As the next general election draws closer, it is worth examining the management style of the man who has held the UK's top job for eight years and looks odds-on to retain it for a few more. What sort of system has he put in place for those who will occupy 10 Downing Street after him?
Tony Blair is a new sort of prime minister, with a robustly managerial approach to the job and ill-disguised contempt for the old established procedures of government. Previous Labour prime ministers looked to such Old Labour thinkers as RH Tawney, and more recently the social entrepreneur Michael Young, under whose guidance Harold Wilson created the Open University. But Blair once shocked Roy Hattersley to the core by asking who Michael Young was.
Instead of looking to the old strategists, Blair's concept of managing the nation is derived from modern management thinkers like Professor Charles Handy (all of whose books he has read, or so he once boasted to Handy's actor son) and Charles Leadbeater, who, when advertising his conference speaking, claims to be 'Tony Blair's favourite corporate thinker'. These were the writers he studied while he was chafing impatiently under John Smith's resolutely traditional leadership between 1992 and '94. Blair has said Leadbeater's book Living on Thin Air 'raises critical questions for Britain's future'. Like many of Handy's books, it's a funeral oration over the grave of the 'safe job' and a call for us all to become entrepreneurs. The entrepreneurial spirit, says Handy, is enshrined in the person of former BBC director-general John Birt. After leaving the BBC, Birt became Blair's personal adviser on strategy.
Blair is equally impressed by American management thinkers. Last year, he received a visit from Shoshana Zuboff, professor of business administration at Harvard Business School, and her husband, investment banker Jim Maxim, who came to Britain to advise Blair on reform of the public sector. And in 2002 the great Michael Porter himself, professor at Harvard Business School, was asked to report on the effects of poor management on UK productivity, and on the training of managers.
Porter is an advocate of the strong chief executive who can be fast on his feet, flexible in his thinking, able to make quick decisions – all in contrast to the UK's traditional style of government. The former Cabinet secretary, Sir Robin Butler, watched horrified as the PM took these recommendations on board and pulled the structure of Cabinet government down about his ears. He once told Blair: 'Your trouble is that you have never managed anything.' Blair protested that he had managed the Labour Party, but Butler replied: 'You didn't manage it, you led it. That's different.'
Blair asked Sir Robin to lead the last of many enquiries into the Iraq war. Butler found that Blair had misled us, but he couched this in such studiously moderate civil service language that no lasting damage was done. Blair has no real regard for such mandarins, but he knows they have their uses. And perhaps Sir Robin felt used, for soon afterwards he gave an interview to Spectator editor Boris Johnson in which he employed far harsher language about Blair's management style than he'd put in his report.
Butler told Johnson: 'It isn't wise to listen only to special advisers, and not to listen to fuddy-duddy civil servants who may produce boringly inconvenient arguments. I would be critical of the present government in that there is too much emphasis on selling, there is too much central control and there is too little of what I would describe as reasoned deliberation which brings in all the arguments. I think I would restore open debate in government at all levels up to the Cabinet. The Cabinet now – and I don't think there is any secret about this – doesn't make decisions.'
No prime minister – not even Margaret Thatcher – has sidelined the Cabinet as Blair has done, Butler added. 'We... suffer very badly from Parliament not having sufficient control over the executive, and that is a very grave flaw... The executive is much too free to bring in a huge number of extremely bad Bills, a huge amount of regulation and to do whatever it likes – and whatever it likes is what will get the best headlines tomorrow. All that is part of what is bad government in this country.'
That, no doubt, is why Sir Robin fought, unsuccessfully, to stop Blair from giving his advisers Alastair Campbell and Jonathan Powell authority over civil servants. The Blair method was explained to me by John Cruddas, his deputy political secretary in the first term (now a Labour MP). He was put in charge of the prime minister's relationship with the unions. Whenever a major industrial relations matter came up, he'd be summoned into Tony's Den along with Geoff Norris, whose job was to keep in touch with employers and the CBI. Others present might include the relevant ministers; then again, they might not. Dotted around the room, in armchairs or on the arms of chairs, might be any combination of political secretary Sally Morgan; chief of staff Jonathan Powell; communications chief Alastair Campbell; and Blair's old legal chum Charlie Falconer. Sometimes Cherie Blair was there, and Cruddas was always glad to see her, because 'she was always sympathetic to the unions and technically very competent'. Peter Mandelson was often the only elected politician in the room, apart from Blair. Cruddas and Norris were effectively made to fight it out. 'Last one standing was the winner, usually,' says Cruddas.
This loose, fluid group takes momentous decisions over coffee in the Den and does not trouble with such bureaucratic formalities as taking minutes – a failing highlighted by Butler in his report. More often than not, they are discussing an issue that under any previous PM would have gone to the Cabinet, perhaps via a Cabinet committee.
Sometimes, the issue does end up in Cabinet – but the Cabinet's task is only to rubber-stamp the conclusion reached in the Den. 'Blair is a good chairman of Cabinet,' says the former Foreign Secretary, Robin Cook. 'He is relaxed, permissive, lets colleagues speak. But it is not part of a decision-making process.'
Professor Peter Hennessy quotes one of his high-level Whitehall contacts as saying: 'What tends to happen is that they [Blair's advisers] will discuss a question among themselves and then – snap! They will decide. They are very loose within and very tight without when dealing with the rest of Whitehall.'
The problem is compounded by the fact that Gordon Brown has his own coterie of advisers at the Treasury. Blair and Brown are a double whammy on the Cabinet system – both are strong leaders, unafraid to impose their will.
Seventy years ago, Clement Attlee got his first Cabinet job and at once asked ICI to give him some management training. But prime minister Attlee's Cabinet was a formal one and it took all major decisions. Blair is the first PM to apply the lessons of management to government decision-making. His method of training his shadow Cabinet for government was to take them to Templeton College, Oxford (predecessor of the Judge business school) in 1996 for a crash course in management techniques.
This way of thinking has resulted in some of the most controversial policies of Blair's premiership. Performance targets in the public sector and PFI contracts came from business gurus. City academies, Blair's new type of state secondary school, are, in effect, a way of taking state schools out of the public sector and handing them over to business people. Blair told Forbes magazine: 'It's about creating the right enterprise culture in Britain, which we still haven't driven all the way down in our country, by any means at all. I want to see far more emphasis on entrepreneurship in schools, far closer links between universities and business, I want to see us develop a far greater entrepreneurial culture. We have only just gone beneath the surface of this so far.'
For Blair, management expertise has replaced ideology. He once told an astonished audience of civil servants that there is not a huge difference between the Labour and Conservative parties. With less and less to separate the parties, he said, voters will vote on the administrative competence of party leaders.
Blair came to Downing Street with less experience of running things than any prime minister for well over a century. So he gobbled up the theories of management thinkers, and they seemed to him to be saying: tear down the bureaucratic civil service structures, the paraphernalia of meetings, minutes and consulting; do it like the best business leaders, on the hoof, in your shirtsleeves, on the sofa, latte in one hand and mobile phone in the other. Run Great Britain plc as though it were a City investment company.
But he overdid it, according to one of his ministers. 'He would not survive as a top chief executive,' says former environment minister Michael Meacher. 'You need a chief executive who listens to his most senior people. He crosses the line between leadership and control freakery. Leadership in companies is based on skill, experience, a track record – not just on authority. You take a view because you have listened and thought it through.'
Blair, says Meacher, runs 'the most centralised style of government we have ever seen. He treats the Cabinet as a forum where he can tell them what he has already decided to do, and woe betide anyone who takes a different view. Sooner or later, this method leads to errors. You need to listen to those who are loyal, but take a different view.'
That, Meacher believes, is why Blair has to have his own people, owing loyalty only to him. The rest of Whitehall regard these advisers with a suspicion verging on loathing. Says Sir Richard Packer, former permanent secretary at the ministry of agriculture: 'After a while you wondered why the system [of Cabinet committees] was not delivering – then you realised that the government had set up a completely different system to by-pass them... There are groups at the centre with the prime minister's ear and I rather think that for those out on the periphery, it seems as though, if something goes wrong, departmental responsibility is clear. If something goes right, they read in the newspaper that it was all the prime minister's idea.' The effect is to increase the power of the PM and decrease that of every other arm of government: parliament, the Cabinet, the civil service. This gives a business-like immediacy to top-level decision-making. It makes Blair faster, more flexible, like a very powerful chief executive. It gave him an advantage in negotiating with American presidents – ironically, because George W Bush is the first ever world leader with an MBA.
Jeff McAllister, London editor of Time magazine and formerly its Washington correspondent, told me: 'The Blair team is much smaller, faster, cleverer and more efficient than the White House team, and this gives them a huge advantage.' But it has its downside: 'When Blair's good he's very good, as he was immediately after 9/11. When he's bad he makes dreadful mistakes, because the checks and balances aren't there.'
Without this hugely increased power – and the self-belief that goes with it – Blair could not have taken Britain to war with Iraq. In other wars – Asquith and World War I, Attlee and Korea, Thatcher and the Falklands, Major and Iraq, even Eden and Suez – there was something of a political consensus, at least in the prime minister's own party, on the need for war.
Blair took his country into Iraq knowing that most of his Cabinet opposed it (they voted for it, as the alternative was resignation, but opposed it when it was first mooted); most of his party opposed it; many close advisers opposed it.
When the new Cabinet met in 1997, its first decision was whether to go ahead with the Millennium Dome or scrap it. Blair had effectively taken the decision to go ahead before he entered Number 10. But few of the new ministers who joined him round the Cabinet table knew that. They thought they were in charge. The heritage secretary, Chris Smith, and Smith's officials, warned that the Dome was a disaster in the making. They were overruled at a meeting of politicians and advisers, including Blair, Smith, Alastair Campbell and Jonathan Powell.
After the 2001 general election, Blair's office collapsed under the dual strains of Iraq and the Blair family's embarrassment over the purchase of two flats in Bristol and their friendship with Carole Caplin. Butler helped pick up the pieces, and took the opportunity discreetly to roll back the power of the 'denocracy'. In Campbell's place, and with reduced and more conventional powers, is the experienced political PR whom the old guard would have recommended in the first place, David Hill.
But it was a tactical retreat. Blair's new system is here to stay. His successors are not going to throw away the power he has won for them. Even before Blair, the British PM was more powerful than the head of government in most western democracies. Twentieth-century premiers built on that power where they could. Lloyd George was the first to have his own staff. Thatcher left the office much stronger than she found it. Blair built on her legacy. Only when a PM is so weak that they can wrest it from him do parliament, Cabinet or the civil service regain any of their lost power. Even then, victory may be temporary. John Major was a weak prime minister, but when Blair arrived he started where Thatcher had left off. Blair's successors are likely to govern as he has; more like a CEO than a traditional PM.
There's one difference. If a board, or shareholders, believe a chief executive is making serious mistakes, they can refuse to do his bidding, and if necessary get rid of him.
No future PM is likely to give up the sort of personal hegemony that Blair has established. MPs and the Cabinet are in a much weaker position than company boards and shareholders if the governing party has a big, tame majority, as it now has. Blair can break the careers of his parliamentary colleagues almost at will, with the possible exception of Gordon Brown.
But should the business of government ever resemble the government of business? Chief executives often have to move fast to gain a competitive advantage, but government is not solely about competitive advantage. Most chief executives cannot declare shooting wars. It's true that if done well, running the country the way one runs a business can improve efficiency. But the checks and balances of democracy need to be in place if it starts to unravel.
Who's in the Den? Blair's inner circle
John Birt Former DG of the BBC, advises on public services strategy and blue-skies thinking
Jonathan Powell Chief of staff since 1997. The PM's gatekeeper
Alastair Campbell Former director of communications. Now helping with the 2005 general election campaign
David Hill Campbell's successor as director of communications. Lower profile, but still hugely influential
Lady Sally Morgan Director of political and government relations. A Labour stalwart, she is Blair's eyes and ears in the party
Andrew Adonis Former Observer columnist, now advises on education policy and public service reform
Pat McFadden Director of political operations, one of Blair's most favoured special advisers
Michael Barber Head of the PM's Delivery Unit. A master of statistics, Barber tracks the performance of public-sector reforms
Michael Levy Fundraiser par excellence and adviser on Middle East policy. Sits in the House of Lords
Prof Julian Le Grand Senior policy adviser on health. Teaches social policy at the LSE
The Blairs and Their Court by Francis Beckett and David Hencke is published by Aurum