AFTER SMITH / 1: Which one will it be?: Tony Blair has emerged as the media favourite to win the leadership contest, but Labour will resent being 'bounced' into a quick decision.

FEW OF the glitterati assembled at the Park Lane Hotel last Wednesday could argue that the transformation of the Labour Party was not now complete. The guest list boasted five times more corporate diners - from industry and the City - than at Labour's last such fund-raising bash in 1992. Against a backdrop of 200 red roses, they were joined by stars from Hollywood, the stage and the media.

Luminaries of the Labour left were there, too: David Blunkett, Robin Cook and even John Prescott, the staunchest critic of Neil Kinnock's red rose socialism. Indeed, Labour's professional bruiser stumped up pounds 3,500 for a set of first editions of George Orwell's novels. What turned out, tragically, to be a last supper was also a perfect example of how successfully John Smith had unified the party. An event which might have been controversial under Mr Kinnock included the fiercest enemies of glitz.

The Labour leader was, by all accounts, in ebullient form, quoting one of Westminster's most popular recent quips - that the Tories' back-to-basics slogan meant, in practice, 'back to my place'.

All this added to the shock of his death the following day, leaving MPs reluctant to contemplate the contest for his successor. His seniority, experience and ability put him in an unrivalled position of authority over his party. Through force of personality he had bound left and right after the bruising battles of the Kinnock years. His leadership had been vindicated only the previous week in the local government elections; the party was looking forward eagerly to the Euro elections on 9 June; and it was licking its lips at the prospect of the Tory disarray that would follow. Like all leaders, Mr Smith had his critics. But few seriously suggested that the party had made a mistake in choosing him or that there would be any rival this side of the next general election.

Within hours of his death, Labour MPs realised that Mr Smith had left more than an emotional void. Was there anybody, they wondered, who could fill his shoes?

THE name that almost immediately emerged - remarkably, given that he is a public school and Oxbridge-educated lawyer - was Tony Blair. His pre-eminence is based on his near-faultless tenure as shadow Home Secretary, traditionally a difficult brief in a Labour opposition. He has inflicted a series of humiliating legislative retreats on his opposite number, Michael Howard. But he has also used the portfolio to put forward a distinctive philosophy. The Blair brand of Christian Socialism, with his emphasis on citizenship and community, strikes a common chord with Mr Smith's emphasis on social justice.

Nobody is under the illusion that a Blair leadership would be a carbon copy of John Smith's. 'He hasn't the same depth,' one MP said. 'He has not been around as long and he comes from a more sheltered background.' Nor would Mr Blair enjoy the same relationship with the left being, in the words of one supporter, 'less tolerant than Smith and less endowed with the social skills to suffer parliamentary fools gladly'. But he has one central advantage: he is thought to appeal to the middle-class voters of southern England, who have proved so hard for Labour to win. One supporter said: 'He gives us the chance to appeal to a younger generation and an opportunity to persuade people to vote positively for us, rather than negatively against the Tories.'

Suggestions that Mr Blair might get an unopposed nomination - sparing Labour a long-drawn out leadership battle - can be discounted. At 41, he is 14 years younger than Mr Smith. For any of the other contenders (all of whom are older) to allow him an easy run at the top job would be tantamount to an admission that their own leadership ambitions were over. As one party worker put it last week: 'These are big players, worried about their careers amid all this change. It is difficult to see a new leadership emerging smoothly.'

It is far from certain that the other leading 'moderniser' - Mr Blair's friend and contemporary, Gordon Brown - will stand aside. True, Mr Brown has more enemies than his rival. The left particularly thinks that, as Shadow Chancellor, he has been too cautious and should have opposed Britain's membership of the Exchange Rate Mechanism. But he has scored more political credit through his skilful demolition of Tory taxation policy. And he enjoys powerful backing in Scotland (which elects one-fifth of Labour MPs) and in the trade unions.

There is nothing to stop both men standing - under the complex voting system, they might not even risk splitting the right-wing vote. But they would undoubtedly dilute the right- wing campaign. And a contest might be personally painful for both of them.

'Although they are not as close as they once were,' said one centre-right MP, 'they would still find it difficult to contest an election against each other. Those of us who could support either of them would rather support one.'

Those close to them expect Mr Blair and Mr Brown to decide between themselves, after taking soundings, which of them should stand. However, the trade union barons - their traditionally decisive influence over the leadership now diluted by their reduced share of the electoral college and by the requirement to ballot their members - will probably still attempt a bit of old-style power-broking. 'There will be a pow-wow of leaders of the labour movement,' said one insider. 'Apart from anything else, we can't leave the Brown-Blair decision to Brown and Blair. It is not up to them. They might take the wrong one. We need to influence that decision.'

Mr Blair starts off with some advantages from the union point of view. As a lawyer, he specialised in industrial cases. As shadow Employment Secretary, he has a working relationship with the unions. He is sponsored by the mighty TGWU, and he has a Northern seat, well-embedded in the labour movement.

'But nobody trusts him,' complained a transport union source. 'Nobody really likes him.' A senior official of another big union was more circumspect - but still critical. 'He has showed himself to be very impatient with the unions. We haven't forgotten how he went on television and announced 'the closed shop is history'. A print union leader very nearly beat him up.'

Possibly the biggest drawback for Mr Blair is the very strength of his bandwagon, particularly in the media. The Labour Party resents any hint that it is being bounced into a decision - and instinctively mistrusts anyone who is recommended by newspapers. (Mr Blair has been endorsed by sources as diverse as Richard Littlejohn, the Sun columnist, and a front-page leading article in the Independent.) 'There is restlessness in the tea room,' said one senior Labour figure, 'about the way that Tony Blair appears to have been elected at about 12.30 on Thursday.' Another said: 'Nobody out there has ever been consulted, and these are the same papers who would be dropping a bucket of excrement over him in six months' time if he got the job.'

THE traditionalist left of the party will approach the leadership contest with some apprehension. It recognises that its candidates start from behind. The name that springs most immediately to mind is John Prescott. Temperamentally, and politically, many union leaders would feel most at home with a Prescott leadership. He is strong on full employment, rights at work and the minimum wage. His stock is justifiably high among party activists because of his role in securing one member, one vote reforms for Mr Smith at the Labour Party conference last October. In a rousing, if at times less-than-grammatical, speech, Mr Prescott swung enough of the unions behind the Smith agenda. A former Cunard steward, he represents the heart and soul of the labour movement.

But his leadership potential is another matter. In a recent interview with Esquire, the shadow employment spokesman described his prospects of acquiring the top job thus: 'If all the likely candidates were run over by a bus, I would do it to the best of my ability and probably make a good job of it. But I'm out of that league really.'

Even colleagues who admire him believe him to be the Tories' dream choice. 'With all due respect to his talent,' said one senior left-winger last week, 'I think he would be a disaster. We simply couldn't win with him.' Some union barons take the same view, and accept that they will have to grit their teeth and vote for someone less to their taste. 'We are just punch drunk after 14 years,' said a craft union leader. 'Policies, yes, but we must get power. That is the most important thing.'

Friends of Robin Cook think he has a better chance of pulling off a soft left leadership victory, or at least giving the modernisers a run for their money. He is their intellectual star and best debater, and relished his closeness to the late Labour leader after his more strained relations with Mr Kinnock. For him, exclusion from a centre-right ruling cabal would be a disastrous outcome. For these reasons, some thought he would approach the new contest defensively - perhaps by quickly offering his services to Mr Blair. But it emerged yesterday that Mr Cook is highly likely - perhaps more likely than Mr Prescott - to stand himself.

The left's main anxiety may be to preserve its power base in the parliamentary party. Its tributes to Mr Smith were particularly warm, largely because it felt it had been brought back into the fold after the Kinnock years. It will want to retain its involvement in decision-making even if the top prize falls to a right-winger.

The potential for making deals, to ensure a balanced left-right outcome in the positions of deputy leader and leader, is hampered by Margaret Beckett. Nobody thinks she has much chance of winning the top position. But she is installed as deputy leader - acting leader until the contest is concluded - and shows no sign of wishing to stand down.

This makes it difficult for 'a dream ticket' to emerge, either on Kinnock-Hattersley lines (with the loser in a leadership contest taking the deputy's position) or on the lines proposed by Lord Healey last week (an immediate takeover by a Blair-Prescott partnership). The deputy leadership could be challenged this year but if that happened the contest ought normally to be in October. That makes it difficult for Mr Blair or Mr Brown to offer the role of running mate to Mr Prescott or Mr Cook, though they may guarantee senior economic posts to either.

Once the decisions about who should stand are concluded, the matter is put to Labour's newly constituted electoral college - under the one member, one vote system designed by Mr Smith and John Edmonds, general secretary of the GMB union. (For how the system works, see box.)

Here, Labour enters uncharted and possibly dangerous territory. Some unions, like the construction workers and the miners, are not sure who their members are, much less how many of them pay the political levy, which would entitle them to vote. Affiliation levels have notoriously been a matter of how much a union wants to spend, rather than how many members support the party.

Under the single transferable vote system, it is also possible that no clear winner will emerge from the first round of voting. Second and third preferences will then come into play. Some people will have two votes - as an individual Labour Party member and as a trade union member. Some, if they belong to an affiliated socialist society as well, will have three votes. And MPs could have four votes. There is no central register of those entitled to vote. It looks like a shambles waiting to happen.

'There is everything to play for, but with this system, they must just be playing it for laughs,' said a union official. 'When they introduced OMOV - against our wishes would ever have to use it so quickly.'

FOR Labour, it is deeply frustrating that, just when it seemed to have the Tories on the run, it should face a leadership contest. Inevitably, the spotlight will move away from John Major's difficulties and Tory disunity. With the elections unlikely to take place before July, press attention will be divided more equally between the Government and the Opposition. 'The real beneficiary of all this,' said one Labour MP last week, 'is John Major. In the short term this takes the pressure off him. He can also hope to inherit a callow, inexperienced opponent.'

In the immediate aftermath of Mr Smith's death, many commentators assumed that it would be bad news for Michael Heseltine's chances of the Tory succession. Mr Heseltine suffered a heart attack last year. It was thought that he had recovered, but the same was said of Mr Smith after his first attack.

But, as one Heseltine ally said last week, 'it's always a mistake to write Hezza off'. Certainly he is not writing himself off (though, naturally, there is no explicit claim on the leadership). 'I would question any suggestion that I am not 100 per cent,' he insisted on Friday. 'I put that question to my doctors . . . They know a great deal about my heart. They have seen inside it.'

In any case, Mr Heseltine's position as front runner would probably benefit from a little dampening. Moreover, some on the Tory right see Mr Heseltine as a good bet precisely because his age and medical history indicate that he would not stay indefinitely in Downing Street, eventually making way for their favourite son, Michael Portillo.

And while Mr Major has a breathing space, none of the fundamentals has changed. As one Tory put it last week: 'Wipe-out in the European elections will still be a big thing, especially at the hands of a party which does not even have a leader.'

The danger is that Labour may descend into factional in-fighting, thus losing all the benefits that have accrued from the bitter Tory quarrels of the past two years. And nobody can doubt that the danger is real, that this could be the final battle between the left and right.

The modernisers, while committed to keeping much of Mr Smith's agenda of justice and equality, want to change the focus. They want a sharper, clearer, more specfic and more radical programme. The traditionalists, in the form of Mr Prescott, have already set out some of their stall: full employment, a national minimum wage and some restoration of trade union rights.

Mr Cook is likely to continue Mr Smith's policies, with an emphasis on fairness, efficiency and democracy. But he too will highlight issues such as full employment and his likely candidacy is certain to reawaken an old and bitter debate.

This is, indeed, a crucial test of the party's appetite for government. As one Labour MP put it: 'Of course it could be divisive. But woe betide any contender who, in the wake of John's death, does anything that turns the contest into an acrimonious one.'

Perhaps the most positive sign of all last week for Labour was the lack of a blood lust. One front-bencher said last week: 'This party is serious about power. It has seen the spectacle of disarray on the other side of the House of Commons all too clearly and will be determined to conduct itself in as dignified a way as possible.' Another added: 'Everyone has watched the Tories' difficulties. We know better than most that if you divide you don't get in. Most people are fed up with opposition.'

But the election of the leader will focus attention on the reasons why the party wants power. That creates an opportunity for the party to go on the offensive, to take the moral high ground and win new supporters. But once those reasons are brought into the open and debated, they are bound to create divisions. One senior Labour figure argued last week: 'It is deeply unfashionable to say this at this time, but the truth is that John anaesthetised the party. That strategy might well have worked against the Tories under John Smith, but it is far from clear that it will work for anyone else.'

Leading article, page 20

Last dinner, Business, page 1

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