Prescott protests at collapse of power base

John Prescott is demanding a shake-up at the heart of the Government after criticism that Tony Blair has mounted a virtual take-over of his Whitehall powerbase.

The Deputy Prime Minister heads the Cabinet Office but is frustrated that some of the units and staff based there report directly to Downing Street. It is believed the latest example came when Lord Birt, the former BBC director general who is advising Mr Blair on long-term transport policy, was allocated an office in the Cabinet Office.

"Prescott is chomping at the bit because he realises he is a king without an empire," one minister said yesterday. "He wants to agree some clear dividing lines so he knows who is working to whom."

Mr Blair's critics have accused him of setting up a "Prime Minister's Department" in all but name by expanding his Downing Street operation after last year's election and virtually merging it with the Cabinet Office.

The Performance and Innovation Unit is based in the Cabinet Office but reports to the Prime Minister and is seen as his personal think tank. It is headed by Geoff Mulgan, who is also director of the Forward Strategy Unit, responsible for "blue skies" thinking in Downing Street.

The Cabinet Office's role in co-ordinating government policy has been reduced following the setting up of the Delivery Unit and Office of Public Services Reform at Number. The Treasury, meanwhile, has kept a firm grip on the performance targets for all Whitehall departments.

Mr Prescott's complaints are expected to result in a review of the complex structure at the centre of the Government following the appointment of a new Cabinet Secretary when Sir Richard Wilson retires this summer.

Mr Blair has rejected pressure from MPs to admit he has created a "Prime Minister's Department", fearing that this would fuel criticism of his presidential style.

But the post-election changes have fuelled speculation that Mr Prescott has been marginalised after he moved last June from the giant Department of Environment and Transport, which was split up.

MPs say the appointment as Labour Party chairman of Charles Clarke, a Cabinet minister and close ally of Mr Blair, has eroded Mr Prescott's other role as deputy Labour leader.

Allies of Mr Blair insist Mr Prescott plays a vital behind-the-scenes role chairing Cabinet committees and is leading the Government's work on issues such as tackling social exclusion and regional government. They say that Lord MacDonald of Tradeston, the Cabinet Office Minister, is a powerful figure in Whitehall, acting as a "progress chaser" across departments.

Yesterday allies of Mr Prescott played down the issue and denied that he felt he had been sidelined.

"There is some tidying up to do. The new structure is a bit of a mess because it was introduced quickly after the election," said one supporter of Mr Prescott.

"He is hopeful it will be sorted out soon."

Mr Prescott, 63, has angrily dismissed speculation that he plans to stand down from the Cabinet at the next general election. He said this week that he intended to serve as Deputy Prime Minister throughout a third Labour term, by which time he would be 71 or 72.