After a trial separation, the Prime Minister finds he cannot do without his Chancellor

Blair has recognised before it is too late that Brown and the economy are vote winners for Labour
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Compare two contrasting political scenes. Last December, the Cabinet held its first meeting to discuss Labour's election strategy. Gordon Brown was abroad in Washington and therefore unable to attend. The Chancellor, who had chaired the two previous campaigns, had become so peripheral that a pivotal pre-election cabinet meeting took place when he was nowhere to be seen. In case the unsubtle symbolism was missed, the word went out before the cabinet meeting had ended. Others were in charge now.

Compare two contrasting political scenes. Last December, the Cabinet held its first meeting to discuss Labour's election strategy. Gordon Brown was abroad in Washington and therefore unable to attend. The Chancellor, who had chaired the two previous campaigns, had become so peripheral that a pivotal pre-election cabinet meeting took place when he was nowhere to be seen. In case the unsubtle symbolism was missed, the word went out before the cabinet meeting had ended. Others were in charge now.

Fast forward to Labour's opening election news conference yesterday, in which Tony Blair and Brown were the joint speakers. Both of them hailed the Government's economic record and erected the familiar dividing lines between their increases in public spending and the cuts proposed by the Conservatives. This will be the main battleground over the next few weeks, as Brown had always wanted it to be. As one of his allies put it to me recently: "There is no point having dividing lines if there are no divisions between the main parties."

At the same news conference, Blair made clear that Brown would remain as Chancellor after the election. As this column argued last month, Blair would not be in a strong enough position to move Brown after the election and there were no obvious successors as Chancellor, so he might as well make his intention clear in advance of the election. Sensibly, Blair has done so at the beginning of the campaign, killing off further destabilising speculation. A restive electorate knows now: vote Blair and you get Brown as well. I doubt if voters would have got Brown if Blair had attempted to move him from the Treasury. Brown decided long ago that he had no desire to endure a period as the Foreign Secretary.

For several weeks, Blair and Brown have been discussing the nature of the forthcoming campaign, but Brown did not know in advance that Blair would as good as state at yesterday's news conference that he would remain Chancellor. The rapprochement is quite obviously in the interests of both and reflects the wishes of Blair's more realistic advisers as well as those in the Chancellor's camp.

For different reasons, Blair and Brown are united in their desire for a big Labour victory. As yesterday's news conference demonstrated, they also do not willingly live up to the one-dimensional stereotypes applied to them. Brown went out of his way to show that he was not an old-Labour chancellor, and Blair enthused about the relatively high level of investment in formerly decaying public services.

When a questioner suggested that New Labour Blair had introduced the Private Finance Initiative against the wishes of old-Labour Brown, it was the Chancellor who leapt in to claim authorship of the controversial policy. Unwisely, Brown reminded us he also introduced the expensive, inefficient and unreliable Public Private Partnership for the London Underground.

There was an almost nostalgically moving phase during the press conference when the duo dissected the Conservatives' tax and spending plans, like two old friends who found they had something in common after all. Blair listed some detailed examples of how the Conservatives' spending plans did not add up. As he was starting to enjoy himself, Brown joined in with another list. Blair retorted "I have got another one," and offered another spending plan from the Conservatives that had not been fully costed. It was a cathartic dance around the discordant tunes of political opponents at an unavoidably tense press conference when the political futures of the two previously warring titans were open to public scrutiny.

The truce follows an extraordinary period in British politics in which, briefly and uncharacteristically, Blair lost touch with the public mood. During the second half of last year, he appeared to conclude that he was strong and popular enough to liberate himself from Brown. Blair started to behave as if last summer's European and local elections had been a soaring success for Labour (they were not) and Iraq had been a triumph.

Some of Blair's close allies insisted during the autumn that the election would not be won as it was in 2001 with a relentless focus on the economy. They fantasised about Brown being moved from the Treasury and briefed some newspapers that this was both inevitable and desirable. Yet throughout this period, polls suggested Brown was the most popular figure in the Government, and the economy was Labour's strongest card.

Elections focus minds. Blair's political antennae have recovered their former sharpness. More than most political leaders, he has a highly developed sense of what is possible in politics. Sometimes it is too highly developed, but in this case he has recognised before it is too late that Brown and the economy are vote winners for Labour in an election that looks closer than had been previously assumed.

The reversal of roles from Brown, the absent Chancellor, to Brown, the key political figure in the campaign, is accompanied by a broader transformation in British politics. For the second successive election, Labour is standing on a platform of economic competence combined with pledges to increase public spending. It is the Conservatives who have acquired Labour's old tendency for reckless economic policies. The dissection by Blair and Brown of the Conservatives' spending plans was not only a nostalgic reminder of how effective they can be when they unite against political opponents. The examples they gave of exaggerated or misleading "savings" put forward by the Conservatives will not be easily refuted. As in 2001, the Conservatives have been unable to resist proposing an intoxicating but unachievable package of tax cuts, improvements in public services and reductions in public spending that they claim unconvincingly will have no impact on the quality of services.

But it is not just the Conservatives' tax and spending plans that contrast with Labour's. As Blair has stated several times this week, Britain is close to reaching the EU average on NHS spendingafter decades of under-funding. How does a Labour government maintain that level of expenditure? This is a more difficult question. Voters in equivalent EU countries pay higher taxes for the better hospitals. If British voters want European levels of health care, transport and education, they will also have to pay for them in some form or other. That remains the most significant divide, the gap between levels of tax and spending in Europe compared with Britain.

As our political editor reports today, Labour's manifesto will repeat the commitment not to raise the basic rates of income tax, but it is probable that whoever wins the election next month will face the choice of cutting their public spending plans or putting up taxes. British election campaigns are not the time for candid reflections on tax. Instead, together, and in fleeting harmony, Blair and Brown look aghast at the Conservatives' spending plans and hope voters will join them in their newly discovered unity.

s.richards@independent.co.uk

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