Tony Blair: Brown to the left of him, a joker to the right

With a controversial visit by George Bush and the Hutton inquiry to look forward to, the last thing a weakened prime minister needed was a public falling out with his chancellor and a newly enthroned and emboldened Tory leader. Andy McSmith reports on an extraordinary week in politics

Dinner in Downing Street must have been a mellow affair, with soft lights, succulent food, silky wines and gentle music - because by the time coffee was served, a temporary peace had broken out in the most fraught, important and intriguing relationship in contemporary politics.

Only a few hours earlier it seemed that the 20-year partnership between Tony Blair and Gordon Brown had reached its breaking point. During nine years of arguments and sulks behind the scenes, the pair have always maintained a united front in public - until Thursday, when the Chancellor publicly aired the disagreement they had had over membership of a little-known Labour Party body called the National Executive Committee.

The rift broke into the open almost at the very hour when the Conservative Party called a halt to its long internecine warfare and acclaimed Michael Howard as its new leader. But the relationship between Blair and Brown, the pivot around which the Labour government is constructed, is more complicated than, for instance, the mutual contempt that grew up between Margaret Thatcher and her long-serving chancellor, Sir Geoffrey Howe, which in the end destroyed them both.

Blair and Brown are like brothers, with shared memories going back 20 years to when they shared an office in the Commons, stacked high with papers and running shoes hanging from a hook on the wall. Sometimes they are engrossed in long, intense conversations in which the Prime Minister pumps the Chancellor for his advice - and sometimes they fight with the consuming fury of a family feud.

On Friday, the morning after their private dinner, it appeared that the feud had been patched over. Their official spokesmen, reading from the same script, briefed that they had decided to "draw a line" under the week's public disagreement, that Brown could attend NEC "whenever he wishes" and that both their offices would "discourage people from talking about the affair".

One of the first reactions in Westminster was of utter bemusement that a politician of Brown's stature could become so agitated over such a seemingly small thing. At least 15 years have passed since anyone took much notice of the NEC . Party reforms instigated by Tony Blair, with Gordon Brown's approval, have all but neutered the committee, making it Labour's ruling body only in name. One of its current members, Mark Seddon, editor of the left-wing newspaper Tribune, said it had cheered him enormously to learn that the committee mattered. "It must be more important than we thought, for Brown to want to be on it and for Blair to stop him from getting on. Anyway, it's put us back on the map. People now know that the NEC isn't just a building in Birmingham."

While this relatively small matter may now have been dealt with, behind this squall lies a much bigger and more fundamental battle over the future of the party and the Government, too big to be resolved through a joint press statement. As Mr Brown himself indicated, it is about control of the manifesto on which the Labour Party will fight the next general election. Earlier this year, Blair shocked the Chancellor by announcing that he was co-opting himself on to the election strategy committee, thus effectively ousting an astonished Mr Brown from its chairmanship.

There was another jolt last week when it was announced that Labour's general secretary, David Triesman is to retire. Mr Triesman's working relationship with the party chairman, Ian McCartney, had all but broken down. His departure will open the way for someone who can be more centrally involved in planning an election campaign. Appointing a general secretary is one of the few remaining prerogatives of the NEC, which cuts Brown out of the process.

But this is not just an argument about who writes the manifesto, but about its content. The last manifesto, in 2001, was Gordon Brown's work. He not only ran the committee which drew it up, but he controlled the political process behind it. The manifesto served its immediate purpose, because it left no hostages to fortune, but its critics in the Blair camp have complained that it said too little, beyond promising generous funds for public services through the Treasury's annual spending reviews, with the result that the re-elected government appeared to have no mission or purpose.

This time, according to the Blair camp, the Prime Minister is intent on having a manifesto that bubbles with radical ideas, which is why he is privately consulting former Cabinet ministers such as Alan Milburn, Stephen Byers and Peter Mandelson, and advisers such as the party's former policy chief, Matthew Taylor and Andrew Adonis, author of the top-up fees policy.

One senior ally of Blair's said: "This is about ownership of the political process, because in the past the spending review has basically driven the manifesto. Now the manifesto process will drive the spending review. That immensely strengthens the Prime Minister and weakens the Chancellor. Four things have become clear about Tony. He has decided to stay, he is staying on his own terms, he is going to push ahead on the whole modernising agenda, and he is not going to stand for this sort of internal opposition any more. In the end, if Tony wants something, he gets it."

The Brown camp, of course, vehemently disputes the Blairite caricature of their man as an Old Labour reactionary. They say that he was at the centre of the Labour government's most radical reforms, such as the decision to give independence to the Bank of England. What he objects to is the Blairite fondness for stirring up controversy within the party, as if reform is only possible when New Labour goes into battle with Old Labour. Brown's view is that the Labour Party, not just the "New" bit of it, is now a radical, reforming, free-market party. And in the larger world outside Downing Street, they say, events are conspiring to weaken the Prime Minister and correspondingly strengthen his Chancellor.

More than a year ago, a row exploded between Gordon Brown and the then health secretary Alan Milburn who, with Blair's backing, was proposing to allow the best-run hospitals to control their own finances, free from the grip of the Treasury. The idea had to be severely cut back, and the incumbent Health Secretary, John Reid, now downplays its importance, pointing to other changes to NHS management techniques which could be more significant. Yet the Government is still struggling to get the proposal through Parliament, and is bracing itself for a string of revolts in both the Commons and the Lords over the next fortnight.

Another dispute between Brown and Blair produced a score-draw last week. The Prime Minister has enthusiastically backed a plan by the Home Secretary, David Blunkett, to introduce compulsory identity cards, as a means of combating illegal immigration. This received a severe jolt when a Cabinet committee refused to agree a draft Bill, against the combined opposition of Brown, Foreign Secretary Jack Straw, Trade and Industry Secretary Patricia Hewitt, Transport Secretary Alistair Darling and others.

Blunkett then saw the Prime Minister privately to insist that last Thursday's Cabinet meeting must make some progress on ID cards, and Blair was able to push through a compromise under which people who renew their passports or their driving licences will find themselves paying for what will serve as identity cards. But the more contentious question of whether ID cards should be compulsory, even for those who do not drive or travel abroad, is unresolved.

An even more difficult dispute is expected to burst into the open before Christmas, when the Education Secretary, Charles Clarke, tables legislation to allow the elite universities to charge higher fees than lesser universities. This could provoke the biggest rebellion Tony Blair has yet had to face from his MPs, not least because the most memorable line from that 2001 manifesto, penned by Mr Brown, was a promise that Labour would not introduce top-up fees for students. The danger that the Government could be humiliatingly defeated is heightened by the expectation that the Conservatives and Liberal Democrats will vote with the Labour rebels. Mr Clarke is trying to win over potential rebels, and believes that his package of measures to help students from low-income families will reduce the scale of the revolt, but he certainly cannot prevent it from taking place.

The fact that Labour is, in effect, tearing up one of its own manifesto commitments plays directly to Tony Blair's single most intractable problem, that public trust in him appears to be slipping away. The biggest single reason is that he took the UK into a war with Iraq on the basis of intelligence reports that Saddam Hussein had weapons of mass destruction. The impending visit of US President George Bush, followed by publication of the Hutton report into the suicide of Dr David Kelly, will serve to remind people that British forces are still tied down in Iraq and those elusive weapons have still not been found.

As Gordon Brown paced up and down in his Kirkcaldy home, trying to get baby John Brown back to sleep, he must have calculated that Blair's position is not as strong as it appears, and that he needs his Chancellor's support more than his allies admit, which is why he returned in fighting mood. One widespread suspicion is that he believes that the job of Prime Minister, which he has craved for so long, could be vacated before the next general election, making it more it all the more imperative that the Labour Party does not commit itself to somebody else's election manifesto. But there is one other distinction between the feuding brothers and the Conservative leadership of 15 years ago. After so many years in power, the Conservatives had come to believe they would never be defeated. Blair and Brown, by contrast, are haunted by memories of humiliating defeats.

After an orgy of intrigue and back-stabbing, the Conservatives finally settled down last week with a display of the kind of regimented loyalty to their leader which used to be their speciality. Mr Howard is experienced enough to keep his party under control until the election, and too shrewd to commit the party to wild promises of tax cuts. Even the decision of Michael Portillo to quit politics has its up side for Mr Howard, because it takes a potentially dangerous rival out of the arena.

Faced with the beginnings of a possible Conservative revival, Blair and Brown are too cautious to allow their own feuding to damage their party: they will try to muddle along. But Blair's partisans insist that their man is set for another six or seven years in the job. Brown cannot abide the prospect of more than a decade in 11 Downing Street, waiting to move next door. They do not agree on future strategy. It is difficult to see how it can end - but sooner or later one or the other must surely resign.

The Mandelsson factor

A spectre haunting Gordon Brown is the return of Tony Blair's old ally, Peter Mandelson. The Independent on Sunday reported two months ago that the legendary spin doctor was on the way back, prompting a furious denial from the man himself.

In a valedictory piece in The Guardian last month to mark Mr Mandelson's 50th birthday, it was reported that "he vehemently denies reports that he is angling to run the general election campaign, or second-guess the appointed organiser, Douglas Alexander". In a radio interview yesterday, he also denied another rumour that he had been offered a job as an EU commissioner in Brussels.

Despite such denials, Gordon Brown believes that Mr Mandelson's fingerprints can be found on some of the preparations for the next election, a suspicion that has exacerbated the Chancellor's relations with the Prime Minister.

Mr Brown's suspicions and Mr Mandelson's denials are not incompatible. At the 1997 election, Mr Mandelson was in charge of organising the campaign, a job Mr Alexander took over in 2001, while Mr Brown dictated campaign strategy. What the Chancellor suspects is that Mr Mandelson is getting involved in helping to shape the strategy, not that he is trying to recapture his old role as campaign organiser.

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