Third Way event splits Labour

Senior Labour figures were at odds last night over a "Third Way" summit near Chequers organised by Peter Mandelson and attended by Tony Blair and the former US president Bill Clinton.

Gordon Brown was due to speak at the event, where leading policy advisers from both Downing Street and the former Clinton administration were assembled.

However, the Blairite guestlist caused an angry backlash from Labour left wingers and some senior ministerial colleagues who were excluded from the luxury surroundings of Hartwell House.

Those left off included John Prescott, the Deputy Prime Minister. He brushed off the snub, joking to friends: "I'm too Old Labour – my English is obviously not up to an international gathering of such a bunch of wonkers."

Some ministers are concerned that the attempt by Mr Mandelson's Policy Network to revive the Third Way, coupled with the Blairite tone of the Cabinet reshuffle, is polarising the party into old rival camps of left and right.

Members of the Parliamentary Labour Party were upset at the promotion of MPs from the new intake closely associated with Mr Blair, leaving those from the 1997 intake disgruntled. Those promoted included David Lammy and the new education minister David Miliband, former head of the No 10 policy unit.

Both were believed to be attending the closed event yesterday along with Mr Miliband's brother Ed, one of Mr Brown's advisers, Andrew Adonis, head of the policy unit, and Geoff Mulgan, head of the performance unit. Ministers included John Reid, the Northern Ireland Secretary, Charles Clarke, the party chairman, and Patricia Hewitt, the Trade Secretary. Alistair Darling, the new Secretary of State for Transport, was among those who were absent. He was attending a wedding.

The left-wing Campaign Group of Labour MPs attacked the conference, claiming it showed that the Third Way's supporters had lost their way. A group leader, Alan Simpson, said: "This weekend's special meeting of Tony Blair and ex-President Clinton at Lord Palmerston's country retreat, organised by that guru of the 'Third Way', Peter Mandelson, provides us with some marvellous symbolism about third way capitalism and its increasing irrelevance to the problem that people face in the real world.

"The 'third way' was only ever going to retain credibility within the bunkers of the rich and powerful. The world outside the retreat is characterised by widening gaps between rich and poor, and an attempted corporate takeover of everything in public hands."

GMB union leader John Edmonds, who will be one of the key speakers at a rival rally organised by the Campaign Group, to "reclaim the Labour Party", said: "There is a growing consensus in the Labour Party that the New Labour project has run out of ideas and energy. The Campaign Group conference will be developing a new policy agenda for the next years of Government."