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UK's Brown recruits old foe to tackle crisis

LONDON (Reuters) - British Prime Minister Gordon Brown revamped his cabinet on Friday, recalling old hand and one-time political opponent Peter Mandelson in an effort to shore up his premiership at a time of economic crisis.

European Union Trade Commissioner Peter Mandelson speaks to journalists in Downing Street, London October 3, 2008. REUTERS/Stephen Hird

The return of Mandelson, the European Union trade commissioner, was a surprise given a history of rows between him and Brown, and his preference for the policies and leadership of Brown’s predecessor, Tony Blair.

But it was clearly intended to strengthen Brown’s position within his Labor Party at a time when the prime minister is lagging in the polls and determined to show voters he is the right man to lead the country.

Mandelson will be business minister and is expected to play a central role in a newly-created economic council that will meet twice a week to frame policies and help people cope with the fallout from the economic crisis.

“The new era that we have entered requires new ways of governing,” Brown told a news conference. “These are new times. The global economy will never be the same again.”

Twice a cabinet minister under Blair, Mandelson also quit twice under a cloud and some Labor members said he was such a divisive figure that Brown’s bold and surprising move may not go down so well with the British public.

Brown and Mandelson have had many spats in a relationship going back 20 years. Initially close, the relationship soured after Mandelson backed Blair for the Labor leadership in 1994.

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“The economic circumstances we face, however unwelcome, also give us an opportunity to show what we are made of,” Mandelson told Reuters in an interview, saying the government needed to be a “tough agent of change” and he was proud to be back.

“The British public will judge us by our resolve, the strength of our policies and our collective and personal commitment,” he said.

Public support for Brown, who served as finance minister for a decade under Blair, slumped earlier this year to leave Labor 20 points behind the opposition Conservatives and on course for a wipeout at the next general election, due by May 2010.

But Brown, 57, has seen support improve in recent weeks as voters worry about the untested Conservatives’ ability to handle a crisis. While still trailing, Brown has cut the deficit in the polls to around 10 points.

A key architect of Blair’s New Labor project that moved the party to the center of British politics, pro-business Mandelson said in an interview this week the party must stay true to that ideal and avoid a drift back to the Left.

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With economists saying Britain looks bound to slide into its first recession since the early 1990s, Brown needs to reassure the public he is the man to steer the country through the economic turmoil before the next election.

The decision to create a special council on the economy, similar to one that handles terrorism and security threats, was expected. The group includes captains of industry from banks, mining, retail and telecommunications companies.

The outlook for Britain’s economy worsened on Friday as a survey showed its services sector contracted at the fastest rate for at least 12 years and bellwether retailer John Lewis reported a plunge in sales.

Brown and Mandelson “will be a double act in a way, contrasting themselves with what they will say is the inexperience of the Conservative opposition,” said Phil Collins, Blair’s former speech writer.

Mandelson was nicknamed the “Prince of Darkness” in Britain for the behind-the-scenes role he played in reinventing Labor, which overturned years of Conservative rule with a landslide victory in 1997. Labor has been in power since.

“The best thing you can have in life is a good plotter on your side, and he’s clearly committed himself to the prime minister and to the government,” said David Blunkett, a former Labor interior minister.

In other appointments, Brown created a new energy and climate change ministry under staunch ally Ed Miliband. The leader of the House of Lords, Catherine Ashton replaced Mandelson as EU trade commissioner.

Additional reporting by Luke Baker, Tim Castle, Matt Falloon, Christina Fincher, Jodie Ginsberg and Golnar Motavelli in London, Mark John and Paul Taylor in Brussels, Writing by David Clarke