‘Three Men And A Loan’: The Fall Of Peter Mandelson

Jeremy Blackburn

Originally published in 1998/1999, Issue 2

The Christmas of 1998 will be seen by political pundits in years to come as the first crisis to assail the ‘New Labour’ government of Tony Blair. I myself, remember sitting at home, having just returned from a short walk with the dog, to find that Geoffrey Robinson had resigned. The following day a similar series of domestic events proceeded the fall of Peter Mandelson. Within days Charlie Whelan had cleared his desk too. Sadly, my golden retriever failed to understand why I was riveted to the television and radio for the rest of the week. This was the greatest of presents any student of politics could get since May 1997; senior members of Blair’s ‘whiter than white’ government turning out to be mired in sleaze. The on-going saga of Geoffrey Robinson had produced a Cabinet resignation, followed by a Treasury spin-doctor’s swift departure; the Conservatives were stunned, the media overjoyed and the general public intrigued.

Peter Mandelson was the great manipulator, architect of New Labour, and the man ideologically and personally closest to Tony Blair. Yet, Peter Mandelson was also the ‘Minister Without Portfolio’ who had failed to get onto the National Executive Council of the Labour Party, the alleged father of the Blairite ‘control’ tendency and a man with serious social ambitions external to government. His career could well have been as great as that of his grandfather, Herbert Morrison, but for the discovery, by an ‘off-message’ journalist, Paul Routledge, of the financial dealings which underpinned Mandelson’s position. While financial difficulties was the first news story to break in the morning papers, for the hierarchy of New Labour this represented something far closer to home, and consequently far more destabilising.

The Loan Scandal Explained

Geoffrey Robinson was the millionaire who gave Mandelson the loan he needed for his West London stylish abode; but Geoffrey Robinson was also under scrutiny by Mandelson’s Trade and Industry Department due to dubious business dealings, which in turn was fuelling debate as to whether Robinson should be allowed to continue as the Treasury’s paymaster-general. As the controversy surrounding this ‘personal arrangement made between two friends and colleagues when we were in opposition’ continued, a darker side to the equation was unfolding within Westminster itself. Robinson’s offshore funds and links with the disgraced Robert Maxwell would make him a political target later, but following the victory of Labour in May ’97, he as a member of Gordon Brown’s select advisory team, is said to have approached several key members of the Cabinet with offers of loans. This was done in conjunction with Charlie Whelan, Brown’s own Treasury spin-doctor, as a means of allying more ministers to the Brown camp. The fact that this plan was hatched shows just how much Blair’s government has been riven with personal discontent since the General Election. Mandelson and Brown’s mutual dislike has been a constant source of friction at higher levels, stemming from Mandelson’s support for Blair rather than Brown during the Labour leadership contest.

It was the so-called ‘Hotel Group’ of Brown’s closest advisors, Whelan, Ed Balls, Ed Milliband and Robinson, sometimes joined by the Nick Brown when he was chief government whip, that covened to carry out their plans for furthering the Brownite cause. Whelan’s links with Paul Routledge, led Mandelson’s supporters to believe that it was Brown’s department if not Whelan himself, who had leaked details of the loan to the press. Mandelson was well aware of the activities of Whelan since his collusion with Routledge over Brown’s biography, which lifted the lid on the Chancellor’s bitterness at losing to Tony Blair; these revelations led to weeks of tit-for-tat briefing campaigns between Mandelson at No.10 and Whelan at the Treasury, to the chagrin of Blair. Conspiracy theorists have argued that the decision to release the cat from the bag was taken by Whelan alone when he saw that Robinson’s downfall was imminent – regardless of this, it is true to say that it was Routledge’s book which provided the fuse for the bomb which dislodged Mandelson from office.

In fact, Mandeslon considered leaking the loan before Routledge could publish. His advisors, who included Derek Draper, toyed with releasing it to the Sunday Telegraph as an act of damage limitation, but by this stage Alistair Campbell had become involved. Campbell realised that the story, if it was leaked too soon, would clash with No.10’s press-releases to justify the bombing of Iraq; when Mandelson returned to Notting Hill the weekend following this, he realised that it was the Gulf crisis and Northern Ireland peace settlement that had saved him up until then. Why Mandelson allowed himself to get into such a dangerous fracas pushes his detractors and defenders into admitting that in reality they know little about the man who made his name controlling others, only to be undermined by his own miscalculation. There followed a meeting with Alistair Campbell and the recently appointed ‘enforcer’ Jack Cunningham, in which he was persuaded that, for the sake of the government’s stand on public morality, he really should resign. Cunningham’s comment on national radio next day that Mandelson had made an error in his handling of affairs signalled the end, if indeed political pundits had ever doubted the outcome.

Political Fall-Out

Mandelson lacked an independent power base in the Labour Party, a fact friend and foes were well aware of; he existed at such a high level due to his fantastic competence and the benefit of prime ministerial patronage. Blair, perhaps unwittingly, underlined Mandelson’s lack of grassroots following when he told The Mirror that the business community would miss him most; to the average Labour activist he was, as Clare Short had put it during his early spin-doctoring days, “someone who dwelt in the dark”. For party leaders in Hartlepool, he was a different man to the persona pushed by Central Office, but this was not simply a local matter, despite the protestations of the Hartlepool Mail. Trade Union equanimity at the fall of the cabinet’s most business-friendly member was massive, but also short lived. They, and Brown’s camp, were only too well aware that the patch of Northeast England that is Blair and Mandelson’s has become a breeding ground for New Labour Blairites. Again for the conspiracy theorists, the placement of obvious Blairites, Stephen Byers to the DTI and Alan Milburn to Robinson’s post in the Treasury, further circumscribes the ambitions of Brown’s camp.

Mandelson’s exit meant that Blair had now lost two ministers to ‘personal misjudgement’. True, Ron Davies did not resign as the price of party infighting, but the Mandelson and Robinson affair speaks of heavy factional fighting within the ruling party, almost as much as Imperial Rome.  Soon after Mandelson’s departure an alliance between Prescott and Brown was muted in the papers, forged it was alleged, to save Charlie Whelan; bluntly speaking, an almost wasted effort, as Whelan’s departure had already been decided. Certainly, many members of the Cabinet tacitly backed Whelan’s removal, fearing no doubt that he would remain a powerful weapon with which to carry out further infighting.

Despite this damaging series of events, Blair emerges the stronger. In late 1997 he had successfully confronted a whispering campaign that Brown was de facto Prime Minister to his President, and thence, attempted to reconcile Brown and Mandelson. During the 1998 summer reshuffle Blair removed a large number of Brown’s clique, adding to which is the resignation of Robinson; certainly he is aware that he must be careful of pretenders to his throne within the cabinet. Not by coincidence did the scandal reach its peak while Blair was holidaying in the Seychelles. His political pruning has not removed the centrifugal division harboured by the cabinet though, that of Old versus New Labour. It will only be a matter of time before this resurfaces, to yet more destabilising effect, driven not by policy, but by personality.

Blair’s public pledge to be ‘whiter than white’ meant that unlike the previous Conservative Administration under Major, he has dealt with the loan scandal swiftly and decisively, unafraid to sack and demote. This was a symbol of his reassertion of control, showing that he is the man at the pinnacle of power within the party and the government. With a large number of colourful and individualistic members of cabinet, it is often easy to see Blair’s middle-England image being oppressed, but his ministers are only too well aware that Blair has never believed in ‘primus inter pares’, and is their benefactor of patronage. Blair is too skilled, too astute, to allow this scandal to do anything other than allow the chattering classes to chatter further. The Conservatives got more from their repeated attacks on Robinson than they could ever have hoped would have fallen from the stars; yet it has not helped their position, nor allowed them a platform to engage New Labour, other than further accusations of ‘cronyism’. Blair’s government has suffered a weakened image, not a wound to its power.

A weakening of his governmental control at the departure of Mandelson is perhaps closer to the mark. Blair relied upon Mandelson as an agent of discipline, a guarantor of public trust and as a man with a reputation for success. Mandelson was possibly the closest minister to Blair in the cabinet in terms of ideological belief; his passing will not only derail the attempted detribalising of politics as a whole, but more specifically, the Labour Party. The entire Liberal Democrat and Labour co-operation venture is now in jeopardy as one of its main architects has gone; only the future can tell if the Lib Dems get proportional representation and a degree of alliance with New Labour. ‘The Project’, as New Labour policies have been dubbed in ‘Cool Britannia’, has been weakened by the consequences of the loan scandal; its recovery is not as certain as some would like to think, particularly with one of its key originators sent to the back benches.

Mandelson’s Prospects

Mandelson’s prospects of a speedy return to frontline politics are slim, and both his friends and enemies know it. Mooting of a reappointment to the role of ‘backroom fixer’ in charge of electoral strategy were put down. Some papers suggested he might run for Mayor of London, but in Blair’s eyes that would probably be a waste of experienced manpower in the face of determined hard-left opposition. More likely, when the time comes, is that he could command an all-party campaign to win the referendum on Britain’s entry into the European Single Currency.

Mandelson on the back benches will continue to help with the realignment of the centre-left, forging ahead with Blair’s idealistic ‘inclusive’ politics. He will probably involve himself greatly in constituency work, while promoting ‘good works’. On the other hand, it would not be impossible to rule out a role ‘With Portfolio, Not Minister’. Millbank and many pro-Blair think tanks, particularly those engaged in constitutional reform, will still seek his advice. The Blair-Mandelson axis of New Labour’s government has been broken; it is unrepairable this term in office. In the second or third to come for New Labour, the rehabilitation of Peter Mandelson would seem assured. We are assured a Blairite future, a future engineered back in the 1980’s by Peter Mandelson.

He is too much of a powerful figure to remain exiled from the Machiavellian corridor politics of Westminster. In a sense, those of us who love nothing more than the colourful scene of British politics can only wait till one of its most determined and interesting characters’ returns. Blair will call upon Mandelson in his hour of greatest need; what and when that will be are matters of conjecture. I can only say that this was but a blip in the grand-scale of ‘The Project’. Prepare for the day Mandelson re-enters ‘Blair’s Rome’, whether over the rubicon or not.