Gordon Brown: Prime Minister. Tom Bower

to elbow his way brutally past those he despised. The conversations ended with Blair losing his temper. Brown, he said, lacked the resilience to withstand personal criticism from his peers, and feared failure. He was a coward. The scales, Blair would tell Anji Hunter, had fallen from his eyes. In the future he would be less deferential towards Brown, less obedient. ‘He chickened out, taking the easy option,’ judged Blair. Others were less critical. ‘Gordon won kudos for not standing,’ said Tam Dalyell.

      Five years later, Brown presented his faint-heartedness as loyalty. ‘I felt I owed a debt of gratitude to John Smith,’ he told Paul Routledge. ‘I felt I had to be loyal. It was for no other reason. I had worked with him for almost eight years on the front bench, and it was right for me to be loyal. I thought the Labour Party was more ready for change than people imagined, but I never thought for a minute of standing against John Smith.’ He considered standing for the deputy leadership, but was turned down by Smith, who felt that two Scotsmen would be electorally unattractive. In turn, Blair rejected Smith’s offer to be his deputy. Revealing his prejudices, Smith chose Margaret Beckett, a left-wing trade unionist certain to antagonise middle England. To minimise their embarrassment and pose as ‘agents of influence’, both Brown and Blair telephoned journalists to explain why they were not standing for the deputy leadership. Few were convinced.

      Brown, previously tipped as the leader-in-waiting, was further deflated when, on 26 July 1992, the day after John Smith’s election victory, the Sunday Times devoted five pages to a profile of Tony Blair as the party’s next leader. Two days later Charles Reiss, the London Evening Standard’s political editor, published a percipient prediction under the headline ‘Coming War Between Brown and Blair’. The whispers in Westminster, reported Reiss, revealed a depth of unhappiness among English Labour MPs about Smith’s appearance as a ‘smiling uncle’. Compared to Blair, who looked approachable and urbane, the newly crowned leader was from the wrong generation. Even the cautious and rhetorical Brown, he wrote, offended some as old-fashioned. Some observers wondered whether the rivalry between Brown and Blair would mirror the similar battle twenty years earlier between Roy Jenkins and Tony Crosland, whose long friendship was corroded by their acrimonious contest for the Labour leadership during the 1970s. The speculation was short-lived. The party was preoccupied by yet another autopsy about its failure to overturn a Tory government responsible for a major recession. The debate identified several culprits, including Gordon Brown.

      Shortly after his appointment as John Smith’s shadow chancellor, Brown hosted a drinks party in his office. In the sombre atmosphere, Peter Mandelson, the newly elected MP for Hartlepool, was openly rebellious. ‘The party,’ he said loudly, ‘has to modernise, and John Smith is not up to it.’ Mandelson’s disloyalty caused no surprise. The dissent was not directed towards Smith alone. Mandelson’s audience knew that in other rooms Brown was under attack for having approved Smith’s discredited shadow budget. Brown’s silence was deemed to be incriminating. He dismissed the criticism as irrelevant. In 1997 he would claim that his new position as shadow chancellor had bestowed on him the power to challenge Smith ‘to change our whole economic policy’. That was undoubtedly the Herculean challenge he set himself in 1992, but at the time many doubted whether he could overcome Smith’s conservatism, and whether the party could change sufficiently to avoid a fifth election defeat.

      The hunger for victory persuaded Brown finally to acknowledge the achievements of Thatcherism. He jettisoned any affection for Neil Kinnock’s ‘Red Rose’. That misty-eyed, superficial change of image had not neutralised the public’s perception that Labour would restrict options, dampen ambitions and nationalise fitted kitchens. On the contrary, Kinnock had reinforced ‘Basildon man’s’ perception of Labour as an enemy, keen to impose shackles on behalf of society. Until the Attlee legacy was repudiated, the new shadow chancellor knew, Labour could not pose as a party offering people opportunities. ‘We’ve got to work from first principles towards policies,’ he again told his advisers including Michael Wills, Geoff Mulgan and John Eatwell. The path back to power, he accepted, was for Labour to appeal to the middle class by changing its image and policies. The first obstacle was the party members, including himself.

      In July 1992 the party faithful were still cursing the ‘culture of contentment’. Gordon Brown hated ‘Basildon man’, the motivated working-class aspirant whom he damned as ‘a selfish, indeed self-centred individual’. To win ‘Basildon man’s’ allegiance, he decided to conceal his disgust and promote the new credo that ‘There is no clash between individual freedom and the advancement of the common good.’ In the frenzy of his writing and speeches, he appeared to abandon his attachment to the idea of the state ‘that all too easily assumes that where there is a public interest there must always be a centralised public bureaucracy’. The state itself, he acknowledged, could itself be a damaging vested interest. In his rush during the summer to compose a new ideology, there were inevitably contradictions. He abandoned pure socialism but espoused collectivism, arguing that individuals should group together for the common good. He abandoned state controls but wanted the markets to operate subject to such controls in the public interest. The new gospel was to revolutionise the Labour Party’s image, but only partially its substance. Gordon Brown could not break away from his life’s attachment to socialism. He urged the faithful not to despair, because ‘The truth is that our natural constituency is the majority who benefit from a just society.’

      In the new House of Commons, the Tories were soft targets. During the election campaign John Major had pledged, ‘Vote Conservative on Thursday and the recovery will continue on Friday.’ Instead, the recession had worsened. Unemployment was rising back towards three million, interest rates were increasing, property prices were falling, car workers were working short time, and the government was poised to announce massive spending cuts. Norman Lamont, the chancellor, was regularly lambasted for misleading the country that taxes would be cut, when in fact they were going up. Inexorably, an old-fashioned sterling crisis was about to explode. Devaluation from the exchange rate of DM 2.95 to the pound was the best cure, but Britain’s membership of the ERM rendered that remedy unavailable. Lamont sought help from the German central bank, but was snubbed. Germany’s economy was expanding while Britain’s was shrinking. Unusually, Lamont’s crisis was also Brown’s. He had supported entry into the ERM, and he rejected unilaterally devaluing sterling.

      The unfolding disaster fulfilled the predictions of Bryan Gould and other Labour opponents of joining the ERM. Their criticism was inflamed by Brown’s aggressive dismissal of their opinions. Robin Cook, supported by Peter Hain, Ken Livingstone and other anti-Europeans, wanted devaluation. Even John Smith supported ‘realignment’. ‘Labour,’ warned Smith, ‘should know the dangers of fixed exchange rates. Harold Wilson’s greatest mistake was to hold sterling against the dollar between 1964 and 1967.’ Gordon Brown disagreed, and insisted that Labour could never again be the party of devaluation. The party, he warned, would lose credibility by following such a policy. Tough on the new orthodoxy, he was sticking to the ERM; forgetting the modernisation gospel he had preached just days earlier, he promoted Old Labour policies of cutting interest rates and greater government investment. Using the identical lexicon as Harold Wilson twenty-five years earlier, he regularly lashed out at the ‘handful of shirt-sleeved speculators’ and City whiz kids dictating the lives of millions and the destinies of national economies. The outbreak of warfare in the party became focused on Brown, who appeared a confused ideologue.

      In early September 1992 the economic crisis escalated. The government’s defence of the pound was faltering. Brown’s support for remaining in the ERM was emphatic. ‘There are those like Lady Thatcher who believe that Britain should devalue,’ he wrote in the Sunday Express on 6 September, ‘and turn its back on Europe and the exchange rate mechanism with all the harsh consequences that would ensue.’ Brown’s alternatives to devaluation were state subsidies and increased taxes. Throughout that week, as the crisis intensified, he was telephoned by journalists and asked why the