by Tom Bower
At that late hour, Blair summoned a meeting at Chequers for ministers, advisers and permanent secretaries at the health and education departments to discuss their experiences. At the end of the day, all agreed the event had been enjoyable but somewhat odd coming in the twilight of his premiership. ‘Are we basically on the right track?’ Blair later asked Hewitt. He speculated about designing a scheme to monitor the progress of reform. The truth, he feared, was that the ‘forces of conservatism’ in the NHS had not been dislodged.
Traditional NHS administrators were still resisting. Economists in the Department of Health were able to show that competition had not improved efficiency. Even Chris Ham, a pioneer of choice in 2001, was unconvinced. Researchers, he wrote, had reported that doubling the budget and making the increased workforce subject to targets were the principal reasons for the NHS’s improvement. Those researchers who reported the opposite – that markets were more important than managers – were derided. In the same vein, statistics showing how mortality rates were lower when two hospitals were in competition – because the incentivised managers demanded higher-quality care – were dismissed. Ever more money, the NHS establishment still believed, was the only route to improvement. Blair’s revolution was teetering, the victim of what he called a ‘vast network of special interests that have every incentive to defend the status quo vigorously, and virtually none to alter it or even adjust it’. He would make one last attempt to conquer their citadel, reverting back to something he had abolished in 1997: Hewitt was directed to resurrect the idea of GPs as fund-holders. Blair gave no hint that his renewed meddling would madden the medical profession, or that he feared Hewitt lacked the political nous to outwit the critics; nor did he give an explanation for his circular journey.
In ‘Our Health, Our Care, Our Say’, a White Paper about community care drafted by Hewitt, GPs were given control of over 70 per cent of the NHS budget to purchase treatment for their patients from the hospital they chose. Fifteen per cent of non-emergency care would be supplied by the private sector.
‘We’re not undermining choice and competition, are we?’ Blair asked just before publication.
‘No,’ replied Hewitt.
On the eve of him announcing that the NHS would be spending more than ever in 2007 – £108 billion, or 9.3 per cent of the country’s GDP – Blair was presented with a stark truth. The additional hundreds of billions of pounds spent on the NHS over the previous ten years had produced improvements, but the cost was disproportionate to the results. Attendances at A&E departments had increased by a third since 2002 because only 60 per cent of GPs were working full-time for the NHS, although GPs’ wages had cost the NHS an additional £1.8 billion between 2003 and 2005. That unforeseen cost would contribute to the NHS’s predicted deficit by 2010 of £8 billion. In addition, the cost of the IT project had escalated to £6.2 billion, with a final estimated price tag of £18 billion, eight times the original figure.
Although there were some positive statistics, Derek Wanless had reported that there was still no proof that all the extra money had markedly improved the nation’s health, as the data, he discovered, was so imperfect. Health inequalities among the population had either remained the same or even increased. Without competition, the gap between the best- and worst-performing hospitals had not narrowed. In the former, operating theatres were used for 75 per cent of the time, while in the latter it was 35 per cent. Despite the NHS’s interminable planning, Wanless wrote, everything had been for ‘short-term imperatives [and] significant opportunities have been lost’.
Targets had distorted everything. The most damning statistics were the opinion polls. Although the NHS budget had grown from £34 billion in 1997 to a projected £127 billion in 2012, the electorate told pollsters they trusted the Tories and not Labour to care for the service. Powell’s self-eulogy – ‘No one will reverse Tony Blair’s public service reforms’ – looked as threadbare as his assertion that ‘We succeeded in strategy but failed in spin.’
The love born in 1997 between Labour and, by then, 1.6 million NHS employees had truly ended. At the 2006 BMA conference, not only the nurses but also the doctors damned Labour for causing ‘a real and imminent danger to the NHS’. That mischievous hyperbole revealed the doctors’ hatred of the market for exposing their selfishness over income and work.
Powell’s enthusiasm over ‘Tony’s fascination with technology’ aggravated Hewitt’s inheritance of a financial meltdown. To her alarm, no one in the department was planning cuts or controlling the public’s insatiable demand for health services. To start getting value for money, Hewitt froze recruitment and cut the number of new doctors. Contrary to Blair’s promise that ‘We’ll put doctors and nurses in the driving seat,’ the strategic health authorities were directing doctors to save money by either not seeing patients or by making them wait longer.
On 24 April 2006, Hewitt was the guest speaker at a conference of Unison health workers in Bournemouth. By then, the trade unions had spread familiar stories about Britain’s health care system being endangered by mass redundancies and widespread privatisation. Newspapers were reporting that some GPs were earning £250,000 a year. The audience ignored that year’s generous pay increase for nurses and instead, preoccupied by the NHS deficits, sleaze, Iraq and the Blair–Brown feud, were impatient with a speaker who represented a leader delaying his departure. In silence they listened to Hewitt deliver an incendiary message: ‘The money isn’t unlimited. It’s not a blank cheque and we’ve recruited too many people.’ To forestall angry interruptions, she added, ‘2006 is the NHS’s best year ever.’
Two days later, she repeated her claim at the annual conference of the Royal College of Nursing. Orchestrated by the unions, the audience jeered until Hewitt was forced to quit the podium. In the aftermath, Blair said nothing to her. There was no opportunity. On the same day, Charles Clarke was under renewed pressure to resign from the Home Office over the failure to deport foreign prisoners, and John Prescott was exposed for having an affair with Tracey Temple, his diary secretary. Considering his costly failures as transport minister, including his waste of £600 million building unused regional fire stations and his expensive failure to create regional assemblies, Prescott should have been fired, but Blair resisted. The weakened deputy prime minister, Blair hoped, would be fodder to protect himself from Brown. Under their oral agreement, Prescott gave up most of his government tasks, although he retained his perks, including a flat in Whitehall and Dorneywood, a twenty-one-room country house in Buckinghamshire.
Three weeks later, during Blair’s absence abroad, Prescott, the acting prime minister, was photographed playing croquet on the Dorneywood lawn in the middle of the week. The public anger reflected Blair’s miscalculation. Back from his travels, he faced roaring Tories in the Commons, while Labour MPs sat glumly behind him. Just a year after his re-election, Black Wednesday was a battle for survival. ‘A soap opera which you couldn’t make up,’ quipped critics after Tracey Temple sold her story to a Sunday newspaper allegedly for £250,000 and photographers snapped the delivery of a new porcelain lavatory to Prescott’s home in Hull. ‘We consciously decided’, wrote Powell, ‘to adopt a Micawber strategy of hanging on, hoping that something would turn up.’ Survival meant no longer focusing on managing improvements in the NHS and education, but ensuring that Labour remained an electable party. ‘Locking in the reform programme’ was Blair’s priority as he sought to secure Brown’s understanding about the importance of Labour continuing to appeal to the middle ground. If he refused, Labour’s fortunes would be threatened by the trade unions.
Blair’s venom was directed at trade union leaders like Derek Simpson, who spoke about ‘disinfecting the party of the Tory agenda dressed up in Labour clothes’. Any hope of preventing old Labour regaining control started with the local government elections in May 2006, and, with Labour trailing by about 10 per cent in the polls, the outlook was grim. Without speaking to each other, prime minister and chancellor travelled toge
ther to launch the election campaign. Over the following weeks, Blair ignored Brown’s insults, including the chancellor’s repeated denials on television that the two men had ever discussed a departure date.
Their division, Blair expected, would aggravate the party’s defeat. Instead, although the Tories won key seats in the south, disaster was averted. The Tories were so disliked that the chance of rescuing his government and helping the party gain a fourth election victory was real. The weakness was not him but Brown. Sullen and unfriendly towards the aspiring English, the chancellor had to know that his chances of winning a fourth term for his party depended on him re-embracing New Labour. But, if Blair was going to box Brown into the ‘renewal of New Labour’, he would need to give his government a makeover.
His response to the election defeat was described by one newspaper as a ‘bloodbath reshuffle’. In theory, he intended to promote Blairites and dismiss Brownites in what Brown called ‘an act of war’. Inevitably, and true to form, the fallen included Blair loyalists. The first casualty on Thursday night, even before the polls closed at 10 p.m., was at the Home Office.
‘I have to make a change,’ Blair told Charles Clarke only forty-eight hours after steadfastly defending him in the Commons. ‘It’s just something I have to do.’
‘I don’t think I should go,’ replied Clarke. ‘I won’t take the hit for the elections.’
‘I think you should,’ said Blair, knowing that Clarke was disliked for his authoritarianism.
‘Do you realise sacking one of your senior supporters will make Gordon’s putsch easier?’ said Clarke.
Blair retreated. ‘Well, have defence or another job,’ he suggested. ‘Anything other than the Foreign Office or the Treasury.’
Clarke’s pride blocked the compromise. Over the following hours, Blair was advised by Mandelson to offer the Foreign Office. He demurred. Clarke would be too independent, he knew. Instead, that night, he summoned Clarke to his flat. ‘Go to defence,’ he said.
‘No,’ replied Clarke, as the tension rose. ‘I won’t be publicly scapegoated for the local election results and to please Gordon. I’ll go to the Foreign Office.’
‘You’ll have to go altogether,’ said Blair unemotionally.
He was a man in a hurry. He had campaigned to serve a full third term, yet now he was under pressure to resign within a year. To protect himself from a coup, others would be humiliated. As usual in such circumstances, he coolly detached himself from his decision.
The following morning, Blair called Clarke. ‘Will you reconsider?’
‘No,’ replied Clarke. ‘I’ll only go to the Foreign Office.’
‘No,’ said Blair.
Clarke refused to send a resignation letter. ‘I’ve been fired,’ he told Blair’s private secretary. A few hours later, he was ‘shocked’ by the news that Margaret Beckett had been appointed foreign secretary. By her own account, Beckett was even more surprised than Clarke. The minister for the environment had arrived in Downing Street expecting to be dismissed. Tens of thousands of farmers faced financial devastation because the Rural Payments Agency had collapsed, and she would be officially criticised for contributing to a blunder that cost over £1 billion in compensation.
‘We were mired by scandal and controversy,’ admitted Blair, ‘and then I did a reshuffle which was the worst of all worlds.’
Foreign Office officials were even more appalled than Beckett. Blair clearly viewed their department with contempt. Jack Straw was demoted, as was Geoff Hoon. Neither was deemed worthy of loyalty. In Blair’s helter-skelter world, he reckoned that he could ride out the familiar media ridicule.
It was at that point that Scotland Yard announced an inquiry into ‘cash for peerages’. Ian Blair, the Metropolitan Police commissioner, was under attack for multiple misdeeds, including his alleged bias in favour of Labour. Ordering an investigation, as requested by the Scottish Nationalists, was an easy option for him, although acquiring the proof needed to obtain a conviction would be near impossible. John Yates, the deputy assistant commissioner assigned to the case, would need a full confession or written proof of an agreement to grant a donor a peerage in exchange for a £1 million loan. Since all the political parties had awarded honours to donors over the past century, Yates faced a difficult task.
Those who would be formally interviewed included Blair, Levy, Powell and Ruth Turner. Blair would be questioned three times, the first serving prime minister to suffer the indignity. ‘There was a risk at one stage’, said Gus O’Donnell, ‘that the prime minister would be arrested.’
Frustrated because no protest could be made over just how pointless the investigation was, Blair approved the handover of huge amounts of sensitive material. ‘Eighteen months of absolute hell for all concerned,’ he complained. ‘It was a running sore of the most poisonous and debilitating kind.’ His management of the crisis was not helped by Powell’s nonchalance that all the accusations were ‘frivolous … Unfortunately for [the police] there was nothing to turn up.’
Two weeks after his departure from the government, Clarke was invited for dinner at Chequers. ‘I’m sorry to have lost you,’ said Blair. It was the same, he added, as losing Mandelson and David Blunkett.
Not quite. Those two ministers were accused of breaking the rules. Clarke’s mistake was to have relied on Blair’s promise of support. His loyalty was not rewarded. Clarke was not even offered a peerage, unlike Chai Patel.
So much during those weeks was odd. No one in Westminster could understand why Ruth Kelly had become the new minister for equalities. After all, she was a noted Roman Catholic and a member of Opus Dei, and had purposely missed all the Commons votes on homosexuality and equal rights. She was not a natural advocate for equality. And there was something more: Blair knew that Kelly had secretly decided to send her son to a private school that specialised in dyslexic children. Her local authority in Hackney no longer provided the right facilities for that condition because Labour had closed those special schools and ended the assisted-places scheme in the name of ‘inclusion’. Kelly had never protested about that policy. On the contrary, during the 2005 election she had criticised Maria Hutchings, the mother of an autistic child who was demanding the reopening of special schools, of trying to ‘grab the easy headline’. Kelly knew she faced a charge of hypocrisy, but Blair was past caring. Hypocrisy was irrelevant. All that mattered was his legacy.
The exception was the Home Office. That citadel of cussedness, he decided, needed shock therapy. John Reid’s self-portrayal as the tough guy sorting out the sinners had won his respect. The troubleshooter offered the exact opposite to Blair: he made a lot of noise and enjoyed giving officials a hard time. Even Elizabeth Filkin, Parliament’s standards commissioner, had suffered his unpleasantness after finding him guilty of not co-operating in her inquiry into questionable payments he had made. Filkin criticised Reid for giving evidence that fell short ‘of a candid and complete account’ and placing ‘pressure of various kinds’ on witnesses to change their testimony. Allegations of wrongdoing no longer troubled Blair, who had long since disregarded his boast of being ‘whiter than white’. Filkin resigned in December, complaining about the ‘quite remarkable’ vitriol from the Labour MPs she investigated, including Geoffrey Robinson and Keith Vaz, who were both suspended from the Commons for misbehaviour. This did not concern Blair either.
So Reid was drafted in yet again, his seventh Cabinet appointment in seven years. The prime minister stood in the Home Office’s atrium to introduce him to his new staff. Reid’s predecessors had struggled to organise the chaotic immigration department. All three had good reason to blame their civil servants, but no official had been told outright in 1997 that the government intended to open the doors to immigration.
‘Your problem’, Blair told his audience of hundreds, ‘is that you are hated by your stakeholders – the prisoners, immigrants and asylum-seekers who do not want to co-operate with you.’ He urged them to face the challenge. He charmed, he was che
ered, and he departed. Reid did the opposite. He arrived with a single message. The Home Office, he said in a spurt of natural malice, was ‘not fit for purpose’. In a single sentence, he successfully demoralised the entire department.
‘You’ve brought the whole temple down,’ observed David Normington, the new permanent secretary.
‘Don’t worry,’ Reid replied. ‘I’ve brought you down. Now you can only go up.’
In Downing Street, a senior official reflected to a colleague that ‘Reid’s Ratner moment has won him no support. He’s not a leader.’
David Blunkett’s reaction was the same: ‘John bashed people on the head, and they rushed away.’
Reid’s first order aroused incredulity. He demanded that the Home Office deport 30,000 illegal migrants a year – about a hundred every day. Like Napoleon, he loved the sound of his command and the smell of the grapeshot, even if his target was impossible. Worse, it was clear that he had not bothered to contemplate how his order would even begin to be achieved. He remained unconcerned even when Blair telephoned to remonstrate: ‘John, I’ve looked into this. I’ve even been to Heathrow. It’s quite difficult to get them out.’ Reid was unapologetic. Denigration, he told Blair, was the only way to reform.
Stubbornness was their common currency. Neither was prepared to ease Brown’s succession. ‘Those dinosaurs are not going to win,’ said Reid about the plots to remove Blair. To prevent Brown going back to an ‘old Labour’ agenda, Blair resisted renewed demands that he name a departure date. He also distanced himself from the NHS’s problems – just as Hewitt’s plight worsened.