Labour's idea of a truce... Brown a 'liar'

Key quote "Honestly, guys, I hate to spoil your story, but I didn't say it and I don't believe it, either" Cherie Blair

Story in full IF GORDON Brown looked anxious at the podium, it was understandable.

He was delivering the speech that could decide his lifelong ambition to become prime minister, a prize so valuable that to secure it he was willing to make peace with Tony Blair and even admit some faults of his own in Labour's most important and most troubled relationship.

Yet even the Chancellor could not have expected that within minutes he would be embroiled in an extraordinary public row amid reports of an attack by Cherie Blair, the Prime Minister's wife. Four words attributed to Mrs Blair shortly after noon yesterday blew apart the carefully stage-managed launch of Mr Brown's public campaign for the Labour leadership.

Mr Brown was delivering a considered, even conciliatory speech to the Labour Party conference, effectively making a carefully crafted peace offering: the speech had praise for Mr Blair, warm name-checks for almost the entire Cabinet and even a tacit admission that Mr Brown himself bore some responsibility for a decade and more of Labour in-fighting.

The intention was to allay growing Labour doubts about the Chancellor's character, to assure the country he is not a bitter, sulking plotter but a leader of humility, warmth and honesty.

Tackling his partnership with Mr Blair head-on, Mr Brown opened up by admitting that his "differences" with the Prime Minister have "distracted" the government, something he said he regretted. But, overall, he told delegates: "It has been a privilege to work with and for the most successful ever Labour leader and Labour Prime Minister."

At that point, Mrs Blair - watching the speech on a television outside the auditorium of Manchester's G-Mex centre - was allegedly overheard by a US television producer saying: "Well, that's a lie." She then walked out of the conference complex.

Mrs Blair last night issued a flat denial of the claim to journalists. "Honestly, guys, I hate to spoil your story, but I didn't say it and I don't believe it, either." But the television producer, Carolin Lotter, and her employer, Bloomberg, last night stood by their account.

Despite Mrs Blair's denial, the Chancellor's allies treated the claim as accurate and issued angry responses against the woman whose dislike for Mr Brown is an open secret at Westminster.

"She is a bitch, a poisonous bitch," one source close to the Chancellor said. Other Brownites were quick to point out that Mrs Blair had issued a false denial via No10 in 2002 over the involvement of Peter Foster, a former criminal, in her purchase of two flats. "She's used No 10 to lie for her before," one said.

One Cabinet minister loyal to Mr Blair was exasperated by Mrs Blair's conduct, worrying that her remark will destroy Labour attempts to present a united front. "This is absolutely the last thing any of us need," the minister said. "It's just stupid, stupid and divisive."

Yet Mr Blair himself will today risk fuelling the fire, using his last conference speech as leader to offer Labour a Blairite "route map" which he says will deliver the "second successful decade of New Labour in office".

While Mr Brown has embraced Blairite reforms, the suggestion that Mr Blair is trying to determine the party's direction even after he steps down may infuriate the Chancellor's camp.

In his speech, Mr Brown signalled he would govern in his own way, a style distinct from that of Mr Blair.

Speaking of the "compassion, duty, responsibility, respect" he learned from his parents and the Church of Scotland, he concluded: "We can, will, must build the good society."

As well as the very Scottish roots of his moral view, Mr Brown returned to his "Britishness" agenda: "People say I talk about Britishness because I'm now embarrassed about being Scottish. Let me say I am proud to be Scottish, and British." But he may still face a significant challenge in persuading English voters to accept a Scottish PM.

A YouGov poll yesterday showed that most English voters still see Mr Brown "more Scottish than British." And Frank Luntz, a veteran pollster who has been conducting research on Labour leaders, said that almost half of his English sample group strongly oppose a Scot as prime minister. He said he was "surprised" at the strength of feeling.

By contrast, Mr Brown's speech lacked his traditional passion, and was met with respectful but not rapturous applause and a three-minute ovation.

Even Mr Brown's friends later admitted it had been a difficult day.

Yesterday was billed as "make or break for Mr Brown" - but in truth it did neither. And the questions about his appeal to voters remain unanswered.

"He's saying all the right things but the problem is still there: people know he's been at the heart of this government for ten years," said one insider. "Is one fairly average speech enough to make a clean break from all that? I don't think so."