Blair and Brown 'preparing takeover deal'

Tony Blair is preparing to hand over to Gordon Brown mid-way through a third Labour term, a report claimed today.

The Prime Minister was said to want to step down in 2007, after a decade at No10. And he was said to have assured the Chancellor that he remains the successor.

The claims, in The Times, follow an apparent warming in relations between the two men since their fraught negotiations over euro entry in the spring.

However, they fly in the face of concerns in the Brown camp that Mr Blair shows very little sign of setting a date for his departure.

In the sparring between the two pillars of New Labour, conducted by allies and aides rather than the men themselves, Blairite ministers such as David Blunkett, Alan Milburn and Charles Clarke have been touted as potential rivals to Mr Brown.

The attempts have foundered. Any confirmation of Mr Brown as the natural heir could be as much an acceptance of reality as an expression of confidence in the Chancellor.

One minister was today quoted as saying: "The succession has been sorted out, and making Gordon jumpy by pretending we want someone else is in the interests of no one."

While Prime Minister and Chancellor have much in common politically, their personal relationship has been strained on occasions since the 1994 Granita deal which saw Mr Brown agree to stand aside for Mr Blair in the leadership election which followed the death of John Smith.

Mr Brown's supporters say Mr Blair agreed at the time to hand over power mid-way through a second term. The Prime Minister's allies deny that he made any such pledge.

Recently, Mr Brown has distanced himself from key Downing Street policies and stayed silent during much of the Iraq conflict.

The pair have agreed a euro referendum only if the economic conditions are right. The agreement eases fears that Mr Blair will stay until he has his place in history by taking Britain into the single currency.

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