Brown's humiliation at the ballot box revives talk of a leadership challenge

Saturday, May 03, 2008

By Victor Gordon

As the inquest begins into Labour's worst set of results for three decades, John McDonnell, the chairman of the left-wing Campaign Group, told close allies he will not be launching a leadership challenge but will head the campaign at Westminster and around the unions for a change in policy.

Another left-wing Labour MP, Ian Gibson, said Mr Brown had six months before Labour's annual conference to demonstrate that he can turn around the party's fortunes before the next election.

The fallout threatens to spark further infighting between Blairites and left-wingers, who are planning to put pressure on Mr Brown to abandon a New Labour modernisation agenda that includes allowing private companies to take over family doctor services, the closure of post offices and more help for the poor.

Mr Brown plans to go on the offensive next week using highlights of a forthcoming draft Queen's Speech, including new help for first-time home buyers, to show that he has not run out of ideas.

One of his senior Downing Street aides said Mr Brown would focus on the economy, making it his top priority over the next two years and leaving other issues to cabinet colleagues. His fightback could, therefore, depend on an economic recovery in time for the next general election, which is now almost certain to be delayed until the end of a full five-year term in 2010.

Leading Blairites, including Charles Clarke, have been critical of Mr Brown's leadership but have firmly ruled out a challenge before the next election.

All are agreed that a leadership contest at this point in time would be suicidal. But the panic in the Labour ranks is certain to keep alive the speculation about who might replace Mr Brown after an election defeat. The main contenders would be David Miliband, a champion of the Blairites, Ed Balls, for the Brownites, and Alan Johnson, a former trade union leader who could unite the warring factions.

Mr Brown promised yesterday to "listen" to voters but failed to answer Labour anger over the abolition of the 10p tax band, which he introduced. His gloomy performance was in contrast to a triumphant David Cameron, who spent much of the day meeting voters.

The results amount to a meltdown for Mr Brown – and a failure of his first big test since taking over from Tony Blair. With a huge loss of key party supporters, Labour MPs said they feared that, in some seats, they had lost all their foot soldiers.

Mr Brown is also facing the threat of a backlash at the weekly meeting of Labour MPs in the Commons, next Tuesday, who fear for their marginal seats. Some senior ministers say privately that they fear "civil war" between the Labour left wing and the Blairites.

One leading left-wing MP said: "We have discussed the possibility of a challenge to Gordon but McDonnell couldn't get enough support to get on the ballot paper last time. The big question for us is whether the party is prepared to move away from the New Labour agenda. Unless we do that, we are heading for a Tory government at the next general election."

A leading ally of Mr McDonnell said the Campaign Group leader would be using a left-wing conference with Tony Benn on 10 May to launch demands for a change of direction by the Prime Minister.

The ally said: "The coalition that brought us to power in 1997 is breaking apart. We alienated all the people we brought together – public service workers, students, teachers ... They are all deserting New Labour."

*Labour suffered a further blow yesterday when it was announced that David Pitt-Watson, chairman of the City firm Hermes Equity Ownership, had pulled out of an appointment as the party's general secretary.

Labour said it had started a new search for a permanent replacement for Peter Watt, who quit amid controversy over loans from the property developer David Abrahams.

The view from all sides

The view from the left

John McDonnell will launch a campaign to abandon the modernisation of public services. "There is going to be a panic among MPs," said one ally. "We have start addressing the main concerns of our core voters and stop trying to appeal to the City. If we don't do that, we will lose the next election."

The view from the centre

"He has got to listen [to complaints] and remove the reasons for them," said a close ally of Mr Brown's. "It is a tragedy that the most damaging issue – the abolition of the 10p rate of tax – is one that runs completely counter to his beliefs." There is strong support for an early draft Queen's Speech to create discussion on affordable housing, the economy, and Iraq and Afghanistan.

The view from the Right

Blairites such as Charles Clarke and John Reid have avoided rocking the boat, but are adamant that to win the next election, Mr Brown cannot abandon New Labour's appeal to middle-class voters. But they want more help for families, first-time buyers and further modernisation of public services. Matthew Taylor, a former Blair adviser, said: "He should imply that there won't be an election for two years, and the only thing that matters is that in two years, the economy will be better and families will be protected."