Philip Webster and Francis Elliott
Win VIP tickets
As the Wall Street crisis began to envelop the City of London, it looked for all the world as though the Labour Party was more concerned with the fate of its leader: Gordon Brown had lost a second minister in five days and his authority was being questioned like never before.
But it was the possible failure of Britain’s biggest savings bank that was beginning to haunt the Prime Minister. The resignation of hitherto obscure members of his Government would be nothing compared with the political whirlwind if HBOS went under.
On Monday night, by chance or by design, he found himself at a City reception face to face with Sir Victor Blank, chairman of Lloyds TSB. Before him stood an old friend – and the one man who could ride to the rescue. Mr Brown then made a rare gamble, perhaps one of the biggest he has taken. In offering to facilitate a Lloyds takeover of HBOS, the Prime Minister knew he was making an unprecedented intervention.
Mr Brown had already been bitten once by the collapse of Northern Rock. Had queues of investors appeared outside Halifax branches, it might have finished him more swiftly than the assortment of MPs who have surfaced to attack him.
Yet his intervention could yet rebound. Some voters may not be so grateful if the deal sends tens of thousands on to the dole at a time when the economy is already contracting.
It was clear from the outset that Mr Brown and the Treasury could not let the Halifax go to the wall, and if the deal currently under consideration goes through, it has the benefit of not involving the use of taxpayers’ cash.
But if HBOS ends up having to accept a lower share price than it wanted, and the whole issue goes to the courts, Mr Brown may get it in the neck from its two million shareholders. To try to avoid such an eventuality, the Government has made clear that, if necessary, it would legislate to prevent the deal being blocked by competition rules. John Hutton, the Business Secretary, will use his powers under the Enterprise Act to ensure the merger is not referred to the Competition Commission “in the public interest”.
Mr Brown has always insisted that he is the leader best placed to take Britain through the economic pains. Now he has the platform to show that.
The nagging doubt for his friends, however, amid accounts of Cabinet gloom, is that he may not be given enough time as the bad news mounts: an Ipsos-MORI poll gave the Conservatives a thumping 28-point lead over Labour, and James Purnell became the latest Cabinet minister to refuse to condemn the rebels in his own party.
Mr Purnell, the Work and Pensions Secretary, said that he shared some of the concerns of the rebels. He also branded efforts to silence them as ridiculous. Tipped by some as a possible successor to Mr Brown, Mr Purnell told the New Statesman: “I think it would be ridiculous to pretend that you can’t complain when you’re worried. I mean, I’m worried that we’re 20 points behind [in the polls]. I’m not going to condemn people or question their motives. [But] I don’t agree with what they did.”
Eric Joyce, Mr Hutton’s parliamentary aide, was forced to deny that he would quit after the party conference. The mood around the Cabinet table this week suggested that the despair that has infected the parliamentary party has also taken root at a senior level. “It’s not quite as if we can’t meet Gordon’s eyes but everyone knows that this is all about him, that all the pressure is on him,” one senior figure said of Tuesday’s political session of Cabinet.
If few senior ministers believe Mr Brown will lead the party to the next election, the number of die-hards dwindled further once they compared notes after the gathering.
One well-placed source told The Times that the view of the most senior Cabinet members was that Mr Brown should be given time and space to manage his own exit, ideally in the spring of next year. “The plotters have been precipitate but they have begun the process. That process will take some time to work through.”
Yet in a further sign of the Prime Minister’s crumbling authority a damaging account of the session was leaked. “There were people staring at their hands, some scribbling on their papers, someone else on a BlackBerry. The mood was awful,” one source was reported to have said.
Mr Brown did not wish for the financial inferno that began on Wall Street and is now licking at London’s gates, but it must surely buy him a little time. For the scale of this crisis dwarfs his Westminster tormentors and provides a stage on which to showcase activity.
His speech next Tuesday will lay out what he and Labour are doing to help ordinary people caught up in the food, fuel and credit crises. He will be able to tell his party that the country would not forgive them if they turned in on themselves at such a time.

Sam Coates's blog about Westminster, politics and spin
Win a luxury weekend to Newcastle and its neighbour Gateshead, find out more here
Risk, resilience and embracing new technology
Industry sectors news at a glance. Interactive heatmap, video and podcast
Discover the power of collective thinking. Submit a solution and be in with a chance to win a Media Hub Home Entertainment System
The inside track on current trends in the charity, not for profit and social enterprise sectors
Everything the Business Traveller needs to know to make a better trip
Make the most of the summer and enter our fabulous photographic competition, you could win a £5000 holiday
Corsica is an island of beauty and contrast, an ideal holiday destination
Enjoy further reading from Travel to Fashion, Business to Sport, discover more
Shortcuts to help you find sections and articles
The clever way to lease a new car is with Car leasing made simple™
2009
per month on 36-month
Personal Contract Hire (PCH)
2008
42850
Car Insurance
£23,093 - £56,211
The Office for National Statistics
Newport, South Wales
£60,000
The Environment Agency
Bristol
Up to £90K
Boots
Midlands
OTE £85k
Credit Protection Association
Nationwide Opportunities
Completely London
Luxury Condo's in Manhattan with NYC views
The best new homes in Wimbledon?
Nationwide
Fabulous Cruise And Cruise & Stay Offers Including Virgin Atlantic Flights Prices Start From Only £699pp!
Last Minute Cruise And Cruise & Stay Offers. Med From £499pp, Caribbean From £699pp!
5 star quality at a 3 star price.
8 fabulous Canadian cities ...you won’t find cheaper
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times, or place your advertisement.
Times Online Services: Dating | Jobs | Property Search | Used Cars | Holidays | Births, Marriages, Deaths | Subscriptions | E-paper
News International associated websites: Globrix Property Search | Property Finder | Milkround
Copyright 2009 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
Brain - Labour saves the banking crisis? Yeah, right. Brown helped cause it. He sold off our gold reserves (not his gold, OURS) without asking at rock bottom prices.The Tories will surprise you as soon as they become the Government . They cannot be worse that the useless bunch we suffer at present
Bob, Cowes, UK
To Brain,
How can the Tories do anything about it as they're not yet in power???
If you're going to criticise anyone blame Labour for squandering the good years and allowing lending of huge mortgage multiples by banks.
PK, London,
The government saves the banking crisis but the tory trolls don't care. It is alll a game to them.
Brain Worrows, London, UK
Darling was claiming on the BBC this morning that the takeover of N-Rock at £100 billion was good. Why then did they not takeover HBOS at £12 billion - a far better investment?
Too many Labour supporters of N-Rock?
M. Cawdery, Craigavon, Co. UK, EU
this goverment is not into boom and bust economics i wonder who said that
dave, london, uk
Brown has made his mistakes but he is still best qualified to lead the boat out of the storm .Cameron will crash the boat if elected ,don't forget that he was chief adviser to Lemond when he pushed rates to 15% in the morning and to 7% by the evening.
Nicholas, LARNACA, CYPRUS
With the price now rocketing, the safest commodity is reported to be gold. The country's gold reserves were sold off at rock bottom prices by the wreckless actions of Gordon Brown - this is the man who is now said to be best able to deal with the economic crisis., he obviously is not.
M.R., Cheshire, UK
I've been horrified by the amount of borrowing friends and neighbours have been prepared to take on, to fund lifestyles that were way out of their true earning potential. True, they've been stupid to do this, but Brown as Chanceller did not regulate bank lending and enjoyed the `boom' in spending.
S, Doncaster, UK
Labourite, London, U.K.
I think I'd take the opposite view. If Brown is ousted now, the new leader will have the ignominy of being the shortest serving PM ever. If the Labour Party allow Brown to lead them into disaster and then get rid of him, the new Leader of the Opposition will be able welcomed
Arundel, South Coast, UK
So where's David Cameron anyway?
Rhys, London, UK
The whole of this present financial crisis can be traced back to Clinton's repeal of Glass-Steagall in 1999, which triggered a massive increase in sub-prime loans in the US.
Clinton should be dragged before an international court to answer for his actions.
SOCIALISM DOES NOT WORK!
Radney, Clevedon,
So Brown gets to pass emergency legislation to stop this going to the monopolies commission does he.Doesnt that mean we break the law here when it suits and they call this "public interest"? Surely the rule was put there to protect the public interest in the first place.
Kevin, London, UK
We're not blaming Brown for the recession, we're blaming him for selling off gold reserves cheaply, raiding our pensions & squandering money when times were good - meaning the Govt is in debt & has nothing left in the coffers for the periodic & inevitable downturn. That's why Brown's NOT a genius!!
PK, London,
the Tories changed their leader because they could read the political wind. Zanulabour couldn't read the back of a cornflakes packet. they are in denial. bring back old Labour says I.
peter c, Devizes, Wessex
When it comes to finances Brown seems to know what he's doing - albeit that we're in a global recession at the moment. He has let himself down though by not sacking bigots aka Harman & Co with their feminist extremism. Now Labour have no men voting for them and v few women.
Nick, London, England
The Labour Party could not care too hoots for Gordon Brown. They are too heavily focused on the disaster facing them. Goodbye to the financial trough they have had their snouts sunk in for 10 years. Goodbye to jobs they did not deserve, or earn, and hello to years of unemployment. Enjoy.
albert hall, hove, england
Are they still blaming the world recession on Gordon Brown?
Let the Labour defectors defect - for good, lets elect a Conservative government and then Cameron can take his share of the blame. In the meantme everyone should read 'The Great Crash1929 by J.K. Gailbraith and the truth may be revealed.
Rodney Barker, Gainsborough, England UK
Yes, that's right Labourite from London - never mind the welfare of the United Kingdom and its citizens as this country faces its biggest crisis since WWII, its the Labour party's interests that should take priority. GB is our leader let him do his job.
Ted, London , England
Reference Lloyds TSB government sponsored acquisition of HBOS: this represents 2 borrowing bubbles brought together, the resulting bubble increases in size whilst exposure to market and economic volatility remains the same. Two things that change; size of the liability + ability to shed jobs. Hmmm
NDG, Tokyo, Japan
That the present Prime Minister, in his previous Post, managed to increase the National Debt by a factor of 6 to an all-time record does not bode well for his Financial Judgement now.
However, HBOS and LloydsTSB unification might prove to be his Salvation. We must watch this space.
P L Hartley, Guildford, UK
The PUBLIC are just sick to death of all the LABOUR thugs and flunkies who have proved by their own behaviour and actions that its NOT JUST THE ECONOMY STOOPID..
Its that they ,UNIVERSALLY< are consumed by their own fortune or about to be misfortune that the gravy train will hit a wall very soon.
RusselleGardiner, toronto, canada
Gordon Brown's economic policies as Chancellor facilitaed the failure of one of the UK's august financial institution. Let's not forget that.
BC, Leeds,
The current difficulties are not the fault of Gordon Brown.
But, hailed as a brilliant Chancellor, his pollicies only increased taxation, for most, and therefore borrowing,
Effectively increasing the severity of the difficulties which were to come.
Sorry Gordon, you and your Darling must go
S G Wyness, Broadstairs, UK
To the Labour cabinet - it's very simple. You're not going to win the election, you know that, but of course you can't admit it. So - oust Brown NOW and you will retain a good number of seats and can rebuild. Keep Brown, and you will be annihilated and won't be able to rebuild for many years to come
Labourite, London, U.K.