Chancellor on the ropes

Last Monday evening saw one of the most dazzling social gatherings of Britain's new establishment since the General Election. From the Archbishop of Canterbury to the Prime Minister, from the Chief Rabbi to the left-wing MP Diane Abbott, from Sun columnist Richard Littlejohn to Ben Elton, from a clutch of national newspaper editors - including The Independent's - to Neil Kinnock, Clare Short and union leaders, they crammed into a south-London gallery to enjoy champagne, sushi, canapes and white wine in celebration of the wedding earlier this summer of Gordon Brown to Sarah Macaulay. It was, in the words of one guest, "the kind of party where you kept looking round to see who wasn't there".

Last Monday evening saw one of the most dazzling social gatherings of Britain's new establishment since the General Election. From the Archbishop of Canterbury to the Prime Minister, from the Chief Rabbi to the left-wing MP Diane Abbott, from Sun columnist Richard Littlejohn to Ben Elton, from a clutch of national newspaper editors - including The Independent's - to Neil Kinnock, Clare Short and union leaders, they crammed into a south-London gallery to enjoy champagne, sushi, canapes and white wine in celebration of the wedding earlier this summer of Gordon Brown to Sarah Macaulay. It was, in the words of one guest, "the kind of party where you kept looking round to see who wasn't there".

As he had done at the much more modest (and characteristically Brown-like) family reception at his home in Scotland at the beginning of August, the Chancellor made a genuinely funny speech, using Britain's approach to EMU as a well chosen metaphor for the courtship of his stunning bride. The couple had agreed, "in principle", to get married, but they had to pass the "five tests" before doing so. Having realised they had both "convergence" and "long-term sustainability", they happily went ahead.

It was the last time this week that Gordon Brown had cause for celebration. For when the Chancellor rises to address the Labour Party Conference in Brighton on Monday morning he will be seeking to draw a line under a tougher and more testing period than any in his political career. By Thursday evening, he was in the TV studios fighting to defend his reputation against charges that he was being obdurate over fuel policy, claims that he had "lied" by saying in a November 1997 radio interview that he did not "know the true position" about Bernie Ecclestone's £1m donation to the Labour Party, and complaints that over pensions he had, in the words of Channel 4's interviewer Jon Snow (another guest at Monday's event), "alienated the vast majority of old people in this country".

On the second of these accusations, Brown was adamant that he did nothing of the kind. And no, he did not say afterwards, as the journalist Andrew Rawnsley reports, that he had lied and that his credibility would be "shredded" if it came out. Indeed, the Treasury insists that he did not, as Rawnsley suggests, go back to his office after the interview but rather boarded a train to Birmingham. He was angry - as he has been angry for most of this turbulent week - at being ambushed with an Ecclestone question after a long interview on the euro. But that's another matter. Indeed, it is well-nigh impossible to find a colleague - hostile as well as friendly - who thinks Brown would have spoken in such a way. That's one reason why he now looks likely to weather the storm.

A second reason is the huge stock of political capital that has accrued to Brown since he became easily Labour's most successful Chancellor. It has been easy to forget that this will be the first time that a Labour government goes into an election not having to apologise for its economic record. A third reason is that everything in his background suggests a formidable staying power.

The Fife upbringing, for a start. The middle son of a Church of Scotland minister with a deep sense of right and wrong - and though not party political - of social justice, and two brothers with whom he is very close, Brown, was outstandingly precocious almost from the start.

The early (and best) part of Paul Routledge's biography of Brown, written with the Chancellor's co-operation, records that he went to the distinctly rigorous Kirkcaldy West primary school at the age of four - a year earlier than normal and at a time when he was also sufficiently entranced by the Rev Awdry's Thomas the Tank Engine to know it off by heart. He went up not one but two grades within weeks.

Not long afterwards he went with his father to see his first football match. It helped to foster in him, a talented team sportsman (until a rugby injury cost him the sight in his left eye as a freshman at Edinburgh University), a lifelong passion both for the game and the team he saw play East Fife that day, Raith Rovers.

Unlike Tony Blair, he was also consumed with an interest in politics from his childhood - he actually remembers listening, at the age of eight, to the reports of Hugh Gaitskell's defeat in the 1959 election. By the age of 12, at Kirkcaldy High School, he was developing another interest, in journalism, as sports editor (his brother John was co-editor) for the stencilled Gazette which was sold in aid of charity. For all that, his background in the Labour Party has been tempered from quite an early age with a fervent belief in enterprise which is worthy of that other Kirkcaldy boy, Adam Smith. And yet he has never shown any interest in personal enrichment.

He was soon writing about politics. Meanwhile, he scored five straight A grades in his Highers, just after his 15th birthday, played the violin in the school orchestra, and was an enthusiastic member of the literary and debating societies. His education gave him what he still has - an almost insatiable thirst for intellectual stimulation, cultural and political.

At the same time, he and his lifelong friend Murray Elder, now a Labour peer, fell under the influence of a left-wing history teacher Tam Dunn. Brown's chosen hero among his predecessors as Chancellor is Lloyd George - not a surprising choice given that the only indisputably successful Labour Chancellor was Roy Jenkins who subsequently defected to the SDP. Indeed, Blair once famously described Brown as "my Lloyd George". Whether or not Blair was consciously casting himself in the role of Asquith, it seemed to imply not only that Brown would have the chance to redistribute wealth but also to succeed him. But the conceit has deeper roots. Russell Sharp, the head of history at Kirkcaldy High recalled Brown's "fascination" with a lesson on Lloyd George's epoch-making 1909 budget.

The big difference, of course, between the two pairs of politicians is that Lloyd George was not even considered a candidate for the Liberal leadership when Asquith succeeded to it. Brown was very much considered when John Smith died in May 1994. And it is this that lies at the heart of many tensions between the two.

On paper, Brown had always looked the stronger candidate. Having gone to Edinburgh University at the absurdly young age of 16; having entered Parliament at 32 (two years older than Tony Blair); having made his name by castigating Nigel Lawson when he deputised for John Smith after his first heart attack in 1988 and, having entered the shadow Cabinet ahead of Blair, he seemed the front-runner of that talented pair. But Blair overtook him, partly because Blair had brilliantly repositioned the party on crime while Brown was executing the equally, if not more, essential (but to the party much more unpalatable), task of extricating Labour from its tax-and-spend past. It was also because Blair's electoral appeal seemed to both the party and its opponents to be much more indisputable.

If Brown has a "psychological flaw", as someone in Downing Street famously claimed, it is that he has found this so difficult to handle. One member of the Government says: "Does he sit there plotting how to take over from Tony as leader? No. Is some part of his brain focused on his own future. I would say probably yes."

This may have contributed to tiny discrepancies in the way the two treat each other. Characteristically, where Blair would routinely refer to "Gordon", in public as well as in private, Brown has a tendency to refer to Blair as "Tony Blair" a locution which lacks the intimacy of a mere Christian name or the explicit admission of his superior position in "the Prime Minister".

It's true that only a handful of members of the two courts can get on with both men. But, importantly, one is Alastair Campbell who holds a daily 8am political meeting with Brown and a changing cast of politicos. These meetings may not be quite as jokey as they once would have been. But, mostly, they work. A central difference between Blair's and Brown's relationship and dysfunctionality between previous Chancellors and Prime Ministers is that they do talk privately and very frankly together - and they do it all the time.

Another difference is that even very minor arguments take place in a goldfish bowl unknown in previous administrations. A great deal of this was eased by the departure of Charlie Whelan, Brown's former press secretary. But the trouble with a book like Rawnsley's is that it rips open healing scar tissues," says one minister.

It's true, too, that despite the fact that they also talk with relative frequency, and that perhaps 70 per cent of the advice they give to Blair is identical, the battle for Blair's ear between Gordon Brown and Peter Mandelson is exacerbated by the former's sporadic resentment that Blair continues to listen to Mandelson. But there is a big point to be made about all this. Even if Blair deploys more of his considerable talent for dealing with difficult people to his relationship with Brown than he would ideally like, he thinks it is worth it.

And it is actually very easy to see why. Because his record so far suggests he could yet become one of the century's great chancellors. Although there have been - particularly in the early days - real tensions in the Treasury over the huge power wielded by Brown's economic adviser Ed Balls (and to a lesser extent Whelan) at the expense of civil servants, the Treasury basks in the power the department has as a result of Brown. One senior official who worked for both Lawson and Brown puts it simply: "It's impossible to imagine Brown being out-voted on something like the poll tax as Lawson was." Some spending ministers are not so keen on the power that the Treasury wields over economic policy, especially given the "We know where you live" tendency Brown can display in public-spending negotiations. But Brown came into the Treasury formidably well prepared, with a fearlessness - most graphically illustrated by the granting of independence to the Bank of England - to take decisions and a clear strategy of marrying absolute economic stability with an assault on poverty, especially child poverty. An example of his single-mindedness is the way that, from being in a minority of one, he forced through a settlement on withholding tax in Europe.

One of the most insidious myths put about by those who claim to prefer to see Brown as prime minister - such as Tribune this week - is that he isn't a moderniser like Blair but really he's "old Labour". Although he can use old Labour language and is more rooted in the party than Blair, this is absurd. Some of the battles between Blair and Brown have been the other way round, with Brown's prudence pitted against Blair's desire to spend more on health and increase the minimum wage.

Certainly, the friction could yet spill into something more serious - for example over the euro after the next election. The Blairite nightmare scenario is that the Cabinet agrees to go in and Brown campaigns only half-heartedly, letting it be known to the delight of The Sun, that he is not wholly in agreement. Opinions differ about whether Blair could move him at some point. His power would make it difficult and one obvious prospect - the Foreign Office which Jim Callaghan held when he succeeded Wilson - is slightly undermined by Brown's notorious dislike of embassies and schmoozing in Europe.

For all the troubles of the past week he remains as indispensable as ever. It is impossible to over-estimate his success in implementing his doctrine that Labour has to be economically credible before it can do the things Labour wants to do. But, either way, the hope among many in the Blair circle is that he will start to realise his best chance to become PM is to stop worrying that he hasn't already done so.