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The war of the Scottish clans

The Home Office vs the Treasury: No. 10 has become the Department for the Prime Minister’s Legacy, leaving the two great domestic departments to slug it out. But does John Reid have what it takes to thwart the Chancellor’s ambition for the top job?

31 May 2006

5:41 PM

31 May 2006

5:41 PM

The Home Office vs the Treasury: No. 10 has become the Department for the Prime Minister’s Legacy, leaving the two great domestic departments to slug it out. But does John Reid have what it takes to thwart the Chancellor’s ambition for the top job?

When John Reid was appointed Home Secretary last month, his staff presented him with a rather macabre gift: a league table of the shortest-serving secretaries of state in the department’s 225-year history. With each passing week he could count how many people he had outlasted. Mr Reid loved the present, especially as he had already beaten the 2nd Earl of Shelburne, who — according to the Home Office briefing at least — had lasted only six days in 1782. Some of Mr Reid’s predecessors managed a whole decade, but none faced the task which has fallen to him. Not only must he repair the Home Office; he must also make it fit for battle with HM Treasury.

For the past nine years the dominant narrative in British politics has been the struggle between No. 10 and No. 11. The struggle is now over; the Chancellor has won, and even those who work for Tony Blair cannot deny he is just playing for time. No. 10 has become the Department for the Prime Minister’s Legacy, drafting lengthy speeches about geopolitics and preparing to launch Mr Blair on a Clintonesque retirement around the world’s lecture circuits. His authority has drained away, his power is gone. It is over.

Rather than accept defeat, however, the Blairites hope to keep their torch burning inside the new glass-fronted headquarters of the Home Office. Mr Reid is to be given all the support he needs to turn the wreckage of that department into something it has not been for years: a political power base that can stand up to the Treasury. Should Mr Reid pull off such a feat, an increasing number of Blairites believe with stubborn optimism that he could successfully challenge Mr Brown for the top job.

The Reid vs Brown enmity has its roots in the murky tribalism of Scottish politics. Mr Reid fought his way up through the sectarian politics of the west coast, where politics is gangland warfare by other means. Mr Brown grew up on the more genteel east coast and cut his teeth in university politics. He started assembling his parliamentary base soon after his election to the Commons in 1983; yet Mr Reid kept his distance. Even today Mr Reid refuses to acknowledge Mr Brown’s semi-official status as leader-in-waiting. That alone encourages his colleagues to ask whether he might just have what it takes to be a plausible challenger.

Appetite for such a candidate is growing by the week. ‘The key is the polls,’ says one No. 10 source. ‘Not a single one shows Gordon able to beat Cameron. So people in the party are starting to ask finally, well, who else might do the job? If John can get some really good headlines, he will have a chance. He understands how to mobilise people, and he has a huge machine at his disposal now. The question is: can he control it?’

Mr Reid, I am told, was genuinely staggered by what he discovered at his new department. He believes that nothing is properly organised and that nothing works. To No. 10, this is the point. ‘Although the odds against John are huge, it gives him a real power base if he can turn the thing round,’ says a Downing Street source. ‘He’d be a hero if the Home Office suddenly became a good news story. It’s a tall order. But it’s the last shot in the locker.’

Mr Reid’s whirlwind tour of the Cabinet — seven jobs in seven years — has given him no time to learn how to navigate the bureaucratic labyrinth he now needs to master. Mr Brown, by contrast, is the Gollum of Whitehall, familiar with every cavern and passageway in the government system.

One senior Brownite doubts whether Mr Reid has grasped the size of his task. ‘John’s in deep now and he’s going to learn what it’s like to run a big political operation when you’re under serious fire yourself. Don’t forget, Gordon’s been at this for nine years. He knows how to use the Treasury as a base. John’s sounding off, but he’s out of his depth.’ The Chancellor is under no illusions as to what No. 10 is up to, nor its true ambitions for the Home Office. He is lying in wait.

Since 1997 Brown has honed the Treasury into the perfect bureaucratic weapon. ‘They leak your policy to the media so it is portrayed to the parliamentary Labour party in the worst possible light,’ explains one of the Treasury’s former Cabinet victims. Licensed rebel MPs can also threaten a Commons rebellion, providing political cover as the Treasury demands concessions. The final Bill then staggers out, perforated by Brownite bullet holes. One of the reasons Mr Blair has achieved so little in nine years of power is that his boldest ideas never survived the Treasury attack.

This is not, of course, the first time the two great domestic departments have squared up to each other. Harold Wilson’s government accommodated serious tension between Jim Callaghan at the Treasury and Roy Jenkins in the Home Office, both of them vying for the top job. Wilson kept the rivalry going with a twist when he swapped the two men over after the devaluation debacle of 1967. What has changed since then is that — thanks to Michael Howard — the Home Office is now a profoundly political department; it remains a managerial nightmare, as Mr Reid has already discovered. But the politicisation of the Home Office by Mr Howard and by his Labour successors, especially David Blunkett, has made it a plausible base for an aggressive leadership attempt.

Some Blairites already jokingly refer to the Home Office as ‘campaign headquarters’. Indeed, Mr Reid’s first move in his new job was to install a second telephone line to deal with political calls — which officials took as a signal that he will be the most politically driven home secretary for a decade.

To follow in the footsteps of the ten home secretaries who have become prime minister — including Peel, Palmerston and Churchill — Mr Reid first needs ideas. And here Mr Blair has sent him formidable help in the form of Liam Byrne, an entrepreneur who became an MP two years ago. Last September he published an audacious critique of Brownite electoral strategy in a Fabian Society pamphlet. ‘A sharp swing to the Left won’t take us back to the glory days of 1997. Nor will binning the reform manifesto on which we’ve just stood and won,’ he concluded.

This required little decoding, and from that moment Mr Byrne was a marked man (‘Bleed Reid, Burn Byrne’ is the Treasury slogan). So Mr Blair has sent him to work for Mr Reid, knowing that they have the brainpower to forge an independent Home Office reform agenda. They are likely to challenge the top-down control mechanisms beloved of the Treasury. But they will need resources. Mr Reid has already declared his department ‘inadequate in terms of its scope, its information technology, leadership, management, systems and processes’. He needs to prepare it for a country where, since 1997, immigration has doubled and violent crime trebled.

It is a Catch-22 for Mr Reid. To defeat the Chancellor he needs cash — yet the Chancellor controls the cash. This advantage is not lost on the Brownites. ‘Look at the spending review coming up and ask yourself the obvious questions,’ says one. The Chancellor is currently fixing the budget of every government department until April 2011, thus ensuring that the Treasury flies on Brownite autopilot once he has left for No. 10. It will be a tight spending round, with generous rises already announced for health and education. The Treasury has every excuse to deny Mr Reid the budget he badly needs.

Would Brown leave the Home Office enfeebled simply to deny a tactical advantage to a man who cla
ims he has no intention of standing? Mr Blair is warning the Chancellor that he cannot starve the Home Office, because left-of-centre governments lose power if crime and immigration are deemed to be out of control. But he is barely listened to. ‘Relations between Tony and Gordon are worse even than people know,’ says one No. 10 source. ‘It’s all played out on an institutional level and it is incredibly exhausting. Gordon’s mind games are beyond belief, like he’s acting just for the hell of it.’

As the Chancellor squares up to Mr Reid, their various lieutenants will also join battle. Mr Byrne will face the equally gifted Ed Balls, long-standing adviser to Mr Brown and architect of Mr Brown’s better ideas, including Bank of England independence. After becoming an MP last year, he is now a Treasury minister and his real job is — as ever — arming Brown with intellectual ammunition.

The third man in the Treasury troika is Damian McBride, who has become a master of the ‘Saturday night drop’ method of spin, whereby the Chancellor’s enemies are guaranteed a nasty surprise when the Sunday newspapers are delivered. ‘You can see Brown’s people planting anti-John stories already,’ laments one Blairite, detecting McBride’s hand in the revelation that Reid spent the Bank Holiday weekend in France.

Mr Reid’s own teeth are sharp enough for him not to require an attack dog. His special adviser, Steve Bates, is tasked with putting political pressure on Civil Service press officers who resent such instructions. The Reid–Bates combination was blamed for driving Simon Wren from his role as Ministry of Defence press chief; he privately complained of incessant politicisation and sought refuge in the Home Office. To his dismay, he is now reunited with his old tormentors.

While Mr Brown commands a united Treasury, Mr Reid must do the best he can while facing enemies on all sides — not least David Davis, the shadow Home Secretary, who recently calculated it takes him 11.9 months to dispense with an opposite number. But Mr Reid’s supporters’ network was boosted after a weekend retreat for Labour top brass at Selsdon Park in Surrey last month, where he dazzled by displaying precisely the blend of abrasiveness and charm required to defeat David Cameron.

Mr Reid needs a power base more than a fan base, and fears it will take months for the Home Office to shape up. He recently moaned that every time his civil servants gave him a statistic, it had to be revised a few days later. It will dismay him to learn that, according to the National Archives, the 2nd Earl of Shelburne held his job for a full four months, not the six days listed in the welcome pack given to Mr Reid by his officials.

Shelburne, at least, went on to the top job. But the Home Office has its fair share of political gravestones. Mr Reid’s list includes such figures as Rab Butler, Herbert Morrison, Kenneth Baker and Michael Howard — all men who longed to reach No. 10 and failed. From now on, Brown’s mission will be to ensure that Reid’s name stands among them, and that the Home Office retains its record as a springboard to oblivion.

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