Anatomy of a `Titanic feud'

He has been described variously as the Architect of New Labour and The Prince Of Darkness. Peter Mandelson is one of the most controversial and complex political figures of our age, and in the first extract from a new biography, Donald Macintyre reveals the bitter clash that threatened to blow the party asunder and traces the roots of Mandelson's fall

It was at Chewton Glen, a five-star hotel in Hampshire, early in September 1994 and less than two months after Tony Blair became party leader, that some of New Labour's keenest minds assembled in total secrecy to discuss the challenges ahead. On the evening before the brainstorming session, Blair, Gordon Brown and Peter Mandelson dined together with the express intention of deciding how the party would now be organised. Brown had arrived with several proposals for changes in personnel - including the installation of Michael Wills as deputy general secretary at Walworth Road. Blair was not keen on the idea, and Brown, expecting Mandelson to show the kind of support which would have been automatic a year or two earlier, was disappointed instead to find that he was on his own; Mandelson argued with his characteristic caution that more time for thought was needed.

After Blair went to bed, Brown and Mandelson stayed up for a nightcap. According to an account subsequently given by Mandelson in confidence to a third party, Brown asked him why he hadn't backed him. He replied that he was not opposing Brown but that "we had to think things through carefully"; Brown had argued that if they were both in agreement, Blair would always take their advice. Mandelson then said that his loyalty to Brown was not in question, but that he was not going "to get into some sort of alliance to outmanoeuvre Tony", at which point, he insisted, Brown replied: "Choose for yourself" - or words to that effect.

Mandelson dated the breach in his close bond with Brown not from the leadership crisis in May when Mandelson eventually threw his support behind Blair, but from that conversation in September. This cannot, at most, have been more than partially correct. Relations had been under severe strain since the tensions over the leadership contest which had followed John Smith's death. Nevertheless, it had seemed to Mandelson, until the Chewton Glen conference in September, that the relationship was reparable; it was severely threatened but not yet fully ruptured. But Mandelson now interpreted Brown as demanding a degree of personal loyalty which would outweigh, in relatively rare moments of dispute, his loyalty to the leader. The great Machiavellian had behaved in rather an un-Machiavellian way.

Had Mandelson simply agreed at this point to back Brown, then the next two-and-a-half years might have gone more smoothly than they did. Indeed, when Mandelson told Blair about the conversation a year or so later, Blair suggested that this is what he should have done.

By the beginning of 1995, according to one of his closest members of staff, Blair himself would repeatedly - "sometimes several times a day" - ask: "Why, oh why, can't my two best people get on with each other?" Although the troubles between Brown and Mandelson did not fully surface publicly until May 1996, they had certainly been worrying Blair since the turn of the year of 1994-5.

The first real clash came over the structure of the campaign for the 1997 General Election. While Mandelson willingly ceded overall strategic command to Brown, Blair was determined that he should nevertheless have a key role. Jonathan Powell, Blair's chief of staff, used all his considerable tact and diplomatic skill to bring about an agreement, but a prolonged power struggle then ensued between Mandelson and Brown over just how key this role would be. The argument raged on throughout the spring and summer.

So much so that at one point Mandelson wrote to Blair suggesting that the attempt at reuniting the two of them be abandoned. Saying that he had been "thinking hard" about "my position in our weird and wonderful firmament", he added: "Whatever the long-term prospect of Gordon reconciling himself to my role in relation to you, I do not believe this is going to happen now. Forcing it is going to aggravate the situation. I fear it will produce further confrontations between the two of you, which are very destructive to your future relationship with him, which is the pivotal one for the success of your government."

Mandelson also touched on a problem which went further than his relations with Brown: that of being part of the inner leadership circle while holding down a relatively junior front-bench job. "From your point of view, it is difficult and embarrassing to cast the `leader's little helper' in a way that is acceptable to everybody else. But I think neither of us has confronted the barrier to this of my being an MP, a new one, with all the sensitivities and hierarchical implications of this... There is no question of me ceasing to act as your friend and adviser. I am always thinking of you. I will do anything you ask of me. You are the most important thing to have happened for our party and the country. But we have to face up to the fact that we cannot go on like this."

It would now, Mandelson suggested, be better for him to pursue his career in a "more normal way". Not for the first, nor last time, Blair patiently talked through Mandelson's concerns, persuaded him to stay in the team, and continued the daunting search for a way to get round the problem.

The 10-month wrangle over Brown's and Mandelson's role in election planning was finally resolved in October 1995. But this did little to help Mandelson's relations with Brown, which were already outstandingly dysfunctional, given that they shared a common purpose. At meetings, Mandelson would complain, Brown frequently behaved as if he wasn't there. If, indeed, he responded at all to points made by Mandelson, he addressed his remarks solely to Blair, or, more time-consuming, intimated that he would discuss a particular issue with him later, when Mandelson and Alastair Campbell were not present. Brown, for his part, was apparently worried that, if he had persuaded Blair on a particular course of action, Mandelson might then perversely take a contrary view just for the sake of it.

Nor was it all one-sided. Mandelson remained convinced that Brown could not, or would not, accept his own independent advisory role. But one occasional observer of Mandelson's behaviour at larger meetings, chaired by Brown, said he had "got away with murder" in his acid and contemptuous asides.

The issues of substance which divided Brown and Mandelson were real, but by no means as many as the chronic tensions between them might have suggested. One was the question of a new top rate of tax. From 1995, Brown was certainly in favour of this, and Blair instinctively against it. Mandelson, with the strong backing of Philip Gould (a key Blair consultant), opposed it because he was convinced, like Blair, that it would send to the voters a subliminal signal that Labour was still essentially a tax- raising party, as well as alienating potential business supporters. The argument was nevertheless a finely balanced one. A new top rate would have symbolically underpinned, as perhaps no other policy did, Labour's claim to be the party of "the many and not the few". It would have made it easy to pay for the agreed goal of a new 10p starting rate to help those on the lowest incomes. And it would have gone some way to blunting the edge of the liberal left's unease about whether Labour was abandoning its redistributive principles.

These were important issues, some of which went to the heart of how far Labour was prepared, as Brown wanted, to promote a redistributionist future. Moreover, much of Brown's irritation that Mandelson might be influencing tax policy was hardly irrational. He was, after all, the Shadow Chancellor. But it was impossible to escape the conclusion that the differences could have been resolved with much less bitterness if there had not been more emotional factors rooted in the traumatic events of 1994.

In Mandelson's view, Brown could not accept that "Being Peter" meant that Mandelson's duty was to provide Blair with independent advice. Yet Mandelson appears to have been unable on occasions to contain his feelings of frustration and anger at what he saw as his rejection by Brown. When he felt slighted yet again by Brown at a meeting on 9 May 1996, something snapped.

So little did the crisis have to do with policy that, three years later, nobody could remember what the row had been about - though the issue was almost certainly child benefit. Feeling slighted yet again by Brown, and then even more so by Blair's backing for Brown - which Mandelson believed owed more to Brown's seniority than to the strength of his argument - Mandelson, by his own subsequent account, "went nuclear, lost all grace".

What happened next became a matter of dispute. There were at least half a dozen people in the meeting: Jonathan Powell, as usual, sitting behind the desk taking notes, and the others, including Blair, ranged on sofas and chairs round the leader's office. Those in the room thought that Mandelson had stormed out, slamming the door behind him. He was later adamant that he had actually been bleeped by someone at Millbank, and had gone out to return the call, inadvertently allowing the door to slam behind him. In a sense it hardly mattered, because he did not return, leaving his colleagues temporarily silent and nonplussed.

En route to an international conference in Prague, however, Mandelson had fanned the flames with a letter, dated 9 May, resigning as election manager at Millbank and, in effect, as a member of Blair's inner circle:

Dear Tony,

I am very sorry that your meeting ended as it did, but I think we have to recognise that you and I have reached the end of the road. I am more than willing to carry on the general election planning if you wish - although we'll reach the same brick wall on that, too, eventually - and I will be very sorry not to play my day-to-day role here in Millbank. All I can say is that Margaret [McDonagh, general secretary of the Labour Party] is excellent, the systems are broadly in place and the whole operation is in a very different state from the one I started with. I hope you don't think that amour propre is the root of my problem. I have long gone beyond that. But I felt greatly let down by you this morning, and embarrassed. I do not want to be in that position again. Needless to say, I will always be available to you in any circumstance to help and advise. Operationally, though, I think we have reached the glass ceiling. I wish your life and situation were simpler and I wish things could have worked out differently with our arrangements.

Love as ever,

Peter.

At the weekend, Mandelson appeared, to those in Prague, to be his normal self. At the British ambassador's residence he had his first and only encounter with Margaret Thatcher. It was a brief and slightly stiff meeting. Mandelson told the journalist Robert Harris later that month that the baroness, excited as usual to be in a rapidly changing Eastern Europe, had impressed him with the power of her belief: "Why can't we believe like that?" he asked. On the Saturday evening, several participants, including the journalist Anne McElvoy, left the official mayor's reception early and wandered, at Mandelson's suggestion, into a disco, where the Prince of Darkness so thrilled McElvoy with his dancing prowess that she wrote about it in The Spectator: "Before long we were the John Travolta and Olivia Newton-John of the gathering. The member for Hartlepool's taut thigh muscles were locked behind mine as we flung this way and that." Not every member of Labour's leadership team was anti-fun, she concluded.

Back in London, however, Mandelson's colleagues were not having so much fun. Not only did Mandelson cause consternation through his departure from the meeting on Thursday but the tensions between Brown and Mandelson had finally - and coincidentally - become public. On 11 May, the Saturday morning of Mandelson's trip to Prague, Philip Webster, The Times's political editor, led his paper with a report, clearly well sourced, saying that Blair was making considerable efforts to resolve the chronic split between Brown and Mandelson.

Blair subsequently pinpointed this as his worst moment yet since taking over as leader. Nor would he accept that Brown was exclusively to blame, telling Mandelson later that it was "six of one and half a dozen of the other". In any case, Blair had already made it clear to Mandelson on several occasions that he had to suppress his emotions in response to what he saw as Brown's persistent refusal to accept him as a colleague; he would be risking a place in the sun if he did not "make it work". Blair now wrote Mandelson a sombre letter: this was "indeed a serious situation", he said; much as Mandelson had been his "rock and comforter", the team was now in a "dangerous" plight and "simply cannot continue in this way". Brown and Mandelson seemed "more desirous of victory over each other than of trying to make it work" and that he could not tolerate walkouts. While he acknowledged that it could be difficult to work with Brown, he added: "We are not players in some Greek tragedy. We have one over-riding responsibility to deliver an election victory, and though it may seem pious, it is just not fair to all those people who really want such a victory and are working for it, to be casualties of some Titanic but ultimately irrelevant personality feud... Have you any conception of how despairing it is for me when the two people that have been closest to me for more than a decade, and who in their different ways are the most brilliant minds of their generation will not lay aside personal animosity and help me win?" He had no wish to lose one of his closest friends, but if the situation could not change then it would have to end. The subliminal message was stark: unless Mandelson could reach an accommodation with Brown, Blair would indeed have to accept his "resignation".

Having received Blair's letter on his return from Prague on the Sunday, Mandelson immediately wrote back a second letter. However "fascinating" his time in Prague had been, he had been "troubled and unhappy as you would expect". He felt wronged - by Blair as well as by Brown - but he was still "desperate to put things right". Nobody in Brown's circle had been able to suggest to him how he could repair relations between them.

The letter went on: "Sue [Nye, a Brown aide and friend of Mandelson's] describes it as a war of attrition and Michael [Wills, a Brown ally and later an MP ] says Gordon is `determined to kill me before I destroy him'. Destroy him for what, to be replaced by whom? As long as I enjoy your confidence and patronage, why should I be bothered by what happens to him? Am I going to prosper from the rise of Robin Cook? It's simply ludicrous. All that is happening is, as a result of the situation with Gordon, I am losing your support, my career is being hampered, I am getting harmful publicity and I am creating further enemies for myself... Nobody, you included, I suspected, thinks Gordon is going to change and therefore, as the number two, I have to go. You are too nice and too considerate towards me to say this, I know, so I had better say it for you. You have to do whatever you think is right for the party to win and, in everything you decide." The letter concluded: "I shall make it as easy for you as I possibly can."

Wills, who has continued to be close to Brown while remaining on good terms with Mandelson, had indeed taken that view of the Brown-Mandelson relationship at the time. He suggested to one friend in the period before the election that the two politicians were "like scorpions in a bottle; only one of them will crawl out alive".

Of all the flare-ups that occurred between John Smith's death in May 1994 and the general election three years later, this was the one which came closest to fracturing the leadership cadre at the top of New Labour. But once again Blair used all his skill and forbearance to solve the problem. As Mandelson and Benjamin Wegg-Prosser (his quiet spoken, bespectacled 21-year-old researcher) sat gloomily down to dinner at their friend Roger Liddle's house in Kennington, Mandelson's mobile telephone rang. It was the leader of the Labour Party, reinforcing the message of the letter that Mandelson had received earlier in the day. At the dinner table the crisis was almost the sole topic of conversation. The collective view was that "Peter would have to keep agreeing with Gordon; that was what Tony wanted him to do".

If this could be made to work, the crisis would pass.