Peter Mandelson - The Third Man - Life at the Heart of New Labour

I listened. On occasion, I nodded. And yes, I added a brush-stroke or two to the psychological portrait George had obviously spent many months assembling. But I said nothing I hadn’t said to others at one time or another before. Nothing, in fact, I hadn’t said to Gordon. So it was difficult not to smile when, in George’s leaked version of our discussion which subsequently appeared in the press, I was said to have poured ‘pure poison’ about Gordon into his ear.

If anyone’s ear was scorched that evening, it was mine, as George expounded on what he saw as his and Cameron’s Conservative equivalent of our New Labour project. They had drained the Thatcherera ideology from the Tories, detoxified the party, he said, to make it electable. I said it had always been my understanding that the rising generation of Tory MPs and the current activists had grown up under Thatcher, and their thinking had been formed under her leadership. George said this was true only up to a point. The party was mainly made up of old people, not young people, most of whom were involved more for social than political reasons. In his own constituency, there were lots of divorcees, widows and widowers whose interest in the party was as a place to find companionship, or a partner. ‘They’re not interested in ideology,’ George said. ‘They’re interested in a Conservative Party that wins.’ His, and David Cameron’s, interest was also in a Tory Party that won.

When I returned to Brussels, I spoke to Tony on the telephone again. We both wondered whether Gordon had it in him to turn things round. My view was that neither of us could tell but that he had to be given the chance to try. Tony reflected on the messy way his own time in office had ended and Gordon’s had begun. It was not just the absence of the long-advertised ‘orderly transition’; what most upset him was that one result of Gordon’s final coup had been to short-circuit the ambitious policy review Tony had put in train to give a post-Blair government a fresh, but still New Labour, agenda. ‘It wasn’t my fault, the way he behaved,’ Tony grumbled. ‘I would have gone in 2004 if he’d worked with me, and if I didn’t believe the whole thing would be pulled apart by him and his people.’ He said he still felt Gordon had a great brain and energy. But, he added, ‘These have got to be directed at the right things. He’s got to go back to being New Labour.’

I don’t think either of us had any doubt that Gordon would return to London after the summer recess with a new determination to turn things round, but at the beginning, events did not help him. The trouble began, at least in Gordon’s mind, with the closest thing he had to an old friend, except for Ed Balls, in the cabinet. Alistair Darling – a Scot, a long-time admirer of Gordon, and his Chief Secretary at the Treasury after the 1997 election – was evidently feeling increasingly pessimistic about where the country was heading, from an already obvious economic downturn to something far worse, and, it seemed, frustrated at being constantly second-guessed by Number 10. He gave a long, and extraordinarily frank, interview to the Guardian writer Decca Aitkenhead at his holiday cottage in the Outer Hebrides. His remarks were not personally unkind towards Gordon, but he felt the country was ‘pissed off’ with the government: ‘We patently have not been able to get across what we are for, and what we are about.’ And he said he believed the recession would be ‘more profound and more long-lasting than people thought’. The economic straits Britain found itself in were ‘arguably the worst they’ve been in sixty years’.

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.