Stephen Byers: Out of his depth and the water's rising

His rise to high office seemed effortless. His tenure at Education was 'brilliant'. A future leader was in the making. Then came the poisoned chalice

Stephen Byers has had another bruising week. The sale of Rover by BMW is one of those rare political stories that simply will not go away. On Tuesday a committee of MPs interrogated him. How much did he know in advance of BMW's announcement? How much should he have known? In a variety of ways, MPs repeatedly asked these two questions. William Hague posed them again the following day at Prime Minister's Questions, suggesting also that Byers should be sacked. Much worse for a politician brought up on a Blairite preoccupation with the media, newspapers from the Financial Times to the Sun scent political blood.

After almost effortlessly rising up the greasy pole, Byers has run out of luck. Until now the 46-year-old former law lecturer has managed to shine without being greatly tested. While the other big players in the Government - Tony Blair, Gordon Brown, Peter Mandelson, Jack Straw, David Blunkett, Robin Cook and John Prescott - were defining themselves as politicians in the ideological and strategic conflicts of the 1980s and early 1990s, Byers was elsewhere. For most of Labour's wilderness years he was a highly effective deputy leader on North Tyneside council. Inevitably in the Thatcherite assault on local government, Byers had some tough decisions to make, which involved clashes with unions over job losses and wage levels. He always handled himself with aplomb, especially in the local media. But this political apprenticeship was nothing compared to the Herculean battles being fought out at the top of the Labour Party during the 18 years of opposition. In the long haul back to power, Byers was not a central figure.

Instead he arrived at Westminster with perfect timing, becoming an MP in 1992, two years before the Blairite bandwagon took off. In a parliamentary party not exactly overwhelmed with talent, Byers stood out as an intelligent, telegenic moderniser. Five years after being elected to the Commons he became a minister.

By the summer of 1998 he was in the Cabinet. At this point Byers was enjoying more political luck than the equally rated Alan Milburn, his close friend and fellow north-east MP. Both had impressed Blair as junior ministers: Milburn at Health; Byers as an Education minister. Indeed Byers's stint at Education has been his most successful in government. Influential Blairites said at the time (before David Blunkett had established himself as their favourite minister) that "Byers is doing a brilliant job on raising standards in schools". Shortly after he was promoted, the word from the Blairite court was "We've stalled on education. Education is missing Byers". By then, Byers had been given a job in the Cabinet as Chief Secretary to the Treasury. He got the call to the top table before Milburn.

Within six months Peter Mandelson had resigned from the Department of Trade and Industry and Byers was promoted again, theoretically to one of the top jobs in government. Byers had just returned home to the North-east when he got the call from Tony Blair, the day before Christmas Eve. He went straight back down to London to have talks with his senior officials at his new department. He must have thought Christmas had come early. In retrospect, this was when Byers' luck ran out.

Against all the evidence, the DTI is still regarded as a plum job in government. In reality the grandly named department tends to seriously wound all those ambitious politicians lured by its glamorous embrace. During the 18 years of Conservative rule there were 11 secretaries of state at the DTI. They included Leon Brittan and Nicholas Ridley, who were forced to resign in highly embarrassing situations, never to return to government. Even Michael Heseltine made little impact, in spite of his promise to intervene between every mealtime of the day. So far, the farcical ministerial turnover has been even higher under Labour. When Byers paid his pre-Christmas visit to his new department in 1998 he was Blair's third secretary of state in 18 months. Margaret Beckett went after a year in which Downing Street and the Treasury had closely watched her every move. Mandelson lasted less than six months.

For decades the DTI has lacked a clearly defined role. Few of its occupants since 1979 have been able to find one. Awkwardly for Byers, his predecessor was one of the exceptions. Mandelson was highly regarded by officials at the department, and respected by business leaders. Even trade unionists praised him highly during his brief tenure. The GMB's John Edmonds compared him favourably to Gordon Brown in one controversial interview. Even so, Mandelson was not there long enough to be truly tested and there is no guarantee he would have handled Longbridge any differently.

New Labour has not had much more of a strategy for boosting manufacturing industry than the previous Conservative administrations. In such a vacuum the senior civil servants at a department can hold considerable sway. One senior Blairite backbencher who recently led a delegation to the DTI was taken aback by what he described as the "cavalier indifference" to manufacturing displayed by the top officials.

"It was like walking back to the 1980s where no lessons had been learnt from the successful manufacturing industries in parts of Europe and North America, where they are producing goods for the domestic market and abroad. They had swallowed the Nigel Lawson ideology that manufacturing did not really matter," the MP observed.

There is a wider problem for the department, exacerbated under the current government. It is the Treasury, not the DTI, that determines most of the policies affecting business. Byers is getting a rough time from business leaders over the high level of sterling. But the economic strategy has nothing to do with him. It is Brown's strategy, not his.

At the start of the year, Byers attempted to speak out in favour of early entry into the euro. "Businesses tell me they want a referendum early in the next parliament," he told the New Statesman in January. But the Treasury is driving the policy over the euro. Brown wants a more neutral tone in the run-up to the election. Within weeks Byers had been forced to retreat. "What matters is that we join when the economic conditions are met. The precise timing is irrelevant. It is when we have met the economic conditions, and I am not going to predict when that will be," he told The World at One a short time after suggesting that the timing was very relevant to business leaders.

The Treasury does not shape only the big picture. It gets its fingerprints over every detail. The former Treasury minister Geoffrey Robinson wrote in a recent New Statesman that his department had been viewing events very carefully at Longbridge. For example, Robinson had had a meeting with Mandelson in November 1998, when both of them were still in government. "From well-informed press reports [about Longbridge], we were looking at a requirement of £250m in regional aid. The ostensible purpose for my meeting was to avoid the Treasury being squeezed by a DTI/Downing Street pincer movement into unconditional financial support. But beyond that I was deeply concerned that the DTI was too laid back about the situation," he said. This implies that the Treasury felt it had every right to get involved in all aspects of the Longbridge affair, from what the Government should do about the plant's vulnerability to the precise level of government assistance. Stephen Byers will be dependent on the Chancellor now in coming up with a decent long-term package for Longbridge.

But Byers would not get very far if he started blaming Brown's economic policies for his plight. He joins the long list of DTI secretaries without a clearly worked-out strategy for the department. Long before the crisis at Rover, senior Blairites, who had sung Byers's praises when he was at Education, were expressing doubts about him in his new job. At different times Byers has attempted to appear as the consumers' champion, the friend of business, supportive of the euro and a little wary of the euro. He has lacked a consistent narrative. At the start of his reign he told his officials that his persistent twin themes would be "enterprise" and "fairness", but such noble, vague aspirations offer little detailed guide about what to do when BMW pulls out of Rover.

His initial, uncharacteristically manic reaction to the sale (spurred on by Downing Street, which tends to panic in the face of bad news), condemning the company, heading for fruitless talks in Munich - and just about everywhere else - gave the impression that he could single-handedly save the situation. Inadvertently it gave the impression, also, that he was to blame for the situation.

This is not the case. BMW is not selling because Byers is at the DTI. There is nothing he could have said or done to have prevented the sale. What is more questionable is whether he should have seen the signs that BMW was about to pull out. Some senior Labour MPs, who believe that Byers was too complacent about BMW's attitude, point out that he lacks any previous expertise in business.

There is a broader lesson here. Stephen Byers performed effectively at the Department for Education because he understood every nuance of his brief. He had been chairman of North Tyneside's education committee for two years in the 1980s and, in the early 1990s, leader of the Council of Education Authorities. In the two years up to the 1997 election he had been an education front-bench spokesman. When the Blairites master a brief and have worked out what they want to do with it they tend to be ruthlessly focused and effective. But when they are suddenly thrown into areas that are new to them, carrying light ideological baggage, they can be easily blown about by events. Longbridge is the equivalent of a gale-force wind.

Unless fresh revelations emerge, Byers will keep his job until the election. But talk of the minister being the next leader of the party has ceased. One perceptive Labour MP says of him: "Stephen has no enemies in the Commons, but no great friends either. He is the Stephen Dorrell of the Cabinet." In December 1998, when he first set foot in the DTI, after a meteoric rise, Byers must have dreamt of a more flattering political epitaph.