Gordon Brown has six months to close the gap with David Cameron if Labour is to have any chance of raising an election war chest, close aides admit.

The Prime Minister needs to reduce the Tories’ poll lead to single figures by the end of the year, say senior ministers. “Unless we are down to at least a nine-point deficit by Christmas there’s no point even starting fundraising,” one told The Times.

Some Cabinet ministers are openly speculating that, in the reshuffle widely expected soon after the local and European elections, Mr Brown could make Lord Mandelson Foreign Secretary. Mr Brown’s closest allies say that he has so far not turned his attention to changes. They expect the elections on June 4 to be “truly awful”. One said: “It’s time for balls of steel.”

Mr Brown had planned to use the reshuffle for an autumn relaunch but his friends said that recent events had made it almost certain this would be brought forward.

Lord Mandelson, the Business Secretary, is being tipped by some ministers to be rewarded with the job of Foreign Secretary for his loyalty to Mr Brown, with whom he had previously been estranged. He was brought back into the Cabinet last summer and has since built an alliance with Ed Balls, the Schools Secretary and perhaps Mr Brown’s closest ally. The pair chair a regular strategy session to prepare the Government for pitfalls and plan announcements.

David Miliband is tipped to move from the Foreign and Commonwealth Office to the Home Office or Department for Children, Schools and Families. Mr Balls could take over at Business. Jacqui Smith, the Home Secretary, who is under investigation over her Commons allowances, is said by her colleagues to have asked Mr Brown if she can stand down from the Cabinet so that she can concentrate on trying to retain her marginal seat.

Ministers will be expected to spend the summer preparing for an autumn relaunch intended to narrow the Tory lead. Departments are being encouraged to introduce public service reforms and switch spending from capital to resource accounts to soften the impact of the cuts needed.

“Our theme will be ‘building Britain’s future’ — that we will continue targeted investment against the Tories’ blanket cuts,” said a senior minister.

Nevertheless, Mr Brown is under growing pressure to match Tory pledges and abandon some expensive and controversial projects. There is, for example, growing Cabinet support for a proposal to replace ID cards with universal biometric passports.

Mr Brown is also being urged by his advisers to re-engage ordinary party members, possibly by opening up manifesto preparations.

Labour has significant debts and is increasingly dependent on union funding as donations from the wealthy dry up. With the Tories expected to spend up to the maximum on their election campaign, the need to restore donors’ faith will become increasingly urgent.

Even loyal allies admit Mr Brown’s remaining electoral hopes depend on the Chancellor not downgrading his optimistic economic forecast in the Pre-Budget Report this autumn. If he has to do so, there is little chance of ministers being able to challenge the Tories over public spending, they say.

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