Andreas Whittam Smith: This tale of greed and self-delusion is a perfect parable for the Prime Minister

Governments that are in reality vote-winning machines sooner or later come to a shambolic end
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The Independent Online

I couldn't help thinking of Tony Blair and his government when I went to the cinema on Saturday to see Enron: the smartest guys in the room.

It is an admirable documentary about the rise and fall of the energy trading group which briefly became the seventh largest company in the United States before collapsing into bankruptcy. As I listened to the story of a business model that couldn't deliver, of greed and self-delusion, of clever executives who couldn't admit they were wrong, I suddenly thought how well this fits Mr Blair's administration.

Enron's business was trading in supplies of oil, natural gas and electricity. But doing these tasks well was not the primary consideration of the people at the top. Something else dominated their thinking: the share price. In the same way, Mr Blair has a supreme objective that outranks keeping our streets safe, or providing good health and education and the other tasks of government. His primary consideration is winning the next election and staying in power. After all, that is why the Home Office paid so little attention to the deportation of foreign prisoners when they had completed their sentences, in case they asked for asylum and thus ruined electorally appealing claims that immigration was under control.

Of course, all companies with a stock exchange quotation want to see their share price go up, and all democratic governments wish to earn overwhelming support at the next election. And to begin with, if pleasing investors is the single object, the stock market responds and fortunes are made. And likewise if deciding everything by reference to opinion polls is an invariable policy, elections will be won and the fruits of power further enjoyed. But what matters in the end is which way round the question is put. Companies like Enron ask what is it we must do to impress the stock market and then they seek to do it.

Companies like Tesco, on the other hand, say that if we become very effective at serving our customers, then sales will rise and profits, too, and shareholders will also be pleased. The applause is the secondary consideration. In practice, the Enrons of this world eventually fail because their priorities are in the wrong order. In the same way, governments that are in reality vote-winning machines sooner or later come to a shambolic end.

When public relations success is much more important than making the business more efficient or the Government more effective and, as a result, performance eventually deteriorates, ministers become psychologically incapable of admitting error or of accepting blame. When the Enron share price was falling fast, the chairman told employees that "Enron is under attack", and this shortly after the destruction of the twin towers. He had equated an unprecedented terrorist outrage with investors selling his shares.

Mr Blair blithely told a Sunday newspaper just before the Home Office disaster was revealed that he would "hassle, harry and hound" foreign criminals out of Britain. Thus the Prime Minister, the chief executive of the British Government, had literally no idea that he lacked the means to do what he wanted. His promise probably wasn't deliberately deceitful, just totally unrealistic. For having neglected their primary tasks, executives in Enron or Blair types of organisations, where the customer is to be exploited rather than served, find that when the going gets tough, they have no means of correcting their course. When they need to run their businesses or governments better, they discover they are incapable of doing so.

Mr Blair, the phrase-maker, once said that what matters in politics is "what works". What he meant is what matters is "what wins". For nothing is currently working very well. Take his promise that there would be no more than 30 children in any primary school class. Class sizes are rising above that line again. Generous pay settlements in the National Health Service have gone £610m over budget. Legal aid chaos leads to job losses in the court services. Iraq policy is ... well, what is it? That is six government departments plus 10 Downing Street currently failing to do what they are supposed to do.

Similarities between the two tales abound. As the Enron executives sought increased personal wealth, even at the expense of their public shareholders and of their employees' jobs and pensions, a sleazy atmosphere of sexual excess, bullying and derogatory jokes at the expense of the poor suckers out of whose naivety they benefited quickly developed.

Glimpses of the same phenomenon are afforded by what we have recently learnt of the way in which John Prescott conducts his office. He puts his hand up the skirts of his female employees, he engages in sex behind his office door when officials are quietly getting on with their jobs, and he uses public funds to entertain his mistress. Binge drinking goes on. In enterprises like Enron and the Blair government this is tolerated.

For the single-minded pursuit of power has the same corrosive effect as obsessive personal enrichment. Such behaviour is out of bounds in disciplined, enduring, successful institutions.

In the Enron story, after denial and then impotence in the face of impending disaster, came deceit. Thus Enron created a web of offshore companies in which it could park and hide its rapidly increasing debts. The famous accountancy firm Arthur Andersen was driven out of business because of its complicity in these illegal schemes.

I won't dwell on the dishonest way the case for war in Iraq was made but turn to more recent evidence of the probity of Mr Blair's Government. Mr Prescott himself has just issued a misleading leaflet to his constituents, portraying as it does his seemingly happy marriage. That little inner voice that should have said "I shouldn't tempt fate" was silent. Then the cash for peerages scandal runs on. In the past two days we have heard two further allegations: that an ex-MP who stood as an independent at the last election was offered a peerage to stand down, and that Cameron Mackintosh, the West End theatre owner, was promised a seat in the House of Lords in return for a loan to the Labour Party.

Finally, then, Enron provides us with a warning. When collapse becomes unstoppable, and that is what I see in the sheer inability of the Government to deliver the results it intends, then the argument that by engineering cover-ups we buy time to put things right can become irresistible. A bad result in the local elections on Thursday would not stop this line of reasoning, indeed it might give strength to it. Much better that electoral misfortune hastens the arrival of a new government under a new leader.

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