Francis Elliott: The Prime Minister is weaker than ever, but still a chill runs down the Chancellor's spine

The Brownite view that Labour is close to tipping point is spreading
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So it's to be war. There will be no time-table. Nor a timetable for a timetable. No countdown clocks, no long goodbye.

Tony Blair could have reduced Labour's conference to moist-eyed gratitude and appreciation just by saying it would be his last as leader.

He has chosen the other path. He calculates that a miserable week in Manchester is a price well worth paying for the preservation of what remains of his authority.

But the currency to be forfeited for a squalid week of in-fighting among the canals of the North is Labour's poll rating. And the party is fast becoming as overdrawn at the bank of public opinion as it is at the Co-op.

Unless he stops spending, a growing number of cabinet colleagues fear, he'll leave them nothing. "We are getting very close to the point when it doesn't matter whether Gordon takes over or not," says a friend and ally of the Chancellor. "There is a cold shiver running down his spine," says another recent visitor to Mr Brown's home in Scotland where he has spent the summer with his new son.

That shiver will have got colder as he read of David Cameron's coup in landing John McCain, the Republican front-runner for US president, as a guest speaker at the Conservatives' conference.

Downing Street is seeking to counter by re-booking Bill Clinton for another turn at Labour's gathering. "They can have a previous president - we'll have the next one," a senior Conservative figure taunted. (Oh yes, Gordon - you, too, were the future once.)

McCain has become the acceptable face of Republicanism; the war hero who abhors Rumsfeld's flirtation with torture, the conservative who opposes Bush's tax breaks for the rich. His brand of muscular, compassionate conservatism is highly attractive to Cameron who has articulated the same sort of community-minded messages, such as the creation of a new national service corps. Supporters in the US are keen to advertise McCain's invocations of sacrifice and duty, rather than the narrow, consumerist politics of the Clinton era.

The McCain coup caps a highly successful few weeks for the Tories that has seen them steal away in the polls, build momentum, and restore reputation at home and abroad.

Labour is looking at the opposite spiral of division, loss of morale, loss of discipline, diminishing support. All are agreed: what is needed is renewal. But even that word now has competing meanings. For most it means the departure of Blair: for the Prime Minister, however, it seems to be mean his continuation by other means.

In the eyes of the Chancellor's supporters, Blair's apparent complicity in the Tory characterisation of Brown as a "roadblock to reform" is his most heinous crime.

Blair's comment that the "largest part" of those who want him to go also want a "change in direction" and don't believe in public service reform has caused fury among Brown's key lieutenants. "It's an outrageous slur," said one. "Blair is doing the Tories' dirty work for them," fumed another.

But the greatest consternation - and one felt well beyond Brown's clique - is reserved for Blair's belief that he can be a midwife to a new New Labour before leaving office. "The party doesn't realise that 2007 New Labour is not 1997 New Labour," he said last week, ominously.

Stephen Byers' intervention on inheritance tax, Blair's own refusal to expand on his departure plans, even suggestions that the Prime Minister is preparing to recant of his endorsement of Brown as his successor - it's clear Downing Street wants to give a non-Brownite candidate one last chance to emerge.

His believes his last act as leader, it would seem, should be to clone himself. Appalled cabinet ministers look on in horror. "The idea we can renew ourselves before the succession issue is sorted is a nonsense."

So the fragile peace brokered last May in which Blair privately let it be known that he would leave Downing Street by July 2007 is in tatters.

Blair has fought - and won - many previous conference battles with his rival. This one is different. First, he has lost support among rank-and-file members in working-class seats. He can no longer count on a "Prescott" effect to damp down dissent. This in turn is emboldening MPs in the mainstream majority to consider signing an unignorable notice to quit.

Unless he changes his mind and gives some sort of indication of his plans at conference, senior backbenchers will indeed start collecting support for a public demand he go immediately.

Second, the cash-for-peerages scandal has virtually bankrupted the national party, fuelling a mood of internal rebellion ahead of mass redundancies. (I have been told that one in five Labour Party officials is likely to receive their P45 as a consequence of that £26m overdraft.)

Third, the Brownite view that Labour is close to a tipping point from which it cannot recover is spreading far beyond the Chancellor's own supporters. Once the belief that Labour will lose the next election takes hold, many fear, it will be impossible to displace.

And, simply, his writ no longer runs in Cabinet. Lebanon showed just how diminished his authority has become. Jack Straw, David Miliband and Douglas Alexander thumbed their noses at the Prime Minister without consequence. Blair has belatedly come to realise how ill-conceived was his initial hard-line stance, although it took an impassioned letter from Sir David Manning, Britain's US ambassador, to soften his position and call for an urgent ceasefire.

As we report today, Blair can expect to be confronted over his refusal to set out a departure timetable when he meets his Cabinet next week. Whether he takes notice of the warning could decide whether Labour chooses to tear itself apart.

A panicky party wanted evidence that Blair and Brown were working on a "stable and orderly" transition. Their leader has chosen, instead, to have one last attempt to deny him the job.

Blair last week promised he would not make mischief for whoever succeeded him, saying that he believed back-seat driving from ex-leaders was "the worst sort of vanity".

There might be a still worse variety, however. What about spending your party's political capital, knowing you will not need it to win re-election, in the pursuit of a pliant successor to curate your legacy?

John Rentoul is away