John Rentoul: Once clunking, now funking... but how will Brown respond?

Gordon Brown should have been in his element. After all, he had waited 10 years for the top job. But, with David Cameron in the ascendancy, the challenge to the PM is to silence his critics and emerge resurgent

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We end the year surveying the wreckage not of Tony Blair's premiership but of Gordon Brown's. The turning point of the year was not what we thought it would be, the stable and orderly transition from Blair to Brown, but the sudden and broken transition from Brown the Better Than Expected to Brown the Worse Than Imagined. The "change" did not lie in Brown's refreshingly different language, welcome though the descent from high moral absolutism was, as when Brown said, with George Bush standing next to him, "Terrorism is not a cause; it is a crime".

Nor did the change manifest itself in the direct clash at last between Brown and David Cameron. We could not see, while Blair was there, how they would deal with each other face to face or how the public would respond. But there were no surprises there. The surprise came from George Osborne, Cameron's number two and shadow Chancellor, in his speech to the Conservative conference in Blackpool in which he proposed to cut inheritance tax. And the change in political fortunes came from Brown's response, calling off the autumn election and copying the inheritance tax cut.

The image of the year was that of Brown, sitting behind Alistair Darling as the Chancellor delivered the pre-Budget report, and grinning unrestrainedly as if stealing Tory policy was terribly clever. In all the history of Brown's disconnected smiling, this was genuine glee and it was horribly misplaced.

The story of the year, then, is that of one half and two quarters. The first half belonged to Tony Blair, as he transformed the failure in which all political lives end (one of the things about which it is safe to say that Enoch Powell was right) into a kind of self-sacrificial success. With clarity of exposition and a faintly lunatic desperation to beat the clock, he set out the big challenges still facing the country and the world, and did as much as he could to start to meet them.

The year began with George Bush announcing, in January, the deployment of 22,500 more troops to Baghdad. The multiple ironies for Blair are too many to count. Everyone said it would not work and it has; only after Blair departed has the situation in Iraq finally started to get better rather than always worse; and yet Britain plays no role in the surge and continues to pull out of Basra regardless.

In March, Blair relied on Tory votes so that Brown wouldn't have to to get a vote in the Commons to renew Trident nuclear missiles. In June he brought President Bush to the G8 in Germany to agree to deep cuts in climate-changing emissions. Then he was off. Gordon Brown's tenure can be divided fittingly, because this is Treasury language into quarters.

The man who boasted as Chancellor of 40 consecutive quarters of economic growth has given us one quarter of prime ministerial honeymoon, from 27 June, when he took over, to his party conference speech on 24 September, followed by one quarter of having stuff happen to him. It is not yet a recession in his reputation, because the economic definition of a recession is two consecutive quarters of decline, but it has been a sharp and significant reverse. It has produced a swing in the opinion polls from an average 11-point Labour lead at the end of Q3 to an average 11-point Conservative lead at the end of Q4.

Brown benefited from the change of tone, in which the sudden end of Blair's insistent noise was mistaken for serenity; he benefited from low expectations; and he benefited from a media culture of hyperbole. For three months, he could do no wrong, although nothing much happened. Some bombs did not go off. There were no charges in the cash-for-honours investigation. There was "an end to spin".

In the fourth quarter, however, things started happening, and most of them were said to be bad for Brown even if they shouldn't have reflected on him personally. If there had been an election, the last week of the campaign would have been dominated by the discovery that most of the new jobs in the British economy over the past 10 years have been taken by foreigners. But if there had been an election, no one would have found out about the HM Revenue & Customs discs, already lost in the internal post, until the votes were counted. And we would have been saved the embarrassment of Brown turning up late for the signing of the Lisbon Treaty had he been re-elected he might not have bothered to turn up at all.

Over the Christmas holiday, as Brown is finally allowed to breathe again after the hammer blows of the headlines for the past three months, there is only one question for next year: can he recover?

Well, he will regain some ground. After the break, with the rollercoaster of expectations on his side again benefiting from low expectations, as he did in the summer his stock will rise. He will perform slightly better and be reported to be walking on water. He started to improve before the end of the year, but that did not fit the dominant story. At his news conference in Downing Street the week before Christmas, for example, he showed a little lightness of touch and quickness of thought. I particularly enjoyed his put-down of a silly question from Nick Robinson. The political editor of the BBC had sarcastically thanked Brown for spending taxpayers' money on a gift of mince pies to the journalists. "It's from me personally, actually," said Brown.

It will not be enough, though. He cannot be as popular as he was in his honeymoon quarter, because that was a benefit-of-the-doubt bounce. The doubts are now disbenefits. Yet he needs to get back that sort of level of support to have any chance of winning a general election, because boundary changes are against him and because David Cameron, whatever his weaknesses that have been concealed by the drama on the Labour side, is a stronger Conservative leader than Michael Howard was at the last election.

Hence the chatter at Westminster in the past few weeks about the possibility of Labour changing its leader again before the next election. Suddenly it has become possible that Brown will be the first prime minister since Neville Chamberlain to take office and lose it again without leading his party into a general election. People resist the idea, for obvious reasons: Labour is so lacking people of leadership calibre that Brown was elected unopposed only six months ago. David Miliband, the Foreign Secretary, was not ready then and does not seem ready now. Ed Balls, the Schools Secretary, seems even less ready. When I reported recently that there was talk, among some of those MPs that plotted to get Blair out in the coup of September 2006, of replacing Brown with Balls before the election, the common reaction was one of disbelief.

But one group of people take the possibility seriously: at least one Shadow Cabinet member who is close to Cameron has thought aloud recently to journalists that Labour might be like the Liberal Democratic Party of Japan, constantly changing its leader and staying in power. The latest idea I have heard from the Labour side is that of a Miliband-Balls leadership ticket, with Miliband as Prime Minister and Balls as Chancellor.

There is no evidence yet that another change of prime minister would save Labour from defeat at the next election, but that can change and there are still two and a half years until the last possible date. One of the more striking effects of a Miliband or Balls succession would be that, now that Nick Clegg leads the Liberal Democrats, all three parties would be led by fortysomething professional politicians.

In this space last year, I said that 2006 was David Cameron's year. It was his election as Tory leader that had first pushed Charles Kennedy from the Liberal Democrat leadership and then helped to panic Labour MPs into putting a 12-month limit on Blair's tenure. If Gordon Brown is unable to confound everything that we know about him, I said, 2007 will belong to Cameron, too. Well, Brown tried, and seemed to be succeeding, and then he failed. The question for next year is how the Labour Party responds to that failure.

Six to watch: Political stars most likely to shine

NICK CLEGG The new Lib Dem leader could be the latest politician to profit from the comparison with old stager Gordon Brown. Or he might be exposed as a lightweight. Vince Cable might yet be back.

JAMES PURNELL Once a Blairite cheerleader, the Culture Secretary has become one of the most reliable public faces of the Brown regime during a difficult period. A certainty for a higher-profile post at the next reshuffle.

MICHAEL GOVE Originally regarded as the requisite nerd of David Cameron's Notting Hill set, Mr Gove has developed into an astute member of the front bench, becoming shadow Secretary for Children, Schools and Families.

SAYEEDA WARSI The first Muslim woman on the Tory front bench has marked her presence with a series of controversial interventions, including helping secure the release of "teddy bear" teacher Gillian Gibbons in Sudan.

LIAM BYRNE As Immigration minister, Byrne has one of the most explosive portfolios in government but has handled it without complaint. He will be allowed to impose his hardline solutions before being promoted.

JOHN SWINNEY Something of an old star on the rise again, the failed former leader of the SNP now has his hands on Scotland's purse-strings as finance minister under Alex Salmond.

Brian Brady

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