Peter Oborne

A nasty plot in Pall Mall

Peter Oborne reveals the Blairite capture of the IoD, the only mainstream business organisation to speak out forcefully against the euro, regulation and tax

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One important factor in New Labour’s special kind of political success has been its ability to capture independent institutions or individuals and convert them into accomplices. Again and again Tony Blair has pulled off this feat. In his early days he co-opted organisations as diverse as the Country Landowner’s Association, the CBI, the Government Information and Communications Service, the BritaininEurope campaign, and the Liberal Democrat party.

The New Labour technique was simple. It targeted vulnerable individuals right at the top of the relevant organisation. An interesting early example was Ewen Cameron — now Sir Ewen — at the CLA. He was flattered by Downing Street, and some came to view him as a partial propagandist for government policy. Another early example was Adair Turner when director general of the CBI. Plenty of businessmen felt that under Turner — now a senior Downing Street adviser — the CBI was far too friendly to ministers. The supposedly independent BritaininEurope campaign saw a number of business leaders — Colin Marshall of British Airways, given a peerage by Tony Blair, was the most egregious example — turned into apologists for Tony Blair’s prevarication over the euro. There are dozens of other cases in point.

This kind of co-option works at two levels. Individually, the Prime Minister uses his personal charm and powers of persuasion, often with the additional allure of guarantees which he would typically later break. Paddy Ashdown’s diaries give a telling account of this process of being wooed, embraced and then betrayed. At the institutional level the case would be made that ‘real influence’ was to be gained by working privately with ministers rather than making outspoken criticism. It was a very seductive argument, all about quiet deals and secret motives. It is how Tony Blair always likes to operate: witness his own relationship with George Bush.

One sign that New Labour retains some of its pristine vigour is that this determination to absorb opposition within the Blairite big tent is unabated. The latest example of institutional capture concerns the Institute of Directors, which represents some 55,000 members from its imposing offices in Pall Mall. Until recently the IoD would give loud and purposeful voice to business anxieties. Indeed, for a period after 1997 it was the only mainstream business organisation happy to speak out forcefully on the euro, regulation and the growing burden of taxation.

In the last 12 months the IoD’s media profile has died away, while criticism of government now comes sotto voce. The story of how this change occurred is a shocking one. It involves the apparent use of private pressure by government, and a smear campaign against one key employee, Ruth Lea, the former IoD head of policy.

Familiar to the general public through her lively performances on BBC Radio Four’s Any Questions?, Lea has enjoyed a long and glitteringly successful career spanning the public and private sectors. After two decades in the Civil Service, she worked as a City economist and then as economics editor for ITN before being hired by the IoD. She pursued this role with great flair — in a sense too much flair, because many ministers, above all Trade Secretary Patricia Hewitt and Chancellor Gordon Brown, viewed her with something close to hatred. There was relief within government when Lea suddenly quit the IoD late last year. She has since maintained a dignified silence.

In fact Lea was sacked. The true story of her departure — which has been followed by a steady trickle of other senior IoD figures over the past few months — can now be revealed. Sackings occur in the private sector all the time. Two factors made this particular dismissal not merely unusual but disgraceful. The first was that George Cox, director-general of the IoD, had discussed Lea at a private meeting with Sir Robin Young, permanent secretary at the Department of Trade and Industry, just two months before. We know this because the conversation was recorded in an internal DTI minute dated 27 August 2003, later obtained by Ruth Lea herself using the Data Protection Act. The key section of this extraordinary document referred to ‘the possibility of achieving change by collaboration rather than the usual upfront public assault route (which X attributed mainly to Ruth Lea)’. George Cox agreed this week that he is the IoD figure referred to in this minute.

But Cox was not merely ready to bandy his employees’ names in conversation with the permanent secretary of the DTI. Much worse than that, when questioned about Lea’s departure, he questioned her stability. IoD colleagues say that he told them he felt obliged to bring in a psychiatrist to help Lea at the time of her sacking. When I put this to Cox this week, he denied it, saying that an ‘occupational psychologist’ had been brought in. When I quoted a colleague who said he had described Lea as ‘out of control’, he replied that ‘if you look at any board minute you’ll find nothing like that at all’.

Coincidental or not, attack on the sanity of colleagues is a favourite New Labour smear tactic. Downing Street famously attacked the Chancellor of the Exchequer for his ‘psychological flaws’, while secret briefers at one stage questioned Mo Mowlam’s mental stability. It is worth noting that nobody apart from Cox has ever questioned Ruth Lea — now established as director general of the Centre for Policy Studies — in this way. The formidable Trevor Kavanagh, political editor of the Sun, who has known her for many years, says, ‘I have always found her thoroughly briefed on every subject, thoroughly professional and able to sum up political and economic matters in a way that newspapers can respond to.’ Christopher Fildes, doyen of economic correspondents, declares that she is a ‘lively, cheerful, sensible and stable person’.

Cox did not only discuss Lea in his conversation with Sir Robin. He also gave vent to his thoughts about Lord Young of Graffham, for many years president of the IoD. The 27 August minute records that ‘X persuaded Lord Young to stand down as president and will either not replace him or will find someone non-party-political.’ George Cox insists that he played no role in persuading Lord Young to stand down. ‘If that’s what’s minuted, that’s not true,’ he told me. When I put it to Cox that he had no business discussing internal IoD personnel matters with government, he replied, ‘You can hardly discuss the IoD without discussing colleagues and where you stand on things.’

The current IoD newsletter shows that Cox has won his reward. Headlined ‘IoD Influence at Number Ten’, it boasts how the ‘board and council were granted a much valued invitation to 10 Downing Street on the evening of 21 April for a private meeting with the Prime Minister’. The article reveals that Tony Blair ‘commented upon the IoD’s increasing influence in helping ministers shape future government initiatives’, adding that the evening ended with ‘a tour of Downing Street’. The move from IoD independence to ‘collaboration’ — to quote the word used in the DTI minute — is now complete. It is an unappetising tale. Ministers are entitled to exercise what pressure they can. But IoD members may feel that their board has jumped on to a bandwagon that is grinding to a halt.