Backbench revolt over Mandelson takes shine off Labour's relaunch

TONY BLAIR'S attempts to fight back after the Government's "Black Christmas" suffered a reverse last night as he was embroiled in a new row over the future of Peter Mandelson.

The Government had put the NHS at the top of its agenda - with Frank Dobson, the Secretary of State for Health, being called to Downing Street for talks about the hospitals crisis, and Gordon Brown, the Chancellor, hinting at a generous pay rise for nurses - but the effort to switch the focus from personalities to policies was hampered by a rebellion by some ministers and senior MPs against the Prime Minister's apparent desire to ensure a swift return to the political front line for Mr Mandelson.

Mr Blair's critics are furious that Mr Mandelson attended a meeting last Friday of a joint working party set up by the British and German governments. This fuelled speculation that the former trade secretary, who resigned three weeks ago, could be back in the Cabinet within a year. John Prescott, the Deputy Prime Minister, is leading the opposition to such a move. "We will not have it," a backbench ally of Mr Prescott said last night. "There will come a point at which Tony Blair will have to choose."

Members of the Parliamentary Committee, which represents Labour MPs in talks with the Government, intend to raise the issue when they meet Mr Blair tomorrow. "We don't see why Mr Mandelson should have any role at all," a senior source said yesterday.

In a further twist, it emerged that Mr Mandelson suspects reports about an early comeback are being fuelled by his enemies, who were delighted that he resigned after revelations about his pounds 373,000 personal loan from Geoffrey Robinson, the former paymaster-general.

Last night, Mr Mandelson sought to dampen speculation about his future. "Talk of a comeback is very premature," a spokesman said. "Peter's priorities are to sort out his life and start to rebuild his political career. It is too early to say what he will do and those in the media who suggest otherwise are wrong."

Downing Street denied that Mr Blair was already planning Mr Mandelson's return. "The idea that people are sitting around in Downing Street discussing what Peter Mandelson might or might not do in the future bears no relation to reality," it said.

Mr Blair's official spokesman insisted there were no plans for Mr Mandelson to have an expanded role as a roving ambassador in Europe. He said the former minister represented the Labour Party, and not the Government, at last Friday's Anglo-German meeting.

The row over Mr Mandelson's future came as Mr Blair and Labour MPs called on the Cabinet to end the faction-fighting which was blamed for the resignations of Mr Mandelson, Mr Robinson and Charlie Whelan, Mr Brown's press secretary.

Jack Cunningham, Mr Blair's cabinet "enforcer", admitted the problems of the past three weeks had "done some damage", and he warned: "It is important that the Government not only works as a team but is seen to work as a team. That is what the Prime Minister wants from his colleagues in Cabinet." Clive Soley, chairman of the Parliamentary Labour Party, called for a halt to "personal feuds" and said a line must be drawn under the Mandelson affair.

Mr Brown, meanwhile, sought to cement his alliance with the Prime Minister by repeatedly praising him in a speech in Edinburgh. He hailed Mr Blair's "historic achievement" in modernising the party and the country. The Chancellor also gave a strong hint that low-paid nurses would receive a big pay rise this April, insisting that the Government's extra resources for the NHS would deliver "a better service for patients, hand in hand with a fair deal for nurses".

Mr Brown's speech was the first in a series of ministerial announcements scheduled for this week, but Downing Street denied that they amounted to a "relaunch" of the Government.

The Liberal Democrats dismissed the initiative as "a reannouncement of old policies" and the Tories said: "You only relaunch a failing brand."

There was further embarrassment for Labour yesterday when Channel 4 News said Mr Cunningham had "walked out" of its studio before he was interviewed about the cabinet fightback, and a senior Labour official admitted the Government was looking " a bit like a soap opera".