From hero to zero: Gordon's cruellest month

The host of the G20 summit has seen his reputation crumble in four painful weeks. Worse still, reports Andrew Grice, it's not events that are to blame – it's the Prime Minister's judgement

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For Gordon Brown, April has proved the cruellest month. Four weeks ago today, the Prime Minister woke up to positive headlines after chairing a successful summit of G20 leaders in London. He ends the month, in the words of one senior Labour backbencher, having "gone from hero to zero".

How did it happen? The main event of the month was a difficult Budget delivered against the most gloomy economic backdrop in modern times. But what really alarms gloomy Labour MPs is that the problems caused by the recession have been compounded by self-inflicted wounds.

Mr Brown's strategy was to dominate the agenda with a three-week blitz on the economy between the G20 and the Budget. It was blown off course by the explosive revelation that Damian McBride, one of his closest aides, had drawn up plans to smear senior Conservatives on a proposed gossip website. Although McBride resigned, that was not the end of the matter. It took Mr Brown six days to say "sorry", leading some senior Labour figures to doubt the judgement of his male-dominated, football-loving inner circle. "It was macho stuff by the boys," one woman minister said this week. "It was obvious from the start he would have to say 'sorry', but he wouldn't do it."

Further questions about Team Brown's political nous were raised by the Prime Minister's decision to try to seize the initiative over MPs' expenses two weeks ago. He had previously declared that only an independent proposals for reform would win the trust of a hostile public. But he panicked after Labour opinion surveys suggested the voters would take out their anger disproportionately against the governing party.

The expenses controversy clouded preparations for a crucial Budget in two ways. Alistair Darling's meetings with Mr Brown to discuss its contents were disrupted by the Prime Minister's preoccupation with expenses. Then the Treasury's carefully-planned media strategy in the run-up to Budget Day was blown off course when Mr Brown decided to rush out his proposed reforms of MPs' expenses two days earlier. "We managed to derail our own Budget," one minister complained yesterday.

Left to his own devices, Mr Darling probably would not have announced a 50p rate of income tax on earnings above £150,000, and might have stuck with the 45p rate he proposed last November. But, needing to show financial markets how he would repair the massive hole in the public finances, he did not object when Mr Brown suggested a 50p rate.

The 50p rate distracted attention from the horrendous borrowing figures, but also provoked accusations that the New Labour project had been buried. Stephen Byers, the former Transport Secretary, accused Mr Brown of "cynical" and "tactical manoeuvring" over the 50p rate, designed to lure the Tories into a pledge to reversing it.

If the Brown blueprint on expenses had been approved, it might have been worth taking the focus away from the economy, still the Prime Minister's strongest suit. But, anxious to get brownie points from the public, he dropped his reform plan on an unsuspecting political world without consulting the opposition or his own MPs. The result was a growing, cross-party rebellion against his proposal to replace the MPs' £24,000-a-year "second homes" payments with a £150-a-day "attendance allowance" for turning up at Westminster. Many MPs objected to "clocking in" and Mr Brown had to withdraw his proposal.

On Wednesday, he suffered a humiliating first Commons defeat as Prime Minister over the Government's refusal to allow 36,000 Gurkha veterans the right to live in Britain. Rebellious Labour MPs caught their own whips unaware by joining forces with the opposition parties to inflict a wounding defeat.

The mood at Monday's weekly meeting of the Parliamentary Labour Party was "black". Backbenchers vented their anger over expenses. Mr Brown was away, visiting Pakistan and Afghanistan, but he was told about the general backbench malaise when he met their shop stewards on Wednesday at the weekly session of the Parliamentary Committee.

"We have got a clear lack of leadership at the top and a PLP that has lost the will to live," one minister admitted. "There is a fin de siècle feel about the place."

Gordon Brown hates being compared to John Major. Yet some Labour MPs did just that after he made a very public faux pas at the end of Prime Minister's Questions on Wednesday. He began to leave the Commons chamber and had to be stopped by his own ministers; he had forgotten he had to make a statement about Afghanistan and Pakistan.

Mr Brown's own MPs ridicule him over the YouTube video in which he announced his ill-fated crackdown on expenses, describing him as looking "tired", "weird" and "strange".

What most worries Labour MPs is that a theme runs through the four main events since the G20 – "smeargate", expenses, the Budget strategy and the Gurkhas. As one former Cabinet minister, paraphrasing Harold Macmillan, put it: "They are not 'events, dear boy, events' but self-inflicted wounds. There is a pattern of behaviour here, caused by a catastrophic lack of judgement at the very top."

Another former minister groaned: "It has been a disastrous month. We cannot go on like this. Our MPs are at the end of their tether."

What will Labour MPs do? All bets are off until after the European and local elections on 4 June. But recent days have seen revived speculation that Mr Brown could be forced to step down if, as looks likely, Labour does badly in the elections.

We have been here before. Last summer, the Westminster air was thick with talk of plots and coups. Mr Brown's critics tried to prod the Cabinet into toppling him. It didn't happen and some think they missed their one chance to oust him before the general election. Others are convinced that backbenchers and Cabinet ministers could yet move against Mr Brown if they believed that ditching him would mean a narrow defeat and not a massacre that could put Labour out of power for 15 years.

There is growing talk that Alan Johnson, the Health Secretary, is being drafted as a reluctant unity candidate if Mr Brown was deposed. He enjoys support across the Labour Party but, rarely for a politician, has no great hunger for the top job.

There is another scenario: that Mr Brown falls on his sword. Allies believe he would do this only if his protégé Ed Balls, the Schools Secretary, would succeed him. That looks unlikely before a general election. Although some Labour MPs hope that the Prime Minister may "do the honourable thing", one ex-minister said last night: "I wouldn't put the chances at more than one per cent."

The hurdles ahead

June elections

Local and European elections on 4 June now represent a major obstacle for Mr Brown. Labour is set to receive a drubbing. Wavering discipline in the parliamentary Party is jeopardising the leadership's attempts to present a united front to the electorate. Old dividing lines and bitter infighting could open up once the polls are over.

Danger rating (out of 5): ****

Expenses

Looming ever larger on the horizon is the July publication of about 700,000 receipts documenting Commons expenses claims. Rumours are already flying around Westminster that several MPs will be embarrassed by the revelations. Mr Brown's haste in trying to reform the expenses system was in part an attempt to have the issue sorted by the time the receipts emerge.

Danger rating: ****

Embarrassing investigations

Separate investigations into the use of allowances by both the Employment minister, Tony McNulty, right, and the Home Secretary, Jacqui Smith, could provide fresh embarrassment for Mr Brown, should they be found to have acted improperly.

Danger rating: ***

Iraq inquiry

With British troops pulling out of Basra yesterday, Mr Brown is under pressure from both opposition parties and his own backbenchers to launch a wide-ranging inquiry into the Iraq war, which he has already promised. If he wavers on the pledge, it could quickly become a rallying cry for those on Labour's left.

Danger rating: **

Reshuffle

Once the local and European elections are over, Mr Brown will be under pressure to reshuffle his Cabinet ahead of the general election, moving those damaged by expenses scandals. His political antennae will need to be working by then – it will be his last opportunity to reconfigure his top team before the general election.

Danger rating: **

Economy

Rising unemployment figures will continue to bruise Mr Brown's claims to economic competence, but a bigger financial pitfall lies ahead. If the Chancellor, Alistair Darling, is forced to revise his extremely optimistic growth forecasts again during his pre-Budget report this autumn, it will earn the Brown administration another black mark on the handling of the economy.

Danger rating: ****