One can only imagine what went through Alistair Darling’s mind last weekend, as the scale of the McBride affair became evident. In his Budget next Wednesday, the Chancellor faces a political mission which was already next to impossible before the email story broke. Now his task has become downright laughable in its scale. To produce a budget with the economy in freefall is hard enough. But to do so with the government disintegrating all around you is scarcely worth attempting. In theory, Damian McBride’s resignation was simply the departure of a spin doctor, already relegated to a ‘back-room’ role. But nobody with the slightest knowledge of the Brown court believes that for a second. This is a moment of deadly, perhaps terminal, peril for the Labour government.
The emails that Mr McBride composed — lurid smears against Tories and their families — are devastating precisely because they are not, as Number 10 disingenuously claims, the isolated ravings of a lone special adviser. On the contrary: the messages between this senior adviser to Mr Brown and Derek Draper, the Labour blogger, have for the first time revealed in unvarnished detail how Mr Brown has been operating over the years — and the methods he deployed to secure his path to power. As chancellor, he systematically recruited attack dogs and dispatched them to destroy some of the most able people in the Labour party, with exactly this sort of smear and innuendo. And while it worked for him, it has proved fatal for his party.
As Britain prepares for what may prove to be the most bleak budget in peacetime, it is worth remembering that the same tiny group of people lies behind the current political and economic crisis. Many financial scandals can be traced back to a testosterone-soaked trading room where a bunch of hard-working, hard-drinking young men came to believe a little too much in their prowess. So too should our focus fall on the team assembled in the Treasury between 1997 and 2007, a gang which played the game according to their own brutal rules.
It started with Gordon Brown and a trio of advisers, Ed Balls, Ed Miliband and Charlie Whelan, whom he took with him to the Treasury and transformed into his personal praetorian guard. After Whelan departed, there was a vacancy for an aspiring assassin. A Labour man, Ian Austin, tried his hand for a while but yielded to a young civil servant recruited from the VAT division: Mr McBride. This is why Mr Brown cannot plausibly disown him. He plucked Mr McBride from obscurity, trained him and promoted him — in exchange for utter loyalty.
Scroll forward 12 years and the same team is still in place — albeit in a different formation. The office has moved to 12 Downing Street, where the PM has established his own ‘war room’ (for Team Brown, of course, government is war by other means). There Mr McBride sat, even when he was theoretically demoted last autumn. On Wednesday afternoons, Mr Balls would return from the Schools Department to chair meetings with Mr Whelan, now political director at the Unite trade union, in attendance. No records are kept of these all-important gatherings.
The ultra-Brownites have not lost the awesome self-assurance which marked them out at the Treasury. They tore up the Bank of England’s power to regulate banks (to calamitous effect). They devised a disastrous ‘golden rule’ for fiscal stability, which allowed Mr Brown to defy all economic wisdom by borrowing massively in an upturn. They concocted accounting tricks to conceal the extent of the consequent debt. In their own minds, they were masters of the political universe, intellectually superior to and politically tougher than the Blairites.
Mr McBride, for his part, took it upon himself to rewrite the rules of political assassination. As one former minister told me: ‘Those emails we saw on Easter Sunday showed exactly how Brown operated. If you crossed him, you’d find a gossipy story about you planted in the papers. Usually in the form of a rumour in the diary columns, never a straight political attack. Sometimes true, sometimes not.’ It would be impossible to tell if the stories were Mr McBride’s handiwork or not — naturally, no fingerprints were left. But the target of the smear was left in no doubt: there was plenty more where that came from.
The tactics exposed last weekend left even Labour hatchet men open-mouthed. George Galloway, expelled from the party, wondered aloud how McBride could have smeared the wives of his victims. ‘Even the Mafia don’t attack each other’s wives,’ he said. But there is no such code for Team Brown. When David Miliband was considering whether to challenge Mr Brown for Labour’s leadership, he worried that details of the adoption of his children from America would find their way into the newspapers.
One Labour privy councillor says that she protected herself in cabinet by delivering a threat to the Prime Minister’s face. ‘I told him that if he sent his dogs after me, I would bite him back far harder,’ she said. ‘It sounds brutal, but he seems to understand that.’ Strikingly, it is female Labour MPs who have been most resolute in their response — they detect a certain element of male thuggery around the Prime Minister. Those who rose against him last summer were almost all women.
And while Alastair Campbell was ruthless with journalists — and held his own against the Treasury — other Blairite ministers had no apparatus to match that of Mr Brown. The special advisers serving Blairite ministers failed to respond in kind to Mr McBride — who was, to give him credit, an incomparable master of the dark arts. When Peter Mandelson called him ‘McPoison’, it was a backhanded compliment from the Prince of Darkness himself, sensing an adversary who might be his equal. Mr McBride hit harder and swooped lower than anyone in Whitehall. Party loyalty didn’t enter into it (he didn’t even join Labour until 2005). He served Brown, and Brown alone.
‘This is why Gordon may go down in history as the single-handed destroyer of the New Labour project,’ says one former Cabinet member. ‘One of the ironies of it all is that he has been much more vicious in opposing others than anyone has in opposing him.’ To hear this from a grown-up politician sounds a little strange: were they all so scared of a former VAT official? Could they not have fought fire with fire?
The ex-Cabinet member continues: ‘Look at Labour’s history. Ever since Tony Benn’s 1981 deputy leadership election, we have had the sense that division finishes you. So even when attacked, people have chosen not to respond because that makes the situation absolutely terminal. But Gordon has been absolutely cynical about it. He has not been bound by that code and everyone else has.’
Certainly, John Reid (whom, for the record, I have not spoken to) did draw a strange pride from his refusal to respond in kind. I was once at a dinner he held for about a dozen journalists where he challenged us to name an occasion, there and then, when he had briefed against Mr Brown. Or, for that matter, when any of his advisers had done so. No one said a word. So perhaps Mr Reid and his acolytes did dutifully observe a code of honour. But — in the words of one jaded special adviser — ‘look where they are now’.
Mr Brown’s claim to be directed in all his actions by ‘a moral compass’ would seem to be the height of hypocrisy, given that he assembled such a close-knit team in the Treasury and then Number 10, and would undoubtedly have known about the style and esse
ntial trajectory of their methods, if not the day-to-day details. But the PM apparently sees no contradiction. His Labour victims sense that he believes the end justifies the means. He and his team take their direction from the fabled ‘moral compass’ — and follow the path by any means necessary, fair or foul.
The tragedy for Labour is that Mr Brown’s awesome attack machine is useless when deployed against the Tories. Crying ‘Tory toff!’ didn’t work at the Crewe & Nantwich by-election last year. Even if Mr McBride had succeeded in his ambition to spread a rumour that Mr Cameron had contracted an ‘embarrassing illness’, the electorate was never likely to vote on the basis of medical trivia. It was perhaps from this sense of desperation that he colluded with Derek Draper, another rehabilitated spin doctor, to produce a website named Red Rag to disseminate smears online.
So who else knew? Could it really have been just Mr McBride, acting alone, not telling any of the men with whom he worked so closely and socialised regularly? I asked Ed Balls, the Schools Secretary, who flatly denies any knowledge of the operation. Tom Watson, who has been recruited to Mr Brown’s inner sanctum as a reward for his work in leading the putsch against Tony Blair, has instructed a firm of lawyers to growl at newspapers who suggest he knew about Red Rag. ‘Imagine that happening in six months’ time,’ a Cabinet Office source said to me. It is the worst imaginable backdrop to any election campaign.
Mr Watson’s legal threat makes clear how badly Number 10 wants this story to go away for ever. Yet it may well run — and not because of any action taken by the Tories, who are looking on in awestruck amazement. This is being seen by many within the Labour party as a sickness that needs to be dealt with now: the bully-boy tactics of the trade unions on whom Labour almost exclusively relies for financing, transplanted to Number 10 with appalling consequences. There is specific alarm at the Whelan-McBride-Balls-Brown axis at the heart of all this and what it may do in the future.
Since being recalled from his semi-retirement, Mr Whelan has lost no time stirring up controversy and has already faced formal allegations of bullying at Unite from John Cryer, a former Labour MP. While Unite donations certainly help ensure that Labour pays its bills every month, many MPs are concerned at what it is being given in return. Mr Blair’s reform agenda has already been sacrificed; and there are other, cruder spoils, such as the elevation of Ray Collins, a former Unite official, to the role of Labour general-secretary. There is also talk of Unite officials demanding safe seats at the next election.
One Labour privy councillor sees the stakes in the starkest terms: ‘We risk going back to the worst days of what Neil Kinnock fought against.’ And there are, indeed, many who see in all this the beginnings of a struggle for Labour’s soul: the battle to prevent the party being governed through back-room deals with the unions. It is Frank Field, rather than a senior Tory, who is talking about a ‘darkness at the heart of Labour’. Some see here the bullying tactics against which the Gang of Four rebelled when Labour split in 1982.
One of the favourite topics among Labour MPs is whether the party will be in a fit state to win the election after next. It is taken for granted that the Tories will be in power but running out of popularity and momentum as they confront the economic disaster that Mr Darling will be describing next week. But what then? Would New Labour — the party that crushed the Tories in three landslide elections — still exist? Or will it have been swallowed up in a reverse takeover by a trade union?
Thatcher was seen as a little cruel, but efficient. Blair was seen as well-meaning, if a little ineffectual. ‘Damiangate’ and Wednesday’s budget may combine to leave Gordon Brown’s party with a crushing tag: corrupt and useless. That his economic tactics have almost bankrupted the country is bad enough. But to bankrupt his party morally and politically is — to Labour MPs — an unforgivable double whammy. With McBride now gone, it will not be long before some start to seek vengeance much higher up the ladder.