Page last updated at 11:41 GMT, Monday, 1 December 2008

Brown unity show with Blairites

By Brian Wheeler
Political reporter, BBC News

Gordon Brown
Mr Brown joked that he had just been passing by

Of all the places you would expect to find Gordon Brown, addressing an ultra-Blairite group's annual conference would not normally be high on the list.

But we live, as the prime minister never tires of reminding us, in extraordinary times.

Mr Brown knows he is going to need all the smart thinking and new policy ideas he can get if Labour is to stand the slightest chance of winning a fourth term.

And one thing Progress is not short of is ideas, even if some of them, on the free market reform of public services, would set the set the teeth of many traditional Labour supporters on edge.

There were certainly a few startled faces in the audience as Mr Brown appeared at the back of the hall.

Not publicised

Not because he planned to stand on the same hallowed platform on which Tony Blair had delivered a farewell speech to Progress two years ago.

But because his appearance at the event had not been publicised in advance. Many people had been expecting an opening address by Work and Pensions Secretary James Purnell.

"I just happened to be passing," joked the PM by way of introduction.

In the past, when he was jockeying for Mr Blair's job, Mr Brown would rally the troops with tub-thumping appeals to traditional Labour values.

Lord Mandelson
When I was Tony Blair's guy I think people felt I had this unaccountable power that I was wielding behind the scenes
Lord Mandelson

But this was a very different kind of speech, aimed at reassuring the keepers of the New Labour flame that - despite tearing up Mr Blair's pledge never to raise income taxes - that the Blairite Project was still very much alive.

"This is the biggest New Labour project of all - giving people the confidence and hope that we can get through this downturn into a better economy and society," he told the audience, to warm, if not exactly rapturous applause.

Putting up income tax to pay for a public spending spree was not about a return to the "envy" based politics of Labour's past but making sure everyone shared the "sacrifice" to help the country get through a recession.

His message, essentially, was that New Labour could be whatever you wanted it to be, as long as "hard-working families" came out on top.

And he should know, he reminded the audience, because he was in there at the start.

"When Tony and Peter and all of us were involved in the late '80s and early '90s we always said our set of values had to be applied to new circumstances," he said.

This was Mr Brown's only reference to Lord Mandelson, founder of Progress.

Lord Mandelson's own appearance at the event a few hours later was very different in character, as he took part in a remarkably candid question-and-answer session with The Guardian's Martin Kettle.

'In a dream'

At times it began to feel more like a marriage guidance session as the newly ennobled business secretary opened up about his rekindled friendship with Mr Brown and how he was genuinely startled to find himself back at the heart of government.

"I never thought I would come back to British politics and I certainly wasn't banking on it," he said.

"I think I am behaving as if I am in a dream. I think possibly I am in a dream-like state."

He said he was "happier now being in government than when I was last in government... I feel more relaxed with my colleagues in Parliament. I feel their attitude to me is not so suspicious.

"When I was Tony Blair's guy I think people felt I had this unaccountable power that I was wielding behind the scenes. People would always look at me and wonder what strings I was pulling, how I wrote all those headlines in the newspapers."

He went on: "It created a tension, a sort of prickliness in my relations with the government and I don't think that is the case now."

'Famously difficult'

He had a "different relationship with the prime minister" now.

"We did have a famously difficult relationship, Gordon Brown and me. I think what has happened is that we have both moved on.

"I rediscovered in Gordon what I saw originally when I was very close to him before 1994 - his big brain, his prodigious hard work and his funny sense of humour, which has certainly been hidden from me for the past 10 years and perhaps from the British public."

Lord Mandelson said he had "rediscovered things I liked and admired in our original friendship".

Politics is much more complicated now and can not be summed up on the back of a pledge card, he argued, something David Cameron's Tories, who were still using the "New Labour handbook circa 1995", had failed to grasp.

'Command and control'

"The pressures on the most vulnerable in our society are greater now because of the economic situation than the way it was back in '97," said Lord Mandelson.

And he gave a frank assessment of where New Labour had gone wrong in its early days in government under Mr Blair, when it saw public service reform in terms of "centralisation rather than decentralisation".

"We were thinking more in terms of command and control and thinking more in terms of targets rather than how we were going to empower people to meet those targets."

But he added, in case anyone suspected him of veering to the left: "I don't want to go back to the old Labour way of empowering the producers and suppliers of public services at the expense of their customers and users."

Labour had to come up with new policy ideas to convince the public it had not "run out of steam" and could only win the next election with a convincing vision of the future.

But - just to confirm that not all of Tony Blair's greatest hits have gone out of fashion, he gave his enthusiastic backing to the euro - a sound that has not been heard since, well, Lord Mandelson was last in government.

"I hold to the view that our aim, our goal, should be to enter the single currency," he told the conference, before adding that the government was "obviously not going to take on that challenge" in the current economic climate.

He might be Gordon Brown's guy now, but Lord Mandelson is clearly still a Blairite at heart.

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