Political storm at home as Brown flies to EU Georgia summit

As Gordon Brown flies off with David Miliband to Brussels today for the EU summit on the Georgian crisis, a political crisis is fast getting out of hand at home. It will be the two men's first jaunt together since the Foreign Secretary spoiled his boss's holiday last month by calling in a Guardian article for a new vision for Labour, without once mentioning his boss's name.

The heat will be off Miliband, however, because Alistair Darling has now gone the Guardian route too. Darling managed to generate even more heat than Miliband with his declaration, in an interview published on Saturday, that the economy is in the worst state it's been for 60 years. He added, among other things, "In 10 months we've gone from doing OK to certainly not doing OK. We patently have not been able to get across what we are for, and what we are about."

As if to support Darling's grim prognosis, a leaked Home Office letter published today suggests that the economic downturn will lead to more crime, more illegal immigration and a rise in far-right extremism.

Brown's summer could hardly have ended more miserably. Darling, until now a loyal lapdog, suddenly ups and bites his master on the Achilles heel. According to a report in the Mail on Sunday, the two men have split over the PM's wish to spend £40bn on a scheme to underwrite mortgages to help homeowners avoid defaulting on their loans. In effect, he is advocating a form of state-backed mortgage.

Both the Treasury and the Bank of England think it's an unwarranted risk.
But Brown, desperate for a populist measure to put some pep into his gloomy backbenchers before the Labour conference opens in Manchester on September 20, wants to announce the scheme as part of a Labour economic 'relaunch' this week.

Whatever the relaunch package ends up looking like - action on 'fuel poverty' is a likely ingredient - Darling's behaviour shows every sign of a man preparing himself for the boot. As Westminster villagers regroup after their holidays, the expectation is that Ed Balls, Brown's trusty lieutenant when he was Chancellor, will replace Darling as Chancellor in an autumn reshuffle after serving his time as Schools Secretary.

A Cabinet reshuffle is not the only issue likely to overshadow the upcoming Labour conference - there's also the little matter of the Glenrothes by-election, a date for which has still not been set following the death on August 13 of the sitting Labour MP, John MacDougall.

Labour holds the seat with a majority of 10,600 but following the disaster in Glasgow East in July - where the Scottish National Party overturned a Labour majority of 13,000-plus - bookies have the Nationalists as firm favourites, even before candidates are named. (Labour is expected to announce its today, and the frontrunner is Lindsay Roy, headteacher at Brown's alma mater, Kirkcaldy High School.)

If Labour loses again in Scotland, the calls for Brown to throw in the towel will reach sizzling point - hence the strategic delay of the by-election until after conference, probably some time in October.

Which brings us to the question - who is advising Brown on such matters of strategy? The Independent on Sunday reported yesterday that Stephen Carter, the PM's divisive strategy guru, was being moved to a new role after a bitter turf war inside Number 10. The Brunswick PR man has made few friends since coming to Downing Street, though to be fair, selling Gordon Brown to the British public has proved to be one of the trickiest jobs in London.

Number 10 has denied the Carter report. But there seems little doubt that Brown has increasingly been seeking counsel from his old friend Wilf Stevenson, who recently left the Smith Institute, the think-tank set up in memory of Brown's mentor, John Smith.

Stevenson and Brown have been friends since they both attended Edinburgh University in the early 1970s. If Stevenson does end up playing a formal role at Number 10, he will be the latest in a long line of advisors who have tried to save Brown's bacon - despite the PM's promise when he took over from Tony Blair that there would be fewer spin doctors on his watch.

FIRST POSTED SEPTEMBER 1, 2008