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C O N F I D E N T I A L SECTION 01 OF 03 LONDON 002451

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STATE FOR EUR/WE, NSC FOR BRADLEY E.O. 12958: DECL: 09/25/2018 TAGS: PGOV PREL UK

SUBJECT: UK PM GORDON BROWN REASSERTS HIS LEADERSHIP AT LABOUR PARTY CONFERENCE, BUT DAVID CAMERON LOOMS REF: A. LONDON 2163 B. LONDON 2010 C. LONDON 623 D. LONDON 1991 

Classified By: DCM Richard LeBaron, reasons 1.4 b, d

¶1. (C/NF) Summary and comment. Gordon Brown succeeded in reestablishing his authority at the Labour Party's Fall Conference in Manchester September 20-24, cutting the Conservative Party's lead in half in post-conference polling and buying himself some time against a serious leadership challenge. Brown's comeback was somewhat overshadowed, however, by the leak of the news that Transport Secretary Ruth Kelly would step down at the next cabinet reshuffle. Brown has refused to comment publicly on a possible reshuffle, but according to media reports he plans to announce a new cabinet lineup on October 2 or 3, with Foreign Secretary David Miliband and Chancellor Alistair Darling slated to remain in their current positions.

¶2. (C/NF) Summary continued. In his keynote speech, which the media dubbed "the speech of his political life" beforehand, Brown hammered the Conservatives over their lack of economic experience in times of global financial turmoil, and delegates in Manchester told Embassy London officers they thought the PM successfully managed to put the Tories on the defensive going into their September 28-October 2 conference in Birmingham. Senior party officials sought to turn the U.S. economic crisis to Labour's advantage by hinting that the U.S. crisis vindicates eleven years of what they described as "regulatory" economic policies under Labour. Even a cursory examination of Labour's eleven year economic record, however, shows the government has at best maintained a light regulatory touch - a point Tory leader David Cameron will certainly highlight next week. Brown has done enough to ensure his survival for now, but Cameron's powers of oratory may well reverse Brown's bounce in the polls. Meanwhile, the finger-pointing inside Labour over who leaked the Kelly resignation indicates Brown still has work to do to stop hemorrhaging support internally. And although the party endeavored to put on a united face at the conference, Embassy London officers witnessed a few chinks in that armor, as grassroots activists pleaded with senior MPs on the margins to stop avoidable missteps in Westminster which they are having trouble defending at the local level. End summary and comment. 

In the Face of Sinking Polls and a Low Level Revolt... --------------------------------------------- ---------

¶3. (SBU) Prime Minister Brown's year-long run of grim news (reftels) continued in the run-up to the conference. A September 19 poll of 788 Labour members and supporters conducted for the Independent found that 54 percent preferred someone other than Brown to lead the party, and 57 percent believed there should be a leadership vote at the upcoming party conference. On a scale of 1 to 10, Brown's personal rating was just 4.30, third to last of serving Cabinet members. On the national level, a September 17 Ipso Mori poll found support for the Tories at 52 percent, the first time they had polled above the 50 percent mark in 20 years, since the era of Margaret Thatcher, with Labour at just 24 percent, and the Liberal Democrats at 12 percent.

¶4. (SBU) In addition to the by-now predictably low poll numbers, Brown was forced to quash a minor revolt the week of September 15, after a dozen MPs asked the Labour Party National Executive Committee (NEC) to issue ballots for a leadership election at the conference. The NEC refused the request, but Brown had to fire three of the MPs involved from their official positions - Siobhain McDonagh as government whip, Joan Ryan as Vice Chair of the Labour Party and the PM's Special Envoy to Cyprus, and Barry Gardiner as Special Envoy for Forestry. Scotland Office Minister David Cairns also resigned, saying he could no longer support Brown as leader. The revolt was not a serious attempt to overthrow the PM: at least 70 MPs would need to call for a leadership challenge before a vote could be held (Ref A), and while the exact number of rebels is unknown, it appears to have fallen far short of that number. Brown's cabinet rallied around him, with many taking to the airwaves in his support. Nonetheless, all of the rebels were Labour stalwarts - McDonagh, in particular, had not voted against the party once during her eleven years in Parliament - who were worried about the party's continued fall under Brown. As one rebel put it to the media, "This is not a coup, it is a cry from the heart." These events increased the pressure on Brown to LONDON 00002451 002 OF 003 give a strong performance at the conference, particularly during his key note speech, to assure the party rank-and-file that he should retain the leadership. 

...Brown Comes Back... ----------------------

¶5. (SBU) Brown's performance appears to have done the job. In the run-up to Brown's speech, key members of his cabinet, including Alistair Darling and David Miliband, took pains to emphasize their support for the PM and highlight his achievements. The speech itself, when it came, was a hot ticket item, with delegates lining up at the doors to the auditorium well before the event. Speaking for over an hour, Brown repeatedly slammed the Tories for their lack of economic experience, and warned that trusting them with the economy in difficult times was a mistake. "What has become clear is that Britain cannot trust the Conservatives to run the economy," he said. "I'm all for apprenticeships, but let me tell you, this is no time for a novice." The use of the word "novice," ostensibly aimed at David Cameron, was also broadly interpreted as a side swipe at Miliband, a would-be challenger to Brown (Ref B). While Brown outlined a few economic initiatives, including free internet broad band for schools, most of the initiatives he touched on had been previewed before. Our contacts in the banking sector were not excited by anything the PM announced, noting that Brown is quite limited in what he can do by the current state of public finance.

¶6. (SBU) Nonetheless, the speech was well received, both in the conference hall itself and with the media, and Brown received a corresponding bounce in the polls. A YouGov survey for The Sun published September 25, the day after the conference ended, showed Labour at 31 percent, up 7 points from the last YouGov poll, and the Tories down by 3 points to 41 percent, with the Lib Dems down 4 to 16 percent. On the question of who would make a better prime minister, Brown rose 8 points to 24 percent, while Cameron fell 2 points to 32 percent (37 percent were undecided). Thirty-nine percent of respondents said they wanted Brown to remain as PM - up 10 points - while the number of respondents who thought he should be replaced as PM fell five points to 49 percent. 

...But Infighting Mars His Victory ----------------------------------

¶7. (C/NF) Brown's comeback was tarnished by the leak September 24 of the news that Transport Secretary Ruth Kelly planned to step down at the next Cabinet reshuffle to spend more time with her family. Brown himself immediately took to the airwaves to say that he had known about Kelly's departure since May, in an effort to stop speculation that the announcement was timed to embarrass him at the conference. Some pundits questioned Kelly's cliched excuse, noting her unhappiness, as a staunch Catholic and member of Opus Dei, with the passage of the Embryo and Fertilization Bill. Others pointed out, however, that Kelly has four children under the age of twelve, all born since she was first elected to Parliament in 1997. More hotly debated than why Kelly chose to resign, however, was the question of who leaked the resignation in the first place, coming as it did just after Brown's well-received speech. Labour ministers who refused to be named filled the newspapers with quotes indicating that Brownites believed Blairites leaked the news to embarrass the PM, Blairites blamed the PM's supporters for trying to flush out Kelly as a party rebel, and still others within Labour blamed the Tories for leaking the news in the first place. Kelly herself expressed surprise that the news leaked when it did: "I was shocked when I first heard the news," she said. (Embassy comment: Perhaps the most plausible explanation for the leak, posited by the Guardian, was that a junior official had too much to drink and blabbed the news to a journalist at the conference hotel bar. End comment.)

¶8. (SBU) Whoever ultimately leaked the resignation, the resulting infighting demonstrated that Brown still needs to shore up his support within the party. And although the party endeavored to present a united front at the conference, Embassy London officers at the conference witnessed some chinks in the armor. In an electrifying side meeting with Children's Secretary Ed Balls and Jon Cruddas, party activists pleaded with Balls - one of Gordon Brown's closest advisors - to take into account how decisions made by the leadership affect the grass roots. "Stop the ghastly cock-ups and changing your mind the day after you make a decision," demanded one elderly delegate. "Central government is making decisions that impact us locally, but LONDON 00002451 003 OF 003 you make it difficult for us to fight for them," said one local council member. Balls conceded mistakes had been made: "We weren't as good as we should have been," he said. Chuka Umunna, the Labour candidate for Streatham, was blunt with Balls. "Gordon Brown needs to connect with the average person," he said. "And, with all due respect, that's not a problem just Brown has. The whole cabinet is having trouble connecting to the average person." 

Taking Advantage of the U.S. Economic Crisis --------------------------------------------

¶9. (SBU) In addition to stressing the Tories' lack of economic experience, Brown and Chancellor Alistair Darling sought to highlight the regulatory measures HMG has taken in the past year to stave off economic crises, including nationalizing Northern Rock (Ref C), authorizing the Bank of England to inject GBP 100 billion into the economy, assisting the merger of the Halifax Bank of Scotland and Lloyds TSB, and being the first major economy to ban the speculative practice of short selling. Other senior officials went further, positing that the USG's move to tighten regulations on the market vindicates eleven years of Labour's "regulatory economic policies." Jon Cruddas MP, favorite of the trade unions and a contender to succeed Brown (Ref D), suggested that the U.S. economic crisis demonstrates that capitalism is failing and is therefore a vindication of social democratic philosophy as a whole, opining that this will help Labour at the next election. 

Foreign Policy --------------

¶10. (SBU) While Brown did not mention foreign policy issues in his speech, beyond praising the bravery of British troops in Iraq and Afghanistan, both Miliband and Defence Secretary Des Browne addressed the conference on their particular areas and were active in side meetings. Miliband repeatedly highlighted the importance of multilateralism in UK foreign policy, saying that domestic support must underpin foreign policy decisions and that that the public was more likely to support policies with broad backing from the international community. He also stressed the importance of a Palestinian state, saying he feared the window for a settlement was closing. "We have years, but not decades," he said. On Russia, Miliband was cautious, saying that the Russians want to be loved, the West has things they want, and we should take full advantage of that. The underlying tone of his message was that, although there can be no relations as usual, we should be prepared to talk with the Russians on areas of shared interest, like Iran. On Iraq, Des Browne frequently used the standard UK line that British relations with Iraq are "poised to change in 2009" depending on conditions on the ground. On the military, Browne devoted most of his address to outlining several new initiatives to help returning soldiers and their families. 

Comment: Here Comes David Cameron ----------------------------------

¶11. (C/NF) Brown had a good conference - but it may not have been enough. At this time last year, Brown was riding high in the polls. David Cameron dismantled that lead and put Brown on the defensive, from which he has yet to recover - primarily through his brilliant performance at the 2008 Tory Fall Conference. Odds are good he will do it again. Cameron is not only a superior orator to Brown, but also has the advantage of getting in the last word, due to the traditional sequence of party conference timing. Labour's attempt to redefine itself as the party of regulation may also boomerang, as Cameron could very well argue that Labour's record is not as "regulatory" as some Labourites have painted it. Finally, Brown has to do something to stop the internal party squabbling from derailing him, as it has time and again over the last year. End summary and comment. Visit London's Classified Website: XXXXXXXXXXXX
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