He's back – and says it's third time lucky

PETER Mandelson yesterday made a dramatic return to frontline British politics in an extraordinary gamble by Gordon Brown to revitalise his struggling government.

Mr Mandelson, who twice resigned from Tony Blair's administration under a cloud, was given the key post of Business and Enterprise Secretary as Mr Brown carried out a wider than expected reshuffle of his frontbench team.

The Prime Minister said that bringing the EU Trade Commissioner and others into his Cabinet meant he had "serious people doing serious jobs in serious times". Mr Mandelson joked that it was a case of "third time lucky".

The former Hartlepool MP will be made a peer so that he can answer parliamentary questions in the House of Lords, having given up his seat in the Commons when he became Britain's European Commissioner in 2004.

Yesterday, the Prime Minister insisted it was the right decision.

"He has unrivalled experience as the Trade Commissioner of the European Commission," said Mr Brown.

"Everybody has said right round the world that he has done a brilliant job. We need all those people with brilliance and expertise to help us as we meet these uncharted times."

The return of the controversial figure – who along with Tony Blair and Mr Brown was the mastermind behind New Labour – was the most dramatic personnel change made by the Prime Minister. Mr Mandelson's return to government overshadowed other moves in a reshuffle which saw the one-time Foreign Secretary Margaret Beckett become Housing Minister, the former Business Secretary, John Hutton, take the defence brief and Ed Miliband appointed to head a new Department for Energy and Climate Change.

The former Defence Secretary, Des Browne, and Ruth Kelly, formerly the Transport Secretary, leave the Cabinet.

Nick Brown, a long-time ally of the Prime Minister, also returns in a surprise promotion as the Chief Whip. The position, however, is not a Cabinet job. The move for Mr Brown could prove controversial with Blairities, but the appointment of Mr Mandelson is designed to placate them.

Mr Mandelson yesterday described his return to Cabinet as a "great challenge and a great opportunity".

"The Prime Minister has asked me to come back," he said. "Our economy – like every other – is facing a very hard challenge as a result of the global financial crisis and in a sense it's all hands on deck."

The move sent shockwaves across Westminster, not least because his relationship with Mr Brown has been frosty ever since he backed Mr Blair rather than him for the leadership.

He will be replaced as EU Trade Commissioner by Baroness Ashton.

None of the more senior posts were changed – Chancellor Alistair Darling, David Miliband, the Foreign Secretary, and Jacqui Smith, the Home Secretary, all remain in their posts. Geoff Hoon is moved from Chief Whip to head up the Transport Department.

• A poll by ICM last night gave Mr Brown a boost for his handling of the financial crisis.

Although the Conservatives are still 12 points ahead of Labour, the survey found that 55 per cent of voters think Mr Brown has handled the economic situation well, against only 39 per cent who say he has performed badly.

A moment of desperation or an inspired political manoeuvre?

IT WAS the move that no-one in the Westminster village saw coming – the return of Peter Mandelson to the heart of government.

Gordon Brown yesterday shocked pundits and politicians alike as he invited one of his biggest enemies back into the fold at a time when he seemed most vulnerable.

On the face of it, it was a surreal development which could only provide ammunition for opposition parties and further destabilise the Labour Party. Known as the Prince of Darkness, Mr Mandelson's toxicity to those who oppose him is infamous.

Was this a desperate measure designed to prop up a desperate Prime Minister? Or was it a decisive act from a leader smarting from being labelled a ditherer, an inspired move to bolster his New Labour credentials?

Mr Brown is facing hostility from the Blairites in his Cabinet and across the party.

Mr Mandelson, who famously decided to back Tony Blair as Labour leader over Mr Brown, could be instrumental in winning their support for the Prime Minister.

However, the move is a huge gamble. The SNP is already briefing that it will use the appointment against Mr Brown in the Glenrothes by-election.

And the gaffe-prone Mr Mandelson will be closely scrutinised, after his two previous departures from government: once as Trade Secretary for an undeclared home loan, then three years later as Northern Ireland Secretary when he became embroiled in passport inquiries Whether it will be "third time lucky" for him in government remains to be seen.

BACKGROUND

"I LOVE you but I can destroy you."

These were the words that, according to Tom Bower's book Gordon Brown: Prime Minister, Peter Mandelson would frequently scream down the phone to his nemesis.

It was ultimately their closeness that tore them apart, but Gordon Brown and Peter Mandelson have been feuding for 15 years. It is believed the Prime Minister had never forgiven Mr Mandelson for backing Tony Blair as Labour leader in May 1994 following the death of John Smith. It is thought he felt betrayed. Relations between the pair continued to be fraught, even after Labour won the election in 1997.

In fact, Mr Mandelson reportedly tried to resign as election chief in 1996 after he and Mr Brown were not even on speaking terms. Mr Blair described the row as a Greek tragedy, involving "two of my best people".

Despite Mr Mandelson being dispatched to Brussels, his lack of support for Mr Brown was still apparent when he called for a leadership election after Mr Blair stepped down and said a "coronation" would be bad for the Labour Party.

However, relations are believed to have thawed this spring. The EU trade commissioner is even said to have had a hand in Mr Brown's recent party conference speech.

Yesterday, Mr Mandelson said: "I get on with (the Prime Minister] fine. I think he's doing an exceptionally good job. Of course, we have had our ups and downs but we have also known each other for over 20 years and originally we worked very well together."