Blair to 'go soft' on Duncan Smith

Tony Blair and his ministers have decided to tone down attacks on Iain Duncan Smith because they do not want to see him ousted as Tory leader.

Ministers admit Mr Duncan Smith's fate will ultimately be decided by Tory MPs but they are to avoid a full-frontal assault that might weaken his position because they would prefer him to lead the party into the next general election. They fear another leader, such as Kenneth Clarke or David Davis, might revive Tory fortunes.

"We will land punches on him, but we won't be trying for a knockout blow," one cabinet minister said yesterday. "He is like a wounded rabbit caught in the headlights and that is where want to keep him. We don't want a dead rabbit."

Some Labour MPs believe Mr Blair has already started to "go soft" on Mr Duncan Smith in recent Commons battles but Blair aides deny the charge. Another minister said: "The Tories would get a boost, at least in the short term, if they put in a new leader. It would raise their profile and their game."

Pro-European ministers and Labour MPs hope Mr Clarke, the Europhile former Chancellor, will take over as Tory leader. They believe that would make it easier for Mr Blair to call a single currency referendum as it would blunt the Tory campaign against joining.

Mr Duncan Smith moved to strengthen his "inner circle" team of advisers yesterday after criticism of his tactics over his "change or die" warning. He appointed Alistair Burt, a former minister and ally of Mr Clarke, as a second parliamentary private secretary to work alongside Owen Paterson.

In a mini-reshuffle on the Opposition front bench, Mark Prisk became shadow Financial Secretary to the Treasury; Chris Grayling and John Baron moved to health and Julian Lewis was appointed a defence spokesman. Hugh Robertson joined the whips office.

Mr Duncan Smith continued his attempted fightback last night with a strong attack on Gordon Brown's handling of the economy. Speaking to the Institute of Directors, he accused the Chancellor of "striking at the heart of our enterprise economy" by imposing extra taxes and red tape on business.

Mr Brown had increased public spending by 20 per cent over the next three years without insisting on reform. The "arteries of the country'' were "clogged by the cholesterol of tax and borrowing''.