Three men in a sulk push New Labour to the edge

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It was the week when, according to one Labour MP, the party peered into the abyss and only just teetered back from the edge. A news story, detailing the froideur between senior Labour figures, opened up a flood of reports of divisions at the highest level of New Labour.

Alarm and anger spread quickly. All week the phones rang with complaints from party members whose tone was crystallised in a letter to the Guardian last Wednesday. "I am," the correspondent argued, "just an active Labour party member who attends meetings, canvasses and gives money to this august body. Would it be too much to ask that the squabbling over the prize starts after the election, and that our aspiring leaders grow up?"

Personalities are central to any political organisation and Labour has its share of egos. Below Tony Blair, its top three - Gordon Brown, Robin Cook and John Prescott - are unlikely to be found holidaying with each other. In fact, the three most senior shadow ministers view each other with a mixture of dislike and suspicion, seasoned with a dose of frustrated ambition. As one MP put it last week: "Two of them are disappointed at not being leader, and one is disappointed he's not going to be Chancellor."

The story which set the fuse burning appeared in last Saturday's Times, detailing the frostiness between shadow chancellor, Gordon Brown, and the party's best-known image-maker, Peter Mandelson. There was no suggestion of a policy dispute: both are arch-modernisers with almost identical views on economic policy. Their feud goes back to 1994, when Mr Mandelson backed Tony Blair for party leader rather than Mr Brown.

When publicity threatened to spin out of control last week, Mr Blair spoke to both men. The result was a rare exchange of extravagant public flattery: Mr Brown praised Mr Mandelson as "one of the most brilliant electoral strategists". Mr Mandelson reciprocated, calling Mr Brown "steadfast and redoubtable".

But by then Mr Brown was fighting fires on several fronts. John Prescott, the party's deputy leader, used a speech to argue against the idea of a "super Treasury" whose remit would be "widening its role to encompass larger economic and social renewal". That flatly contradicted a speech made two weeks ago by Mr Brown in which he called for just such a department, "a ministry of finance and a ministry for long-term economic and social renewal".

So why is Mr Brown in so much trouble? According to one critic, he "provokes massive hostility among colleagues". He has also been accused of rampaging over others' policy areas and of making pronouncements without consultation. Some believe that Mr Brown still has ambitions to lead the Labour Party and behaves as such.

But it is his message - "tough choices" - which has proved difficult for many shadow ministers to swallow. As shadow chancellor, he has buried Labour's tax-and-spend past, resisting colleagues' spending plans.

In the midst of this, Mr Prescott may have seen an opportunity to kick him when he was down. One critic described the deputy leader's behaviour as "that of the school bully who hears the cry 'fight' and crosses the playground to join in".

His intervention, however, was more than opportunistic thuggery. It is reminiscent of the 1964 Labour government and George Brown's Department of Economic Affairs, an unsuccessful attempt to counter balance the Treasury with an agency devoted to economic growth and job creation.

Earlier this year, Mr Prescott spoke positively of Michael Heseltine's work in the Cabinet Office, arguing that the minister's "challenge to the Whitehall structure of power, which concentrates on the Treasury, needs a little more time before a judgement can be made". In Labour hands, Mr Prescott thinks, Mr Heseltine's job could be the one part of Whitehall which counter balances the Treasury, helping bring about full employment - the issue on which Mr Prescott fought the deputy leadership campaign.

This is an ideological battle, one with deep roots in Labour history and central to Mr Prescott's future. There may be four players at the top of the Labour Party but there are only three top jobs, and Mr Prescott runs the risk of losing out. Mr Cook, who has positioned himself to the left of Mr Brown, would like to be Chancellor. While some of Mr Brown's critics believe he could, in government, be moved immediately to the Foreign Office, it is unlikely, partly because he has a following in the party, partly because his move might suggest a relaxation of spending discipline which could cause alarm in the City and currency markets.

Mr Cook, who proved his mettle in the Scott debate, would be difficult to demote and now seems happy at the prospect of being Foreign Secretary. He would, after all, have a crucial role over economic policy through monetary union. Earlier thoughts of splitting the Foreign Office, with responsibilities divided between Europe and the rest of the world, appear to have fallen by the wayside.

So where does that leave Mr Prescott? He could inherit Mr Heseltine's job, but its current brief on competitiveness and deregulation is hardly appropriate to a Labour government. The next best thing for Mr Prescott would be a big department - with the Home Office (the number three job in government) now being touted as the prime possibility.

However clashes of ideology and personality are resolved, last week reinforced the need for argument to be behind closed doors. The injunction has gone out from Mr Blair's office to behave - at least in one respect - like members of a Conservative Cabinet. One source said: "We have to think like Michael Heseltine. We all know he spends most of his day hoping John Major will fall under a bus. But even in private, you don't get so much as a sniff of it."

n More than a third of voters see Labour as a divided party, and fewer than one in seven believes what Mr Blair says, despite the Opposition's lead in the latest opinion poll. Labour's popularity ratings are up to 52 per cent, giving the party a 25-point lead over the Tories, who are languishing on 27 per cent according to an NOP poll for today's Sunday Times.

Alan Watkins, page 19