Let me tell you what's really spooky about the Blair/Brown agreement...

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The Independent Online

"Brown had never liked Blair. In private conversation he was referring to Blair as 'show pony', 'lightweight', 'hasn't paid his dues'." So said John Prescott, after Tony Blair promised Gordon Brown, in front of witnesses, that he would step down in his favour but then reneged on the deal. This is a true story, only the names have been changed. Brown was actually Paul Keating, the Australian Finance Minister, Blair was Bob Hawke, the Prime Minister who had won two full parliamentary terms, and Prescott was Graham Richardson, one of Keating's ministerial supporters. The parallels between the Blair-Brown partnership, possibly the most successful in British history, and the Hawke-Keating partnership in Australia, 1983-91, are spooky.

"Brown had never liked Blair. In private conversation he was referring to Blair as 'show pony', 'lightweight', 'hasn't paid his dues'." So said John Prescott, after Tony Blair promised Gordon Brown, in front of witnesses, that he would step down in his favour but then reneged on the deal. This is a true story, only the names have been changed. Brown was actually Paul Keating, the Australian Finance Minister, Blair was Bob Hawke, the Prime Minister who had won two full parliamentary terms, and Prescott was Graham Richardson, one of Keating's ministerial supporters. The parallels between the Blair-Brown partnership, possibly the most successful in British history, and the Hawke-Keating partnership in Australia, 1983-91, are spooky.

Keating was a brilliant reforming manager of the Australian economy with an abrasive personal manner; Hawke the great front man who made Australians feel good about themselves. But Keating's ferocious ambition for the top job caused friction and, after he passed the halfway point of his second full term, Hawke agreed to a meeting, with two mutual friends as witnesses. The secret Kirribilli agreement was struck at this meeting on 25 November 1988, named after the Prime Minister's residence overlooking Sydney harbour. "Against my basic judgement," said Hawke in his memoirs, "but because I wanted to contain the relationship and to maximise our chances at the 1990 election, I indicated that after winning the election I would, at some stage thereafter, step down as leader, clearing the way for Paul."

Hawke went on to win the 1990 election by a whisker, but thought Keating was being privately and semi-publicly disloyal. They had another meeting in January 1991. Hawke told Keating his actions had given him "no alternative but to repudiate the Kirribilli agreement".

So far, so familiar. Only Blair has never given Brown such an unambiguous promise - or had to repudiate it so definitely. Perhaps Blair learned from Hawke's mistake. As young opposition politicians, Blair and Brown visited Australia in 1990, and met Hawke and Keating to talk about centre-left government. They also learnt something about partnership, ambition and betrayal - and the uses of constructive ambiguity.

The nature of their meeting at the Deputy Prime Minister's apartment last November remains shrouded in mystery. It has been widely reported that Blair indicated to Brown that he would stand down this year. The Prime Minister denies it, but he would, wouldn't he? And neither he nor his friends have offered an alternative account, or explained how the Chancellor seems to have formed his allegedly mistaken impression. But they do not want to "feed the story", and I am told that Prescott has confirmed to Blair, in front of another witness, that his understanding of what was agreed differs from that reported.

Clare Short's account, in her memoirs serialised in these pages and in our sister daily newspaper last week, provides a surer foundation for interpreting the Blair-Brown relationship. She says the Prime Minister told her in February 2002 - more than a year before the Iraq invasion - that "he really needed Gordon to help him more". His main concern then was that Brown should help him to "make progress" towards Britain adopting the euro, which he linked with the information that he "really did not want a third term".

This is important because it suggests that the "understanding" between Blair and Brown was a continuous process, not a single event. It explains why friends of the Prime Minister both deny that a "deal" was struck last November and insist that it was Brown who failed to keep his side of the bargain by being so obstructive. I think Blair continually sought to encourage Brown to be more supportive by holding out the possibility that, if he were, he might take over at some point before the next election. In 2002 Blair wanted support on the euro not - as Brown supposed - because he hoped his Chancellor would put his desire to become Prime Minister above the national interest, but because Blair thought a more positive approach to the euro was in the national interest. Then he needed Brown's support on Iraq, which was eventually delivered, although not until as late as January 2003. A year later, he sought Brown's support to get him through the tightest Commons vote of his premiership, on higher tuition fees, and the Hutton report the next day.

In each case, Brown trod a balance. In order to understand his dilemma, we have to return to the parallel universe of Australia a decade ago. Richardson, the promoter of Keating's ambitions, explained bluntly: "In planning a challenge, you must undermine the leader in the eyes of the caucus [ie, Labor MPs] to unseat him, but not so much that the electoral damage is irreparable." Precisely so. Thus Brown always came round in the end, but not until he had fought to the brink in private and advertised his doubts in public. His supporters protested his supportiveness; Blair's supporters, on the other hand, likened him to the boy in Just William who delights in putting a spider on people's necks and whisking it away with a flourish, claiming to have done them a favour.

Another reason why Short's tale is significant is because it tells us that Blair-Brown relations were even worse than tittle-tattle-obsessed journalists suggested. Using Short and two other, unnamed, Cabinet ministers as intermediaries is a curious way of doing business. In defence of tittle-tattle, it has to be said that the Blair-Brown divide does matter. Indeed, with the Conservatives in their weak state, the ideological gap between Blair and Brown over public services is almost the only disagreement in politics that matters.

Brown advertised the gap yesterday at a conference for disillusioned Blairites with the ambiguous title, "A Third Term Worth Fighting For." He spoke again of the "ethic of service" which is about "compassion, duty, respect and obligation" as well as "contracts, markets and exchange" - implying that the first list was superior to, and in conflict with, the second. Blair, rightly in my view, rejects that implication.

That is why the "Blair reneges on deal" story cannot be dismissed as of mere historical interest. True, the important fact is that the Prime Minister has decided to fight the next election. My guess is that standing down was a real possibility but never a settled decision, and what persuaded Blair to rule it out was, above all, the failure of the Conservatives under Michael Howard to pose a serious electoral threat. As is said of criminals and mountaineers, he did it because he could.

But the lessons from the parallel universe of Blair's childhood home, Australia, are not entirely encouraging for him. A few months after Hawke reneged on the Kirribilli agreement, Keating challenged him for the leadership and failed. Keating resigned from the government, and by the end of the year Hawke was so weakened that Keating challenged him again and won. He went on to win the "unwinnable" 1993 general election, but was a one-and-a-half-term prime minister, losing to John Howard, the conservative, in 1996. And Howard is still there.

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