‘I didn’t do that!’ he protested. ‘Well, somebody did,’ I said calmly, to which he replied: ‘OK. But we’re going from one improvisation to another. It’s ridiculous. I’ve got all these things to do, all this policy in my mind, but no means of communicating it.’ Then he got to what was really upsetting him. ‘That fucking Darling interview! It fucked up everything, absolutely everything, I wanted to do last week.’

None of us reckoned, however, on a series of events about to erupt five time zones away from Downing Street. They were hugely significant, an economic shock so seismic that they made Alistair’s interview seem understated. They began with the news that one of America’s most venerable investment banks, Lehman Brothers, might be going to the wall. Over the weekend, the US authorities scrambled to find a buyer. On Monday, Lehmans filed for so-called Chapter Eleven protection. It was the biggest bankruptcy in American history. World stock markets tumbled. Another British bank, HBOS, was soon showing signs of being in serious trouble. This was staved off by Gordon, who with a word in the ear of the Lloyds chairman Victor Blank encouraged a mega-merger between Lloyds and HBOS. By the end of the week, with the Labour conference convening in Manchester on Sunday, the economic news was becoming ever more worrying.

Gordon phoned me on Friday night. He said he had been trying to get me for two days – I had been at a climate change conference in Oslo, and had not been returning messages. He started by talking about his conference speech. It was clear the political ground had shifted. ‘Now,’ I told him, ‘you actually have something big to talk about in your speech. It really is the global economy, stupid.’

This was what we had been talking about since the summer. But now it was well and truly dramatised. The terrible crisis meant it was not just a theoretical and not just a political argument, but a real, immediate challenge. If Gordon got his message right, he had an opportunity to break through in a way he simply would not have been able to do before.

He agreed. ‘It’s not just about individuals and society. It must be markets as well,’ he said. His only doubt, one Tony would have found reassuringly New Labour, was how far he could go in attacking the markets. I reassured him that it wasn’t about attacking the markets, but individuals within them who had been acting irresponsibly, and that he should have no compunction about attacking them. But mostly what I told him was to put all his extraneous worries to one side: the so-called coups, Alistair’s interview. ‘Don’t, for God’s sake, let yourself get sidetracked,’ I said. ‘And don’t stop being prime ministerial.’

I was fairly certain now that, given the economic turmoil, Gordon had every chance of turning in a performance sufficient to save his job. Only a frontal assault from David Miliband was likely to spur rebellion, and that was not going to happen. For the media, however, the conference was shaping up as a tale of two speeches: David’s on the Monday, and Gordon’s on the Wednesday. David spoke eloquently, and ranged far beyond his brief as Foreign Secretary. In parts, he sounded very much like a leader-in-waiting. He echoed his July call for the party to choose hope, energy and new ideas over ‘fatalism’. But even without his unfortunate ambush by a photographer outside the conference hall, who snapped him grinning and holding a banana, David was not pushing for the leadership. Besides, there was no vacancy. Unless, of course, Gordon unravelled when he strode onto the stage.

He did the opposite. By some distance, it was the most powerful performance, the most effective message, he had delivered since his descent had begun a year earlier. It was personal. It connected. It had touches of self-deprecating humour. It played to his strengths. Galvanised by the magnitude of the new economic and financial crisis, he managed to produce what he had so far been failing to do. He offered a coherent reply to questions left unanswered for so long: What were the challenges Britain faced? What were the policies, vision and leadership needed to rise above them? And why was he the man to provide them? His most effective line, aimed at David Cameron, was: ‘I’m all in favour of apprenticeships. But let me tell you that this is no time for a novice.’ It was clever, it was simple, and it was what people wanted to hear.

I was back in Brussels when Gordon gave his speech, and was preoccupied with preparing for a trip to China and a speech of my own when I got there. Especially with the economic crisis deepening, I was keen to encourage expanding business and trade ties between the EU and the Chinese. But I was determined to press Beijing on our concerns about protectionist barriers, and China’s lacklustre attitude to enforcing intellectual-property rights. I watched Gordon’s address on television, however, and saw that it had gone well. I got two text messages that evening. The first was from one of the team at Number 10, saying very kindly that I’d made a ‘profound difference’ to Gordon’s performance. The second was from Sue Nye. ‘Gordon,’ it read, ‘says “thank you” for your help.’ As always with big set-piece speeches, especially Gordon’s, I was just one of many who had contributed. But it had been worth the effort. I told Gordon I felt it had been a good speech, the right message, effectively delivered, at the right time. What I didn’t say, in part because I was sure Gordon already knew and feared it, was that he had cleared only the first hurdle on the road to recovery.

By the time we next spoke, I was in Singapore, on my way home from Beijing. The call came in the early hours of the morning. He was upset by continued signs of discontent among an assortment of backbenchers, echoed by several former Blair cabinet ministers. There was a ‘plot’ to drive him out, he insisted: ‘The plotters are the problem.’ He singled out three former ministers as the alleged culprits: Stephen Byers, Alan Milburn and John Reid. ‘They are steering it,’ he said. ‘They had a plan, it misfired, and they failed. They wanted to wreck the conference, and they didn’t succeed.’

In fact, as far as I could tell, neither they nor anyone else had had some grand plan for conference Armageddon. At least for now, Gordon was safe. ‘You’re getting this out of proportion,’ I told him. ‘I don’t know why you’re so wound up.’ He was not wound up, he replied. But he was obviously distracted, and if he stayed that way, his conference escape could turn out to be no more than a very brief respite. ‘What you have to focus on now is the fact that we don’t have a strategy to win the next election,’ I told him. ‘The other stuff doesn’t matter. New Labour 1997 is not going to win it for us in 2010. It has to be renewed, reinvented. Nobody is doing that, and you have to focus on it.’

‘Can’t you do that?’ he asked, returning to a theme I thought we had finally got beyond in the summer. ‘I’ve got it intellectually,’ he said. ‘I’ve got the policies. I accept it’s different from 1997, and that now we’ve got to say what we’re doing next. But I just can’t turn it into a strategy.’

I put it to him directly: ‘You need a government team to do this. Perhaps you should wonder whether you may have contributed to making people feel less of a team. You have to rebuild it.’

‘I realise some in the cabinet feel ambivalent about me,’ he replied. ‘But others have got to show a lot more maturity.’

Sensing that we had taken this as far as we could for now, I said: ‘I have to show some maturity, and go to sleep.’

‘Why? Where on earth are you?’ asked Gordon, genuinely surprised.

‘Singapore,’ I said. ‘And it’s after 2 a.m.’ Gordon, profusely apologetic, and I, very tired, agreed to talk the following day.

When he phoned he was, at least briefly, in a brighter mood. ‘If it’s not after midnight, I guess I’m calling too early,’ he joked. But he remained unsettled. He was some distance from getting a hold on the team effort I’d been urging him to make his priority.

‘You get wound up about the wrong things and the wrong people,’ I said. I advised him not to make a big mistake in the cabinet reshuffle the press was now anticipating. I was worried about reports that he was planning to replace Alistair Darling with Ed Balls, which in the gathering economic crisis struck me as perverse. No matter how upset Gordon had been over his Chancellor’s interview, a vote of no-confidence in the Treasury was hardly going to help. ‘Some may think it odd,’ I said.

‘We’ll have to talk on a landline,’ Gordon replied, with a sudden air of mystery. ‘But I have a bigger plan than that – one which everyone will eventually say is good.’

‘A tactical nuclear explosion?’ I asked. At which, for the first time in ages, he laughed. He would say nothing more, beyond a suggestion that we talk again.

I was worried. From my experience, Gordon’s ‘big plans’ had a habit of creating as many problems as they solved. His conference speech would not in itself ensure that he and the government could recover, but it was a start. He had had one last chance at survival, and he had taken it. One more ‘big plan’ gone wrong would risk not just ending his short and unhappy premiership, it could leave the government, and the party, in even deeper crisis.

The next call from Downing Street came two days later. It was not from Gordon, but Jeremy Heywood. It began encouragingly enough, with an assurance that I would have an opportunity to weigh in with my views before the reshuffle warheads were launched. ‘I think Gordon will want to see you to discuss the reshuffle,’ he said. But then he too added, ‘He wants to do something quite big.’

‘In what way big?’ I pressed. He said that was something I would have to discuss with the Prime Minister. Apparently, Gordon wanted to do something that would affect me. This was getting more puzzling, and more worrying. I took it to be a suggestion of some root-and-branch reworking of the cabinet, with my job in Brussels offered as consolation prize to one of the victims. The prospect of my entering a truly final political exile came as a shock. It also seemed an odd way for Gordon to recognise the help I had tried to give him in his darkest hours. I did take comfort from the fact that I was better equipped to deal with being cast into the wilderness this time round. With my EU term ending in barely a year, I had begun to adjust to the notion of life beyond politics. But it was unsettling, and I said so. ‘He’d better not muck around with my job,’ I told Jeremy. ‘If this “big plan” involves getting rid of someone with a promise of my job, you should know I’ll be furious.’

‘It’s not that,’ he said. ‘We’ll talk again.’

The next call, on Wednesday, 1 October, was no more illuminating. This time it was from Gordon. ‘I’m going to do this reshuffle,’ he began. ‘I need to talk to you about it. I want to put an idea to you – something I hope you’ll go along with.’ He asked if I could come to see him in Downing Street the following morning. I said I would be in London anyway, for a briefing at the Treasury on the financial crisis, and I could see him after that. He seemed satisfied, but before hanging up he added very sternly: ‘Do not discuss this with anyone.’

‘Discuss what?’ I asked.

‘Nothing,’ he replied. ‘Just don’t discuss it.’ Since I had no idea what he was on about, that was easy enough to agree to.

Maybe my famed political antennae were not as good as they have been cracked up to be. Maybe Brussels had dimmed my Westminster instincts. Maybe, despite our recent rapprochement, I simply assumed that Gordon and I had fought so many battles that some sense of estrangement would always survive. In any case, when I discreetly entered Number 10 on the afternoon of Thursday, 2 October 2008 through the french windows at the back, near the Foreign Office, I was anticipating a conversation about the other potential jigsaw pieces in Gordon’s grand scheme. I took his and Jeremy’s hints at some role for me to mean, at most, another attempt to get me to play a part in forging the ‘strategy’ he desperately wanted. I had difficulty in seeing quite how that would work, but I was willing to listen, and to help if I could.

We met in the small wood-panelled dining room on the first floor. Gordon took a spoonful of yoghurt and unpeeled a banana. ‘I don’t like sandwiches,’ he said when I offered him the plate. Then he got down to business.

‘I need to do something big. I need you to join the government. I want you to help get us through the economic situation. You would do it at the Business Department, from the House of Lords.’

For a moment, I was stunned. I was also seized by panic at the prospect, even if Gordon genuinely felt he could make it work, of a return to the political jungle, and an end to a European sojourn that had turned out even better than I had expected. ‘Thanks,’ I said, ‘but I actually like my present job. I have things I want to finish. And I have my comfort zone.’ I had my work. My life. The protection I now felt I had from the frequent ghastliness of Westminster politics as I had come to know it. I had my travel, my friends. I was now on top of the Trade Commissioner’s job, and trying against all odds to play my part in rescuing hopes for a world trade deal, not to mention the intractable negotiations to update our trade relations in Africa, or the never-ending talks on Russia’s membership of the World Trade Organisation.

Gordon would not be dissuaded. He said the world trade deal was going nowhere fast – he had just been in Washington, and he was sure of that. I was pretty sure of it as well: its prospects were looking about as dire as Gordon’s before his conference speech.

‘Think of what you would be able to achieve back in the government,’ he persisted. ‘It’s a great opportunity.’ And he added: ‘We need you. We could work together.’

‘Well, it would certainly be a surprise for everyone,’ I laughed. Yet, except for the undeniable satisfaction I would take from an unlikely – more nearly, impossible – third return from the cabinet dead, I still found the idea unsettling. Gordon left me to ponder.

When he returned to the room, it was with Sue Nye in tow. He suggested that she and I speak. This was the start of a carousel of conversations, first with Sue, then with Jeremy Heywood, as Gordon departed and reappeared, joined the discussion and left the other two to urge me to see the logic of his proposal. It made sense from every angle, they insisted. It would be the right thing for Gordon, for the government, and for me. I was tempted. It was not merely the idea of returning to cabinet. At a time when Gordon and New Labour were in political crisis, and the country was facing an economic one, I did feel that I could play a part in making things better.

But for other reasons, I was still reluctant. Even in our resumed, long-distance relationship, I had been reminded that Gordon could be hair-raisingly difficult to work with. ‘It’s all too difficult,’ I told him. ‘I’ll have to talk to Reinaldo about it. He’ll hate the whole idea of becoming involved in British politics again – and the media. He’s suffered enough.’ Gordon replied that by all means I should call my partner, then hurriedly added: ‘If you want, I’ll talk to him.’ The moment passed. Gordon’s suggestion, like so much else when he was at his best, had been genuine, and generous. So too was his invitation to me to return to the top ranks of government.

I would not say no outright, I told him finally. I had to think it through. I also needed counsel from someone who knew both me and Gordon well, and whose instincts I had learned to trust. I said I wanted to discuss it with Tony. Gordon said that was fine, and we agreed that I would return by the end of the afternoon.

As soon as I left, I phoned Reinaldo. His reaction was not just surprise, but more nearly disbelief. Who could blame him? Yet as we talked through the obvious pitfalls, he came to the view that what mattered was whether the contribution I could make by returning to cabinet outweighed them. If I felt it did, I should do it. ‘But you’re right,’ he said, ‘to talk to Tony.’

When I arrived at Tony’s office in Grosvenor Square, he was in a meeting. As he ushered me in a few minutes later, it was apparent that Gordon had phoned ahead. Tony grasped my hand and laughed out loud. ‘You could not make it up!’ he said. But he added: ‘On the other hand, it has a certain logic. It’s a no-brainer. You belong in the government. The economic crisis is real. If the Prime Minister asks you to serve your country, you have to. It certainly wouldn’t look good if people got to know that you’d turned him down.’

‘He’s a nightmare to work with. It might be awful,’ I said.

‘It might be,’ Tony replied, ‘or it might not be. You don’t know. In the end, people will just say that you did your best.’

When I returned to Number 10, Gordon was waiting. ‘OK,’ I told him. ‘I’ll do it. I’m still not sure it’s the right thing for me to do. But I’ll do my best.’

‘It is the right thing,’ Gordon said. ‘I’m sure. You’ll see.’

As I left, I was in a daze. I did feel a sense of excitement, the surge of adrenalin I had almost forgotten in the gentler political climate of Brussels. The role Gordon had mapped out for me might turn out to be the most important and fulfilling of my political life. My new cabinet job would take me back to the now-renamed Department of Trade and Industry. It was the place where I’d cut my departmental teeth, where with a team of impressive civil servants I had done well, only to leave long before I had expected or hoped to. It meant that along with whatever ‘strategic’ role Gordon clearly wanted me to play, I would be at the heart of framing the government agenda where it mattered most: the economy.

I couldn’t help but smile at imagining what the media would make of my return. Outrageous? Astonishing? It was certainly both of those. But also risky? Ill-advised? Insane? I could only hope not. There was just one thing of which I was sure as I returned to my home off Regent’s Park, beyond the gaze or interest of reporters, at least until the news of the reshuffle became public. As so often when conflicting issues had to be weighed and a difficult decision made, Tony had been right. If the Prime Minister asks you to serve your country, you have to.

But I also knew that the reasons I had decided to come back, the reasons that in some ways I wanted to come back, were more complex than that. They had less to do with Gordon, or Tony, than with me. It is true that everything I had become as a politician had been marked by my relationship with New Labour’s two, very different, Prime Ministers. But the roots went back much further: to my time with Neil Kinnock, and with London Weekend Television’s Weekend World programme in the 1980s; to my experience in local government, the trade unions and youth politics in the Old Labour heyday of the 1970s; to my time at university. And to a bright white family home ten miles up the Northern Line from the Houses of Parliament, on a suburban street called Bigwood Road.

2 (#ulink_8ef4af3f-cf05-5132-a0b2-9c48a7aa97e6)

Born into Labour

Big Wood seemed much bigger to me as a child than it does now. It began at the top of our road, three minutes’ walk from our door. At the other end was an even larger expanse of green, the extension to Hampstead Heath, which bordered the neighbourhood where I spent the first two decades of my life. Hampstead Garden Suburb was the creation of Dame Henrietta Barnett, a Christian social reformer who believed that mixed communities with the feel of a country village would soften and ultimately heal the hostility of urban life. At the turn of the last century, after many years of charity work in the East End of London, she enlisted the architect Sir Edwin Lutyens and the utopian town planner Raymond Unwin to make her vision a reality.

The Suburb was less posh and intellectually self-important than Hampstead proper, which lay just over a steep incline and a mile or two nearer the centre of London. Under the Suburb’s original planning rules, there were no fences or walls between properties, only hedgerows. No shops were permitted within its boundaries. And no pubs. While the social activist in Dame Henrietta must have understood the attraction of a comradely pint at the end of a working day, the Christian in her could not abide the idea. The roads were wide, and trees were everywhere, bursting with white and pink and purple in springtime. It was a place designed for walking, and letting one’s eyes tilt skywards. The Suburb was centred on a lovely church square – St Jude’s C of E on one side, the Methodists opposite – and the adjacent girls’ school Dame Henrietta created, and which bears her name. For families, the Suburb was ideal. As a child, I loved it – an ardour that briefly dimmed when, as a teenager, I found it a bit too quiet and confining, but which I have since rediscovered. It was in London, yet not quite of it.