Andrew Grice: The Week In Politics

Gangs of New Labour: Gloomsters v happy bunnies

As they departed for their summer break, Labour ministers and MPs fell into two very distinct tribes. The Gloom Mongers believe that Tony Blair will hang on too long in Downing Street and that Labour is heading for defeat at the next election. But the Happy Bunnies think the party is in a stronger underlying position than the horrible day-to-day headlines suggest and that Gordon Brown will provide the bounce needed for a fourth election victory.

"There is a battle going on between pessimism and optimism," said one close Blair ally. It would be wrong to suggest that all the Happy Bunnies are Blairites and all the Gloomsters are acolytes of Mr Brown. But the Blairites are generally more optimistic than the Brownites.

While the Blair camp's message reminds me of Corporal Jones's "don't panic" plea in Dad's Army, some Brownites sound more like Private Fraser's "We're all doomed".

Many in the Chancellor's gang fear that the Government is treading water and that, unless Mr Blair departs sooner rather than later, Labour will sink. The longer the Prime Minister hangs around, they say, the harder it will be for his successor to repair the damage caused by the Iraq war, the "cash for honours" affair and Mr Blair's craven support for George Bush over Lebanon (which has angered normally loyal members of his Cabinet).

The pessimists want Mr Blair to announce his departure timetable at Labour's annual conference in Manchester in September. "We may not have reached the tipping point yet, but we are not far off it," one Brown ally told me. "If Blair sticks around into next year, we could pass the point of no return as a government."

The Gloom Mongers fear a Labour rout in next May's elections to the Scottish Parliament, Welsh Assembly and local authorities. While the Tories enjoy their highest opinion poll ratings since Black Wednesday in 1992, the number of people who approve of the Government's record is at its lowest since it came to power.

Even some of Mr Brown's natural allies fear he may inherit the crown too late to save Labour from a defeat that could put it out of office for many years. They fear he will no longer offer the new politics he once promised because he will be desperate to appeal to Middle England. They are expressing concern about what they call the "Tonyfication of Gordon": they fear Mr Blair is locking Mr Brown into his New Labour agenda, and cite the Chancellor's strong support for renewing the Trident nuclear missile system.

The Happy Bunnies admit the Prime Minister is on his last lap but insist he does not need to say anything about his intentions in September. He might need to do so before next May's elections, but should carry on until the summer or autumn of next year.

The optimists deny the Government is drifting. Mr Blair's strategy is to take difficult decisions on education reform, pensions, nuclear power, Trident and public spending in the first half of this parliament so his successor will enjoy some room for manoeuvre in the run-up to the election.

The Happy Bunnies reject the parallel with the dying days of the Major government. They point out that Labour was far from routed at local elections in May and say the wonder is that the Tories are not 10 or 15 points ahead in the polls. "The voters don't like us, but they don't want to kick us out," said a Blairite minister. He said the economy was stable and Labour had not lost its reputation for economic competence, as the Tories did on Black Wednesday.

Labour's optimists say that Mr Cameron is in a much weaker position than Mr Blair was as Leader of the Opposition. They are convinced that the Tories' relatively modest poll lead reflects an inevitable disenchantment with the Government after nine years in power rather than a positive endorsement of the New Tories. The optimists argue that Mr Cameron has accepted big chunks of Labour's agenda and will struggle to carve out his own. They claim that the Tory leader gets in a terrible tangle when he tries to turn his soft words into hard policies, as he will need to do soon.

The Happy Bunnies do not underestimate the loss of trust cause by Iraq or the threat from the police investigation into "cash for honours". But they insist Mr Blair will "take the hit" and Mr Brown will be able to make a fresh start, rebuild trust and convince the voters that the Labour brand has not been tarnished by sleaze. He might also admit that mistakes were made in Iraq and even throw off the "poodle of Washington" tag.

Who will be proved right, the optimists or the pessimists? It could go either way. But I suspect that the outcome of their debate, rather than anything Mr Cameron can do, will determine the next election. Remarkably, after nine years in office, Labour's fate still lies largely in its own hands.

a.grice@independent.co.uk