The Third Man: Life at the Heart of New Labour

For four years, I had worked side by side with Charles. We could not have been closer politically. I had always viewed the challenge of overhauling Labour’s image as inseparable from promoting Neil as leader, often at the cost of friction with the NEC. I recognised that in fighting for my own seat, I was going to be less directly involved in the next election campaign, but I knew I could still help, and had assumed that, in some capacity, I would do so. To be told to clear my desk, without a successor or any continuity in place, struck me as rash and irresponsible. When I told Julie about my talk with Charles, she was alarmed at the idea of my packing up and going. So were Sue and others in the office. Philip was even more upset.

When they made their views known to Neil, he decided I should stay on until party conference the following autumn. Charles acquiesced. He recognised the advantages of my staying put for now, but was resolutely opposed to my having any role in the general election. He vetoed fresh appeals from Philip as the campaign drew nearer. I am sure that he understood my desire to stand as an MP. It was a desire he shared, and would later fulfil, and I suspect this may explain why he reacted so strongly to my doing so now. He also saw my decision as an act of flight, undermining Neil’s last realistic shot at power.

For a while, it looked very realistic indeed. Mrs Thatcher was being battered by protests against her Community Charge, or ‘poll tax’. She was in lethal cabinet combat with her Chancellor Nigel Lawson over whether Britain should join the Exchange Rate Mechanism, a system whereby currencies’ exchange rates were fixed within a series of narrow bands, linked to the German mark, intended to stabilise currency swings in preparation for a single European currency. Lawson wanted Britain to join. Mrs Thatcher did not, and had put him in his place by bringing in his rival Alan Walters as her economic adviser, a move that eventually provoked his resignation. In March 1990 I helped mount a by-election campaign against the Tories in Mid-Staffordshire, which we won with a 21 per cent swing, essentially by making it a referendum on the poll tax. In May, we made further gains in the local elections. By the end of the party conference season in the autumn – and the end of my five years at Labour headquarters – two separate polls showed us with a double-digit lead over the Tories.

I left Walworth Road in October 1990. Neil had the good grace to join me at a farewell reception for journalists, and he and Julie Hall presented me with my farewell gift: a huge portion of fish and chips, and mushy peas, all wrapped in a copy of that morning’s Daily Mirror. A few days later, Philip and Julie drove down with me to Foy for one of my final weekends before the cottage was sold. As Charles must have suspected, I continued to speak with Philip, and received summaries of his polling and focus group data, his analysis and strategy memos.

I had hoped that my job at Walworth Road would go to David Hill, Roy’s chief lieutenant. I felt his experience, seriousness and good relations with the media would mesh with Colin’s youthful energy and flair. That idea foundered on Neil’s unwillingness to have a ‘Hattersley man’ running the show. When I then lobbied for Colin to be promoted, Neil was supportive, and voted for him on the NEC. But his own staff spread the word that Colin was too close to me, encouraging NEC members to go for John Underwood, a former TV reporter who they thought would be a safer, and more easily manageable, pair of hands. Underwood saw the job very much in traditional Labour terms. Instead of acting as a change-maker, or in fact personally promoting Neil, he worked in concert with other shadow cabinet and NEC members, whatever shade of opinion they held. He and I overlapped for my final months. He lasted in the job for about a year, and when he decided to leave, in mid-1991, David was finally brought in.

I had been gone only a few weeks when the entire political landscape suddenly changed. After another test of wills over European monetary union – this time with her Deputy Prime Minister, Geoffrey Howe – Mrs Thatcher was challenged for the leadership by Michael Heseltine. She won the first ballot, but not convincingly enough to ward off a second vote. Initially, she said she would contest it, and win. Yet when one minister after another told her the game was up, she accepted the inevitable. On 22 November she announced that she was resigning as Prime Minister. Heseltine, having wielded the knife but failed to finish the job, could not strike again, and by the end of the month John Major – with just three months as Foreign Secretary, and a year as Chancellor – became leader of the Conservative Party and Prime Minister.

Neil was ecstatic. ‘It’s fantastic, kid,’ he beamed when I saw him a few days later. He had always felt rather intimidated by Mrs Thatcher, and had feared that Heseltine – rather than the untested, unpolished and uncharismatic Major – would follow her. I believed that Heseltine would have suited us in the long run. I thought he was too mercurial, too impulsive, too flawed a politician to unite his party behind him. Whatever John Major’s weaknesses, I felt he was sure to benefit simply from not being Mrs Thatcher, a leader the country had always respected more than liked. I also thought that we had made Major’s job easier: by focusing so much of our political fire on Mrs Thatcher, we had made her the issue with voters, rather than developing the policies necessary to defeat the Tories. I did not, however anticipate how strong Major’s political position would become in his early months in office. Domestically, he was the un-Thatcher; abroad, like Mrs Thatcher in the Falklands, he had a good war: the joint US and British operation in January 1991 to force Saddam Hussein’s Iraqi troops out of Kuwait.

Far from being at the centre of Labour’s response, I was now out of a job. My time at Walworth Road had transformed my political life. When I arrived, I was a junior producer of high-brow political television. Though it had not always been easy, I had acquired the tools of modern political communications and campaigning, and applied them in a way that had transformed Labour’s approach and image. At first, leaving was a shock. It was as if I’d run a marathon, or stepped out of the ring after a fifteen-round fight, to find that once the adrenalin rush subsided I was left with the aches and pains, and no new challenge to work for.

But the period before the general election would broaden and invigorate me in other ways. My first bit of good fortune was to have Dennis Stevenson as a friend. Though he was nearly a decade older than me, I had got to know him when I was chairman of the British Youth Council and he was head of one of its member organisations, the National Association of Youth Clubs. He became something of a mentor, first in my youth activity and then on every step of my political and professional life. Bright, cultured, generous with his time, he gave unfailingly wise advice on how Labour might modernise its economic policy and detoxify its image with the business community. Now he offered me a four-day-a-week position at the business consultancy he had created, SRU. As in my early days at LWT, I probably learned more than I contributed. I did work hard on a number of projects that were certainly a change from Walworth Road. For one client, I travelled to Denmark and the Netherlands to explore the market for chilled desserts. I was determined to pull my weight, especially since Dennis had agreed to let me build my schedule around my commitments in Hartlepool. Dennis, his high-octane partners like the London style guru Peter York, and their clients opened up a window on the business world. I got additional work with the help of another friend, the founding Weekend World editor John Birt, who was now Deputy Director-General of the BBC. I took on a part-time consultancy advising the corporation on how the different parties’ policies might affect it after the election.

My most important new connection with an old friend was political. Roger Liddle and I had drifted apart since the mid-1980s, first because I had moved away from Kennington, and then because we found ourselves on different sides of the Labour–SDP schism. The Fulham by-election had been painful for both of us, and especially for his wife Caroline. While we had had almost no contact since then, it was typical of him that when I came under attack during my selection campaign in Hartlepool, he leapt to my defence. I was accused of having come close to abandoning Labour and joining the SDP at its birth in 1981, but Roger, who had been part of the many hours of late-night discussions I had had with close friends at the time, refuted the suggestion.

When I was selected he sent me a note of congratulations, and we began to see more of each other. He was still in the SDP, or more accurately in the now merged Liberal Democrats, but he was starting to drift back towards Labour, or at least to see the possibility of accomplishing within a new kind of Labour Party the social democratic project that had inspired his original breakaway. He had set up a consultancy firm called Prima Europe, specialising in advising businesses on the implications of British and European regulation, and he now offered me a small, part-time role which I gratefully accepted. Roger would become a constant presence in my political life. Over the two decades that followed, I can honestly say that between them, he and Philip Gould informed every political, strategic or policy judgement I made. Early on in politics I had developed an ability to make decisions and stick with them. I also knew the importance of getting the decisions right. I invariably relied on Philip and Roger to reach a settled point of view.

By late 1991, I was concentrating on winning my own seat in Hartlepool. My direct involvement in preparations for Labour’s general election campaign was limited to a detailed note, at David Hill’s request, on the lessons to be learned from 1987 – ranging from the need to keep a tight day-to-day hold on events, messages and media coverage, to the imperative of avoiding burn-out in the final stages by setting aside time simply to sleep, as well as having a final-week campaign plan. I continued to talk to Philip regularly, and, if much less often, to Neil. I desperately wanted him to be successful. He had worked and driven himself hard, and taken political risks, to make Labour electable. But at Walworth Road, the unsettled aftermath of the Underwood interregnum had left Colin both exhausted and sceptical about whether there was any real will to win. Before long, he resigned too.

In October, I went to see Neil and Glenys at their home in Ealing. I could see a new desperation in Neil. He was very nervous about the coming election, and said he felt an inability to ‘find words’ for his speeches – an especially painful anxiety for a leader who relied so much on his oratory. He felt he was losing the battle against his poor image, and was upset at the favourable press Major was getting. As we talked, Glenys suddenly interjected: ‘Why don’t you have Peter back to organise things and get a better press?’ If there was any doubt of how low Neil’s self-confidence had sunk, it was clear in his reply. He couldn’t bring me back, he said, ‘because of the Mandelson myth, and what everyone will say about him pulling the strings and controlling me’. I left disappointed not so much by my own inability to help Neil, as by the growing feeling that no one could do so. He seemed isolated, down. It was as if the fight had gone out of him.

For a while, there were murmurings among Labour MPs, shadow cabinet ministers and the unions about replacing Neil. Some union leaders began quietly to canvass the option of John Smith becoming leader before the election. Gordon and Tony even went to see John to gauge his intentions. He replied that he was not interested. He said he did not think we had any chance of winning with Neil, but that he was not going to take the risk of taking aim at him and missing. So Neil survived the talk of rebellion.

My view was that even under a new leader, we would have a hard time winning. With the exception of our abandonment of unilateralism and a partial retreat on nationalisation, our policies simply hadn’t changed enough since 1983. With John’s commitments to £3 billion in increased pension and child benefits in the policy review, we would also be going into the election on a platform of higher taxes. And since he had pledged to unveil a fully-fledged ‘shadow budget’ before voting day, tax was sure to become a major issue. As the campaign approached, John finalised a package that would increase National Insurance contributions for anyone earning more than £21,500 a year. It was a formula for alienating voters of almost every class and background.

Neil knew this was trouble. He tried, but failed, to get John to scale down his proposals, and at least to phase in the NI increase. I am sure even John recognised the danger, but he felt it was outweighed by the loss of trust he would risk by a last-minute change to his tax or spending plans. Gordon, Tony and I also felt the tax issue would greatly hurt our chances in the election. But although it didn’t really register with me at the time, there was a nuance of difference in the reasons each of them objected. Gordon favoured John’s plans for increases in state help for pensioners and struggling parents. His problem was practical and tactical: how to pay for them, and how and when to announce and implement them. While Tony saw welfare increases as a commendable long-term goal, he felt that Labour’s priority must be to demonstrate to middle-class voters, and to our traditional working-class supporters who aspired to be middle-class, that we would not raise their taxes. We had to show we were on their side. That outweighed all other considerations for him. To the extent that I thought about the discrepancy, I put it down to the fact that Gordon’s political position was more delicate than Tony’s. His roots, like John’s, lay in Scottish Labour. Now that he was Shadow Trade and Industry Secretary, he held the senior economic portfolio next to John, making any appearance of disagreement with him out of the question.

There were growing strains in his relationship with John. Gordon’s rise through the party’s ranks had caused suspicions in the Smith camp that he might become a rival for the succession if we lost the election. These were being fed by Gordon’s oldest and bitterest Scottish Labour rival, Robin Cook. John got the head of the GMB union, John Edmonds, to phone me in Hartlepool late one Friday night with the aim of putting Gordon in his place. ‘I gather the mice are playing,’ he began. When I replied that I had no idea what he was on about, he said: ‘I hear you and others are trying to push Gordon. This isn’t helpful.’ I wasn’t, and I told him so. In fact, Gordon, Tony and I were all sceptical about whether John could deliver the change Labour needed. We had been talking, if only in speculative terms, about the merits of a ‘modernisers’ challenge’, with Gordon going for the leadership and Tony as deputy. The Edmonds phone call was obviously intended to pre-empt any such move.

It was followed, days later, by a more explicit signal. On the shuttle flight down from Edinburgh to London, John turned to Gordon and asked point-blank whether he would try for the leadership. Feeling cornered, Gordon answered in the only way he felt he could: ‘No, absolutely not.’ ‘Good,’ said John, ‘because it would not help our friendship if you did.’ Gordon was so worried about the veiled threat that he asked me to ensure that his undertaking to John appeared in print. I obliged, and later in the week a columnist duly reported that should Labour lose the coming election, Gordon would not be a candidate for the leadership against John. Nobody assumed that Neil would stay.

This did not keep Gordon from making his misgivings about the shadow budget plans clear to John. Short of going public, though, he was never going to be able to force a change. The Tories had no need for such scruples. On 10 March, the day before Major called the election, the Tories’ final budget took aim at our obvious vulnerability on taxes. Lawson’s successor as Chancellor, Norman Lamont, announced a new 20p income tax band.

To many in Labour, and to at least some in the media, we still had every chance of winning the election. We had a small lead in the opinion polls, even after the budget. The Tories had been in power for thirteen years. The economy was in the deepest recession for decades. Our manifesto was more voter-friendly than in 1987. But not by much. When the NEC met to sign off on it, Neil mustered a majority against a series of motions from Tony Benn, Dennis Skinner and their allies: a call for an explicit reference to socialism, a vow not to impose pay restraint, and a demand to phase out private beds in NHS hospitals.

Our campaign strategy was to play things safe, not to screw up, and to cling on to our poll lead until the finish line. David Hill did a highly professional job at Walworth Road, while Philip was an even more important mainstay than in 1987. We had a few mishaps, but none of them fatal. After the campaign was over, the media and many inside Labour singled out Neil’s final, prematurely triumphal rally in Sheffield as crucial to the result. I never believed that. Nor did Philip’s later research bear it out. It was our tax and spending plans, made starkly clear in John’s shadow budget a few days before the election – and the way that message played into a wider image of Labour as too extreme, too much of a risk, to be trusted in Downing Street – that sealed our fate.

My own campaign involved making my case to the voters of Hartlepool. Just because I was standing in a safe Labour seat didn’t mean it was fail-safe. I highlighted local issues, above all the need for investment and economic growth in a town still feeling the effects of the post-war decline of its staple industries. I also raised what would soon become a distinctly New Labour priority: the need for even a left-of-centre party to get serious about crime, and tougher on criminals. The personal high point for me was when my mother, always reluctant to venture into the political limelight, joined me on the campaign. The political high point was my result. The Tories added 1,000 votes, or 1 per cent of the electorate, to their 1987 tally. Our vote rose by more than 3 per cent, to nearly 52 per cent.

Still, I had no doubt by election day that Britain as a whole was going to vote in a fourth-term Tory government, and the national results were indeed the worst of all worlds for us. We had lost. But we had picked up forty seats, bringing our total to 229. The Tories, on 376 seats, had lost forty-two. The Lib Dems, with twenty-two, were two seats down on 1987. Though John Major would still have a comfortable Commons majority, the election had been close enough for many in Labour to feel we were almost

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