Brown faces the wrath of Labour's biggest benefactor

Gordon Brown is to replace the Prime Minister as the main target of criticism from the Labour Party's biggest single financial benefactor.

The Chancellor, who will make his first public speech for 48 days at the TUC Conference today, will come under fire from Amicus for depriving workers of protection because of his strict adherence to flexible labour markets.

Senior officials believe other government figures, including Tony Blair, would adopt a more supportive line on employment rights and manufacturing if Mr Brown could be persuaded to drop his hardline approach. It has been assumed so far that while unions were deeply suspicious of the Prime Minister, they were better disposed towards Mr Brown, who was seen to have far deeper roots in the Labour movement. Some sources believe that the Chancellor's address today might even constitute the start of a campaign to take over the Labour leadership.

Derek Simpson, joint general secretary of Amicus, said Labour's core aims would never be achieved unless the Treasury made a U-turn. "Clearly the key to saving manufacturing is to change the philosophy the Treasury holds on the flexible labour market. We need to make them understand that strong employment laws lead to high levels of investment and productivity. This is how the French and Germans lead in quality and added-value manufacturing. The adherence of the Treasury to the US model for the labour market will lead Britain into a cul-de-sac of inequality. The gap between rich and poor grows even wider. To achieve the Labour Party's aims, the Treasury needs to do a U-turn.''

As part of the new "anti-spin'' approach of the Government, Mr Blair's aides were reluctant to brief journalists on the Chancellor's speech. But it is understood Mr Brown will try to concentrate on the economic successes of the Government in comparison with previous Conservative governments.

It is also thought that his speech will attempt to reassure sceptical union leaders about the Public Service Forum agreed last week after a delegation to Downing Street.

David Prentis, general secretary of Unison, the biggest public services union, believes the structure may simply turn into a "talking shop''. It is thought that the Chancellor will give more details about the forum, which is ostensibly aimed at giving the unions a formal input into policy.

The conference narrowly accepted a relatively supportive line on the European single currency which will please the Prime Minister more than the more sceptical Chancellor.

Despite the opposition from Unison and the Transport and General Workers' Union, delegates passed a statement by the TUC's ruling general council welcoming the Government's "stated strengthened commitment to, and support for, the principle of joining the euro when the five economic tests are met''. It is one of the few motions where the union movement failed to show a united front. Much of the rest of conference will pass unanimously resolutions strongly critical of the Government.

LOW PROFILE WHERE HAS THE CHANCELLOR BEEN?

Gordon Brown's speech today is his first high-profile appearance for several months. The Chancellor has been conspicuously absent from the airwaves as the Government struggles with the inquiry and fresh questions over spin.

Mr Brown has been in Scotland for the summer with his wife Sarah Macaulay, who is expecting a baby next month.

The Chancellor's low profile has been interpreted by some in Westminster as an attempt to distance himself from the tribulations of the Blair government over the Kelly affair, but his allies deny that Mr Brown has been keeping a low profile to enhance his own standing and accuse his detractors of trying to "stir things up".

Before Mr Brown went on holiday he gave a speech in New York backing the Prime Minister's stance on Iraq, and the day after Dr David Kelly died he supported Mr Blair at the Labour Party national policy forum. The Chancellor has also written an article for the Guardian on tackling world poverty.

Marie Woolf

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