Dismissing Treasury plans as a "quick fix", the Prime Minister yesterday ordered the Paymaster General Geoffrey Robinson to rewrite his proposals for the coal industry and force more competition into the energy supply industry.
The Prime Minister's intervention in the coal review emerged yesterday as Downing Street was keen to play down reports of continuing power struggles between Mr Blair and Gordon Brown, the Chancellor
There were also intensive efforts to smooth over the row between Mr Brown and Margaret Beckett, the President of the Board of Trade, over her defeat on the minimum wage, with ministers privately blaming the Chancellor's camp for the way that Mrs Beckett was treated.
"Gordon went to the line on Wednesday night to ensure she was defeated," said a senior minister. "We wanted stories about the Labour Government meeting its election pledges. All that came out was Gordon Brown's victory over Margaret Beckett."
Mr Blair's allies say that the Prime Minister, in another move to assert authority over the Chancellor, has insisted that partial privatisation of the Post Office - the sale of 49 per cent of its equity - should be included in the options for granting the Post Office more commercial freedom in the Autumn decision on its future.
The Prime Minister's allies were last night saying Mr Blair was determined to demonstrate his authority over his Chancellor, and that this will be underlined with Thursday's coal review.
The result of the lengthy review, to be announced by Mrs Beckett, will force a restructuring of the industry over the long term to allow coal to compete with other sources of energy on a more equal footing. Mr Blair does not want to be seen propping up jobs in uncompetitive pits.
The energy generating companies PowerGen and National Power will be told to sell some of their power stations to increase competition in energy supply, opening the way for coal to compete with gas.
Electricity price setting will also be reformed.
A slow-down in the construction of gas-powered generating stations will be enforced, but there will be no moratorium.
The political crisis over the coal industry was brought to a head by RJB Mining, the UK's leading deep mine company, which has to renew its contracts in July or close pits.
Ministerial sources said the package could guarantee supplies of about 25 million tonnes - saving around half the 5,000 jobs at risk and eight to 10 pits owned by RJB that are threatened with closure.Reuse content