Peter Mandelson “dripped pure poison” about Gordon Brown into the ear of a senior Conservative just weeks before his extraordinary cabinet come-back, it was claimed last night.

Mandelson is alleged to have laid out a long and detailed critique of the prime minister’s failings in a private conversation with a leading member of David Cameron’s top team.

In addition, Mandelson, who was summoned back to government last week as business secretary, warned that Brown was vulnerable to the charge that he had presided over a “culture of debt”.

It was exactly this criticism of Labour that became the main theme of the Tory conference in Birmingham last week.

The senior Conservative spoke of his shock at Mandelson’s extreme candour. “He poured out pure poison about Brown,” he said. “It was not like a passing thing. He had really thought it through.”

The revelation will cast doubt on the prime minister’s decision to bring back a controversial figure who was twice forced to resign amid scandal. It also exposes the fragility of the truce between Brown and Mandelson, who were until recently sworn political foes.

Last night Mandelson denied he had criticised Brown. “It is a totally baseless piece of fiction made up in the Tory party propaganda unit,” he said. However, The Sunday Times was aware of the “poison” conversation well before his surprise return to cabinet.

Ed Balls, the schools minister, yesterday admitted it had been a “risk” to offer him a peerage and place him at the heart of the government’s battle to contain the financial crisis. Yesterday it also emerged that:
- The prime minister “repeatedly appealed” to a sceptical Mandelson, urging him to take the cabinet position.
- Brown was forced to clear his closest advisers out of Downing Street after a cabinet ultimatum demanding reforms to a “dysfunctional” office.
- MPs who plotted to bring down Tony Blair in September 2006 were rewarded with ministerial jobs.

Further details have emerged about the circumstances of Brown’s offer of an olive branch to Mandelson. Early reports suggested Mandelson “bit his arm off” when offered the chance to return to cabinet. However, friends of Mandelson said he had been unsure whether to take the job because he was keen to remain in Brussels to see out his full five-year term as commissioner next year.

“This was very much Gordon’s idea, not Peter’s,” said a Mandelson ally. “Peter was . . . reluctant. He didn’t agree right away. It was a dilemma.”

Senior ministers led by Jack Straw, the justice secretary, and Geoff Hoon, who was moved from chief whip to transport, had told Brown he needed to make radical changes or else risk a collapse in cabinet loyalty. The cabinet threat was one of the triggers for Brown’s decision last week not only to bring back Mandelson but also to do a spring clean of No 10 personnel.

Stephen Carter, his senior political adviser, has been given a peerage and made minister for communications.

Ian Austin, his fiercely loyal parliamentary aide, has also been moved out of Downing Street into a ministerial position, and Damian McBride, the press spokesman blamed for negative briefings, has been stripped of his responsibility for speaking to the media.

Taking control of the No 10 machine as Cabinet Office minister will be Liam Byrne, a Blair-ite former management consultant who is popular with fellow cabinet ministers.

Brown yesterday completed his government reshuffle by announcing the new junior ministerial posts. Among the promotions were MPs who signed the 2006 letter that forced Blair to bring forward the date of his departure.

The Brownite plotters finally given government jobs included Kevan Jones, who becomes defence minister, Sion Simon, skills minister, and Chris Bryant, deputy leader of the house.

Tom Watson, credited as the ringleader of the coup, has been given a powerful position as a Cabinet Office minister based at No 10.

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