Brown faces poll setback amid talk of challenge

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Gordon Brown suffers a damaging new setback to his faltering authority today, with a poll showing that he is less trusted with the economy than any other leader of a major Western nation.

The further evidence of collapsing public confidence in Mr Brown comes amid growing signs that his ministers are manoeuvring for position and that there is deepening gloom in Labour ranks about the party's prospects in next month's local elections.

Just nine months after taking over from Tony Blair, there is even speculation that the Prime Minister could face a leadership challenge if he fails to turn the Government's fortunes round in the near future.

Labour MPs are alarmed that Mr Brown's reputation for skill in managing the economy during his decade as chancellor is being dismantled by the economic downturn and fall in house prices.

A Harris opinion poll conducted in several countries for the Financial Times today will confirm their fears. It found that 68 per cent of British voters were "not confident at all" in their government's ability to deal with the economic crisis. That figure fell to 52 per cent in Germany, 51 per cent in the United States, 50 per cent in France, 43 per cent in Italy and 36 per cent in Spain.

A YouGov poll for The Sunday Times discovered Mr Brown's personal rating among the public has fallen from plus 48 in August to minus 37 – an even more dramatic collapse in popularity than Neville Chamberlain suffered when Hitler invaded Norway in 1940. It also put the Tories on 44 per cent – 16 points ahead of Labour on 28 per cent. It is the party's biggest lead since 1992 and enough to propel David Cameron into Downing Street with an overall Commons majority of more than 120. The Liberal Democrats were on 17 per cent.

With the Government braced for more bad news in local elections on 1 May, signs of unrest are growing at all levels of the Labour Party in Westminster. The question preoccupying ministers and backbenchers alike is whether Labour has reached a point of no return similar to that passed by John Major's government in the mid-1990s.

The optimists argue that the tide can be reversed as Mr Cameron's Tories have not reached the levels of popularity enjoyed by New Labour under Mr Blair. And despite a torrid six months since Mr Brown's decision not to call a general election, Labour remains for the moment relatively united. Downing Street insists the poll ratings will revive as the economy recovers.

But dissent – and implicit criticism of the Prime Minister's performance – is bubbling to the surface. Ivan Lewis, a previously loyal Health minister, warned two weeks ago that the Government risked losing touch with voters' concerns.

The Olympics minister, Tessa Jowell, said the Prime Minister should take "very seriously" a threatened Commons revolt next week over the doubling the 10p minimum rate of tax.

Geoffrey Robinson, a former minister who is among Mr Brown's closest allies, said: "It is hurting many people the Government never set out in any of their policies to hurt."

There is also growing private criticism within Labour ranks over Mr Brown's style, with accusations that the damaging tag of "ditherer" could stick to him. Downing Street sources insisted that the Prime Minister, who meets bank chiefs tomorrow before flying off for a four-night visit to the United States, was not affected by the mutterings.

They said: "At a time when every Labour MP and activist is working flat out to deliver the best result for Labour in the local elections, it is slightly surprising that a few individuals are spending their time trying to disrupt the party's unity." But the febrile atmosphere within the party was reflected by the first outbreak of speculation since he became Prime Minister nine months ago that Mr Brown could face a leadership challenge.

Charles Clarke, a former home secretary, said last night there was "absolutely no foundation" in a report he could mount a "stalking horse" challenge to the Prime Minister. But some Blairite MPs believe anti-Brown manoeuvrings could intensify this year if the Government's woes deepen. Frank Field, a former minister, accused Ed Balls, the Schools Secretary, of criticising faith schools – a stance popular among Labour activists – to position himself for the party's "next leadership contest". The claim was angrily denied as "just ridiculous" by Lord Adonis, Mr Balls' junior minister.

Meanwhile, Jack Straw, the Justice Secretary, was said to be privately worried about the Government's moves to extend the 28-day limit on the pre-charge detention of terrorist suspects to 42 days. Jacqui Smith, the Home Secretary, renewed her efforts to rally support for the increase to 42 days, although it appears increasingly likely that the Government could be defeated on the measure.

Geoff Hoon, the Chief Whip, is known to be privately pessimistic about the Government's chances of winning the vote.

Alan Johnson, the Health Secretary, came to Mr Brown's defence yesterday. He insisted the Prime Minister was facing a "character assassination" campaign from journalists similar to that endured by Tony Blair, John Major and Margaret Thatcher.

The hurdles ahead in a difficult month

*There is little space left in the Downing Street diary as Gordon Brown attempts to bring fresh momentum to his premiership.

Having urged banks to pass last week's interest rate cut to borrowers, he will tomorrow meet bank chiefs to discuss the fragile housing market. That evening he will fly to New York for talks with American business leaders on the global financial crisis. He will hold what should have been high-profile meetings with George Bush and the three presidential hopefuls, John McCain, Barack Obama and Hillary Clinton. But they are bound to be overshadowed by Pope Benedict XVI's first visit to the US.

Mr Brown returns next week to the prospect of a Labour rebellion in a Commons vote on the doubling of the minimum 10p rate of income tax. In the local elections of 1 May, Labour fears Ken Livingstone could be removed as Mayor of London by Boris Johnson.

A further cloud on the horizon in May is an impending Commons defeat on detaining terrorist suspects for up to 42 days.

What should be the PM's strategy?

Lance Price FORMER LABOUR DIRECTOR OF COMMUNICATIONS: "He is a genuine Labour Prime Minister of the sort we haven't seen for some time, but I think he's afraid to admit it. He has a good story to tell; he should give an interview or speech to explain he is taking all this flak because he wants to make a difference."

Peter Kilfoyle FORMER DEFENCE minister: "Let's start again. We need to get back to what we are supposed to be there for, which is looking after the people who voted for us and not the City and the merchant bankers."

Matthew Taylor former head of downing street policy unit: "The Government has got lots of values and priorities. But we need a sense of the hierarchy of Gordon Brown's priorities – what is it that matters above all else to him?"

Denis MacShane FORMER FOREIGN OFFICE MINISTER: "Labour MPs should get out of their Blairite or Compass [a Brownite think-tank] trenches from which they shell each other, and show a little bit of confidence by walking above the parapet and attacking the Tory enemy rather than each other."

Sunder Katwala general secretary of the Fabian Society: "There is an underlying agenda and vision that defines the Government. But I don't think it's being communicated clearly. There needs to be a focus on the underlying arguments about governing Britain and less on short-term tactics."

Glenda Jackson former transport minister: "We've got a lot of work now the local elections are coming up and we have got to do that. The worst thing we could possibly do at this stage is to believe what the headlines are saying."

Neal Lawson CHAIR OF THE COMPASS THINK-TANK: "It is the change agenda that will get the Government back on track, but time is running out for that. Gordon Brown could ensure, for instance, that the people at the top of the pile pay as much tax as those at the bottom."