King courtier: Lord Mandelson

He's made the most spectacular comeback in modern politics and kept his old rival in post. No wonder the First Secretary is on the march

(PETER MACDIARMID / GETTY IMAGES)

Peter Mandelson is everywhere. The Business Secretary not only has a government department to run, but he also presides over or sits on what must be a record number of Cabinet subcommittees – 35 out of a total of 43 – dealing with subjects as diverse as local government, the Olympics, Afghanistan and planning for a flu pandemic.

He is constantly in and out of 10 Downing Street. He is running Labour's next election campaign. Scarcely a day goes by without his putting in an appearance on radio or television. He even finds time for major social events. This week, he was in the front row at the Burberry spring-summer fashion show, and at the Goodwood revival, where he posed in front a Mini painted in the colours of the Union Jack.

But merely to list his activities is to miss the main point about the recently ennobled "Baron Mandelson of Foy in the county of Herefordshire and Hartlepool in the county of Durham". It is said of Lord Mandelson that his exceptional skills are more those of a courtier than a politician. If that is so, he is now the courtier who has become as powerful as the king.

Last June, when the Work and Pensions Secretary James Purnell walked out of the Cabinet, Peter Mandelson held Gordon Brown's political life in his hands. If the Business Secretary had resigned, Brown's government would have collapsed. Because he stayed, Brown is still Prime Minister.

He is the voice of experience in a government which is curiously inexperienced despite Labour's long years in office. The party has been in power so long that memories of what it is like to be on the losing side have faded. There are only four members left in the Cabinet who were MPs the last time Labour went into a general election with the prospect of losing, 18 years ago. The advisers who surround Gordon Brown are, with a few exceptions, new to their jobs.

But Peter Mandelson was there when times were bad, and now he is back, with nothing to lose. In his younger days, he went in for histrionics. He would throw tantrums, threaten to walk out of meetings, have bouts of persecution mania, or go into prolonged sulks when he felt wronged. If you made a joke about him in his presence, however well meant, he would bristle and launch into self-justification. Now, at the age of 55, he is said to have discovered how to laugh at his own expense. He seems altogether happier in his own skin.

He demonstrated this in June, during one of the many minor crises in the Cabinet war room. Gordon Brown had just selected Simon Lewis, Vodafone's former head of communications (and brother of The Daily Telegraph editor Will) as his new press spokesman, but before Downing Street had prepared the formal announcement, the news turned up in the Financial Times, triggering one of those famous outbursts of prime ministerial rage. As Gordon Brown's fury reached a crescendo, who should glide into the room but Lord Mandelson. "Have you seen this, Peter? Someone has leaked it," Brown shouted.

"Gordon," the First Secretary replied in his silky smooth voice, "you will find that there are briefings, there are leaks, and then there is seepage. This story seeped." With that, the Prime Minister calmed down.

The biggest single reason that you can see a smile on Lord Mandelson's face these days is, his friends say, the sheer surprise and relief that he is back where he always wanted to be. Until a year ago, he was fated to be remembered as the "twice disgraced" ex-cabinet minister. By his completely unexpected comeback, he has rewritten his political epitaph. What is more, he has been brought back by the man who for so long was his worst enemy, who did more than anyone else to undermine him during his previous spells in Cabinet. Recent political history has not produced a more extraordinary rapprochement.

"He's got the position that he wants from the guy he never wanted it from," one of Mandelson's old cabinet allies said yesterday. "June was when he could have decided that enough was enough, and he didn't do that. That suggests that unless something breaks in a really big way, he will be there until the bitter end, because he is a Labour loyalist and because, although he has an insight into the problems, he doesn't see an obvious alternative."

Peter Benjamin Mandelson grew up in the shadow of his grandfather, Herbert Morrison, the wartime Home Secretary and deputy leader of the Labour Party. Morrison's only child, Mary, married Tony Mandelson, advertising director of The Jewish Chronicle, a sociable man known in left-wing circles around Hampstead by the nickname Mandy. Their younger son combined his father's love of mixing with the wealthy and well connected with his grandfather's ambition.

His political career got off to a brilliant start, after he took office as Labour's Director of Communications on his 32nd birthday, in 1985. His handling of the 1987 general election campaign made him famous, and put him at the centre of the action right at the beginning of the project that became New Labour, promoting the careers of up-and- coming MPs Tony Blair and Gordon Brown.

His spectacular falling out with Brown came in 1994, when he sided with Blair in the Labour leadership election campaign in a way that Brown considered treacherous. Mandelson had by now acquired a reputation for being arrogant, manipulative and deceitful. Having become MP for Hartlepool in 1992, he had established himself as the most unpopular man on the Labour benches.

His greatest political asset then was the complete trust that Tony Blair had in his strategic judgement. Blair once joked that his mission would be complete when the Labour Party learnt to love Peter Mandelson. Four years ago, Michael Howard jokily asked Blair in Prime Minister's Questions for a progress report. "A lot done, a lot still to do," Blair answered.

There was, indeed, a lot to do. Peter Mandelson's cabinet career crashed in December 1998, when it was revealed that he was secretly heavily in debt to Geoffrey Robinson, whose affairs were then being investigated by Mandelson's department. He was trustingly brought back by Tony Blair as Northern Ireland Secretary, only to be forced to resign in January 2001 over another political misjudgement, involving an application for British citizenship by an Indian businessman from whom Mandelson had sought backing for the Millennium Dome.

As a final gift to his old adviser, Tony Blair appointed him an EU commissioner in November 2004, when it seemed that he must be out of British politics for good. Now, at last, Mandelson has achieved something to match his formidable grandfather.

One irony is that after all those years when he wanted to be the trusted friend, ally and adviser to a Labour Prime Minister, he is now more in demand than he needs to be to satisfy his ambition. He wants to make his mark as Business Secretary, by laying out a strategy to revive Britain's manufacturing base, sorting out university tuition fees, and clamping down on internet piracy. But all this requires time, and for at least 20 per cent of his working life he is helping with crisis management.

However, he now has nothing to lose. As a peer, he does not need to worry that he might lose his seat next year. Contrary to some speculation, he has no expectation that he will ever lead the Labour Party. Among his enemies there is a grudging acceptance of his political skill. Aides to George Osborne often remark that he is the member of the Government the Tories fear most. Peter Luff, the Tory chairman of the Commons Business Committee, which watches over Lord Mandelson's department, has noted how much he seems to be enjoying himself.

"When he comes before our committee you see the positive relish with which he avoids answering the questions," Mr Luff said. "His basic technique is the same as the one he uses on the Today programme, where he tells you the question you ought to have asked, and answers at great length. Length, of course, is an effective weapon, because it limits the number of questions you can ask. He's brilliant at it.

"I have to say that politics as a whole is richer for having him back. Many people hate him, but you have to admit that he has extraordinary skill. As a Conservative politician, I have to say no, it's not a good thing that he's back, because he's a very dangerous enemy."

A life in brief

Born: Peter Benjamin Mandelson London, 1953, to parents Mary and Tony.

Early life: Raised in Hampstead, north London, he went to Hendon County Grammar School. Later he read Politics, Philosophy and Economics at St Catherine's College in Oxford.

Career: After a brief stint as director of the British Youth Council, he worked for Lambeth council. As a producer at London Weekend Television he worked on 'Weekend World', before re-entering politics as Labour's Director of Communications in 1985. He was manager of the 1987 general election campaign. Elected to the Commons in 1992, he controversially left the Cabinet in 1998, and then again in 2001 when he was Northern Ireland Secretary. Made EU Commissioner in 2004, he completed a shock return to politics as Business Secretary last year.

He says: "I'm a fighter not a quitter".

They say: "He's got the position that he wants from the guy he never wanted it from" – an old Cabinet ally