Brown gives it one last shot

If you're 3-0 down with 10 minutes to play, you don't want to get an injury, do you?

GORDON Brown did not hang around on Thursday evening after he had delivered his speech at the CBI Scotland dinner in Glasgow's Hilton hotel. The Prime Minister had Scotland's political and business establishment all in the same room, and yet he was off before you could say "amuse bouche".

That morning, former home secretary Charles Clarke had declared that Brown should "stand down with honour" if he couldn't sort things out. The Government was still recovering from the run on the pound after Chancellor Alistair Darling declared that the economy was in the worst state for 60 years. Clearly, Brown was in no great mood for chit-chat.

It is hardly a relaxing time. With the publication of plans to help Britain's stagnant housing market, last week saw the first stage of his crucial September relaunch. This week sees the publication of measures to help people with rising energy bills. Overarching them both – and indeed entwined with Brown's future – is the dire state of the UK economy and how or whether the Prime Minister can turn it around. Will anything he does this month make any difference? And if not, where does it leave him?

In some ways Brown cannot win because his relaunch takes place against a background of wildly inflated expectations. Over the quiet summer weeks a frothy meringue of speculation has been allowed to grow around Westminster, to the extent that Brown's September 'rescue plan' was always going to disappoint.

Economists described the housing package last week as being of marginal significance. The increase in stamp duty exemption to homes under £175,000, and the offer of five-year interest-free loans to some first-time buyers may tempt some, but they will not trigger a rush to the estate agents. "If it's marginal finance and marginal savings people are after I don't think this changes much at all. People would be better waiting for house prices to fall," said Ed Stansfield, property economist at Capital Economics. The real action will only happen once the glued-up financial markets offer more funds to allow banks to boost the number of mortgages they are offering. That may happen in September, it is true. But it will be most likely September 2010.

But if Brown's plans last week fell short of expectations, next week could be worse. The proposals – expected to involve assistance to poorer households so they can insulate their homes – fall a country mile short of the one-off windfall tax that dozens of Labour MPs wanted to extract from energy companies, and the climate change levy which ministers were hoping to charge.

Environment Minister Hilary Benn was forced to take to the airwaves on Friday to deny that ministers had "caved in" to energy firms. Just to rub it in, the political village will move to Brighton next week where the Trades Union Conference will hear wave upon wave of condemnation of Brown's "failure" on the matter. No matter that Brown's restraint was due to the fact that the tax would stifle investment and be added to energy bills anyway. The Brothers are not impressed.

The Prime Minister is sure to fall back on what he maintains are the underlying strengths of the British economy – about which, he declared last week, he was "cautiously optimistic", a phrase in stark contrast to the gloom of his Chancellor. The hope of the optimists is that the devaluation of the pound – while deeply unwelcome for holidaymakers on the continent – will act as the spur for a new British export boom. There are those who argue that Britain is better placed to rebound this winter than the rest of Europe. Brown and his ministers are also pointing to the £120 tax break which low and middle earners will start receiving in their pay packets at the end of this month (although, for many, this simply takes them back to where they were before the 10p tax rate was scrapped). Despite all this, few outside the precincts of Manchester City football club share the Prime Minister's sense that green shoots are emerging.

It suggests that Brown's torment will continue into the autumn and winter, with no breakthrough. Certainly, Labour MPs and ministers appear to be fast losing the belief that anything can be done to turn his position around.

"Everything is being seen through the prism of Gordon's authority," says one hapless minister. And while there was weary impatience with Charles Clarke over his characteristic dart for the radio mike last week, what was more significant was the fact that few actually disagreed with what he was saying.

"He was just stating the bleeding obvious," said one Labour figure in the Government. "Is there anyone who doesn't think we are heading for defeat?"

That sense of resignation about Brown-led Labour is now palpable – made all the more so because no one appears to have a plan about how to end it. The state of the party was summed up by another minister last week.

"I don't think Gordon will be there by Christmas," he said in an off-the-record chat. So how will it happen? He hadn't a clue. David Miliband's summer grab has come and gone, but the Foreign Secretary is no nearer to forming a political base upon which to challenge Brown. So instead, trapped in gridlock, a deadly sense of fatalism is setting in within the party, where defeat is accepted and positive action deemed pointless. "If you're 3-0 down with 10 minutes to play, you don't want to get an injury, do you?" one senior Scottish figure put it beautifully.

And yet the stasis may be broken. The Glenrothes by-election is now being pencilled in for November 6, after the autumn push and the Labour party conference. The SNP will seek to take a seat which borders right onto the Prime Minister's very own turf. Brown's hands are already all over the campaign. The candidate, Lindsay Roy, is a close friend. Brown is expected to take full control of the strategy. Defeat, therefore, would be personal. And dozens of Labour MPs across Britain will ask themselves: "If he can't win in Fife, what chance has he got in…"

Glenrothes may turn out to be do-or-die time for the Prime Minister. For Labour, in its present baleful state, either would be better than what they have at present.