Mandy takes up the reins

Whoever ends up leading Labour into the election, the past seven days have shown where the power really now lies. Here's today's Journal column.

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Traditionally, the time of the year between the start of the MPs long summer recess in July and the build-up to the party conferences in September has been known as the political ‘silly season.’

In most years, an uneasy peace descends over Westminster, and political journalists are reduced to writing about such ephemera as John Prescott finding a baby crab in the Thames and naming it after Peter Mandelson.

But with an election less than a year away and Gordon Brown’s government still mired in difficulties at home and abroad, nobody expected this to be one of those summers when politics effectively goes into abeyance.

And something else has changed too since Mr Prescott observed that tiny crustacean in 1997. From being the butt of Old Labour humour, Lord Mandelson of Foy and Hartlepool is now seen by most of the party as vital to its slim hopes of election victory.

In one sense, it’s a fulfilment of former Prime Minister Tony Blair’s more controversial pronouncements.

Asked once how he would know when his mission to transform his party had been completed, he replied: “When the party learns to love Peter Mandelson.”

With Mr Brown off on his holidays this week – in so far as the workaholic PM is ever off-duty – the former Hartlepool MP has been large and in charge around both Whitehall and the TV studios alike.

In so doing, he demonstrated beyond any remaining doubt that he has now inherited the mantle of his one-time tormentor Mr Prescott, as Deputy Prime Minister in all but name.

Lord Mandelson is sensibly playing down excitable talk that he could actually become the next Labour leader, although one influential backbencher declared this week that he was the only person who could beat the Tories.

There has not been a Prime Minister in the House of Lords since Lord Salisbury in 1902, and to have one in 2009 would be extraordinary even by the standards of Lord Mandelson’s topsy-turvy career.

Nevertheless, one had the unmistakeable sense this week that this was a moment he had been looking forward to for a long time, such was the relish with which he took up the levers of power.

His aim was nothing less than to set a new strategic course for Labour as it approaches an election that almost everyone now expects it to lose, and lose badly.

Such pessimism about the party’s prospects is hardly surprising given its dire performance in the Norwich North by-election ten days ago, a result which if replicated across the UK would give David Cameron a majority of 240.

So far, it has not led to a renewed bout of speculation about Mr Brown’s leadership, but it has brought about a growing realisation that he has lost the argument over “Labour investment versus Tory cuts.”

This tired old mantra has been central to Mr Brown’s re-election strategy, but has failed to gain any traction with a cynical public that believes spending cuts will follow whoever wins in 2010.

What Norwich North did was to present an opportunity to those Cabinet members who want to move away from a strategy which they think the public now regards as fundamentally dishonest.

Hence the new note of candour in Lord Mandelson’s interview with BBC Newsnight this week when, without actually using the c-word, he accepted that cuts would indeed be part and parcel of a Labour fourth term.

“I fully accept that in the medium term the fiscal adjustment that we are going to have to make….will be substantial. There will be things that have to be postponed and put off, and there will probably be things that we cannot do at all,” he said.

It wasn’t the only change in election strategy Lord Mandelson announced this week. He also appeared to commit Mr Brown to a televised debate with Mr Cameron, despite Downing Street’s insistence that the Prime Minister remains opposed to the idea.

“I think television debates would help engage the public, help answer some of the questions at the heart of the election, help bring the election alive in some way,” he said.

For what it’s worth, my guess is that it still won’t happen, for the simple reason that electoral law obliges the big broadcasters to give the Liberal Democrats almost equal airtime to that of the Labour and Conservative parties.

This will mean that Nick Clegg will have to be included in any head-to-head between the party leaders, something the other two might be keen to avoid.

But that is by-the-by. The real significance of Lord Mandelson’s comments this week is that he now feels in a strong enough position to set out his own agenda without clearing it with Number Ten.

Some could even see it as the beginnings of an attempt to distance himself from Mr Brown and prepare the way for a new leader with a new, more open style.

After the failed “coup” in May I predicted that Mr Brown would, at some stage, come under fresh pressure to stand down in favour of Home Secretary Alan Johnson, and nothing that has happened since has caused me to revise that view.

Mr Brown’s position remains weak. Labour MPs who effectively put him on probation in May spoke then of the need for a demonstrable improvement in Labour’s performance by the autumn, but there is absolutely no sign of this happening.

But whatever internal machinations occur in the run-up to the conference season – and my guess is that there will be plenty – one thing is becoming increasingly clear.

It is that whether it is Mr Brown or Mr Johnson who leads Labour into the next election, it will be Lord Mandelson who is once more pulling the strings.