My Life, Our Times

by Gordon Brown

  By autumn 1992, however, all the logic pointed to the need for a devaluation of the pound within the ERM. It was now clear we had joined at too high a rate and our economy was being throttled by interest rates set to keep the exchange rate stable. While I made the predictable calls for pan-European reflation and measures that would have eased the pressure on Britain, the truth was that we were in an impossible position. In any sensible world, we would have had only two choices: get our European partners to agree to a devaluation, or get out.

  But Labour had an additional problem of its own: people thought we would always devalue the currency when the going got tough, as Labour governments had done in 1931, 1949 and 1967. Harold Wilson had famously been ridiculed after the 1967 devaluation for saying the ‘pound in your pocket’ was worth as much as it always had been. As shadow chancellor, I was determined that Labour should not to be seen as the party of devaluation and I stood out against this for longer than I should have. But my political logic was sound. If the Conservatives devalued they should get the blame for it – and not us. I faced criticism from some of my Labour colleagues but that is exactly what happened.

  On Black Wednesday, 16 September 1992, the Conservatives abruptly took Britain out of the ERM. John Smith then made his first speech in the House of Commons as Labour leader in a special session. Despite his past support for membership of the mechanism, he brilliantly skewered Major as ‘the devalued prime minister of a devalued government’. Major and his chancellor, Norman Lamont, suffered irreparable political damage from this fiasco; Conservative support plummeted in the national polls. It was a remarkable turnaround.

  We now had a chance to build a new economic policy and I was building a team to deliver it. At the centre of my new operation was Sue Nye, who at a very young age had run the office of Jim Callaghan, and went on to do the same for Michael Foot and Neil Kinnock. Sue came to work with me after Neil stepped down as leader. Her loyalty was beyond any call of duty; and her knowledge of the Labour Party, broader and deeper than that of anyone I know, has subsequently been put to good use in the House of Lords. She was to be head of my political office until the day I left Downing Street in 2010.

  With Geoff Mulgan leaving to form the new and highly successful think tank Demos in 1993, I had begun talking regularly to the brilliant economist Gavyn Davies, who happened to be Sue Nye’s husband and was to later help with valuable advice during the Great Recession. In tandem, I also began drawing on the advice of Ed Balls, the very young leader-writer and columnist of the Financial Times and probably the most gifted economic thinker of his generation. Now a national celebrity in his own right, he is, in my view, a future prime minister. In 1994, Ed joined my Treasury team full-time. In the same year, I appointed a press secretary, Charlie Whelan, who was head of media for the Amalgamated Engineering Union and had helped ease the passage of ‘one member, one vote’. Ironically, given the intense fights they would have later, he came at the recommendation of Peter Mandelson, who was now MP for Hartlepool. In the summer of 1994, Ed Miliband – whose wide range of talents and leadership qualities I had spotted when he was working for Harriet Harman – signed on and focused on developing our anti-poverty policies. He was later joined by the very young but incredibly capable Spencer Livermore, who worked alongside another expert researcher, Nick Vaughan, for the Opposition front bench’s rapid rebuttal unit. By then I was also drawing on the part-time help of Michael Wills, a highly successful TV producer who would later become MP for Swindon. At various times in these years I also had the help of Ed Richards, later the head of Ofcom, and Neal Lawson, who set up the think tank Compass.

  Tony and I had an extraordinary close working relationship during this period. Together, we felt we had to pay attention to, and learn from, what was happening to social democratic parties around the world. In January 1993 we went to Washington DC, meeting key figures in President-elect Clinton’s team, including Larry Summers, Robert Reich and Paul Begala. They explained how Clinton had gone about making the Democrats electable – the party’s previous election victory had been Jimmy Carter’s in 1976 – through putting the economy front and centre of the campaign, recognising they had to win over Middle America to their cause and emphasising responsibilities as well as rights. Clinton had focused on welfare reform, changed the perception that the Democrats were soft on crime, and overcame the narrative that his party was always in favour of taxation for taxation’s sake.

  I returned strengthened in my resolve to modernise our economic policy and to win the debate for change not just with the public but also within the Labour Party, publishing How We Can Conquer Unemployment in September 1993 – setting out the case for a New Deal to tackle youth and long-term unemployment – and Fair is Efficient, which argued that greater equality was the prerequisite for economic efficiency. I wrote of what I called the economic illusion that prosperity had to be bought at the cost of fairness.

  Such was the conflict between the traditionalists and modernisers within Labour that Tony and I were barraged with criticism even for visiting Washington. Following on from our dialogue with the Democrats, when I proposed we adopt public-private partnerships to fund much-needed infrastructure, I similarly came under fire. The attacks only served to bring Tony and me closer together – just before events would begin to drive us apart.

  On Wednesday 11 May 1994, I arrived back home late from a fundraising dinner at the Park Lane Hotel. The event had been held to raise money for the upcoming European Parliament elections in which Labour was expected to do well. In keeping with the European focus, John Smith shared a platform with former French prime minister Michel Rocard. I sat at the front table directly across from John, who was on stage. He looked grey and exhausted. John had been travelling up and down from Scotland to sort out what was a parochial problem in his constituency that he should never have had to deal with: an inquiry into local government boundaries in which his council had asked him to act as their lawyer.

  Later, I was one of those who frequently quoted the words he ended his speech with that night: ‘The opportunity to serve our country – that is all we ask.’ That eloquent finale will be long remembered, but I could see how tired he was. As I joined in the standing ovation – some of the business leaders present that night did not stand, something all of them must have regretted the next day – John and I caught each other’s eye. He gave me a look that said, ‘I got through it, and I did what I had to do.’

  John then stayed up late to have a drink with Rocard. Early the next morning at his flat in the Barbican, as he prepared to leave for a campaign visit in what was now one of our target seats – Basildon in Essex – he collapsed from a heart attack. While being rushed to St Bartholomew’s in an ambulance with his wife Elizabeth by his side, he suffered a second attack. The accident and emergency unit to which he was taken was one he had visited only a few weeks before to campaign against a threatened closure. That was where he was pronounced dead.

  I was up early that morning to get ready for Treasury Questions against the chancellor, Ken Clarke. Around 9 a.m., I got a phone call from Murray Elder. Murray, who had had a difficult but successful heart transplant in 1988, was himself in hospital. He phoned me twice: first to tell me that John was very ill and had been rushed to hospital; then, a few minutes later, with the news that John had died. The medical staff had been unable to resuscitate him. The devastating news, Murray added, would not be announced formally for two hours while John’s family – including his three daughters, Sarah, Jane and Catherine – were informed and given time to come together. The death was announced to a shocked public at a press conference in the hospital’s Great Hall at 10.40 a.m.

  Tony was on a trip to Aberdeen, campaigning for the European elections. After I hung up with Murray, I instantly phoned Tony and told him the news, and said that it would be announced to the public two hours later. Soon Tony was on his way back to London to confer with Alastair Campbell and others.

  I tried to contact Elizabeth,
started to pen an obituary and began preparing a statement I would make in the House of Commons, hoping the Speaker would give me permission to deliver it at the outset of Treasury Questions. Writing the tribute to John took longer than I thought, not least because I wanted to do his life and achievements justice. I struggled that morning with genuine grief; I had known John and his family for nearly two decades. The obituary later formed the start of a book that I edited with the journalist Jim Naughtie on John’s life and work.

  A shell-shocked party decided to postpone the choice of a new leader until after the European elections; Margaret Beckett became acting leader. In truth, though, the starting gun had already been fired. I believed that I was the best candidate to take over from John. As Murray Elder reminded me at the time, John had told him that he shared that view. And I assumed Tony would support me.

  But events were to work out differently. In the days that followed John’s death, my brother Andrew took time off from his TV work to help me and kept a full day-to-day record of what transpired and, in particular, of conversations he and I had with Tony.

  When Tony and I spoke by phone on the evening of 12 May, he made it clear that he wanted to stand. I was surprised. He had always told me that he had never wanted the leadership: he would be happy to be chancellor and then take a top job at the European Commission. At one point he had even told me he might leave politics to work in television.

  When we came to the Commons together, I had worked to broaden Tony’s appeal within the Parliamentary Labour Party. I had helped write speeches for him and advised him on how to win over the trade unions and the Labour Party membership. More than once, he said I was the senior partner in our relationship.

  But the campaign for Tony had already started the night of John’s death. Alastair Campbell, then assistant editor (politics) of the mid-market tabloid Today and Tony’s closest friend in the press, appeared on Newsnight to announce that Tony would be the next leader. In the Evening Standard on the afternoon of John’s death, Sarah Baxter, another apparent Blair sympathiser, published an article entitled ‘Why I say Tony Blair should be the next Labour leader’. The next days’ newspapers were full of stories from writers like Trevor Kavanagh of the Sun favouring Tony.

  The vacancy had come at a difficult time for me as I fought to make the party economically credible. I was not only in a bare-knuckle fight with John Edmonds, leader of the GMB union, who wanted Labour to commit to borrowing more to go for growth, but with members of the parliamentary party who favoured this approach to economic policy. Nonetheless, I believed that, in any choice between myself and Tony, I would have the support of the Labour grass roots and I knew that I could secure the majority of MPs.

  But I made a fateful decision: that either Tony or I had to stand down. The Labour Party was still in a fragile relationship with the public. And the public, I thought, would never understand how two leading reformers could stand against each other with daggers drawn. With Margaret Beckett and John Prescott both likely to stand for leader and Robin Cook considering doing so, I took the view that, if Tony and I both ran, we would split the modernisation vote and neither of us would win. I knew that in any contest with Tony I would have to draw a dividing line, for example, by making a distinction between two forms of modernisation. I would argue that my policies were not only the best for winning an election but were the best reflection of our enduring values. I would have to argue that Tony could not pull this off and, perhaps more damaging to our future as a party, explain how his ideas of the future were not exactly the same as mine. I was not aware then of how important this distinction was to prove to be to the future of the Labour Party.

  By Saturday, the Murdoch press were all backing Tony. The following day, they would publish a series of polls that reinforced this. I told Peter Mandelson in a call that most MPs and the unions would oppose Tony and I had the best chance of winning. Even so, I was worried: the media was writing Tony up as the only moderniser. It was wholly unfair but predictable. And if I forced Tony out of the contest, then the press would say that Labour had written off Middle England. According to Andrew’s account of these days, I speculated that, if I became leader, we would have to signal radical change later that year including further party reforms and an end to Clause IV.

  On Saturday, Margaret Beckett phoned with a plea she was making to each potential candidate to avoid discussing the leadership until after the European elections on 9 June. But no one, I’m afraid, paid attention. That day, I visited Elizabeth Smith at her Edinburgh home. She took some comfort from having been with John that fateful Thursday morning. I reminded her of John’s achievements and of the respect in which he was held across the whole country. ‘It’s up to you now,’ she said as I left.

  The Sunday papers not only contained pro-Tony articles but also a story by Andy Grice of the Sunday Times which claimed that there was a ‘secret pact’ between Tony and me not to stand against each other. The article implied not only that I was involved in a backroom deal but also that I should be the one to stand down. My desire to avoid a split vote had been turned against me. I decided that I would fight on and make a leadership speech the next Sunday in Wales after John’s funeral. John had been due to speak to the Welsh conference; I would take his place. And support for me was growing. Donald Dewar, John’s best friend, had already offered me his support for the leadership. George Robertson, then shadow Scottish Secretary, also came to me to pledge support. He did so even though his political outlook had always been closer to Tony’s than to mine. Indeed, half the shadow Cabinet told me they were with me. I was heartened that I was commanding a broad spectrum of support, left and right. I had no doubt I could and would win.

  The Sunday Times piece, however, now set the context. On Monday, Peter faxed me a note about Tony’s ‘southern appeal’. At the time, when I and others read it, we thought that it was putting Tony’s case. But it appeared to end with an offer: ‘My fear is that drift is harming you … You have either to escalate rapidly (and to be effective I think I would need to become clearly partisan with the press in your favour) or you need to implement a strategy to exit with enhanced position, strength and respect. Will you let me know your wishes?’ The irony about Peter is that, for all his gifts for seeing an opportunity and creating a positive story about New Labour, he was his own worst enemy: perhaps it was a personal modesty that meant the one person he could not brand successfully was himself. Often, I too misunderstood his motives.

  That evening, Tony arrived in Edinburgh, ahead of visiting Elizabeth the next morning, and asked to see me. There was a touch of comedy about the meeting. I agreed to meet him at the home of one of his friends, Nick Ryden, a property developer, who lived in the well-to-do Edinburgh suburb of Merchiston. It was a rambling mansion that Nick was in the process of renovating. At the meeting, Tony introduced a new argument for his candidacy – that Robin Cook, Margaret Beckett and John Prescott would stand down in his favour and the election would be uncontested. It was wishful thinking. But he also wanted to assure me that, if I would stand aside, I would not only stay on as shadow chancellor but have complete autonomy over economic and social policy. This had some appeal, as I would have overall control, in a way I had not under John, of what I was to call the ‘fairness agenda’.

  At this point, I went to wash my hands before going on to another event. After eventually finding the bathroom amidst the building works, I shut the door and it locked behind me. The door had been replaced but there was no handle on the inside. I was locked in the house of Tony’s close friend. For a few moments, I was literally out of the contest. Luckily, I had an early mobile phone – the size of a brick – and was eventually rescued from my imprisonment.

  Tony asked to see me again the next morning after paying his respects to Elizabeth. My brother Andrew, who was now in Scotland with me, collected him from outside the Smith home and wrote up his impressions from the details of their conversation in his diary:

  It had been years
since I had chatted to him for more than passing pleasantries. But immediately we talked at ease. With a pinch of salt, I hear his eulogy to GB. He’s the ‘greatest political mind the Labour Party has had’, he says – and TB ‘couldn’t do it without GB’.

  Yet Tony was determined, noted Andrew, that I should make a decision that day. And indeed when he arrived at my home in North Queensferry, his mood was close to desperation. He reiterated that he wanted me to stay on as shadow chancellor and would give me control over economic and social policy. This time, he added another promise – that if elected as prime minister, he would stand down in his second term. He said this was a family choice that he had already made. He wanted to be free from day-to-day politics to be with his children in their teens – the time of life when parents are most needed. It was a promise he repeated on several occasions. In between our talks, I went off to take a call and, as Andrew also recalls, Tony said to him that if he did not stand ‘he would look like a monkey’.

  When Andrew drove Tony back to the airport after our meeting, he wrote that Tony was ‘much more tense than earlier’. He was talking to Andrew in the full knowledge that his offers which he had already made to me personally would be reinforced through repeating them to Andrew. The diary continued:

  He showed the desperation of his position when he reveals that GB could win if he stood. What he doubted was not that – but whether GB could win the general election. It’s the trump card to play – especially against GB who believes above all else that, after four defeats, nothing should come in the way of Labour winning the election. TB also talks about how all of this has come ‘too soon’ for his young children. Only aged 10, 8 and 6 years old, he’s worried about the prospect of media attention on them. Talks about how if he goes for the leadership now, he would want to spend time with them later before they’re too old – perhaps in five years’ time.