Andrew Grice: And the real champion of leaks is...

Inside politics

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The first time I met Gordon Brown, at a briefing for local newspapers, he gleefully handed round a bundle of leaked government papers revealing plans to cut its spending in the regions. It was the mid-1980s, and he was shadow trade and industry secretary.

Ten years later, I was summoned to Mr Brown's Commons office late one Friday to receive a bumper crop of leaked Treasury documents suggesting the Chancellor, Kenneth Clarke, withheld from MPs crucial information about the impact of the European single currency. The resulting Sunday Times splash forced a steaming Mr Clarke to make an emergency Commons statement the following day and disrupted his preparations for his Budget the day after.

In opposition, Mr Brown was a regular recipient of leaked documents, which he deployed with devastating effect against the Tories. Now the boot is on the other foot.

Yesterday, Mr Brown was on the defensive over leaks, and the astonishing arrest of Damian Green, the Tory spokesman on immigration, who was quizzed by the Special Branch officers for nine hours on Thursday after the Home Office identified a mole following a spate of leaks.

Brown aides say he was "open-mouthed" when told about the police's action, and are adamant no minister authorised it. But given that Mr Brown probably received more civil service leaks than anyone else while the Tories were in power, there is more than a little irony in him being embarrassed by an official leak inquiry by his own government.

The Home Office says it had to investigate leaks of "sensitive information" which prevented it from operating properly. Yet it seems the material was politically sensitive for ministers, rather than any threat to national security.

The Metropolitan Police has done the Government no favours. It is unprecedented for an MP to be arrested for doing his job, and raises profound issues about the role and powers of Parliament. Imagine the outcry if a 34-year-old rising star called Gordon Brown had been banged up for receiving those documents about spending cuts.

It wasn't the first headache Mr Brown had over leaks this week. He is said to be "furious" that two key elements of Monday's pre-Budget report (PBR) were leaked in advance, the temporary cut in VAT and the landmark increase in the top tax rate to 45p in the pound in 2011. Some ministers are convinced a Treasury mole exists, and that the shadow Chancellor, George Osborne, announced plans to cut inheritance tax last year because he knew the Chancellor, Alistair Darling, was about to do the same in his PBR. When he did, it looked like a desperate attempt to copy the Tories.

Like Mr Clarke in 1996, Mr Darling found his strategy for his big day derailed by leaks. Although Labour often trails announcements in advance, he and Mr Brown apparently wanted all the PBR details held back until Monday. Their two-pronged strategy was: convince the markets the Government would balance the books in the medium term to prevent a further run on the pound and to convince the public the pain would be shared fairly. That's why they opted for a top-rate tax rise, rather than an eventual rise in VAT to 20 per cent or a 1 per cent increase in national insurance contributions (instead of the .5 per cent announced). They hoped the pre-Christmas VAT cut and the top-rate rise would both be popular, so the public would buy the package as a whole.

Mr Brown certainly didn't intend to provoke the obituaries for New Labour that followed the U-turn on tax. Although left-of-centre MPs have a spring in their step, they are being premature in dancing on New Labour's grave. Lord Mandelson discussed the 45p rate with Mr Brown and Mr Darling in advance and gave it his seal of approval. The Secretary of State for Business did not rejoin the cabinet to kill New Labour; he came back to save it from a catastrophic general election defeat after which the party would veer left.

Mr Brown and his ministers insist that a tax rate is not totem, and the basic tenets of New Labour are intact, including a commitment to market-based public service reforms; a close relationship with business and labour market reforms. But some Blairite MPs fear the top rate decision is a huge gamble. As one put it: "The danger is that the public don't see the PBR as a set of emergency measures but think high tax and spending is in Labour's DNA and that we've reverted to type."

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