Brown May Have Defused Calls for His Ouster in U.K.

By Mark Deen and Kitty Donaldson

Sept. 24 (Bloomberg) -- U.K. Prime Minister Gordon Brown may have defused calls to step down, rallying lawmakers and union leaders with a pledge to crack down on excesses in Britain's banking industry.

Union leaders, who fund two-thirds of the ruling Labour Party's budget, praised Brown's criticism of ``unbridled free- market forces'' and of bonuses ``based on short-term speculative deals.'' Lawmakers including Foreign Secretary David Miliband said Brown had their support to stay in office.

``The speech has done the job for now, given him some breathing space,'' said Bill Jones, a professor of politics at the University of Manchester. ``The international economic crisis has risen like a huge wave that has submerged Brown's own troubles.''

Brown is distancing himself from the pro-business agenda that brought Labour to power in 1997 after turmoil in financial markets forced governments in Britain and the U.S. to bail out banks. While 13 Labour lawmakers called on Brown, 57, to quit as his poll numbers slumped, the prime minister has shifted toward policies favored by traditional supporters.

``This is exactly the sort of agenda that people wanted to hear from their Labour government,'' said Dave Prentis, general secretary of the Unison union, which is the second biggest in Britain with 1.3 million members. ``He set out clearly his vision for that fair society and an action plan.''

Praise From Ministers

Brown's 58-minute address to Labour's annual conference in Manchester, England, yesterday drew a four-minute standing ovation from the audience of party activists. Cabinet members and lawmakers lauded the speech, marking a contrast with the mounting criticism heaped on Brown since May when his party endured a record defeat in local elections.

``He connected with the way ordinary, hard-working, middle- income people feel right now,'' Liam Byrne, a Labour lawmaker who serves as immigration minister, said in an interview. ``People will look at this and see a prime minister who is back in business.''

Brown, who succeeded Tony Blair in June 2007, urged voters to stick with his experience, rather than switch to the ``novice'' David Cameron, leader of the opposition Conservative Party, which commands a 20-point lead in polls. Brown said the Conservatives remain ideologically opposed to tougher market regulation and the rescue plan that protected savings at Northern Rock Plc, the mortgage lender that sought government support a year ago.

Conservative View

The Conservatives said Brown is drawing political advantage from a banking industry crisis whose roots stretch back to his term as finance minister for a decade under Blair.

``This was the same old Brown,'' said George Osborne, a Conservative lawmaker who speaks on finance. ``No apology for the mess he's got the country into, no new ideas that show us how he's going to get out of it. Gordon Brown is retreating to the left to save his job.''

For now, Brown seems to have done well enough to quell concerns within his own party, according to Labour supporters and union officials. Paul Kenny, general secretary of GMB, the third- biggest union, said Brown's language was ``very different to that which we have heard before'' and ``welcome'' to his members.

``He has probably saved his skin,'' said Will Hutton, an author and director of the Work Foundation, which consults on policy. ``He remains a problematic leader, but there is no one better in the wings.''

Miliband's Support

Miliband, 43, was accused by lawmakers of challenging Brown in July, and polls show that he is the favorite among Labour activists to take over if Brown were to step aside. He backed his leader yesterday.

``This was a strong message for David Cameron,'' Miliband told journalists after the speech, adding that Brown's ``true voice came out in a very profound way today.''

Brown's trouble with his own party is by no means past.

Labour next month must fight to maintain its hold on a once- safe Parliament seat in Glenrothes, Scotland. Brown's legislation extending detention without charge for terrorism suspects faces opposition in the House of Lords. And the Treasury's autumn economic statement due by December will highlight the growing budget deficit.

Kelly May Leave

Transport Secretary Ruth Kelly may leave the Cabinet after telling Brown over the summer that she was not able to reconcile her job with her commitment to her family, the Guardian reported today.

Kelly is likely to leave in an imminent formal reshuffle of the Cabinet, at which point Chief Whip Geoff Hoon may also leave to replace Peter Mandelson as a European commissioner, according to the Guardian.

Former Home Secretary Charles Clarke, Brown's most vocal critic inside Labour, said the party can win a fourth term, though he refused to say whether that can happen under Brown.

``The immediate crisis for Brown is over, but there is another one looming,'' said Mark Wickham-Jones, a professor of politics at Bristol University. ``He is not going to go this week. Nobody wants to wield the knife at the moment, and there is nobody who is clearly placed to take over.''

To contact the reporters on this story: Mark Deen in Manchester, England at markdeen@bloomberg.net; Kitty Donaldson in Manchester, England at kdonaldson1@bloomberg.net.