Late in the afternoon of Wednesday, 16 September 1992, Brown was in his office in 1 Parliament Street, overlooking the Treasury building. That morning he had still been convinced that the government would remain in the ERM, helped by Germany’s revaluation of its own currency. He would be vindicated, he reassured John Smith, despite his critics including Ken Livingstone, who again had advocated devaluation. Around Brown were his advisers Neal Lawson, Michael Wills, Lord Eatwell and Geoff Mulgan. The tension was high. The constantly updated television news bulletins reporting Norman Lamont’s battle to save sterling were unnerving. If Labour had won the election in April, Brown would have been the focus of the TV cameras outside the Treasury, and the target of baying Tory MPs inside the Commons. His plight was better than Lamont’s, but the politician whose talent was to ridicule his opponents knew that he was vulnerable to mockery. He had allied himself to a policy which, to his amazement, was collapsing – and worse, he did not understand the reason.
At 7.30 p.m. everyone in Brown’s office watched the television pictures of the chancellor emerging into the spotlights, brushing his hair, and confessing defeat. Britain, he announced, was withdrawing from the ERM and devaluing. In a surreal exercise, the viewers in Brown’s office darted between the television and the window, gazing down at Lamont in the distance to reassure themselves that the television pictures were reality.
After Lamont’s announcement came to its abrupt conclusion, the atmosphere in the office was ‘on a knife edge’, recalled one of those present. All eyes swivelled towards Brown and then away. His shock was palpable. He had made a fundamental mistake, and he was terrified. This was the most testing moment of his political career. His refusal to seek the nomination in Hamilton or to contest the party leadership were failures of courage, but were not life-threatening. This crisis endangered his entire future. At that moment he was due to lead the attack against the Tories for a policy he himself supported, and simultaneously he was under attack from the left wing of his own party for ideological folly. No one was certain whether he would cope with the explosion of emotion. Under pressure, the ashen-faced Brown’s behaviour was extraordinary. Some eyewitnesses say they observed the neurotic pessimism of the son of the manse. Others witnessing the brooding volcano in that untidy office would mention the inherent self-destruct button of the Scottish character.
But Brown did not self-destruct. He reasserted his self-control, the tension eased, and he began designing a strategy for his survival. Driven by his hatred for the Tories and his searing ambition to become party leader, he contrived a convincingly venomous denial of the past. ‘We have to fight to avoid going down with the government,’ was the common sentiment. His first decision was to reject an invitation to appear on that evening’s Newsnight. He knew he would have to answer the charge that if Labour had won the election they would have been hit by the same crisis, and would have reacted identically to the Tories. The party, Brown decided, had to avoid self-flagellation and pontificating about the ‘current mess’. Instead, he would offer soundbites damning the government.
As he faced the news cameras he propped a piece of paper in front of his eyes bearing the words, unseen by the viewers: ‘Huge chasm’. His identical soundbites, emphasising this ‘huge chasm’ between the government and Labour, blamed everything on the Tories, and suggested that Labour had never endorsed the disastrous policy. ‘We demanded interest cuts,’ he repeated endlessly, although that was not a solution to the crisis. ‘The government failed to listen to our warnings … The Tories are the party of devaluation … The Tories cannot be trusted on the economy.’ The government’s humiliation was transformed into a Labour success. ‘I say to Norman Lamont: spend your energies pursuing the useful job of creating jobs for others rather than the futile goal of clinging to your own.’ Of John Major he said: ‘The recession started when he became Treasury secretary, worsened when he became chancellor and intensified when he took over as prime minister. Every time he changed jobs, thousands lost theirs.’ Stubbornly, he repeated his rehearsed phrases and ignored supplementary questions. He may have turned the facts upside down, but the public was unconcerned. Their spleen was directed at the Tories. Labour’s support for the policy was forgotten. Brown’s calculated indifference to the truth did not impress the party cadres. The left, disgruntled by his modernisation agenda, was whispering against the now isolated shadow chancellor.
Two weeks later, Brown arrived at the 1992 party conference in Blackpool. The criticism had not relented. The opinion polls showed that Labour was still not trusted by voters on the economy. His fear had plunged him into a deep, black mood. He was convinced that Robin Cook and John Prescott were conspiring to expel him from the front bench, and that he was fighting for survival. Reconciling Brown with Cook, complained fellow shadow cabinet member Frank Dobson, the spokesman for employment, had become ‘a lost cause’. Brown’s grudges exploded in private but were concealed from the public. As he toured the corridors at the conference hall he repeatedly told delegates he encountered, ‘There is no way that Labour could have kept its credibility if I’d come out in favour of devaluation.’ Because he had resisted the devaluation chorus, he continued, Labour had been immunised from blame for the collapse of the pound. The Tories, he said, should be cast as the party of devaluation. Repeatedly he told his critics to blame the Tories for ‘betraying Europe’, twisting the responsibility for the ERM crisis away from the real culprits, the Germans and the EU Commission who had refused to support Britain. His conference speech was an old-fashioned tirade: ‘The City of London is Britain’s biggest casino, and the winners are celebrating over £500 million won by cocky young men betting on a certainty.’ He demanded curbs on currency speculators (whom he had earlier predicted would be controlled by the ERM) and advocated ‘managed exchange rates’ as ‘absolutely necessary’. The contradictions were glaring, but that was irrelevant. Despite his faltering popularity, he was again first in that year’s elections for the shadow cabinet, with 165 votes.
Brown returned to London determined not to waver. Preoccupied by a zealous conviction of his virtue, he became impenetrable and impregnable to the doubters. He was dubbed a political glacier, but he pursued his duty. ‘I must come up with some big ideas,’ he told friends. In 1906, 1945 and 1974, Labour had reinvented itself. In 1992 the party again required a huge intellectual effort if it was to win credibility. Those pessimists preaching that Labour’s support could not break through the 35 per cent barrier, or that the party had a declining base, were ignored. His tactics had provided breathing space and an inspiration for a new crusade. He immersed himself in rewriting Labour’s policies to make the party electable, in a style his supporters called ‘radical populist’. His latest political journey was calculated to convince electors that Labour was abandoning the economic policies on which it had fought the previous election.
Brown was resolved that Labour would never again pledge to raise taxes in an election campaign, but that was only the beginning. The image of Labour as the party of inflation, high spending and begging from the IMF had to be eradicated. No future Labour government, he decided, could finance failing industries or restore unlimited powers to the trade unions. He would pledge support for full employment, but refuse to support higher taxation or restore the earnings link to state pensions. He began speaking about the importance of developing Labour’s response to the new shibboleths: globalisation, the financial markets and the ‘knowledge economy’. Relying on competition in the market rather than imposing state controls, he slowly recognised, gave people greater opportunities; knowledge rather than capital had become the key to wealth, and he listened to those saying that the poor would be enriched by learning new skills rather than by the imposition of state control over wealth. The new gospel would present the party as a modernising agent for the economy, society and the constitution. Much of Thatcherism, Brown acknowledged, was irreversible.
His reward was more unpopularity.