Brown’s big moment

The Prime Minister faced down his enemies and won back Labour's confidence. Now comes the difficult

Never underestimate Gordon Brown. That would appear to be the lesson to take from this year's Labour conference by his political enemies inside and outside the party. The Prime Minister began the week in Manchester as the architect of Britain's economic downturn, besieged by challengers to his authority. He ended it by making a credible case, in his party's eyes at least, that he is the only man for the job of steering Britain through uniquely difficult times.

Two Davids were slain by Goliath's insinuation that this is no time for "novices". Brown's main conference address was not quite the speech of his life, though it might have been if he had made it last year. But it was the best many activists had ever seen him make and precisely the message they wanted to hear: a new calibration of the relationship of the market and the state containing a solid challenge to the banking industry to get its house in order, along with a renewed commitment to the role of government. The key section of his speech was these words: "Just as those who supported the dogma of big government were proved wrong, so, too, those who argue for the dogma of unbridled free-market forces have been proved wrong again." In other words, 2008 may turn out to be as signi ficant as 1989. As the US government contemplates a $700bn banking bailout, the rules of the political game have changed just as surely as they did after the fall of the Berlin Wall.

Now comes the difficult part: delivery. This includes, for instance, making good on the bold claim that "in the months ahead we [will] rebuild the world financial systems around clear principles". Politicians are often accused of making promises they can't keep, but this really is quite a pledge. If the Prime Minister pulls off this superhuman feat he will deserve to be back in contention for the next election.

Brown now seems to have accepted his Chancellor's assessment that the world is entering the most difficult economic period it has experienced for 60 years, despite allowing a disgraceful briefing operation against one of his closest and most loyal political allies following Alistair Darling's remarks in a Guardian interview over the summer. Though the Chancellor's comments provided a rather gloomy assessment of the situation for a party so far behind in the polls, they now seem like something of an understatement.

The one outcome the clever boys who invented new Labour never considered as they excised the socialism from their party was that we would witness a crisis of global capitalism in the first decade of the 21st century so severe that it would force both Britain and America into nationalising financial institutions. The events of the past month are beyond the wildest predictions of the handful of Marxists left in the Labour Party. But they have allowed Gordon Brown to reposition himself as a man of the left: if not quite a socialist, then a confirmed social democrat. This is a high-risk strategy, because it will have confirmed what the Conservatives and those on the right of the Labour Party have always suspected about him. The autumn will show whether Brown will be able to counter charges from the right-wing press that he has simply taken his party back to its statist roots in order to guarantee his own political survival.

One test as Brown moves the political centre of gravity in his party to the left is whether he can hold together a coalition within his party of those who would be naturally suspicious of such an approach. Within the cabinet, John Hutton at Business and James Purnell at Work and Pensions will take some convincing, but their loyalty will be all the more vital. As the Prime Minister contemplates the imminent re shuffle, he will have to consider promotion for more "Blairites" such as the immigration minister Liam Byrne and the Europe minister Jim Murphy, neither of whom is his natural ally.

Bring all the talents

It seems like a very long time ago, but this was supposed to be a "government of all the talents". If the financial crisis is as serious as many in the government suggest, then extraordinary times require bold solutions. There is an argument for saying that the Prime Minister should invite David Cameron and Nick Clegg to Downing Street and tell them the time has come for all good men to come to the aid of the country. A national government would allow Brown to bring in expertise from across the political spectrum.

Just imagine if Vince Cable's business expertise could be harnessed in the present situation. An offer of cabinet posts to the Tories and Lib Dems would also serve to completely wrong-foot the opposition. Such thoughts are fanciful, of course, but they raise some interesting questions about Gordon Brown's leadership.

Let's imagine for a moment that such a coalition would be in Britain's best interests. It could also include, as Bernard Donoughue suggested in these pages last week, some Labour big beasts such as Charles Clarke and Alan Milburn. Would Gordon Brown have the generosity of political spirit to bring together such a group when he can barely hold together his own cabinet? There is a serious side to such speculation, which is this: Cameron may well turn out to be capable of such generosity. The Tories have already mischievously invited the education minister Andrew Adonis to cross the floor and there is little doubt that further offers would follow a Conservative election victory.

The overarching narrative of Manchester 2008 may be that Gordon Brown lived to fight another day but the whiff of rebellion still hangs over the Labour Party. David Miliband may have pulled back from his "Heseltine moment" (his parliamentary private secretary, Dan Norris, was sending out messages to MPs on Monday urging them to brief journalists that the Foreign Secretary's speech was intended as an act of loyalty). But too much has now been said and done. Every senior political journalist at Labour conference will have had conversations with at least one cabinet minister, expressing grave doubts about the Prime Minister's leadership. Despite attempts during conference to smear as traitors those who, like Siobhain McDonagh and Joan Ryan, called publicly for a leadership contest, the two women ended up looking more like conscientious objectors. It is to the eternal discredit of Labour colleagues who treated McDonagh and Ryan as pariahs that they failed to recognise the years of devoted service they had given to the party.

Competing narratives

Gordon Brown quite wisely used Manchester to move the debate on to the global stage and away from the petty sectarianism that has engulfed the Labour Party. Unfortunately, this was challenged by two competing narratives that dominated the late-night bars in Manchester.

The first was the relentless bullying and poisonous briefing carried out by Brown's inner circle of bag carriers and the second that No 10 Downing Street has become "dysfunctional" under Brown's stewardship. The word "thug" was rivalled only by "rebel" in the lexicon of this year's Labour conference. There was serious speculation, for example, that No 10 obtained an advance copy of the Guardian magazine in which Decca Aitkenhead's interview with Darling appeared, and leaked it to the Telegraph before the Guardian went on sale.

Recent events have allowed the PM to reposition himself as a man of the left

There is a growing consensus which includes cabinet ministers and journalists that Brown must act to control his main spin doctor, Damian McBride, who has been held responsible for some of the more personal attacks in recent months. The presence in Manchester of McBride's predecessor Charlie Whelan, who now works as the political director of the trade union Unite, did not help the atmosphere. Seconds after Brown's speech, Whelan was telling anyone who would listen that the Prime Minister's "novice" remark was certainly intended as a reference to David Miliband.

The second narrative of conference, that No 10 has become dysfunctional, is even more damaging for the PM. Ministers talked freely of "sclerosis", "indecision" and "incompetence" as the defining features of their dealings with the centre of government. One senior Labour figure, who had experience of working under Tony Blair and Brown, said the difference was immediate and startling. For instance, there were key individuals under Blair. "If you called Jonathan [Powell] or Anji [Hunter] or Sally [Morgan] you knew you would get a decision within 24 hours. With this lot it would sometimes take weeks or months. Sometimes you heard nothing at all." The trouble for Brown is that no attempt to shake up the operation has made a significant difference.

A lot is resting on Brown's first reshuffle, which will be such a huge test of his authority that there is every possibility he will delay it still further. The decision he makes about his Chancellor could turn out to be the most defining moment of his premiership, beyond his decision to call off the election that never was. One reason Gordon Brown will find it so difficult to sack Alistair Darling is that he and those around him are furious at the way he was hung out to dry over the summer. Darling has the capacity to become the Geoffrey Howe of this Labour government if he chose to do so. It is a cruel paradox that the Prime Minister's greatest ally could become his most dangerous foe. lInside trackInside track