Focus: It could be a week when Blair needs his friends

At last year's Labour conference, Tony Blair was everybody's darling. This year, he will face a less adulatory reception. Cracks are showing in New Labour's carefully programmed image, and tough negotiations loom over public sector pay, 'plots' to centralise power and, bitterest issue of all, electoral reform

TONY BLAIR wrote to every member of the Cabinet last week, warning them about the Labour Party conference. There were the usual comments about tough choices, rights and responsibilities, respect for others. He told them the "Tories did not just lose the election, they lost the battle for ideas". He even acknowledged several ministers' concerns about the economy by saying the difficult decisions would eventually reap "benefits for all".

But at the end, just when John Prescott, Gordon Brown and Margaret Beckett might have been snoozing into their cornflakes, the Prime Minister turned to Blackpool. "The party," he wrote sternly, "is essential for our success and I want to work with the party to change Britain." The message was clear - however much you want to, you can't ignore the grassroots activists. It was a tacit acknowledgement that, after 16 months in power, dissent is beginning to show and that the next few days are not going to be easy. On the surface, this Labour conference is the whizziest and most carefully controlled.

The platform from which Mr Blair will address delegates is ultra- modern, backed by a mosaic of constantly changing, multi-coloured images of "new Britain". The lectern is made not of boring old wood, but of trendy Terence Conran-style glass. There are few "fraternal greetings" from trade unions in the conference brochure, but loads of glossy corporate ads which have helped make this gathering the most profitable ever.

It is all beautifully New Labour, but underneath the cracks are beginning to show. Last year, Mr Blair strode into the conference to hear delegates chanting, "things can only get better"; this time as he drives down the Blackpool promenade, past the lights and the fairground attractions, he knows he is heading for a roller-coaster ride. Downing Street is already preparing the ground. "It was a real jamboree last year," an adviser said. "This year will be different. It's not designed to have lots of razzmatazz. It's sleeves rolled up, down to work. Of course, there will be debates - once you start getting on with the business of government people disagree."

The problems may start today, when Blair faces a question-and-answer session with his party members. Millbank Tower insists that the questions have not been vetted, but it remains to be seen how much free-thinking takes place. Over the week, proportional representation, the shelving of transport improvements and public sector pay will be the topics subject to the most vocal rows. But the real source of resentment among local activists is what they perceive as the attempt to centralise power.

The results of the election to the ruling National Executive Committee, to be announced on Wednesday, will be the focus of this frustration. The Blair circle now acknowledges that three or four left-wingers are likely to be elected - despite the vigorous campaign by the modernisers to keep them out.

Mark Seddon, the editor of Tribune, is almost certain to get on, and is rumoured to have been supported by several Cabinet ministers including Robin Cook, Gordon Brown and Margaret Beckett. He is a serious player who undermined the Blairites' attempt to discredit the Grassroots Alliance, as the left-wing slate was known. But the individuals do not really matter - the result will be a bid for independence from the ordinary members who refuse to obey instructions from the centre, a victory for free-thinking over pager mentality.

MANY taking the train to Blackpool argue that the leadership's attempt to control dissent - for example, by closing certain sessions to the media - will in fact emphasise splits. "The left will just spill out on to the fringes," one activist said. The fiercest heat will probably be generated by the proportional representation debate on Thursday. Lord Jenkins has completed his report on reform of the voting system and agreed to hold over its publication until after the Labour conference. But his attempt to head off confrontation appears to have failed.

It became clear when Labour's Conference Arrangements Committee met last Wednesday that this was going to be a problem. Of the 150 motions put to conference by local constituencies, 23 - by far the largest single group - were about electoral reform, and they were overwhelmingly negative. Crucially, most of the unions, who have a wide array of votes behind them, back keeping the first-past-the-post system.

One, the AEEU, has been so well organised that nearly all the motions submitted by the grassroots follow its proposed format. Its survey of constituency chairmen found that nearly three-quarters oppose PR and more than 70 per cent described the system likely to be commended by Lord Jenkins is "flawed".

More importantly, ministers will be lining up on opposite sides of the argument this week. Tomorrow lunchtime Derek Fatchett, the Foreign Office minister, and John Spellar, the Defence minister, will argue against PR in the Washington Suite of the Imperial Hotel. A few hundred yards away that evening, in the Rostria, Mr Fatchett's boss, Robin Cook, and Mo Mowlam, the Northern Ireland Secretary, will be putting the case for reform. This is also something that defies the usual left-right barriers. Dennis Skinner, the arch old Labourite, will be speaking on the same side as the moderniser, Helen Brinton.

OPPOSITION been strengthened among many ordinary Labour members by the involvement of Lord Jenkins, who left the party to found the SDP. "A traitor," said one. "We'll oppose anything he recommends." It has been further fuelled by Paddy Ashdown's speech to the Liberal Democrat conference last week in which he threw down the gauntlet to Blair. "That man is like a fly buzzing around your head and needs to be swatted away," one minister said. "The idea that this pimple on the body politic is telling us how to run the country is a joke."

And there are growing indications that Blair agrees that Paddy's demands on PR are getting tiresome. The PM's allies say he is secretly pleased that opposition to reform is growing in his party because it will make it easier for him to disappoint the Liberal Democrats. Yesterday he invited Ken Jackson, leader of the AEEU which is spearheading the campaign against PR, to his suite at Blackpool's Stakis Hotel. He let it be known that he was "relaxed" about the idea of conference voting against changing the voting system.

Those on both sides of the argument now privately acknowledge that Blair is "cooling" towards electoral reform. The most influential members of his Cabinet - Brown, Prescott, Straw - are instinctively opposed to it; the Prime Minister himself has said consistently he is "not persuaded" of the case for change.

It is becoming increasingly unlikely that there will be a referendum this side of the election - Labour's manifesto included a commitment to hold such a ballot, but the party is now avidly pointing out that it did not specify when. "Blair doesn't want to change the system; he's got nothing to gain from it and everything to lose," one MP said. A vote would simply highlight fundamental splits. "It's our version of the Tories and the single currency," one politician said.

If Blair simply delays the vote, the Liberal Democrats would be kept hanging loyally on until the next Parliament - but even then they might not get their wish granted. "It won't happen - not in the foreseeable future," a minister said. "He'll kick it into the long grass and not hold a referendum until after the election," another member of the Government added."

In fact, a party row about the issue is just what the Prime Minister needs to get this political football kicked into the next door garden.

In his speech to the conference on Tuesday, Blair will confront opposition to his policies in the Labour Party, telling the activists that they must be prepared to modernise. "We will show the same resolution in changing the country as we did in changing the party," he will say.

He will warn that there are tough choices ahead on health, education and welfare - and decisions that the Labour rank and file will not like. He will acknowledge that there is resentment among some members about the pace of change and the refusal to redistribute wealth. This week will show that there are differences between the leadership and the activists. But on PR, dissent is proving rather useful. This is one area in which it could suit the Prime Minister - as he told his Cabinet - "to work with the party".