Mandelson's move rules out early cabinet return

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PETER MANDELSON'S chances of an early return to the Cabinet receded when he took on a job heading an Anglo-German group. Despite speculation that Tony Blair may recall his ally in an autumn reshuffle, the former trade and industry secretary intends to chair the German-British Forum for at least a year.

A spokesman said last night: "He does not expect an early return to government and is therefore looking at a number of things to do in the voluntary and public sector that will keep him busy alongside his parliamentary and constituency duties." The Hartlepool MP, who resigned in December over his pounds 373,000 home loan from fellow minister Geoffrey Robinson, was tipped this summer for the Northern Ireland secretary and defence secretary posts.

At the weekend Mr Blair said he believed Mr Mandelson had "paid the price" over the Robinson affair and hinted he could return to high office. With his work with Voluntary Service Overseas, the new post is another tentative step in the former spin-doctor's attempts at political rehabilitation.

But chairmanship of the German-British Forum will last at least a year and it is understood Mr Mandelson intends to remain in post for the "medium term". Set up in 1995, it is a private sector-sponsored group without party political affiliation.

Last night Mr Mandelson said: "I am committed to fostering strong links with other European countries but Britain's economic relationship with Germany is vital. We need to enlarge our common ground to drive economic reform and investment so as to secure Europe's economic future."

He is to go to Germany next week on a fact-finding mission, when he will be anxious to answer criticism of the Third Way by members of the ruling Social Democratic Party.

At the weekend Chancellor Gerhard Schroder's party suffered heavy losses in regional elections amid complaints that his Blairite modernisation plans were too unpopular with party activists and voters.

Mr Mandelson will urge the SPD not to shy away from Labour's sweeping internal policy reforms, particularly on economic policy, and will suggest that more, not less, change is needed to improve its electoral fortunes.