Donald Macintyre: Mr Byers and the lessons of this absurd political fiasco

'The relentless struggle by ministers for short-term advanatage more often than not backfires'
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When Stephen Byers went to defend himself in the Commons last night it was still hard, in an overwhelming mood of international crisis, to take his travails really seriously. There is little doubt, after all, that the basic decision about what to do with Railtrack will stand. And while relations with City and the investing classes have been damaged, we should treat with some scepticism the hype that it's now over for Public Private Partnership.

Yes, Andrew Turnbull, the Permanent Secretary at the Treasury, was obliged to tour the City last week trying to calm fears over the loss to investors, including those of Railtrack staff who had been encouraged by government policy to buy shares, only to see their value dwindle dramatically. And yes, the opponents of Private Finance Initiative will be able to point to Railtrack's failure as an example of what can go badly wrong when the private sector is trusted to deliver public services. But the idea that private sector investment in state projects will now dry up is to misunderstand the nature of the profit motive.

With £60bn needed for rail investment over the next 10 years, with a guaranteed source of revenue ensuring a return, a lively demand to make the trains run on time, and a government that may be more strapped for cash than it might once have hoped, you can bet that the queue of contractors ready to invest will remain a healthy one.

What's more, the basic decision on Railtrack – which had come to be seen, not unreasonably, as a conduit for public money to get into the pockets of its directors and shareholders, was almost certainly a credible first step in the necessary wholesale restructuring of the industry. This is an urgent task for a government which was, perhaps, too content to blame the Tories for the mess they had created and too slow to see that an electorate that had twice voted Labour now expected Labour to clear that mess up.

But while this has not, therefore, been quite the calamity the government's opponents have presented it as – or would have done if, at least until last night, the Tory front bench had not performed quite so inadequately – there are still real lessons to be learned.

The first of these is the welcome exposure of the obsolescence, not to mention the inbuilt self-destructiveness, of spin. This doesn't mean that presentation doesn't matter. Indeed, one of the most telling criticisms of Mr Byers in all this is that after he somehow allowed the notion to get abroad that this was a macho "old Labour" seizure back into public ownership – not least through his original handling of shareholder's compensation – he then went to ground for the best part of four days. This ensured that the rage of shareholders, combined with quiet satisfaction among the more unreconstructed elements of the Labour Party, conspired to make the decision look like a good old-fashioned onslaught on the commanding heights of the economy and not much else.

Somehow the message got lost that it had actually been Railtrack itself in July which, in the course of drawing attention to the appalling escalation of its financial liabilities, had suggested the receivership option. If this fact hadn't got lost, at least until Mr Byers finally surfaced at the weekend, it might have been easier to still the cries of anguish from outraged shareholders apparently ignorant of the basic truth that shares go down as well as up.

If this is one of the points which understandably annoyed the Treasury – and I'm told that it did – the Chancellor himself cannot wholly escape the blame. His department also rather disappeared from view, except to distance itself discreetly from Mr Byers once the story went wrong. This was despite the fact that the Prime Minister was absent for much of the week and that the Treasury had been intimately involved, to put it mildly, in the preparatory work that led to the decision.

On the other hand, this is not the first time that Mr Byers had allowed something similar to happen. Maybe it' s because he is in fact so impeccably New Labour that he feels he has to disguise the fact from time to time. When the Corus closures cost thousands of steel jobs before the general election, Mr Byers, then Trade Industry Secretary, felt obliged to indulge in a lot of "old Labour" handwringing about the heartlessness of the employers – who were, admittedly, not going to win any prizes for public relations for the way they made the announcement – rather than state what was almost certainly his real view, namely that the job losses resulted from overcapacity in the world market, the dangerously high level of the pound and Britain's non-membership of the eurozone.

So presentation matters. But the days when the dark arts of spin could be a successful part of this, if they ever could, have long gone. It is safe to assume that the reason Mr Byers felt unable to appear on coast-to-coast television in the days after his announcement was that he didn't want to answer questions about his own spin doctor Jo Moore, whose robust attitude to her job – to put it very politely – has been the subject of daily comment and revelation. Not for the first time, government policy had been unspun by the existence of the spinners.

No doubt Mr Byers was entitled to be irritated when he read on Friday morning that the Treasury were fed up with his handling of this issue. Even if the Treasury was – also understandably – irritated, not to say downright suspicious, that the Railtrack decision had leaked, bringing forward the timing of the announcement to a Sunday, this was hardly collegiate behaviour. (Nothing new there, of course.)

And Mr Byers had seen the advantage painfully ripped from him two years ago, when Mr Brown had unsuccessfully opposed a hike in the minimum wage only for his allies to swiftly ensure that Mr Brown took the credit for the rise. No wonder he was at pains in his weekend interviews to associate the Treasury with a Railtrack decision that had gone rather less well.

But that isn't quite good enough. For Secretaries of State are big people, or should be, who have departments and put their names on bills. They should be able to defend their policies as well as take credit for them. If they are being bullied by, say, the Treasury, as Harriet Harman found out too late over the lone parents affair early in the first parliament, then they should stand up to it. And if they aren't being bullied they should defend their cause, as Mr Byers finally began to do at the weekend and in the Commons last night.

In Mr Byers' case he should have appeared on television to defend the Railtrack decision in the crucial days after it was made, even though it meant having to defend Jo Moore as well. (After all, the decision to keep her was his too.)

So the real lesson is this. The relentless, tricksy, micro-struggle by Ministers for short-term advantage, whether personal (over their colleagues) or party (over the opposition) more often than not backfires.

Hooray. If the lesson is learnt – and that is admittedly a big if – it will make for better government.