And this was what was making me uneasy. I started to worry that confronting the party with the need to change was the easy part; confronting these non-political interests and public opinion was the hard part but also the necessary one.

I was learning rapidly, and what I learned was fascinating but also daunting. The problems were deep, and systemic. During the winter break in 1998, in between dealing with various crises, I got out the 1997 manifesto and reread its promises on public services and crime. I laughed at their modesty. The challenge wasn't meeting them. The challenge was: so what? An increase in the numbers treated on waiting lists of 100,000 not even a reduction overall in the list, just in numbers treated. Infant cla.s.s sizes to be under thirty not in all cla.s.s sizes, just five-, six- and seven-year-olds. Halving the time it took juvenile offenders to come to court not all offenders, just youngsters, and that reduction from historic highs. New Labour, New Britain? It was ridiculous.

But to go deeper, to start changing systems was a whole different order of political as well as practical task. Adjust a system and people hardly notice. Change it and out of every channel come the interests the system maintains.

As I write now, looking back, I sense in the speeches and meetings an anxiety that something was missing, some dimension barely glimpsed, let alone understood, but important, crucial even. Now, of course, I know what was wrong. But then I was seeing as through a cloud.

This was reflected in the conference speech for 1998. A couple of weeks before, we had had a Cabinet away day at Chequers. We had the usual presentation from Philip Gould about polling and the Tory Party's complete incapacity. Worries on delivery were coming through. I remember telling them about a person who wrote to me back in May 1998 beginning the letter of complaint: 'Now you've been in power for some years ...' The impatience was starting. The point was I shared it.

As Philip intoned about the Tories, I looked around the room. We were in the Great Parlour upstairs, a kind of huge drawing room with seventeenth-century Dutch wood panelling and a fine large mahogany dining table, though the room was never used for dining. Above the main chair where the prime minister sat was the same picture of Walpole that hangs in the same spot in the Cabinet Room in Downing Street. Walpole was the first and longest-serving prime minister (just under twenty-one years); he held office at the whim of the Crown, was often detested, but also very effective. The hint of a smile in his portrait always reminded me a little of John Smith. Benevolent, except when crossed; in which case, dangerous.

I thought of the history of the room. I thought of Chamberlain, who loved to tend the Chequers rose garden personally and whose private diaries are still on the shelves. Chamberlain: denounced by history. A comparison to Chamberlain is one of the worst British political insults. Yet what did he do? In a world still suffering from the trauma of the Great War, a war in which millions died including many of his close family and friends, he had grieved; and in his grief pledged to prevent another such war. Not a bad ambition; in fact, a n.o.ble one.

One day, meandering through the bookcases, I had picked up his diaries and begun to read the account of his famous meeting with Hitler prior to Munich, at the house in Berchtesgaden high up in the Bavarian mountains. Chamberlain described how, after greeting him, Hitler took him up to the top of the chalet. There was a room, bare except for three plain wooden chairs, one for each of them and the interpreter. He recounts how Hitler alternated between reason complaining of the Versailles Treaty and its injustice and angry ranting, almost screaming about the Czechs, the Poles, the Jews, the enemies of Germany. Chamberlain came away convinced that he had met a madman, someone who had real capacity to do evil. This is what intrigued me. We are taught that Chamberlain was a dupe; a fool, taken in by Hitler's charm. He wasn't. He was entirely alive to his badness.

I tried to imagine being him, thinking like him. He knows this man is wicked; but he cannot know how far it might extend. Provoked, think of the damage he will do. So, instead of provoking him, contain him. Germany will come to its senses, time will move on and, with luck, so will Herr Hitler.

Seen in this way, Munich was not the product of a leader gulled, but of a leader looking for a tactic to postpone, to push back in time, in hope of circ.u.mstances changing. Above all, it was the product of a leader with a paramount and overwhelming desire to avoid the blood, mourning and misery of war.

Probably after Munich, the relief was too great, and hubristically, he allowed it to be a moment that seemed strategic not tactical. But easy to do. As Chamberlain wound his way back from the airport after signing the Munich Agreement the fateful paper brandished and (little did he realise) his place in history with it crowds lined the street to welcome him as a hero. That night in Downing Street, in the era long before the security gates arrived and people could still go up and down as they pleased, the crowds thronged outside the window of Number 10, shouting his name, cheering him, until he was forced in the early hours of the morning to go out and speak to them in order that they disperse.

Chamberlain was a good man, driven by good motives. So what was the error? The mistake was in not recognising the fundamental question. And here is the difficulty of leadership: first you have to be able to identify that fundamental question. That sounds daft surely it is obvious; but a.n.a.lyse the situation for a moment and it isn't.

You might think the question was: can Hitler be contained? That's what Chamberlain thought. And, on balance, he thought he could. And rationally, Chamberlain should have been right. Hitler had annexed Austria and Czechoslovakia. He was supreme in Germany. Why not be satisfied? How crazy to step over the line and make war inevitable.

But that wasn't the fundamental question. The fundamental question was: does fascism represent a force that is so strong and rooted that it has to be uprooted and destroyed? Put like that, the confrontation was indeed inevitable. The only consequential question was when and how.

In other words, Chamberlain took a narrow and segmented view Hitler was a leader, Germany a country, 1938 a moment in time: could he be contained?

Actually, Hitler was the product as well as the author of an ideology that gripped several countries, of which Germany was one. By 1938, fascism was culminating in a force that was not going to act according to Chamberlain's canons of reason, but according to the emotions of the ideology. He misunderstood the question and so answered wrongly.

But, my G.o.d, how easy to do. By contrast, Churchill spotted the right question and answered it correctly. Churchill: loathed in many quarters, distrusted so much that the King didn't want him in Baldwin's government; accused of errors in the Dardanelles in the First World War and in the gold standard policy of the 1920s; very nearly not appointed prime minister in 1940 and only becoming so when Halifax refused.

There he had sat at the same table in Chequers, occasionally delivering his broadcasts. He loved Chequers. He sacked the cook for not making the soup properly; turned the Long Gallery into a cinema; often stayed in bed until midday as he barked instructions to his secretaries; began dinner around 10 p.m., all washed down with vast amounts of champagne and brandy, and finished work at 2 a.m. Loved his holidays!

So there I was at the away day, gazing at my colleagues round this famous memory-soaked table, a repository of so many words and meetings, and thinking not of war not then but of how the unease I felt was related to wondering if I was asking the right fundamental question. I knew the party had to continue to be led strongly and planted firmly in the centre. When I spoke, I focused not on polling or the Tories but almost entirely on the overriding need to modernise, and in particular how we couldn't just be advocating more money in public services.

The unease was this: maybe the real problem wasn't the party's failure to embrace modernisation; or, at least, not only that. Maybe it was that the country didn't really buy it. What if instead of taking on the party, I had to take on the public, my allies, the strong trunk holding up my branch? It was not a thought designed for repose.

We were riding high, the country, though impatient, was still essentially supportive; the Tories were nowhere, we were politically supreme. Why risk that? So, yes, we should drive through reform, but not to a depth or at a pace that overwhelmed people, that disorientated or destabilised them. Truth be told, we were also still learning. In March 1998, we had published a Welfare Reform Green Paper, had started tax credits, begun the Sure Start programme for children, introduced the minimum wage, the literacy and numeracy strategy, and the education action zones for the inner city. There was NHS Direct coming in and the first antisocial behaviour legislation. There was activity and there was impact.

But in each case, again I felt it was unsatisfactory. We now had some decent policy reform nuggets going beyond the very limited commitments we had made in the 1997 manifesto, but that is what they were nuggets, no more. Literacy and numeracy hours were a step forward for primary schools, but what about failing comprehensives, particularly in the cities, which were the real Achilles heel of the state school system? And failing local education authorities? And the teaching profession? Tax credits, and the various measures in the Welfare Reform Green Paper including new 'stakeholder' pensions above the existing state pension that would be offered at a low cost to employees by their employers, and new welfare-to-work incentives, new 'employment zones' to target extra help on the unemployed and a unified Employment Service and Benefits Agency these were all very well; but what about the 1.7 million and rising on incapacity benefit, signed off work for life with precious little incentive even to start looking for employment? We talked of the dramatic reduction in the numbers unemployed, but this masked the huge rise in numbers on incapacity benefit that had taken place under the Tories and was continuing under us, and the Green Paper proposed only tinkering changes in this crucial area.

Similarly, NHS Direct was a concept for the future, and specific strategies for tackling cancer and other chronic conditions, alongside extra doctors and nurses, were making a difference in the health service, but they were partial responses to the chronic endemic problems of rising waiting lists, long waiting times, outdated working practices and nugatory patient choice within the NHS. So serious was the NHS situation that the annual nightmare of 'winter pressures' had us holding our breath and hoping that the NHS would not collapse entirely in the first winters after 1997. And the criminal justice system seemed impervious to any reform beyond the further entrenching of rights for offenders and ever more bureaucratic processes enc.u.mbering the police and the courts.

To bridge the gap between reform and aspiration, we set alongside these piecemeal reforms a swathe of performance targets to eliminate the longest hospital waiting times, raise school literacy and numeracy and GCSE scores, etc. There were also new national agencies and structures to drive improvement, such as the National Commissioning Frameworks, the National Inst.i.tute for Clinical Excellence in the NHS, the National Literacy and Numeracy Strategies, and a new National College for School Leadership with mandatory leadership qualifications for new head teachers, to raise standards in education. These were sensible steps to improve accountability for extra funding and spur departments and their agencies to greater efforts. We were to go further and as I describe later publish a full 'NHS Plan' in July 2000 which highlighted greater staff flexibility, greater decentralisation and the reduction of waiting times as key priorities. These were to be achieved alongside the step change in NHS spending and the transformation of the NHS estate starting to take place thanks to the recent Comprehensive Spending Review.

But as we flogged the horse harder for only partial improvements, it became clearer to me that only so much could be done by driving improvement from the centre through targets and piecemeal top-down reform, even with the significant extra funding coming through. I increasingly came to see the centralised systems themselves, and the disempowerment of front-line managers and the denial of user choice which they entailed, as a fundamental part of the problem. I wondered as did some of the newer and more radical faces in my Policy Unit, although this was still heresy in the party, not least among most of my ministers whether we had been right to dismantle wholesale GP commissioning in the NHS and grant-maintained schools in education, instead of adapting these concepts of local self-governance to spread decentralised management across the state health and education systems, but without the inequity inherent in the underfunded Tory reforms we inherited.

From talks with capable voluntary and private sector providers only too willing to engage in public service delivery but prevented from doing so, I also chafed increasingly at the restrictions placed in the way of good independent providers establishing themselves within health, education and the other public services. This seemed to me a cla.s.sic case of the confusion between means and ends which had dogged the left for a generation and which it was New Labour's mission to overcome. For public services to be equitable, and free at the point of use, they did not all need to be provided on a monopoly basis within the public sector, controlled in a rigid way by national and local bureaucracies often deeply resistant to innovation and genuine local autonomy.

In short, our mantra was 'investment and reform together' emphasising rhetorically the big difference in the public services between New Labour and Old Labour (investment without reform) and New Labour and the Thatcherite Tories (reform without investment). But where was the scale of reform to match the scale of the investment coming on stream?

In welfare and law and order, I similarly worried that we had a good mantra 'rights and responsibilities together' but no comprehensive policy thrust to underpin it. It wasn't just the benefits system. Another acute concern of mine was antisocial behaviour. What were we actually changing on the council estates to eradicate the constant barrage of low-level crime which made a misery of so many lives, and to break the grip of worklessness pa.s.sing from generation to generation? More police officers, and police modernisation which we took forward with, for example, the introduction of auxiliary community support officers able to do much of the community policing job in a more focused way were only partial responses; the police also needed better, more immediate tools for the job in terms of sanctions, which meant a shake-up of the criminal justice system. We had to move from concept to policy, and were doing so only fitfully and painfully.

I was starting to think more systematically about New Labour and its relationship with the welfare state we had inherited and pledged to preserve and improve. The welfare state and public services, as we recognise them, were created after the tumultuous events of the Second World War, but their origins lay in the early budgets of Lloyd George, in the groundbreaking economics of Keynes, in the combination of vision and mastery of detail that was Beveridge. The state would provide.

Capitalism had driven the Industrial Revolution. Unregulated, unrestrained, untamed, its giant wheels rolled over the great ma.s.s of the people, squeezing work and profit out of them. But it was also bringing them together, letting them see how they toiled and sweated not as individuals but as a collective machine, and not for their own benefit but for the benefit of the owners of capital.

Out of such common struggle came the trade unions, the cooperative societies, the great engines of collective spirit and will to confront the grinding wheels of capital. For some, such confrontation was for the purpose of eliminating capitalism; for others, to make it fairer.

Out of this struggle came the idea that to change society, there had to be political organisation and there had to be democracy. The ma.s.s was the majority. They should take command of the laws of the land. Those who had too much should yield to those who had too little. The ones who took the profit by their capital should yield to those who made it by their labour.

Out of this idea came the notion of the state, not in the sense of the ultimate authority, but in the sense of the political and social expression of this collective will; the state not as in the phrase 'the grand affairs of state', but as in the state as benefactor, as provider for those who couldn't provide for themselves.

So the state grew, first in the field of pensions and National Insurance, then in education, then finally after the war in the National Health Service. The state also regulated: health and safety laws; mining; the Protection of Children; redundancy and unfair dismissal legislation in the 1960s and 1970s. The state would protect. Its power would regulate, restrain and tame the power of capital.

But, in time, two things happened with profound political consequences for progressive politics, not just in the UK but everywhere where the same process of change had occurred. First, as the state ameliorated the conditions of the people, so the divide became more apparent between those who wanted to humanise capitalism and those who wanted to eliminate it. For fifty years or more, this put the Labour Party on the rack, meaning that its divisions were not just about means but about ends, giving it a fatal incohesion right in its guts. Second and for the purposes of reform, of more consequence the state grew, and as it grew, its very success became its problem. Suddenly, alongside the vested interests of capital could be seen very clearly the vested interests of the state. Bureaucracies are run by people. People have interests. And whereas the market compels change, there is no similar compulsion in the public sector. Left to its own devices it grows. Governments can change it, but governments use the public sector, depend on it and are part of it.

Moreover, and partly as a result of what the state has achieved, as prosperity spreads, the beneficiaries of the state find they are also its funders through their taxes.

In the 1930s, before the state's full power had been developed and when the ma.s.s of the people were still 'the ma.s.s of the people', the middle way in politics could be easily defined. It was a public sector, owning a.s.sets and regulating in the interests of fairness, alongside a private sector suitably constrained. Harold Macmillan's book The Middle Way The Middle Way, written in 1936, was extraordinary for its time. It accurately reflected where social democratic politics should have been. But such politics only got there in the 1960s.

And that was the point. By the 1960s we had caught up with the 1930s. Anthony Crosland's book The Future of Socialism The Future of Socialism was a magnificent essay in bringing Labour to the reality of life in the 1950s, but we only really imbibed it and digested it by the late 1980s. was a magnificent essay in bringing Labour to the reality of life in the 1950s, but we only really imbibed it and digested it by the late 1980s.

Whatever the enormous impact of the Thatcher reforms had been on the private sector of the 1980s, we had inherited a public sector largely unreformed; and we weren't instinctively inclined to reform it. The state was still as it had been since 1945. In fact, had Clement Attlee come back to earth in 1998 and examined modern Britain, much would have astounded him. But the welfare state, rather like Whitehall, he would instantly have greeted as an old friend.

There was a further political complexity of which I was all too acutely aware, and which bore directly on the issue of reform and the unease I felt. As I say above, the people today are largely beneficiaries and funders of the welfare state and public services. Unfortunately, what this means is that simultaneously they want more of them and to pay less for them. And, again unfortunately, they are perfectly within their rights to hold these apparently contradictory sentiments.

It also makes them sorely prey to those within the service who tell them change will harm them. It always makes me hoot when the polls are trotted out showing how respected and trusted are doctors' opinions on the NHS, and how despised the opinions of politicians (and in 1998 the British Medical a.s.sociation attacked us for the first time), when it is so obvious that those who are running a service have a self-interest as well as a public interest to serve, and when for most of the politicians, there is no reason other than public interest for taking them on.

So all this I knew. And if I am honest, I hesitated to probe fully my own doubts about the true radicalisation of what we were attempting. What we were doing up to then was working well politically, and well enough on the ground.

In the NHS, we were beginning to reorganise the system itself. Power to commission was being devolved to primary care trusts, themselves run by GPs. Increasingly, they would hold the budgets and negotiate with the hospital trusts. But the reality was that a large part of the commission was already accounted for, in ensuring emergency admissions, operations, consulting appointments and so on. And there was no alternative provider to which they could turn. Likewise, GPs had a complete monopoly. Compet.i.tion, even in the event of a hopeless service, was literally banned. So the different bits could negotiate with each other, but if they were unhappy, there was not a lot they could do.

We had, of course, increased the investment and there were extra staff being recruited and so on, but not enough to notice in what was a ma.s.sive organisation, the biggest single employer in Europe.

It had been our pledge to remove the so-called divisive internal market of GP fundholders and ordinary GPs. This was a limited market experiment. Some GPs loved it. Others hated it. It did indeed make for a two-tier system. As grammar schools had. The trouble with this criticism was that an unreformed system also had its tiers. The middle cla.s.s will always find a way to make the system work, or at least answer to them in some form or other. So good schools, comprehensive or not, would be in good neighbourhoods.

Throughout that period, then, roughly March 1998 to December 1999, we went through enormous policy introspection as the Green and White Papers flowed, the policy wheels turned and the Civil Service toiled. I debated with policy experts, think tanks and the Number 10 unit headed by David Miliband, but had, as I have said, a growing hunch that our approach was not right. Not that it was wrong or having no effect it was but that it was incomplete at best, short of a dimension that was not peripheral but core.

The extraordinary thing was that there was no outside body, or inst.i.tute or centre of learning that provided the dimension, with the possible exception of the work Richard Layard did for us at the London School of Economics on the New Deal. I used to pore over the latest offerings from various highly reputable academic or scholarly quarters, and find nothing of any real practical help. The trouble was that they essentially wanted to discuss the ideology behind the issues of reform. In a bizarre way, they focused on the politics but that was not what I needed help with. I needed to know the practical answer. To me, to charge for the NHS or not is a political or ideological question, but the fastest way to cut waiting lists is not.

While we were trying to come up with solutions 'what counts is what works' the sobering truth was that the system of welfare and public services was vastly complex, and 'what does work?' was the question I kept referring to, without a great amount of external intellectual sustenance being provided. So we continued with the approach we had taken driving from the centre but we shied away from deep systemic reform. As a result, we could not produce change that was self-generated or self-sustaining, but only change generated and sustained from the centre.

Nevertheless, at the party conference in 1998 the speech flowed. It set out the third way not old left nor Thatcherite right; we had enough momentum to show things were changing; and to be fair the basic message was one of constant challenge, at least to the party. It was strong on devolution within the nation and partnership outside of it with Europe and America. It had all the right themes, pressed all the right b.u.t.tons and, on the whole, generated the right responses.

As I sat afterwards with the close political family Jonathan, Peter, Alastair, Anji, Sally, Peter Hyman I knew we were still at the start of the journey, knew we still had a mountain to learn about as well as to climb, and my feelings were mixed, impatience and frustration knocking shoulders with the pride in achievements and political success; and of course there was also this glimmering of an appreciation that the rhetoric and the reality were out of alignment.

Another part of the problem was that there was increasingly no real interest in a policy debate. The Tories were in many ways hors de combat hors de combat, still licking their wounds and, aside from Europe, not much bothered in opposing a government that, by governing from the centre, was making it pretty hard for them to get orientated.

Moreover, the media had settled into a mode, developing over time, whereby without a major controversy or visual focal point, there was no real interest in describing policy. For instance, they had been more engrossed in the Harriet Harman and Frank Field pas de deux pas de deux than in the intricacies of the pension debate, Harriet being the Secretary of State for Social Security and Frank being the Minister for Welfare Reform. Admittedly, this saga was fairly engrossing. Harriet was not really a policy wonk and this portfolio required a lot of wonkery. Frank was not really politically astute and it required a lot of political astuteness. than in the intricacies of the pension debate, Harriet being the Secretary of State for Social Security and Frank being the Minister for Welfare Reform. Admittedly, this saga was fairly engrossing. Harriet was not really a policy wonk and this portfolio required a lot of wonkery. Frank was not really politically astute and it required a lot of political astuteness.

The result was a severe mismatch, like a kind of 'dating agency from h.e.l.l' mistake. Frank was hugely persuasive on the big picture, but I couldn't seem to get him to focus on the practical policy. Harriet was desperate to be supportive of the policy, without quite understanding that it was her job to devise the d.a.m.n policy.

Frank used to lock himself away in his office to 'think the unthinkable', but the problem was not so much that his thoughts were unthinkable as unfathomable. Harriet fussed and fretted. They would sit in the Cabinet Committee disagreeing with each other, which was more than mildly disconcerting. The upshot was that we tried to steer policy out of Number 10, but it was hard. And, of course, the policy area itself was incredibly hard. The results were less than satisfactory.

I removed Harriet in the July reshuffle, which she took well, to her credit. When I refused to make Frank Secretary of State, he resigned. It was embarra.s.sing, and though I both really liked and respected Frank a genuine free independent spirit I was also relieved. Some are made for office, some aren't. He wasn't. Simple as that.

After party conference we began preparing in earnest for the Queen's Speech. Although for the reasons given I was not wholly satisfied with the welfare reform package, it was to be the centrepiece of the speech. The weeks prior to it and it was rather late that year, on 24 November, delayed by the leftovers from the previous packed parliamentary session were a direct lesson in how the agenda can be hijacked by events from the grave to the trivial, or at least the sensational.

On the morning of 27 October, Jonathan Powell and Alastair Campbell suddenly interrupted the usual slew of meetings to pull me into the Downing Street dining room. The two of them together always meant trouble. What they told me made my eyes get wider and wider until I was like someone with goitre. It was one of those laugh, frown, gasp, sad routines.

Ron Davies, the Secretary of State for Wales, had been robbed by a black male prost.i.tute on Clapham Common. My mind was fairly boggling, and we asked Ron to come into Number 10.

'It's all very easy to explain,' he began. 'I had been in Wales for the weekend, I drove up to London, and to stretch my legs I decided around midnight to go for a walk on Clapham Common.' Puzzled looks from listeners. 'I b.u.mped into this Rasta bloke and we got talking, you know, as you do.' Eyebrows raised further. 'He said: Why not go for a curry? I said: Fair enough, and got in his car.' Mouths start to fall open. 'Then we met up with a few of his mates and suddenly I was set upon and robbed. Could have happened to anyone.'

Stunned silence, then almost in unison, 'Er, not really, Ron.'

I know it's all absurd and, set out like that, comic; but it was also someone's career and life just about to disappear down the drain. That is what is so unbelievably cruel about political life. Of course it was the dumbest thing. In Ron's statement, which I helped to draft, I described it as 'a moment of madness', but I knew his career couldn't be salvaged. The problem was not anything to do with s.e.x or not, it was the misjudgement. I felt desperately sorry for him. I had known him since we came into Parliament together in 1983. He was a talented operator, though most people felt he was too talented an operator for comfort. But no one really deserves what he got.

And, naturally, it followed the same course as virtually every resignation I ever dealt with. At first they understand and comply. Then, as the enormity sinks in, they rebel and finally they become resentful. Ron followed that pattern precisely. And, of course, the hounding they get is a horrendous pressure on them and their family. Ron's was a resignation that was inevitable.

Over time, however, I became increasingly resentful of how resignations were forced. And so much depended on the circ.u.mstances of the revelation.

Unbelievably, a few days after Ron went, the News of the World News of the World trapped Nick Brown, whom we had moved from chief whip to be the Agriculture Minister in the July reshuffle, with someone who they said was a rent boy. When Alastair told me and rather innocently I had never been sure Nick was gay the room did sway a bit. Two gay scandals in one week. And there I am, completely committed to equality between gay and straight. Chris Smith had just bravely come out as the first openly gay Cabinet Minister. People knew Peter Mandelson was gay. I was a little alarmed at the public becoming a trifle wide-eyed themselves at everything. trapped Nick Brown, whom we had moved from chief whip to be the Agriculture Minister in the July reshuffle, with someone who they said was a rent boy. When Alastair told me and rather innocently I had never been sure Nick was gay the room did sway a bit. Two gay scandals in one week. And there I am, completely committed to equality between gay and straight. Chris Smith had just bravely come out as the first openly gay Cabinet Minister. People knew Peter Mandelson was gay. I was a little alarmed at the public becoming a trifle wide-eyed themselves at everything.

To be fair to the News of the World News of the World, they came to us with the story on the Thursday before the Sunday publication, and Alastair heroically persuaded them to run it with Nick coming out as a gay man. The result was the story turned from a sordid scandal into an honest confession and Nick was saved.

He had been very angry at being moved from chief whip, and I knew he was more or less continually working for Gordon and against me, and had actually probably been doing so all along. But when the revelation came, he was saved, not least because he wasn't chief whip, though mostly because we went out of our way to save him. And here's where you just can't get all aggrieved as leader. You would think he would be grateful. Not a bit of it. He carried on believing he had been hard done by and that I was out to get him, when, of course, I could have got him there and then and finished him off. But we didn't because we were not like that. It was always odd to be described as having this incredibly ruthless machine, when actually we had plenty of ruth; indeed, on occasions far too much of it.

Just before Christmas 1998 there was a huge resignation, one that in time I came bitterly to regret and in respect of which I still reproach myself, though when I reread Alastair's diary on it and its accurate account of what the media furore was like, it is hard to see how it could have been toughed out.

Essentially, Peter Mandelson had been given a loan by Geoffrey Robinson, the Paymaster General, to buy a house. The sum was large, certainly in those days: 373,000. Peter was Secretary of State for Industry, and the department was inquiring into Geoffrey's business dealings, an inquiry established in response to a Tory complaint, and set up well after the loan was made. Peter hadn't disclosed the loan to his permanent secretary. He should have. That he didn't do so was, I had no doubt, nothing to do with being dishonest. In fact, Peter had had nothing whatever to do with the inquiry into Geoffrey, and neither would he have. If he had disclosed it, the affair would possibly have been manageable, though in the event the media just went for the whole thing rather than that one aspect.

As was my wont with 'scandals' at that time, I pulled in the Lord Chancellor Derry Irvine and Charlie Falconer, who had until recently been Solicitor General, as two good forensic minds. Both thought it very difficult.

I pushed the issue away for two days, and in any event was intensely preoccupied with the proposed US military action in Iraq at that time. The Guardian Guardian had broken the story, and the rest piled in. It was wall-to-wall mayhem. Several members of the Cabinet called to say it was hopeless. Good old Jack Cunningham, whom we had moved from Agriculture to be Minister for the Cabinet Office, went out to defend the position, but even he found it hard. At least Parliament wasn't sitting, thank G.o.d. had broken the story, and the rest piled in. It was wall-to-wall mayhem. Several members of the Cabinet called to say it was hopeless. Good old Jack Cunningham, whom we had moved from Agriculture to be Minister for the Cabinet Office, went out to defend the position, but even he found it hard. At least Parliament wasn't sitting, thank G.o.d.

By 23 December, I felt I couldn't sustain it. I steeled myself and told Peter, who accepted my decision with extraordinary grace. I also sacked Geoffrey. And I told Gordon that Charlie Whelan, his spokesperson, had to go as well.

My feelings were beyond rage; more real sadness and a sense of doom. The truth is I don't know that Gordon's people leaked it you never do know but only two people were party to the agreement for the loan, and I was sure as h.e.l.l Peter hadn't told anyone, since he hadn't even told me. And it was the Guardian Guardian, not the Mail Mail or the or the News of the World News of the World, to whom the story had been given; it was therefore more likely to be a party source such as Charlie Whelan, since the Guardian Guardian was more or less the party in-house paper at the time. was more or less the party in-house paper at the time.

One thing was for sure: whoever it was had done it with complete malice aforethought. This was not a story, it was a political a.s.sa.s.sination, done to destroy Peter; but it was done also to damage me and damage me badly, without any regard to the impact on the government.

I sat in Chequers that Christmas Day and contemplated. Peter was a brilliant Secretary of State, had real verve and imagination, and was loved by his department (and believe me this is pretty rare). He was an important part of the government, and a crucial part of New Labour. This would end his career. Knowing all that, someone gives the story to the Guardian Guardian. What is the mentality of such a person? Determined, vengeful, verging on wicked. It frightened me because of what it might mean. People always think politicians behave to each other like something out of a Jeffrey Archer or Michael Dobbs airport novel, but in my experience, they don't. There is rivalry, backbiting, undermining, but little that you could describe as really dark. But this was.

I knew, in one sense, sacking Charlie Whelan was unjust because, as I say, I really didn't know that he was responsible; and to be fair, he denies it. I also knew, however, that if I didn't sack him, then a terrible lesson, with possible momentous consequences, might be learned for the longer term. So, after a bit of toing and froing, he went.

At the time I was certain Peter had to resign. Now I am not so sure. The trouble is, it's impossible to appreciate fully what it is like to be at the centre of a media frenzy, unless you have gone through it.

When they have decided to go for someone, they start with the story. That story may be true, but it is then embellished. If resistance is met, they just up the pressure until the frenzy is the journalists' equivalent of the screaming abdabs. If resistance continues, they basically say: right, we will continue running this story until the person resigns. The problem then becomes not the story but the total submersion of the government agenda. Nothing but nothing gets through.

Being prepared to wait that out is really hard, believe me. Towards the end of my premiership, when caution had finally been abandoned to the winds, I did tough it out (when there were calls for Tessa Jowell and John Prescott to resign), but it is a ghastly power struggle, and you worry as prime minister and leader of the party at the collateral damage and feel a responsibility to avoid it.

However, I still wish I had sat it out. It was an early trial of strength with the media and I backed down. To be fair, I also felt Peter had been stupid and wrong in not telling his permanent secretary; as happened with his later resignation in 2001, he didn't always help in the handling. But you know something? In the end that's beside the point. The point is not actually one about friendship or loyalty. It's about the country. There's a limited pool of talent in politics. A special talent and he was and is very special should have been saved in order to serve. When Gordon was prime minister and Peter asked my advice as to whether he should go back into government, I answered affirmatively without hesitation. His absence from my government was a huge loss; his presence in any government is a huge a.s.set. Simple as that. So it's not just on policy that you learn in government.

On Boxing Day, I went off to the Seych.e.l.les. Poor old Alastair. He would call me up saying the press were terrible, I was being panned, and I was sitting in the sun or on a boat fishing or just generally relaxing, playing football with the protection team and the locals. It would drive him crazy. He felt he was bearing the brunt when I was 'swanning off', but he never understood me and my holidays. The truth is I had had a bellyful, and needed some sun and an environment as far removed from Westminster, Whitehall, Downing Street and Fleet Street as could be imagined. Alastair tried calling a few times to sort out the details of the Whelan business, but eventually gave up in frustration. I had said Whelan had to go, and the details didn't trouble me. He was going.

The reason I had had a bellyful, however, was not only the rash of resignations. November and December 1998 had also been dominated by Iraq. On 11 November, I had met with George Robertson, the Defence Secretary, Robin Cook and the Chief of the Defence Staff, General Sir Charles Guthrie. Saddam had thrown out the weapons inspectors, who had written a d.a.m.ning report on the outstanding issues relating to weapons of ma.s.s destruction and Saddam's continuing ambitions to develop a programme for them. President Clinton was contemplating a military strike. Charles took me calmly through the options and the likely casualties were we to partic.i.p.ate. As ever, he was straightforward, clear and strong. The next day I took Cabinet through it, with George warning that this was the most serious development in respect of Saddam since the Gulf War.

On Sat.u.r.day 14 November, we met in Downing Street again in the morning. We were set for air strikes to begin at 4 p.m. Suddenly the news came that Clinton had decided to pause, since Saddam had sent a new letter saying he would readmit inspectors. Then we got the letter. It was full of holes, typical Saddam rubbish. Over the next eighteen hours, finishing at 4.30 a.m. on Sunday, I was in constant contact with Bill. The action was suspended, much to the relief of Robin, who had been troubled by it. I was determined to keep the US alliance intact and functioning at what was a crucial moment.

The inspectors went back in, but it was clear Saddam was just messing about. Finally, when their report came in mid-December, it was d.a.m.ning again. This time Bill decided we had to act, and we did so with four days of aerial strikes in Operation Desert Fox. It was a nerve-racking time, and the operation was a limited success. The general feeling was that Saddam had got away with it again.

EIGHT.

KOSOVO.

The awakening from Opposition to government lies in the tough nature of decision-making. In Opposition you can, if skilful enough, mask contradictions, conceal choices, blur distinctions, cast a cloak of ambiguous consensus over discordant, spiky and unpalatable decisions. So it looks smooth. In government, it is all jagged edges. The moment you choose and start acting on the choice, the edge starts to cut.

My awakening on domestic policy took place over time. Probably I only fully found my voice on domestic reform in the last term. The awakening on foreign policy was, by contrast, abrupt. It happened over Kosovo.

The categorisation of policy into foreign and domestic has always been somewhat false. Plainly a foreign crisis can have severe domestic implications, and this has always been so. Two things make the distinction even more misleading today: first, the world is far more integrated, so home and abroad tend to come together; second, as a global media develops, foreign crises are often played out in real time and graphically on our TV screens. They swiftly become domestic challenges. This can be because they impact on domestic life as with the world economy or immigration but also because people's sympathies and emotions are involved. When Israel attacks Gaza, for instance, the vivid nature of war and its attendant suffering is displayed immediately in our homes in the remotest parts of Britain. We are engaged in a way that, decades ago, would have required a kind of Midlothian campaign to get people aroused.

Yet even this description almost trivialises what is happening. It is not simply that people get affected by what they see; it is that they care about other people. Their feelings are genuine. They see starving children in Africa and are moved to act. They witness injustice and expect their government to help correct it. While they may care most about what happens within their borders, they are not indifferent to misery beyond them.

The culmination of all these things, more forcefully today than ever before, is to make the world interconnected not just economically or in self-interest but emotionally, the heart as well as the head. When we talk of an interdependent world, we mean that we are linked, that challenges and solutions tend to be in common, that problems in one part of the world can easily trigger reactions in another; but also that we feel at a human level more connected across national boundaries than ever before. The s.p.a.ce we live in feels more shared, more held in common. Travel, ma.s.s media, the Internet and modern communication all pull us in one direction: together. Personally, I like this. I am comfortable no, more than that, excited by a world that is opening up, allowing us to experience and learn more about each other. However, even if I resented it, I would have to accept it as a fact, possibly the the fact, of modern politics. fact, of modern politics.

In the course of this, foreign policy and domestic policy interact and overlap; yet we still devote much to pretending they don't. Having read widely, I knew a lot about history before becoming prime minister; but about contemporary foreign affairs, I knew little. The 1997 campaign was fought almost exclusively on a domestic policy basis. If you had told me on that bright May morning as I first went blinking into Downing Street that during my time in office I would commit Britain to fight four wars, I would have been bewildered and horrified.

That's the way it is. I can't remember an incoming American president who fought a foreign policy campaign to reach the White House; or who didn't, in the course of his administration, end up being preoccupied with it. The conventional wisdom among all political strategists is that to base a campaign on, or become immersed in, foreign policy is a disaster, the beginning of the end. (As I found out, to a great extent that is true.) The reason is that the public think it's both important and at the same time very distant from their daily preoccupations.

So, at one level, the public understand the need for the big international picture. At another, to them it is round after round of summits, banquets and political chummery. It seems so remote 'What's it got to do with us?' is the cry. What you come to realise as a leader is that although this feeling may be understandable, it is also wrong. The very nature of the interdependence makes it so. Globalisation pushes people together. The challenges are faced together, and the solutions in part, at any rate have to be found together. Therefore, it is unlikely that a challenge in continent A, if it is truly serious, will not lead to a challenge in continent B. The phrase 'global community' is a cliche, but it's also true. It's the way we live now.

There is another consequence of the interaction between foreign and domestic policy: the foreign policy itself has to be conducted in a different way. Global challenges require global solutions. Global solutions require global alliances. Global alliances can't be constructed on the basis of narrow national self-interest. They have to be based on shared global values.

Take climate change, which is the the global challenge. The solution is a global agreement. The agreement requires developing and developed nations China and India, America and Europe to agree. Their national interest lies in a collective bargain. That bargain won't work unless it is fair to countries at different stages of development. By this process of reasoning, the national interest relies on a multinational accord that is based on a shared perception of fairness. global challenge. The solution is a global agreement. The agreement requires developing and developed nations China and India, America and Europe to agree. Their national interest lies in a collective bargain. That bargain won't work unless it is fair to countries at different stages of development. By this process of reasoning, the national interest relies on a multinational accord that is based on a shared perception of fairness.

The effect of all this is that a traditional foreign policy view, based on a narrow a.n.a.lysis of national interest and an indifference unless that interest is directly engaged, is flawed and out of date. I happen to think as Gladstone did that it is also immoral; but even if I didn't, I am sure that in the early twenty-first century, it doesn't work.

This of course became the dominant debate over foreign policy during my time as prime minister. By the end, I am afraid, I was in a small minority when this thinking resulted in military action, but it was more widely accepted, at least in theory, when it came to the economy, the environment and other issues. It also utterly confused left and right until we ended up in the bizarre position where being in favour of the enforcement of liberal democracy was a 'neoconservative' view, and non-interference in another nation's affairs was 'progressive'. But more of that later.