UK: More Branson than Hanson.

UK: More Branson than Hanson. - If Tony Blair's performance as head of the Government were compared to that of a new CEO in a large corporation, how highly would he be rated?

by Peter Oborne.
Last Updated: 31 Aug 2010

If Tony Blair's performance as head of the Government were compared to that of a new CEO in a large corporation, how highly would he be rated?

The first 100 days are a crucial test for any new CEO and no less so when the man in the hot seat is prime minister Tony Blair. It is the sort of analogy of which Blair himself is fond. As one senior aide says: 'The differences obviously are vast but in some way he does see himself as the CEO of a big company. He thinks very much like a CEO. He spends a lot of time thinking strategically about what markets we should or should not be in.

'When he was going up and down the country making speeches to groups of business people, he used to ask them to judge him as the CEO of the Labour Party, and he would say, "Look, I've come into this vast, moribund, loss-making enterprise and turned it around".' This then is how he has asked to be judged. So how does chief executive Blair measure up on the evidence so far?

Barely three months into his term, the prime minister has already established his own authority and set a new style of government. Free of the ideological baggage of most of his predecessors, he has brought a managerial and technocratic approach to government to which business people can relate. 'This is a new sort of pragmatism in government,' says Chris Miller, chief executive of manufacturing conglomerate Wassall. 'It shows up in the way Labour is trying to take the politics out of schools. This is anything but the old Labour-style politics of envy or the politics of dogma.'

The style is marked by a relaxed, businesslike, jackets-off approach, 'much more Richard Branson than James Hanson,' as one FTSE chief executive puts it. There are echoes too of the management style of Archie Norman - the former Asda chief executive, now a Tory MP, whose accessible, US-style teamworking culture and deft exploitation of PR opportunities New Labour has emulated. Within days of taking office, Blair instructed his cabinet ministers to 'Call me Tony' - they immediately obeyed. But, however relaxed the style, none of them is in any doubt at all that the prime minister means business and that those who fail to measure up will be ruthlessly dealt with. There have already been victims. When health secretary Frank Dobson stepped out of line by announcing the abolition of tobacco sponsorship of sport, he received an immediate and heavy rebuke from Blair's hatchetman, Peter Mandelson. Dobson is one of a small group of cabinet ministers - Welsh secretary Ron Davies, transport minister Gavin Strang and the newly dubbed secretary of state for culture, media and sport Chris Smith are the others - who are already being tipped by insiders for the chop in the first cabinet reshuffle.

Previous Labour governments brought in trade unionists and academics as advisers. Blair has little time for either category. Before the election he spent a great deal of time wooing business. After the election he demonstrated this interest was not feigned by bringing a large number of top businessmen into senior positions. There are vital advisory roles for Barclays chief executive Martin Taylor (Blair offered him a full-time post as head of the Number 10 Policy Unit but he declined), and Prudential chief executive Sir Peter Davis. Lord Hollick, chief executive of United News and Media, is a special adviser on trade and industry while Sir David Simon gave up his job - if not his shareholding - as chairman of BP to become a junior trade minister.

One of the reasons for Blair's desperation (there is no other word to describe it) to bring in talent from the business world was the sheer lack of choice he had within his own ranks - a situation few in business will have had to face. As Jonathan Fry, chief executive of Burmah Castrol, observes: 'He's chosen a reasonable team given the very limited choice.' Furthermore, as Dennis Stevenson, chairman of Pearson, points out: 'No chief executive would have an executive board of anything like 20. And even if he did, he would not be mad enough to saddle each of these with between two and five managers further down the line, each of whom has a private office and a strong public profile.'

Despite these constraints, Blair's first cabinet has been broadly welcomed - perhaps surprisingly so - by business leaders. Allan Leighton, who succeeded Norman as chief executive of Asda, hails the chancellor, Gordon Brown, as 'brilliant'. Even Margaret Beckett, the left-leaning trade secretary, has so far escaped criticism. Perhaps that is because she has yet to declare her hand. Perhaps because she will never be given the freedom to do so.

Labour insiders claim that Brown is in the process of building a Whitehall empire from his Treasury base: Beckett is an important Brown ally and the DTI little more than a client state.

Most business people say they are impressed by the way Blair lets his colleagues get on with their job. Aides say that he sees his role as setting out the basic strategy for their department (within weeks of taking power the prime minster had intensive one-to-one sessions with each of his cabinet ministers in which he spelt out their roles and objectives) and leaving them to it. Nowhere is this more evident than the Treasury. Officials used to prime ministers taking an obsessive interest in the preparations for the Budget were amazed by the way Blair left the chancellor alone.

As Leighton accurately observes: 'If you have the confidence in your team you lead rather than manage. It is very noticeable how Blair has allowed his people to speak for themselves. The prime minister was quite absent, really, from the Budget.'

One reason for this is the exceptionally close relationship between the prime minister and the chancellor. Just as Blair was happy to delegate the election campaign to his friend three months ago, he is now equally happy to delegate the running of the economy and much more besides. It is much noted at Westminster where Labour aides make jokes about 'President Blair' and 'Prime Minister Brown'. It is an extraordinary partnership dating back 15 years when the two men were young MPs, and analogous in a sense to the famous Hanson and White partnership that took the corporate world by storm in the 1970s. Such relationships can be highly creative but they are explosive if they collapse. The Blair/Brown axis needs to be watched.

Another reason for Blair's lack of interest in the Budget is that he has been out of the country for a very large proportion of his time since becoming prime minister. Overseas visits have included two trips to the Netherlands for European summits, a flying visit to Asia for the handover of Hong Kong, Denver for the G8 summit and New York for the United Nations. Some business people see a danger in this frenetic overseas activity. Cadbury Schweppes CEO John Sunderland warns: 'He has hit the international scene very early on and in a big way. There is always a very difficult balance to be struck between being seduced by international politics and domestic politics. At the end of the day home matters more.' British Land chairman John Ritblat expresses the same concern rather more bluntly: 'You need to be extremely disciplined and actually spend time in the kitchen to make the long-term strategic changes,' is his view.

Decisiveness and speed are key requirements for any chief executive and there is no denying that Blair has shown both. Sunderland declares himself 'impressed by the speed with which Blair and his team have hit the ground running. Evidence of preparation has been one of the most characteristic things about the last 100 days.' However, he does have his reservations about Blair's apparent inclination to 'make decisions without consultation'. The sheer speed of change is also a concern for Ritblat, who says: 'I quite understand that the Government wants to get cracking but are they doing too much too soon? I think that a good number of the new MPs are well-meaning but not all that well-equipped to be involved in what is an enormous business. They've got plenty of time and should remember that.'

Another key requirement for a new chief executive is a clear statement of objectives, and here - in the eyes of some - the prime minister has been less sure-footed. Fry declares: 'It was enormously impressive the way he gave clear objectives for the party when he took over as leader four years ago. But it's early days to judge whether he's set clear objectives for the country as well.' Pearson's Stevenson, who is close to New Labour and hosted a series of dinner parties for high-powered business people to meet the prime minister before the last election, disagrees. He says: 'Blair came into office with a remarkably clear understanding of what he was going to do ... And he's done precisely that. You don't have to agree with his vision, but you can't deny that it exists and is very clearly expressed.'

But has Blair yet communicated this vision to the country at large? Fry argues not: 'It very much helps to crystallise one's objectives with a phrase that everyone from the senior management to the blue-collar workers understands. It doesn't need to be more than four words. Look at Honda's slogan, for example: "We are the Ford of Asia." My local railway has a soundbite: "Empty the M4." It says it all. I don't think that Tony Blair has yet come up with anything in the same line. Though judging by the way that he sorted out his party, I would say that the portents are pretty good on that front.' And even he agrees that Blair has displayed real leadership since taking office in May: 'He's relaxed, charming, charismatic, reasonable and straightforward.'

There is no disputing Blair's high personal ratings - with both electors and with business people. But doubts do remain - and they are serious ones. As Ritblat says: 'The jury is out on whether we've still got a vindictive element in some areas of the Government or whether Tony Blair's apparent pragmatism will win through.'

Certainly relations between the Government and the business community have not been entirely smooth - evidence perhaps of the delicate balancing act Labour has in reconciling its pro-business stance with its socialist roots. Some of the decisions - the granting of independence to the Bank of England and the creation of the new securities board - have sent out impeccable New Labour messages. Others have not. Top business people were dismayed by heritage secretary Smith's fierce attack on the directors of Camelot for excessive pay rises just weeks after Labour took power. Smith demanded that they repay their bonuses. After a week's stand-off, he climbed down.

According to one Whitehall insider, the Downing Street switchboard was 'on red alert with calls from top businessmen who regarded themselves as friends of Tony Blair' at the height of the Camelot row. At Cadbury Schweppes - one of the shareholders in Camelot - Sunderland is still furious. He declares: 'The whole issue played blatantly to the public gallery and it was clearly a potential abuse of elected power.' His view is endorsed by Ritblat: 'The Lottery has really been managed quite brilliantly and is virtually a Harvard Business School case study. Labour's readiness to use the Lottery directors as scapegoats was most discouraging.'

The Camelot episode became more mysterious still four weeks later when Blair pressed the green light on the Millennium Exhibition. It emerged that the Government was happy to pay a generous £9 million commission to Mark McCormack of International Management Group in return for raising private sector cash for the enterprise. Mandelson, self-nominated minister for the Millennium, made no bones about it: McCormack was the best man for the job and deserved to be remunerated accordingly. The contrast with Smith's hamfisted meddling in the National Lottery could hardly have been more blatant.

To make matters worse, Camelot was no isolated affair. In the early weeks, several ministers gained easy credit with the Labour left by sounding off against so-called City fat cats.

When Railtrack announced a 15% rise in operating profits, the group was promptly carpeted by deputy prime minister John Prescott. He claimed that the rise was at the expense of the tax-payer and attacked the company for being too slow in its investment programme. And new Treasury minister Helen Liddell, one-time spokeswoman for Robert Maxwell, called the bosses of Britain's top insurance companies to lecture then on mis-selling pensions.

They took the assault like lambs (and report that the minister has been 'good as gold' ever since). Perhaps most offensive of all was the sports minister Tony Banks' treatment of Tesco chairman and Sports Council chief Lord Ian MacLaurin. Within days of taking office, Banks called for his head. One top FTSE chief executive describes Banks' behaviour as 'the biggest stupidity, gratuitously offensive and the worst possible signal to the business world'. It all amounted to a surprisingly confrontational approach by a government that was supposed to be looking to build alliances with business.

There was an element of old Labour in the Budget too. Brown has been one of the leading Labour modernisers over the past decade, but he still harbours ambitions to lead the party: he has his left-wing constituency to attend to. In the weeks before Budget day, Labour insiders report an angry argument between Number 10 and the Treasury about the burden of the windfall tax. The prime minister was eager to keep it around £3 billion, while the chancellor wanted to raise it very much more.

On balance, the chancellor won. The tax took out £5 billion and its scope was extended beyond the utilities to include BAA, Railtrack and BT. The windfall tax - especially what Wassall's Miller calls its 'worrying element of retrospection' - was loathed by business people. They were also more or less unanimous in condemning the Budget's failure to hammer consumer spending. 'It could have been a lot worse but there will be a price in terms of higher sterling and interest rates for not having hit the consumer harder,' declares Miller.

That was not all. Fry is one of dozens of top business people angry about changes to the tax system such as the abolition of foreign income dividends and the abolition of advanced corporation tax credits for pension funds.

The Budget showed that some elements of old Labour remain in the new government. Neil Lawson, a former adviser to the chancellor who now heads the well-connected Lawson, Lucas, Mendelsohn lobbying firm, puts it graphically: 'The tide goes out, and some rocks get left behind. The minimum wage and the windfall tax are just some elements of that.'

It remains to be seen whether the Camelot issue has proved a salutary lesson for Labour high command. The Government's fence-sitting in the row about BBC director-general John Birt's 20% pay rise and over the strike by BA's cabin crew, suggest that perhaps it has. As to whether Blair can do for UK plc what he did for the Labour Party - surely one of the decade's greatest turnaround stories - the jury is still out. As Sunderland says: 'The key issue is not how Blair gets on during his honeymoon, it is how he performs in mid-term when the Government is dealing with problems of its own creation.' Fry concludes: 'If I was at a meeting of non-executive directors summing up the new guy after 100 days, I would say: "We may well have picked a very good man but it's awfully early to say. Let's meet again in two years' time."'

Peter Oborne is political columnist on the Express

KEY DATES - EARLY DAYS

2 MAY Blair picks his government. Old-style left wingers including Clare Short, Frank Dobson and John Prescott given senior positions. But in general a well respected team. The prime minister likely to ring changes after a tasteful time lag. 8/10

5 May Bank of England made independent. Popular move which was kept a carefully guarded secret.10/10

6 June Heritage secretary Chris Smith backs down after attack on lottery 'fat cats'. End of badly handled and unfortunate episode which sent all the wrong messages to business. 0/10

16 June Prime minister and foreign secretary Robin Cook take first steps to building new 'positive' relations with Europe at Amsterdam Summit. 7/10

3 July Budget cuts corporation tax by 2p in the pound but hits business with the abolition of credits on advanced corporation tax and foreign income dividends, and fails to damp down consumer spending. 5/10.

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