President Blair trumps Brown on welfare

Ministers expressed astonishment yesterday at allegations that Gordon Brown wants to curb child benefit for the better-off - in defiance of a Labour manifesto pledge. Anthony Bevins, Political Editor, reports that it will fuel No 10 suspicion about the Chancellor's ambitions, and analyses the edgy relationship between the Downing Street neighbours.

Tony Blair is expected by Cabinet colleagues to use his new Cabinet committee on welfare reform to assert his authority over the Chancellor of the Exchequer - who has told friends that he is "Prime Minister" to the Blair "presidency".

The real Prime Minister, who returned to Britain from Tokyo last night, is to open a national campaign for welfare reform in the West Midlands tomorrow night.

In a rare in-depth Cabinet discussion of a single issue before Christmas - a reaction to the shock Commons revolt over the cut in lone parents' benefits - it was decided that Mr Blair should chair a new committee on welfare reform, to give coherence to a policy that was in danger of developing piecemeal.

Some Cabinet colleagues saw that as a direct slap-down for Mr Brown, who was the motive force behind the curbs on lone parent benefit, introduced by Harriet Harman, Secretary of State for Social Security.

But there was dismay yesterday that, for the second time in a month, well-informed "Treasury sources" had floated suggestions that Mr Brown was planning to tax child benefit, along with a revival of controversial plans to remove the benefit for 16 to 18-year-olds in full-time schooling.

One report said the taxation of child benefit, "a move that could be announced as early as the March Budget", could mean better-off mothers losing more than pounds 1,000 a year.

The manifesto says: "We are committed to retain universal child benefit where it is universal today - from birth to age 16 - and to uprate it at least in line with prices." Taxation, even for the better-off, would be a clear breach of that pledge.

The Treasury-inspired reports, described by one minister as unhelpful mischief- making, come on top of last week's disclosures that Mr Brown believed Mr Blair had betrayed a personal pact to stand aside in any leadership contest.

Mr Blair told BBC television's Breakfast with Frost on Sunday that there was no secret pact, and sources close to the Prime Minister said it was nonsense to suggest that he could have beaten Mr Blair in the 1994 contest to succeed John Smith.

A source close to the Chancellor yesterday protested that paranoia was so great over Mr Brown's alleged campaign to increase his party power- base that complaints had been made about the number of meetings he was holding with MPs.

However, The Independent has been told that after one No 11 party for MPs, a dissident backbencher had thanked Mr Brown for a wonderful party, to which the Chancellor had replied: "The Labour Party? Yes, it was a wonderful party, wasn't it?"

Mr Blair said on Sunday that Mr Brown was one of his "closest, closest friends", and if people were hoping that the Tory history of prime ministers falling out with their chancellors was going to be repeated, they were in for a disappointment. Nevertheless, it is known that Mr Blair has on a number of occasions imposed his will upon the Chancellor.

He vetoed Mr Brown's pre-election demand for a new higher top rate of income tax; he blocked a manifesto commitment to abolish child benefit for the over-16 school children and he insisted that Mr Brown should make a Commons statement ruling out membership of the European single currency before the next election.

One of the Cabinet-level complaints made about Mr Brown is that he runs economic policy far too close to his chest.There were real fears that he was exerting the same close control over welfare reform.

Now that Mr Blair has decided to put the issue on the cabinet table - open for genuine debate and discussion, with a public input from his round- Britain tour - Ministers will not hesitate to side with him against the Chancellor, who has few Cabinet friends and a number of powerful enemies.