Panicked Blair orders Labour election revamp

The Chancellor is to regain command of key election roles after claiming victory in his bitter battle with Alan Milburn, the trusted ally Tony Blair picked to run the campaign six months ago.

The U-turn, which will put the Chancellor in charge of media strategy and major policy announcements, is a humiliating setback for Milburn, who agreed last year to front ‘Operation Third Term’ after desperate appeals from Blair.

The shake-up follows a traumatic week for Labour, which saw an already faltering campaign stumble into a fresh crisis, sparking panic at the highest levels of the operation within weeks of the expected polling day.

Scotland on Sunday can reveal that:

Milburn met Blair privately early last week to plead with him to stick with his chosen election team, amid gathering rumours that Brown was set to return;

Blair insisted that he would stick to his agreement not to allow the Chancellor to "hijack" the campaign;

But after a humiliating public row with reporters on Blair’s first electioneering stunt of the campaign, the team was plunged into panic and Blair ordered a rethink;

A rattled Prime Minister then approved proposals to return Brown to a central role similar to the one he played during the last two election campaigns.

It was clear last night that the hastily-arranged reshuffle is not guaranteed to resolve the problems with Labour’s campaign effort.

Incensed allies of Milburn, the former health secretary, warned he would not be "shunted aside" to accommodate Brown. But another admitted he was "finished".

Blair was forced into a drastic rethink after Milburn’s early strategy for the election - expected on May 5 - drew complaints over negative campaigning and "dirty tricks".

Blair ordered a review after his public clash with reporters on Thursday, while unveiling a poster claiming that the Tories would slash 35bn from spending on public services.

The event, billed by Downing Street staff as "the real start of the election campaign", was overshadowed by a row over the figures, and Labour’s tactics in choosing to attack the Conservatives.

A senior Tory source close to Conservative leader Michael Howard told Scotland on Sunday: "Blair mentioned the 35bn lie 20 times in a speech on Friday afternoon. It’s clear that Blair has decided to employ the techniques of [Nazi propagandist Josef] Goebbels: say something often enough and hope people believe it."

Welsh Secretary Peter Hain later revealed the anxiety within the Cabinet over the attack-dog strategy during a speech to Labour activists in Swansea.

"People won’t vote for us just because we are not the Tories," he said. "They will vote for us only if we convince them we have the positive policies to meet the challenges of the future."

The Chancellor’s value as an electoral asset was underlined in the days after he presented his Budget last week, when polls suggested he was more popular than Blair, and that more people would vote Labour if he was leader.

Brown, who ran the successful Labour campaigns of 1997 and 2001, will replace Milburn in the key role of dealing with the press and broadcasters, including the symbolic role of hosting campaign press conferences.

He will also specialise in marking dividing lines with the Conservatives, beginning with a mission to explain and drive home the claim that Tory plans to slow government spending growth amount to a spending cut.

Milburn will keep the title of general election coordinator in name only, advising directly to Blair, and for the moment will be left in charge of drafting the party’s manifesto.

But one member of the Milburn camp hinted that the overhaul is destined to cause ructions at the top of the team.

"The suggestion that in some way Alan is going to be shunted to one side to let Brown come in and take over is ridiculous," the friend said. "People are getting carried away saying that this is inevitable, but it cannot happen. Alan has told the Prime Minister that."

The Conservatives said any change in Labour’s team would be proof that "the wheels are coming off their campaign". A spokesman said: "It’s irrelevant who is in charge as long as they keep alienating the public with a campaign of fear and smear."

Blair has for months been asking Brown to become more involved in the campaign, particularly after the Conservatives outlined plans to reform council tax which would result in a 500 saving for pensioners.

The Prime Minister established a campaign hierarchy with himself at the top, and Brown equal to Milburn, along with John Prescott, Deputy Prime Minister, and Ian McCartney, party chairman.

In the past two months, Labour MPs in constituencies targeted by Conservatives have become alarmed by polls suggesting the Tories will claim a swath of seats in West Yorkshire and the Midlands.