New 'New Labour'

Tony Blair's press aide, Alistair Campbell, scribbled four words on a piece of paper: "New Labour, New Britain." It was September 1994, and Blair's inner circle had gathered to map out the final steps in their takeover of the Labour Party he had led for only two months. At the time, some Blairites worried that Campbell's in-your-face break with the past would spark a revolt among the traditional party faithful. But no. When the slogan was rolled out at the party's annual conference a few days later, no rebellion materialized--and Labour would never be the same again.

It turned out to be the most successful political makeover in modern British history. With Blair at the helm, the transformed Labour Party--business-friendly, lightened of its socialist baggage--went on to crush the Conservatives in 1997 and won again in 2001 and 2005. But with this month's local elections, the wheels came off Blair's bandwagon. His party lost more than 250 council seats across England, mostly to the resurgent Conservatives. Labour's 26 percent share of the overall vote ranked a pitiful third behind the Tories' 40 percent and the Liberal Democrats's 27 percent. It was Labour's worst electoral debacle since the Thatcher years, and raised serious questions even among some loyalists about whether the man responsible for New Labour was now more of a threat than a blessing to his party.

Despite approval ratings that have sunk to Bushian levels (as low as 31 percent before the vote), Blair certainly doesn't seem to think so. The day after the election, the prime minister reshuffled his cabinet. Home Secretary Charles Clarke was ousted, victim of a scandal involving the release of immigrant criminals. John Prescott's responsibilities as deputy prime minister were curtailed, partly the result of a flap over his sexual peccadilloes. Less than 100 percent behind Blair on Iraq and a critic of American saber-rattling over Iran, Foreign Minister Jack Straw was replaced by Margaret Beckett, although she's already being criticized for her lack of foreign-policy experience in an era of international upheaval.

None of this amounts to a real changing of the guard. On the contrary, the new roster, dominated by Blair stalwarts, looks like a desperate bid by the prime minister to hang on to his job--and therefore seems certain to deepen splits in the party at a time when the Tories, impotent for so long, are gathering strength once more. His elevation of two acolytes in particular--the bruising Scot John Reid to the Home Office and the modernizing former union boss Alan Johnson to the Education Department--puts them in position to challenge Blair's designated successor, Chancellor of the Exchequer Gordon Brown.

The prime minister has said he will not serve a fourth term, and the dominant assumption in British political circles is that he plans to hand over power to Brown in a year or so. Yet although a few Brownites got ministerial jobs last week, the cabinet looks less like the "transition cabinet" that Brown allies had hoped for and more like a "getting a grip" cabinet, as a source close to Blair described it to NEWSWEEK. The same source scoffed at the notion that Brown will be content to wait his turn patiently after such an embarrassing loss: "Yeah, he'd like to wait until tomorrow--maybe until Monday."

Other splits are emerging as well. One unmistakable message of the election was that New Labour under Blair is beginning to look old and stale, even frail. Some of its members, never comfortable with the prime minister's moves from left to right to begin with, are up in arms. In Stoke-on-Trent last week, Labour City Councilman Mick Salih lost the seat he had held for 13 years. "I shan't be renewing my membership and that's a fact," he said. "This is not the Labour Party I joined all them years ago. It's the Tory Party in disguise."

That remains a minority view within the party. For all their bickering, the up-and-coming Blairites and Brownites who are Labour's next generation are all modernizers, "not back-to-the-future types," as YouGov polling company chairman Peter Kellner puts it. And among the handful of thirty- and fortysomething M.P.s who are rated as credible future contenders for the party leadership, "there's nobody who's not New Labour," says Alastair Campbell, who left 10 Downing Street in 2003.

But for Brown allies, that lends even more force to their argument that what the party needs is a "renewal"--a code word that the cagey chancellor is using more and more. Better to revitalize the party's image with a change in leadership now, they argue, before more political missteps fuel some serious ideological infighting. "I think we have to be more ambitious," says Labour M.P. Graham Allen. "We've been a safe pair of hands. But there's a feeling of disappointment that our governance was so risk-averse [after the 1997 landslide]. I'm keen that we go further under Brown."

Blair doesn't seem to agree that to save Labour he needs to give it up. But if his unpopularity continues to taint the party, calls for him to do so will only grow louder.