Blair shows 'em who's boss

Stephen Castle tracks the Labour Party's week of ducking and diving on its union policies

The week was one of almost comical confusion, ending in bitterness and deep division. Did David Blunkett, the leader of Labour's employment team, favour banning strikes in the public sector? Would Labour compel union leaders to ballot their striking members every time employers made a new pay offer? Did Stephen Byers, another employment spokesman, say to four journalists over dinner that Labour might soon break its historic links with the unions? At various stages of the week, the answers seemed to be "yes, yes, and yes". By the end of the TUC's annual conference in Blackpool, the answers were "certainly not, possibly not, and who will ever know for sure?"

Perhaps Mr Byers best summed up the confusion. Hearing that newspapers were about to predict a Labour-trade union divorce, he wondered where the story had come from. "Nobody mentioned it at dinner last night," he said to a colleague.

Was this a triumph or a disaster for Labour? Its strategy for the TUC was clear. It had been agreed, several days in advance, when Tony Blair gave Mr Blunkett the go-ahead to float Labour's plans to curb strikes.

The first goal was to trump Tory proposals for new anti-union measures, which have already been floated and may well figure in the Queen's Speech in two months' time. The second was to pre-empt any public suspicion that Mr Blair would allow union bosses to resume the powerful role they played under the Labour governments of the 1970s. What the Labour leadership feared, said one source, was "three days of minimum- wage rows at the TUC and, on the government side, a series of initiatives saying that Labour is the strikers' friend".

Where things went wrong was in the execution. Mr Blunkett's plans first surfaced in last week's Sunday Times. Labour would consult on proposals for compulsory arbitration, mainly in public-sector pay disputes, the paper reported. Journalists on rival papers put the story to Labour. Not true, they were told. Labour would encourage more agreements to go to arbitration and to abide by the results. But there would be no compulsion.

The next day, however, Labour sources seemed to corroborate the Sunday Times story. The most likely explanation is that they saw looming headlines of the "Labour-backs-down-in-face-of-union-anger" variety. As one cynic at the TUC put it: "Excalibur [Labour's computerised rebuttal system] seems much swifter at denying any policy shift to the left, than any one to the right. Maybe it's a fault in the software." But there was probably also confusion about the difference between compulsory arbitration, which, in effect, rules out strikes, and voluntary arbitration, which doesn't. It is doubtful Mr Blunkett ever intended to go beyond the voluntary form.

On Tuesday, confusion gave way to uproar. Mr Blunkett elaborated on his plans in London's Evening Standard. First he said Labour would not be held to ransom by "armchair revolutionaries". Then he dropped a new policy bombshell: unions in disputes should re-ballot their members when employers improve their pay offers. Even for a 0.01 per cent improvement? In a radio interview, Mr Blunkett explained that the conciliation service, Acas, would decide if an offer was "significant" enough to force a new ballot.

But, again, there was another question: would there be compulsion? No, Mr Blunkett said, there would be no legislation. Mr Blair, however, refused to rule it out on the well-worn political principle of "never say never".

Although there was no real disagreement Labour looked amateurish. Policy had dribbled out, first in a broad-brush press story, then in a newspaper article, then in broadcast interviews and finally in Mr Blunkett's speech in Blackpool. (For good measure, that differed quite substantially from the advance text distributed to journalists.)

As one source put it: "Part of the trouble was that Blunkett hadn't produced a document. If he had, someone would havesorted all the rough edges. If you do things on the hoof, elaborating your position in interviews, language invariably differs and you end up with chaos."

Mr Blair arrived in Blackpool from a North Sea oil rig on a BP executive jet. He found John Monks, the modernising general secretary of the TUC, in a fury. Two drinks sessions at the Pembroke Hotel, and an emollient performance by the Labour leader at the General Council dinner, calmed things down.

But not for long. By Thursday evening, rumours were circulating of new Labour plans which would see the complete breaking of the union link.

Quite what was said by Mr Byers in Blackpool's Seafood Restaurant remains unclear. Though journalists are allowed to use the information gleaned at such dinners, they are not supposed to reveal the source. At conferences, however, everybody knows who is dining with whom. It did not take a genius to work out that Mr Byers was the source of the story that appeared in several papers on Thursday morning.

What, Mr Byers was apparently asked, would happen if a Labour government faced a rash of public-sector strikes, as its predecessor did in the late 1970s? It seems likely that Mr Byers hypothesised that this might be curtains for the Labour-union link. After all, by then, Labour might not need the unions' pounds 6m annual subsidy.

The party's pre-election manifesto document calls for an inquiry into the funding of political parties. Should that recommend state funding, allowing the unions to withdraw their money, it seems inconceivable that their 50 per cent block at conference would be retained.

Some modernisers would certainly welcome such an outcome. But there is nothing resembling a firm plan to sever Labour's union links; inevitably, this was another story that the party had to deny.

So how did Labour emerge from this extraordinary week?Mr Blair cannot have been unhappy. The rows conveyed one broad-brush message to the public: Labour was "standing up" to the unions. Mr Blair's favoured soundbite - that he will govern for all the country, not any one part of it - had the opportunity for frequent outings. As one moderniser put it: "It showed them who's in charge of the political agenda." But there were costs, too. Some electors may have got the impression that, when the unions protested, Labour had to back-track.

The rows also suggested deep divisions in the Labour movement. They could surface again at the party conference next month. Last year, the Labour leadership won every vote; any defeat this year will be written up as a big set-back. The unions could still cause trouble if, as one Labour aide put it, "atmospherics" remain poor. That seems the under-assessment of the week. One union source said: "If they had wanted to piss off the deeply loyal Labour trade union members who cherish their connection with the party, they couldn't have found a better way of doing it."

Leading article, page 18