BLAIR: hints of steel behind the smile

Frenetic activity has characterised the first week of politicking with power: despite this some key reforms are being sidelined

When Gordon Brown, the Chancellor of the Exchequer, walked into one of the state rooms in his new office at No 11 Downing Street he remarked on one of the paintings. "Yes, Chancellor," replied the civil servant walking with him. "It's a Gainsborough."

At the Department of the Environment, John Prescott, who is not normally lost for words, stopped in mid-sentence when the office blinds started to lower. "Yes, Deputy Prime Minister," explained the civil servants. "It is an automatic device to control the internal temperature."

Tony Blair occasionally had to pinch himself to make sure it was all real. When he was told that the Deputy Prime Minister wanted a word, he asked, "What can he want?", thinking first of Michael Heseltine.

Around Whitehall, Labour's new ministers were coming to terms with a life transformed. One minister encapsulated the excitement: "We've been talking about it for so long and, all of a sudden, you actually feel that you can make things happen."

A second minister explained: "It is as if a curtain has suddenly been wrenched back. I knew all this existed but not how it worked. Only now do I see fully all the advantages."

His example was severely practical: "I used to go to conferences by tube, arriving hot and sweaty having scribbled my speech the night before. My Conservative counterpart would sail past in a Rover and remove from his briefcase a neatly word-processed speech that someone else had written for him. Now it's the other way around."

CHANGE was everywhere: Question Time reformed, pay increases turned down, first-name terms in Cabinet, hopelessly overcrowded government benches in the Commons, a new deal in Europe. But the biggest and boldest move was under way in the Treasury: Gordon Brown called in Terry Burns, the Permanent Secretary, on the evening of 2 May to show him a three- page blueprint for giving the Bank of England operational independence by cutting the Government free from responsibility - and blame - for setting interest rates.

A handful of Treasury mandarins were brought into the know; the Chancellor summoned the Bank's governor, Eddie George, to the Treasury over the May Day bank holiday to outline the proposal. "It is fair to say the governor was gobsmacked," said a Treasury aide. "But he came out of the Chancellor's office beaming."

The monthly meeting of the Chancellor and the governor was brought forward from Wednesday to Tuesday. A news blackout was imposed but behind the scenes Brown's publicity people were working overtime on controlling the reaction. "We were slightly nervous," admitted one. "We didn't know what the reaction would be."

The Brown-George summit was disclosed to the media at 7.58am on Tuesday, moments before the two men met. There had been some mild tinkering with the Chancellor's letter to meet textual objections from the governor, but it was virtually unchanged. Mr Brown went through the motion of handing over a text that had already been agreed and then held a presidential- style press conference in the Treasury - which also succeeded in largely obscuring the 0.25 per cent increase in interest rates made public at the same time.

As soon as the news of his reform was on the wires, Mr Brown telephoned as many of Britain's former chancellors as he could lay his hands on to tell them what he had done: Norman Lamont, Nigel Lawson, Denis Healey and James Callaghan. This was no exercise in political protocol. Mr Brown's advisers were anxious to ensure that past chancellors - who would be approached by the media for their comments - were on side. And so they were. (Only on Friday night did the Treasury think of the one they had missed - it was John Major.)

It was a momentous week for Robin Cook and John Prescott, too. The new Foreign Secretary paid well- publicised visits to Paris and Bonn, confirming an agreement with Germany to ban the use of landmines - just the kind of thing to strike a chord with party members. More significant was the apparent transformation of the relationship with the European Union, which went down well at the Foreign Office. "The Civil Service is clearly pleased with the change of style on Europe," said one observer. "Their preference is always to finesse a `yes', rather than emphasise a `no'." The Foreign Office was also delighted by the obvious warmth of the relationship with the Clinton administration, confirmed by the announcement that the President will drop in on Blair later this month. "I'm sure we'll have differences but at the moment it's all nice, sweet heaven."

Mr Prescott waded into an all-day meeting on Monday for briefings on key policies, including the referendum on a new strategic authority for London and an elected mayor. There are no less than 75 unresolved questions about London and its mayor but the referendum will take place on the same day as local elections next year. By Thursday's Cabinet Mr Prescott had three Bills scheduled for this week's Queen's Speech - others will establish regional development agencies, and make house building easier by allowing the phased release of local-authority capital receipts.

It has, of course, been a week of personal drama and high politicking, involving difficult decisions about the lives and ambitions of scores of politicians. Many spent an agonising two days waiting for a call from Downing Street. For one new minister the sensation was like being an adolescent in love: "You've met her, you've got a crush on her, and you don't know why she hasn't rung. Is it something you've said that upset her, or perhaps she never really liked you and was just being polite. And then you wonder, should you phone?" Some, indeed, could not wait and rang the newly appointed Chief Whip, Nick Brown. Often they were disappointed.

With Cabinet announcements completed on Saturday, Ministers of State got their call on Sunday morning. One came in from the back garden to assure the Downing Street switchboard that he would be at that number for the rest of the day. He eventually heard from Mr Blair. Others were not so lucky. One new minister spent Saturday with a mobile phone and Sunday in the garden, regularly checking the answerphone in case he had not heard the ring: "By Monday morning I was not optimistic. I felt very wound up. Then the call finally came. By then if he'd offered me the job of head-gardener at No 10 I would have accepted."

Among the surprises was Tony Banks, the minister for sport, who had written off his own chances in a foreword to a book on life as a backbencher by Paul Flynn, which was published last week. "The chances of Tony Blair asking me to do anything other than shut up and vote are extremely remote," pronounced Minister Banks. Another surprise was Sir David Simon, chairman of BP, as minister for European trade at the Department of Trade and Industry. His new job was first announced and then denied last weekend - the deal having been that there should be no announcement until BP's figures were published.

But beneath the surface a battle was raging. Mr Cook had long suspected that his ability to pick his Europe minister at the Foreign Office might be threatened. It was, after all, a job that Peter Mandelson - an intimate of Mr Blair but not a fan of Mr Cook - was rumoured to covet. Before the election Mr Cook did all he could to bolster the position of Joyce Quin, Labour's European spokeswoman. But the Prime Minister put his own stamp on the foreign affairs team by replacing her with Doug Henderson, a close ally of Mr Blair and Mr Brown. It was one early example of steel in Downing Street.

It was not the only one. At No 10, Mr Blair's powerful press secretary, Alastair Campbell, and Jonathan Powell, the chief of staff, have had their status as special advisers placed on a legal footing through an Order in Council, which permits both men to direct civil servants and thus to exercise a tighter grip on the levers of Whitehall. Mr Powell is expected to become the principal private secretary at Downing Street when the present incumbent, Alex Allen, leaves shortly.

There will also be a daily meeting modelled on the strategy committee that met in Labour's Millbank headquarters four times a day during the election. In government this means a daily meeting chaired by Mr Mandelson with the Chief Whip and representatives of the big four, who will themselves meet each Monday.

Downing Street's grip is already tightening. A letter from Mr Campbell to senior officials instructs them to clear all big interview bids with No 10. Versions of this story also suggest Mr Campbell asked for details about ministers' plans to lunch with journalists. Labour's media and communications strategists, who were at the heart of its pre-election campaign, want to keep up the momentum. It is no surprise that they are dismayed by the negative and defensive approach of the government's publicity machine.

Despite Labour's shrewd capture of the public mood and its skilfully populist touch, there were, after only a week, harbingers of unhappy times ahead. For a start, the pace cannot be maintained. "They're running as if they're still fighting the election. They can't carry on like this for five years - or even five more days," says a civil servant. There are strains over the status of Mr Powell because civil servants do not like the precedent of a political appointee, albeit a former diplomat, being principal private secretary. "There are," one mandarin said, "times when he is signing documents or putting his reputation as a civil servant on the line. That all changes rather subtly."

Ministers, now bolstered by the Civil Service machine, are hardly likely to meekly allow the Downing Street press machine to take credit for their triumphs. One source said: "There are too many egos at stake." Another added: "The fact that the Campbell memo leaked almost the instant it was written is a good indicator that he will not have it all his own way."

The new administration's agenda looks bold in many respects but several key items have been sidelined. They include a Freedom of Information Bill. The idea will feature in the Queen's Speech this week but only as a commitment to a White Paper. One Civil Service cynic observed: "By the time they get round to producing a White Paper and preparing to legislate, they will have been in government for long enough to under- stand the advantages of not having a Freedom of Information Act." (The carefully spun explanation in Whitehall is that the omission of a Bill owes more to cock-up than conspiracy. According to this version, the Bill slipped out of the Queen's Speech only because the train bringing David Clark, Chancellor of the Duchy of Lancaster, to London was delayed, and he missed the opportunity to argue for it at the crucial Cabinet committee.)

Another reform that may sidelined is proportional representation for the European elections in 1999. Without a Bill is this session, it would become all but impossible. And while the reform of Question Time was broadly welcomed, the jury is still out over the extent of Mr Blair's commitment to a new style of politics.

But things really have changed. Listen to Neil Kinnock, arriving at a reception for diplomats and politicians in London last Friday: "They say a week is a long time in politics, but this is the shortest I have ever known - and the most delightful. Events in the UK fill me with so much pride and excitement about the constructive potential for the future, it is difficult - even with my considerable vocabulary, my Welsh windbaggery - to do justice to the way I feel."