Revealed: Blair's secret plan to sack Gordon Brown

An astonishing confidential document - disclosed by The Independent on Sunday three days before Gordon Brown takes over as Prime Minister - proves that Tony Blair planned to sack Mr Brown as Chancellor of the Exchequer immediately after the last election.

The Cabinet Office document, drawn up by a team of Downing Street advisers including Lord Birt, the former director-general of the BBC, shows that far from the "unswerving support" the Prime Minister pledged to Mr Brown this week, he planned to scupper his career and break up the Treasury just two years ago.

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The revelations will shock Labour Party delegates assembling in Manchester for the formal announcement of Mr Brown's succession as Labour leader.

They will also confirm long-held suspicions by allies of Gordon Brown that the Prime Minister has been undermining him for years. The top-secret paper confirms talk at Westminster that Mr Blair intended to sack Mr Brown after the 2005 election and move him to another post to loosen his control over the domestic agenda.

The paper provides the first concrete proof that the speculation was true, including draft speaking notes for the Prime Minister, a briefing for the "new Chancellor", as well as a list of personal qualities Mr Brown's successor should have.

Marked "Copy No 1 - Prime Minister Confidential Policy", the paper says the new Chancellor's qualities must include "lack of personal investment in previous policies". It adds that "teamwork" is a key asset, something that arch-Blairites have accused Mr Brown of being incapable of.

The document adds that on the first day in office Mr Blair should " convey to the new Chancellor" his plans to split the Treasury and hand many of its key roles, including responsibility for tax credits, to other ministries.

In the week in which Tony Blair finally leaves the stage, the leak starkly illuminates the extent of the breakdown in the central relationship of the Labour government over the past decade.

It emerged last week that Cherie Blair repeatedly urged her husband to sack Mr Brown, and that Mr Blair told friends of his intention to ditch the Chancellor.

The paper was prepared by a trusted team of advisers in the Prime Minister's Strategy Unit, in close co-operation with John Birt and the Economic and Domestic Secretariat in the Cabinet Office - Mr Blair's elite civil service support team.

Downing Street sources have told The Independent on Sunday that Mr Blair wanted to be kept closely informed of its work and watched presentations of the plans as they developed. As proof of how closely involved Tony Blair was, The Independent on Sunday has seen the Prime Minister's own personal copy, drafted for him in March 2005, weeks before the election.

One Downing Street insider said that the secret plans were known only to a small coterie of Mr Blair's inner circle, including Alan Milburn, Lord Birt and a group of key Downing Street officials.

"There were all sorts of presentations to the Prime Minister. He was definitely aware this was going on - he wanted it. There was a big thing about how Mr Blair was going to make a big comeback after the election. His basic command was 'I want to refresh my government'. It was about Mr Blair being so sick of the in-fighting with Brown," said one source.

The blueprint for the third term included Mr Blair's notes for briefing the Chancellor and other ministers, including the new environment and industries secretaries and energy minister, who were all expected to be "neutral" on nuclear power. A list of policy decisions to be made throughout the third term, including raising the retirement age and taking a "nuclear decision", are listed in detail.

Many of the changes listed in the document have been brought in, but the preparations to radically reshape the Government and split the Treasury were rapidly shredded after Mr Brown stepped in to rescue Labour's flagging election campaign.

As Labour slipped in the polls, Gordon Brown did a deal not only to keep his job, but to have a say in the post-election reshuffle, in effect anointing him as Mr Blair's successor.

Some months before the last election, the Chancellor had been sidelined from the campaign when Mr Blair put Mr Milburn, his staunch ally, in charge.

In the weeks before the campaign, Downing Street advisers were instructed to draw up a far-reaching blue-print for Mr Blair's third term, and to renew government so it was fit for the next 10 years.

The secret "Gov 2015" programme, the start of a 10-year plan to be put into effect the moment the 2005 election was over, is entitled "3rd Term Plan: Implementation Pack". It shows that the Prime Minister not only wanted a new Chancellor but also to emasculate the Treasury as a power base.

It proposes boosting the role of the Chief Secretary to the Treasury, who would head a new Office of Delivery and Expenditure within the Treasury, which would be responsible for public service delivery and control of spending. The Prime Minister would chair a new cabinet committee determining "overall strategy".

The proposals suggest that Mr Brown was to be kept in the dark about the changes afoot, while his own civil servants would be asked to work on the plans without telling him.

The document says that the Prime Minister must decide whether to tell the top civil servant in the Treasury in advance of the secret plans "in confidence" so he could work with Sir Andrew Turnbull, the Cabinet Secretary, to refine them.

The changes were to be abrupt and ruthless, planned months in advance of the election.

A list of "Actions to be taken by the Prime Minister in Week 1" begins with him conducting the reshuffle. His second priority in the first two days after the election result would be to "Convey to new Chancellor and Chief Secretary the high-level plans".

The paper headed "draft speaking notes for the Prime Minister in his Day 1 briefing of the Chancellor" begins: "I propose to make some significant changes to the role of the Treasury." It sets out point by point how the Treasury would be reduced from a powerhouse to an administrative department.

Mr Blair proposed to remove the Treasury's ability to spend money because it had "caused a conflict of interest". Most of its enterprise team would be transferred to the DTI, which would be renamed the Department for Trade, Productivity & Energy (DTPE) - a name change that was made but then swiftly dumped after objections by Alan Johnson, who was put in charge of the department after the election. Responsibility for overall policy on productivity would also go to the (DTPE) department, while a new Office of Delivery and Expenditure would be established within the Treasury to ensure that "the spending allocations and targets are aligned with the Government's strategy". The Department for Work and Pensions would take over responsibility for tax credits and tackling poverty.

The blueprint was designed to address Mr Blair's concerns that Gordon Brown's powers over spending and allocating money to government departments were so extensive that they worked against the Government's own spending priorities. His advisers were determined it would never happen again. At Downing Street those in on the plans speculated that the changes were so dramatic that Gordon Brown, when he caught wind of them, would resign his post before being reshuffled. Others said he would have to be pushed and be made Foreign Secretary "to give him more experience".

The plans to diminish the Treasury and appoint a "new Chancellor" demonstrate the depths to which the relationship had plummeted, and the extent of the distrust between the two men and their rival courts.

It was the lowest point of a steady deterioration that led to shouting matches, slamming doors and angry accusations - a situation that many in No 10 thought frustrated good government.

The tension was so palpable that Mr Blair's aides complained that they were treated like children in a dysfunctional relationship. Estelle Morris, the former education secretary, recently said that "the tension between them made decision-making impossible".

Tony Blair complained that Gordon Brown's influence over domestic policy had stifled many of his reforms. At the 2005 Labour conference, the Prime Minister said revealingly: "Every time I've ever introduced a reform in government, I wish in retrospect I had gone further."

The source of the enmity goes back at least to 1994 and the unexpected death of John Smith, the Labour leader. Mr Blair and Mr Brown, both rising stars on the opposition benches, were pitched into competition for the job. Elected in 1983, the two MPs shared a cramped office in Westminster and were close friends. They enjoyed each other's company and worked in partnership as an energetic modernising force in the party. Mr Brown, the more experienced politically, took Mr Blair under his wing. Soon Mr Blair, promoted to the role of shadow Home Secretary, showed his parliamentary skills and asserted himself with a "tough on crime, tough on the causes of crime" message. When John Smith died, Gordon Brown was still the senior partner, but Mr Blair emerged swiftly as the modernising candidate considered most likely to win over middle-class voters.

The famed meeting at the Granita restaurant in Islington over who should become Labour leader sealed the premiership for Mr Blair. Over dinner Mr Blair is said to have reached an understanding with Mr Brown that he would not stay at Downing Street for ever and would step down to hand over the reins of power to his friend. Mr Brown was given guarantees that, as Chancellor, he would have control not only of the economy but also policies such as reducing poverty.

Mr Brown is said to have left the dinner with the understanding that Mr Blair would stand down during his second term. But his feeling that Mr Blair had somehow cheated him of his rightful inheritance poisoned the early years of government. One ally of the new Prime Minister said in 1998 that the Chancellor had to get a grip on his "psychological flaws". In time it became clear that Mr Blair had no intention of handing over in his second term. Allies of the Prime Minister have often insisted that no time limit was put on his premiership but that he had made it clear that he would not go on and on. Repeated attempts to extract a date from Mr Blair failed and gradually the fault lines in the relationship became wider.

So bitter was the distrust between the two former friends that in 2004 the relationship reached near meltdown. The simmering tension finally became so great that the Chancellor's patience snapped and he told Mr Blair, " There is nothing you could say to me now that I would ever believe."

In 2004 Mr Blair tried to dampen the flames by announcing that he would step down as Prime Minister during his third term of office. But the stand-off continued. At times, the two men would not speak to each other. Then, exasperated, Mr Brown would storm into No 10 and confront the Prime Minster face to face. Allies of the Prime Minister accused the Chancellor of being paranoid and obsessive.

By 2005, on the eve of the election, the dysfunctional marriage was heading to the divorce courts. But what the Treasury did not know was that Mr Blair was already drawing up the divorce papers - in the shape of the secret strategy document outlining plans to move Mr Brown out of the marital home. As the document was being drafted in secret, the relationship between Mr Blair and Mr Brown was at one of its lowest ebbs. Although the Chancellor was known for his campaigning skills, the Prime Minister publicly snubbed him, appointing his arch enemy to head the 2005 election campaign. Alan Milburn, the former health secretary, was summoned to the forefront of the campaign. However, preparations for the campaign began to falter and Mr Blair had no alternative but to bring the Chancellor back centre stage.

With Alastair Campbell as the intermediary, the Prime Minister struck a deal with Mr Brown. Not only would there be no question that he could keep his job, but he could also rewrite the manifesto on the economy and education, and have a say in the reshuffle following the election victory.

Mr Blair's blueprint was hastily filed in a desk drawer, where it has remained until now. The Treasury remained the powerhouse it is today.

Mr Brown, unaware of how detailed the plans were that had been drawn up to move him, rallied to the cause. Labour's first election broadcast, by the Oscar winner Anthony Minghella, featured Mr Blair and Mr Brown talking about their "shared values".

Crucially, on the day that the Attorney General's fuller and more equivocal legal advice on the Iraq war was leaked, Mr Brown rescued Mr Blair at a news conference by firmly saying, when asked if he would have taken the country to war, "yes".

Visibly surprising Mr Blair with the strength of his endorsement, he continued: "I not only trust Tony Blair, but I respect Tony Blair for the way he want about that decision."

Cementing Mr Brown's position, Mr Milburn, seen by some as a plausible " heir to Blair" and rival to the Chancellor, dramatically dropped out of government.

Could it have been that he had been lined up for the role of Chancellor and did not want to serve in a government where his arch-rival's power had not been switched off, as planned, but given a megawatt boost?

The key architect of the plans, Lord Birt, also announced shortly afterwards that he would resign as Mr Blair's strategic adviser and join a finance firm. His four years at the Prime Minister's side had given him a pivotal position, often resented by civil servants and ministers who complained he used to interfere in policy. John Prescott was characteristically outspoken, launching an attack on "John Bloody Birt".

Mr Blair, on the other hand, praised his blue-skies thinker: "His hard-headed analysis and ability to get to the heart of the most complex of problems has proved invaluable." Had he not stepped aside, his blueprint suggests John Birt would have had a key role in overseeing the reshaped government and Treasury and would have been part of an " implementation team" to "run the change process" which would have included the Cabinet Secretary, then Sir Andrew Turnbull.

The plans will appear to Brownites as a back-handed stitch-up, designed to reassert Mr Blair's authority across government and undermine his most valuable lieutenant. Mr Blair's team was, according to the paper, preparing to "hit the ground running" on day one.

But two years on, in the final days of Mr Blair's premiership, it is Mr Brown who has prevailed and is preparing to revitalise the Labour government with a blueprint of energetic and radical proposals.

Today Tony Blair will travel to Manchester to hear Gordon Brown make a speech, accepting the leadership of the Labour Party. When he shakes hands with his old friend his smile is likely to be firmly fixed, and his tributes generous. But Copy No 1 of the confidential blueprint is proof that Mr Blair's accolades are less than sincere.

Further reading: 'Tony Blair - Prime Minister' by John Rentoul, Little Brown

How Blair tried to sack Brown

1992 'Two bright boys'

Back in the innocent days before John Smith died, Brown and Blair are the 'two bright boys' feared by Alan Clark, the Tory minister, admired by Neil Kinnock, and promoted to top posts by Smith

1994 The breach

Tony and Gordon take a walk for the cameras after Brown has announced that he will not be a candidate for the Labour leadership. Early outing for the Mark I forced smile

1995 Bruise beneath the surface

In opposition, Blair and Brown work closely together, but Brown's resentment at being beaten to the leadership takes the form of a 'titanic feud' behind the scenes with Peter Mandelson

1997 Neighbours

The newly elected Prime Minister and Chancellor wow a grateful and relieved nation with clever stuff like Bank of England independence, although their secretive way of working horrifies the civil service

1998 Putting on an act

Within a year things were already so bad, with Blair's people deriding Brown's 'psychological flaws', that they were forced to watch football together for the cameras. Who is supporting Scotland or Morocco?

2001 I'm not listening

As the first four-year term draws to a close, Blair suggests he might let Brown have a go in the driving seat if the Chancellor helps to make the case for Britain adopting the euro. Brown refuses to take the bait

2001 Give us a clue

As the election that was postponed by foot and mouth approaches, Brown becomes increasingly impatient to learn of Blair's intentions about the next one. Blair's too busy eating his fish and chips

2004 'Nothing you could ever say'

Having told Brown that he would stand down this year, Blair changes his mind. Brown takes it calmly: 'There is nothing that you could ever say to me now that I could ever believe.' Or words to that effect

2005 Brown seals the deal

Just before the start of Blair's third election campaign, the Pope dies. Blair is forced to push Alan Milburn to one side, ditch the Birt plan and bring back Brown to rescue Labour's electoral fortunes

2005 Corny, but it works

With Blair and Brown running as a team, the Labour campaign achieves lift-off. Blair is returned with a majority of 66; Brown keeps his job and tightens his grip on the succession, which is finally his two years later