Cracks begin to show among Downing St inner circle as Labour's popularity wanes

As Gordon Brown's inner circle plotted the launch of Labour's campaign for the May local elections yesterday afternoon, the atmosphere was cordial and surprisingly upbeat despite three gloomy opinion polls since last week's Budget. Behind the scenes, however, tensions are rising in Downing Street between the Prime Minister's "old guard" of close advisers and the new broom he brought in to spruce up his act.

Stephen Carter, who left the City public relations firm Brunswick to become No 10's head of strategy in January, is ruffling feathers. It is not because he has brought in other PR people to beef up an operation whose shortcomings were painfully exposed last autumn when Team Brown talked up and then abandoned a general election.

Even his critics admire the softly-spoken but ruthless Mr Carter. But they are wondering whether he is in danger of breaking the first rule of political communications – the PR man should keep in the background and never "become the story". When Alastair Campbell broke the rule, he had to go.

Eyebrows were raised at the end of last week when PR Week, the public relations industry's house journal, published an organogram showing Mr Carter at the top of the No 10 tree after Mr Brown – and with a bigger photograph than the Prime Minister. No one can prove Mr Carter was behind it, but some colleagues are muttering that he may have been rather naïve in talking about his shake-up at No 10, and would now be more careful after getting his fingers burnt.

In contrast, insiders noted, parallel changes brought in by the other new power in Downing Street – Jeremy Heywood, the Permanent Secretary – had been implemented quietly without any publicity.

The changing of the Prime Minister's Praetorian Guard was illustrated on Monday, when Spencer Livermore, one of Mr Brown's closest aides for 10 years, quit as No 10's director of political strategy. He had planned to leave before Mr Carter arrived, but his exit was less than happy: Mr Carter had already bagged his office.

The eyebrows of long-standing Brownites also twitched at the other new recruits head-hunted by Mr Carter. David Muir, who joined from advertising agency WPP, is the new director of policy strategy, and Nick Stace, formerly communications director at Which?, will draw up a plan from now until the general election. They have one thing in common: they are friends of Steve Hilton, David Cameron's closest aide and strategic guru. There are other personal friendships between New Labour advisers and Mr Cameron's "Notting Hill Set" but most worked for Tony Blair rather than Mr Brown and Labour traditionalists are suspicious.

The third recruit to Mr Carter's "new guard" is the American Jennifer Moses, a former managing director of Goldman Sachs and ex-director of the lingerie firm Agent Provocateur. She has declined to join the Labour Party.

Mr Carter raised hackles last Friday when he outlined his strategy to political advisers, ministers and Labour officials. He is said to have referred to Mr Cameron as "Dave" and the shadow Chancellor George Osborne as "George".

Some Labour aides left the meeting wondering whether Downing Street had been taken over by technocrats from the PR world who have no real party political beliefs. "We didn't go into party politics to be one big happy family," one said. "We've got to show how we are different to the Tories."

At a political session of the Cabinet on Tuesday without civil servants present, ministers agreed they should ensure the public sees more dividing lines between Labour and the Tories.

Mr Carter's supporters argued that his first priority was to stabilise and then improve the No 10 operation – and that "the politics" can follow later.

No one is yet saying "Get Carter" and current, as well as former, colleagues of Mr Carter sing his praises. One Labour insider said: "He gets things done. He will give it his all for six months. If it doesn't work out, he'll go back to the PR world."

The Prime Minister's team

STEPHEN CARTER

The new director of strategy at No 10 used to head the media regulator Ofcom and was chief executive of the PR company Brunswick, whose founder Alan Parker is close to Gordon Brown and is believed to have recommended him for his new post.

DAVID MUIR

Mr Brown's new political strategy director was previously one of Martin Sorrell's right-hand men at the advertising agency WPP.

SUE NYE

Mr Brown's longest-serving aide has worked for Labour since Michael Foot was leader. As director of government relations, she is the Prime Minister's "gatekeeper".

NICK STACE

The new special adviser on communications will stay out of the day-to-day running of the No 10 machine but will work up strategy lasting until next the general election.

JEREMY HEYWOOD

The first-ever permanent secretary at Downing Street has been lured back to No 10 from Morgan Stanley. He was a trusted civil servant who acted as go-between for the Brown and Blair camps.

MIKE ELLAM

Gordon Brown's official spokesman is a former Treasury aide who briefs journalists twice a day but keeps out of party politics.

DAMIEN McBRIDE

Switched from being neutral civil servant at the Treasury in 2005 to become Mr Brown's special adviser, allowing him to brief media on party political matters.