One of Gordon Brown's senior advisers has a theory. He estimates that the Blair/Brown soap opera erupts in the media every three months, as regular as the seasons. The trigger is usually a newspaper report suggesting that Brown wants Blair's job immediately and is still angry about not securing the leadership in 1994, or claiming that Blair feels betrayed by his chancellor and is ready to sack him. After the first report, others wade in. Then everyone calms down again for three months.
The adviser is on to something: check the cuttings. But even when the personal animosity between the two men is not itself the story, much of Britain's political debate is observed through the prism of their conflict. Brown's opposition to foundation hospitals, for example, is not usually judged on its merits but dismissed as posturing to old Labour, part of his long-running leadership campaign.
It is understandable that the relationship between the two men who have dominated British politics for a decade should be portrayed in human terms. It is a fascinating duopoly of mutual regard and suspicion. But it is also more than that, and it is surprisingly seldom that the actual policy and ideological differences between the two men are held up to the light.
Before I attempt that task, one of the cruder caricatures needs to be cleared away. The political tensions are not between a modernising prime minister and an old-Labour chancellor. Brown gave independence to the Bank of England, imposed a two-year spending freeze in the first term, cut the basic rate of income tax and developed the private finance initiative. Now he is distracted by the need for more flexible labour markets and is quite explicit that the interests of public sector workers do not equate with the public interest. This is not a set of views designed to please union leaders in a future leadership contest. Conversely, Blair recognised the urgency of increasing public spending, especially in the NHS, halfway through Labour's first term, and was a firm supporter of the tax rises announced in the 2002 budget. Blair and Brown are both New Labour to their fingertips.
But what does that mean? New Labour is a flexible concept, ill defined enough for its originators to fall out over its precise purpose. At the heart of recent tensions between Blair and Brown is an only partly ideological dispute over a real conundrum: how to deliver flexible public services of a similarly high standard in both poor and affluent areas without crushingly bureaucratic control from the centre. The question has tormented the government since it came to power, but especially since the 2001 election. Many themes of Labour's bumpy second term coalesce around this issue: the role of markets, centralisation, pluralism, the functions of the public and private sector. Blair and Brown sometimes disagree intensely about the best way to address the question. This is not surprising. There are no easy answers.
To take one example that highlights their broader dilemma: Blair and Brown have risked their political lives by raising taxes to pay for improvements in the NHS. Should they hand over the cash to hospitals and let them get on with it, knowing they will get the blame if the hospitals underperform? Is there a middle way in which the government retains some control over what happens at a local level? What institutional form should that middle way take?
Even on this issue, which has generated some sweaty rows between Downing Street and the treasury, there is a fair amount of agreement. Both Blair and Brown accept that public services cannot be run from Whitehall alone. They also concur that Labour's first term was marked by an excessive dependence on the centre. At first they felt compelled to set national standards and targets in order to try to drive services on to a higher level. Now that some public services are functioning better they are ready to loosen the strings, at least to some extent. Neither is an ardent pluralist. Neither is a determined centraliser any more.
Presiding over, and reinforcing, the relatively small substantive differences over policy are differences in tone and temperament. Recently, Blair has become much more impatient than Brown. He grasps at suggestions and transforms them fairly quickly into policies, keen to be seen as bold. Cabinet ministers are under constant pressure to come up with new ideas and are sometimes rather alarmed to find that their proposals quickly become a central policy plank in a prime ministerial speech. Even now, some cabinet ministers are unsure how the proposal to establish foundation hospitals was conjured up as if from nowhere. The explanation for the haste is straightforward: Blair had put pressure on ministers and advisers to come up with radical proposals for the NHS in order to justify the tax rise and he had been persuaded that string-pulling from the centre does not work on its own.
Brown had reached rather similar conclusions but is more doggedly forensic in his approach to policies, posing a range of questions-strategic, economic, ideological-before he lends his support. Brown tends to ask: what do we want to achieve and what do we need to do to prepare the political ground? He has shown great patience and self-discipline in developing policies on tax and spend, welfare to work and tax and benefits integration. Although Blair can master the detail of every policy across government from Northern Ireland to the common agricultural policy, he is more light-footed-pouncing on an initiative in order to show momentum and energy and worrying about the details afterwards. (Brown, of course, has more time to focus on one set of ideas compared with Blair, who has the whole international and domestic agenda to consider.)
These stylistic tensions reached a peak when Blair addressed last year's Labour party conference. Brown could barely disguise his alarm when Blair declared that the government was "at its best when at its boldest." Brown recalled the many occasions when he had taken risks-stealth taxes, discreet redistribution-against the instincts of a cautious Blair, and feared that Blair was now being bold for its own sake, adopting policies, sometimes with reactionary outcomes, that had not been properly thought through.
For his part, Blair viewed Brown's response with growing irritation: a conservative chancellor was threatening to block necessary reforms, partly-and here the soap opera makes a brief appearance-for reasons of personal ambition and a determination to retain control over every area of domestic policy.
Alongside this issue of style and temperament there is a small, but significant ideological divide in relation to the defining issue of Labour's second term. Having experimented with centralisation in the first term, Blair has become more of an evangelist for local initiatives, flexibility and choice in the delivery of public services. He assumes that it is better to raise the standards of some hospitals and schools, thereby keeping middle-class parents and patients in the public sector. In time this will raise overall standards and make everyone better off, even if the price is a greater gulf between top and bottom.
Blair outlined his position in a Fabian lecture in June, arguing that, "Our supposedly uniform public services are deeply unequal." His aim was to put "power in the hands of the parent or patient so that the system works for them, not for itself... to end the one-size-fits-all model of public service, which too often means one supplier fits all, with little diversity, irrespective of how good new suppliers from elsewhere in the public sector, and the voluntary and private sectors, might be." The public, he said, wanted the consumer power of the private sector, but the values of the public sector.
Brown, in turn, has reflected at great length on what he sees as the limits of consumer power in the public sector, and the connection between centralisation and equality of provision. In a pamphlet published at the end of last year, the journalist David Walker put the case for an active centralised state, arguing against the prevailing fashion that Whitehall rarely knows best: "Communities may be energetic and progressive; they may also be sluggish and mean. Localism has to mean that some people get more and some get less, just like in markets. It is not a level playing field out there. Some cities have been poor and poorly run forever. Some regions will always be richer and therefore capable of sustaining higher taxation... pursue the new localism far enough and the capacity of progressive government to lessen inequality will be permanently damaged."
Brown read this pamphlet with some interest when the row within government over foundation hospitals was reaching its peak last autumn. Blair supported giving maximum freedom to foundation hospitals, including the acquisition of additional borrowing powers. He believed that the more freedom the hospitals had, the more dramatic their improvement would be, thus energising the entire NHS. In his Fabian lecture he described "universal choice" as his approach to reviving public services: "Universal choice gives poorer people the same choices available now only to the middle classes... Choice sustains social solidarity by keeping better off patients and parents within the NHS and public services... Choice puts pressure on low-quality providers that poorer people currently rely on."
There is within that argument a whirl of ideas ranging across the political spectrum. Can there be universal choice? Blair would point to the expansion of specialist schools. In 1997 there were 182 such schools, mainly in affluent areas. Now there are over 1,000, many of them in disadvantaged areas. Blair's aides justify his impatience by arguing that unless standards are raised quickly, the middle classes will conclude that increases in public spending are a waste of their money. They also argue that it is poorer families who suffer most from the erratic performance of many schools and hospitals. The same aides are genuinely mystified when those on left and right attack Blair for lacking a purpose. As one put it: "People can attack us for many things but surely it is obvious what our purpose is. We are trying to revive the public sector. Thatcher tried to revive the private sector. After decades of neglect we are trying the same with the public sector."
There is a view in Downing Street that the current measures for schools-the expansion of specialist schools and city academies-are far more radical than foundation hospitals. Blairites wonder why Brown has been more concerned about the NHS-implying that it is political opportunism. The truth is that Brown has spent more time planning the tax rises to pay for increased resources in the NHS than on any other policy; he spent years preparing the political ground before acting. He did not want to see all this effort blown apart by an ill thought through reform. He also feared that, as originally conceived, foundation hospitals would mark the breakup of the NHS just when the government was hailing its commitment to a nationally funded service by increasing taxes for it. Specifically, he was adamantly opposed to granting foundation hospitals additional borrowing powers. Some Blairites portrayed this as a display of old Labour and treasury conservatism. But Brown posed a practical question. How would the hospitals pay back loans if they overborrowed? The government would never allow a foundation hospital to close down, so there were two likely answers: they would find the additional cash by charging patients or by asking the treasury to bail them out. Already privileged hospitals would get more money still.
So intense was Brown's alarm it prompted him to write a densely argued Social Market Foundation (SMF) lecture on the role of markets and their relationship with a left of centre government. It was a substantial and subtle piece of work, under-reported because Brown delivered it in the build-up to the Iraq war and because it is not an easy read. (The next journalist to allege that this government is obsessed solely by spin and presentation should be punished by having to learn the speech by heart.)
The lecture highlighted Brown's determination to limit the powers of foundation hospitals, but also his broader commitment to market solutions in most areas. This was not the speech of an old-Labour chancellor, as some columnists alleged at the time. It was partly a return to the arguments he deployed in the build up to the tax increases to pay for the NHS last year. "The essential question in a world of advancing technology, expensive drugs and treatments, and rising expectations is whether efficiency, equity and responsiveness to the patient are best delivered through a public healthcare system or whether-as with commodities generally-market arrangements, such as the hospital selling and the patient buying, are the best route to advancing the public interest." He gave a clear answer: "We know that the consumer is not sovereign: use of healthcare is unpredictable and can never be planned by the consumer in the way that weekly food consumption can. Where the private sector can add to, not undermine, NHS capacity and challenge current practices by introducing innovative working methods, it has a proper role to play-as it always has-in the NHS."
Note the concluding aside. At the start of the second term, Blair portrayed the involvement of the private sector in the NHS as a radical innovation. He seemed deliberately to be picking a fight with his own party. Brown pointed out that the private sector had always had a role in the NHS, but he set out its limits: "The private sector must not be able... to exploit private power to the detriment of efficiency and equity."
After rushing to endorse foundation hospitals, Blair even appeared to flirt with the idea of "co- payments" in hospitals. He argued that in some public services a combination of public spending and payments by consumers was the way forward. Later, Blair's advisers explained that he was referring to top-up fees for universities, not charging patients. Moreover, when he considered Brown's objections to foundation hospitals he broadly agreed with them. For all the heat that was generated, this was more a dispute between a coherent and an incoherent approach to reforming the NHS. No wonder the former health secretary, Alan Milburn, who thought he was pleasing Blair by espousing less coherent proposals, chose to spend more time with his family.
Some people try to give these small differences large ideological labels. Blair, it is said, is a social liberal. His main concern is to "raise the floor" for those at the bottom-whether in terms of incomes of the poor or public services-and is much less concerned about inequality and the gap between top and bottom. Blair advocates a greater variety of means to achieve his ends, allowing the private sector and voluntary bodies to become providers. Brown, on the other hand, remains a market-friendly social democrat, anxious about any reforms that might result in greater inequality of provision. There is something in this, but the dividing lines in reality are fuzzier. It is true that Blair is more promiscuous in his instinctive support for new local initiatives, especially those involving the private sector. But he often retreats when the practical implications are thought through. Brown is more egalitarian and probably does worry more about the gap between top and bottom than Blair, but both men agree broadly on the ambitious targets for lifting families and children out of poverty and on the mild, but not insignificant, New Labour redistribution measures. According to the Institute for Fiscal Studies, since 1997, tax and benefit changes have increased the income of the poorest 10 per cent by 15 per cent and reduced the income of the top 10 per cent by 3 per cent.
Their disputes over policies relating to tax and spend and redistribution have not been as intense as those aimed at reforming the public services. Before the 1997 election Brown was briefly in favour of a 50 per cent top rate of income tax. Blair argued strongly that it would not raise much cash and would unnecessarily alarm middle-England voters and newspapers. Brown did not put up much resistance and has subsequently accepted that Blair's instincts were right. As one of Blair's advisers put it to me: "Both Tony and Gordon were scarred for life by the 1992 election when Labour put an openly progressive case at a time when the Tory government was in quite a mess-and still lost." With great political dexterity Blair and Brown have linked the middle classes to a moderately redistributionist project. Part of the technique has been to avoid income tax increases with their echo of past Labour governments. The strategy has not been entirely friction free. Brown was displeased when Blair questioned some of his stealth taxes and the chancellor has also been known to return from pre-budget discussions with Blair and declare with a mixture of disdain and despair: "He wants me to cut taxes and increase spending."
Yet overall the differences between them reflect personal priorities more than positions on the left/right spectrum. Brown has annexed the department of social security to the treasury in order to pursue his anti-poverty agenda, while Blair has focused on education. When Estelle Morris became education secretary she told her staff: "There are Tony departments and Gordon departments. We are a Tony department." This hardly represents a great ideological divide.
When tensions between them erupted over welfare reform early in the first term, the divide was once more between patience and impatience, coherence and incoherence. In 1997 Blair was keen to be seen as urgently radical in his plans for welfare. He knew that Frank Field personified an informed moral radicalism in this area. He appointed Field a social security minister and made him a privy counsellor, a rare honour for a junior minister. The symbolism was a substitute for a clearly thought through policy. When Blair realised that Field's hostility to means testing would involve a substantial increase in public spending and taxation, he sacked him. Brown was more aware of Field's aspirations from the beginning. He had read Field's books on the subject. The chancellor had a much more clearly worked through set of moderate welfare reforms, based around the idea of rewarding work and the targeting of poorer families and pensioners living in near poverty. Brown's more coherent and modest set of ideas have prevailed, ultimately with Blair's support.
In the end, the two of them tend to reach a consensus, having more in common than almost all recent pairings of prime minister and chancellor. No previous Labour chancellor could have made Brown's SMF speech on the role of markets. His main theme was the need for a left of centre government to embrace markets rather than view them with suspicion: "The private sector can provide value for money in rebuilding the infrastructure... flexibility in labour, capital and product markets can advance economic efficiency and social justice... we must not confuse public interest with producer interests... we should celebrate competition and extend it." This was a more analytical version of Blair's speeches early in the second term when he sketched out the case for the increased involvement of the private sector in the provision of public services.
There is even considerable agreement between Blair and Brown over the great conundrum: national standards versus local flexibility. Like Blair, Brown has recognised the need to let go. The caricature of the treasury as the ultimate control freak is out of date. Brown's chief economic adviser, Ed Balls, argued in a speech called "new localism" that the treasury sought "maximum local flexibility and discretion to innovate." He added the condition: "Alongside this devolution of power there must be maximum transparency about both goals and progress in achieving them with proper scrutiny and accountability." He gave the example of regional development agencies, where they agreed "stretching output targets" with national government with reasonable freedom as to how they achieve them. In local government, he said, the high performing councils would receive greater independence-what is known as "earned autonomy."
Many people in the Labour party argue that this does not go far enough, but Blair would broadly agree with the treasury approach. They are both trying to manage a balancing act in which power is devolved, but not too much. After a long period in which local government in large areas of the country has been moribund, there is only a small pool of able councillors and local innovators. Blair and Brown have not spent decades in opposition to give away power to incompetent local bureaucrats.
The two of them agree also on the new policy combinations that enabled New Labour to reach out to a broader section of the electorate than old Labour could. In opposition it was Brown who devised the famous soundbite "Tough on crime; tough on the causes of crime," words that helped to propel Blair into the political stratosphere. Brown is keen to combine enterprise with fairness. These juxtapositions are at the core of New Labour, implying that apparent incompatibilities, the old dividing lines in politics, are wholly compatible and mutually dependent on each other. Blair would call this the third way. Brown never deploys that term.
As with the reform of public services, the juxtapositions have led to internal tensions when precise policies are applied to them. To take one example, for more than a decade Blair and Brown have stressed the importance of duties as well as rights. But problems have arisen with some of Blair's policy initiatives aimed at matching the soundbite. Last year Blair annoyed the chancellor by proposing that parents who failed to ensure that their children attended school would have their benefits stopped: they would not get their rights without assuming their parental responsibilities. Inevitably the worst offenders were the relatively low paid who were at work early in the morning, and thus unable to coerce their kids to school. At the moment when Blair was threatening to remove benefits, Brown was increasing the income of the same people through tax credits targeted at the low paid. Brown would be giving with one hand, Blair taking away with the other. The same situation arose when Blair proposed to withdraw aid to third world countries that failed to co-operate with asylum policy, at a time when Brown was proclaiming the government's triumph of writing off some third world debt. On these fronts Brownites see a frivolous approach to policymaking, while Blairites fume at what they regard as the constant blocking of experiments to address some of the biggest issues: the future of hospitals and schools, crime and asylum policy.
Finally, there is a third category of difference: neither personal style nor ideological conviction but rather differences over strategy-how you grapple with and sell issues, what your attitude should be to the middle class, or the left, or the rise of the populist right. On the latter, for example, Blair believes it must be addressed in Britain with high-profile action on crime and asylum seekers. Brown believes that the economy is central, economic insecurity being at the root of swings to the right.
Europe is a strategic issue too, although probably demands a category all of its own. They both agree about most of the substantial issues relating to the single currency. Blair worries as much as Brown about over-regulated markets in the eurozone and recognises the need for the sustained convergence of exchange rates. But while Brown wants to stick to the pragmatic, hard-headed, economic case for the euro, Blair is more willing to see it as a necessary part of exerting full influence over the future direction of Europe. And, as ever, Blair is in more of a hurry.
So, yes there are differences of tone, ideology and strategy between the two men. Yet both of them, brought up on four successive election defeats, constantly ask themselves the same question: how do we build a left of centre project in a country that voted for one of the most right-wing parties in the EU for nearly two decades? Sometimes they come up with different answers. The near death of the Labour party has produced a duopoly that can be fearfully cautious, but one that is also the most formidably creative and successful partnership in modern British politics. When Blair steps down-probably two years after the next election, if Labour wins-Brown will almost certainly succeed him. The evidence of this inquiry suggests that there would be a shift of emphasis, but not a big change of direction.
