The latest opinion poll in Britain showing the opposition Conservatives six points ahead of the ruling Labour party has raised the possibility of a hung parliament with no one party having an overall majority and a return to the kind of political uncertainty not seen since the 1970s.

Kenneth Clarke, the Conservatives’ business spokesman, said earlier this month that a hung parliament at this point in the economic cycle would be a disaster, an assertion his boss David Cameron was quick to try to play down after the latest survey.

The fact is that a landslide Conservative victory, which at one point had appeared inevitable with polls showing Cameron’s party 20 points ahead, now looks far less likely after Prime Minister Gordon Brown’s best opinion poll showing in almost a year.

The Ipsos MORI survey in the Observer newspaper showed Labour on 31 percent, the Conservatives on 37 percent and the Liberal Democrats on 17 percent. The last British election to deliver a hung parliament was called in February 1974 by Conservative Prime Minister Edward Heath. His decision to call a snap poll in the face of labour unrest and economic turmoil disastrously backfired. A second election in October 1974 allowed Labour’s Harold Wilson to turn a minority government into a small working majority.

The fresh glimmer of hope for Labour came against a backdrop of confidence in economic recovery, a Labour by-election victory and signs the Conservatives were struggling to win over floating voters. Labour, in power since 1997, has suffered from the longest recession on record, a scandal over lawmakers’ expenses and military losses in Afghanistan. A general election must be held by June 3. 

“I do think that in the middle of an acute national crisis a hung parliament would be one of the biggest disasters we could suffer … that would be a bigger danger than a Labour victory,” said Clarke, one of the heavyweights of the Conservative party and a former finance minister.

“Fear of City Turmoil if Election Delivers Hung Parliament,” was the Daily Telegraph headline prompted by Clarke’s comments over an article that referred to the “potentially devastating effect such a result could have on the financial markets at a time when the economy is on a life-support machine.”

Asked whether he agreed with Clarke, Cameron told the BBC: ”Not really, no. Ken has his own way of explaining these things. I think frankly anything is better than another five years of this Labour government.” He added: “I am working night and day not for a hung parliament, but for a majority government.”

Nick Clegg, leader of the Liberal Democrats, which may hold sway in a hung parliament as the second main opposition party, commented after the latest poll: “It’s a great thing that we’re going to have a major debate where a lot is at stake.”

What causes the greatest concern is the potential impact on the bond market, where the British government borrows by selling gilts, wrote Andrew Porter in the Telegraph. “A stalemate at Westminster could see market confidence drain away completely, leaving the U.K. facing a buyers’ strike as no one is prepared to buy gilts. After that, the only place to go is the International Monetary Fund.”

Do you think Britain is heading for a hung parliament? Would this undermine British economic recovery and what would be the consequences? Are critics of a hung parliament simply not used to a coalition government in Britain where a hung parliament is a rarity?

Chalk and organic cheese would be an understatement.

There is a surprising public perception that there wouldn’t be much difference between a Conservative or Labour government, but there couldn’t be fewer similarities between the supporters of both movements and the two party conferences.

It would be hard to imagine union activists sipping on cocktails from the Knightsbridge luxury store Harvey Nichols stand at the Labour party conference in Brighton, but in Manchester thirsty Conservatives can enjoy an HN gin ricky.

They can also buy soft, pastel cashmere jumpers from Marks & Spencer or get a suit fitted in the market place. Cufflinks and chalices await those who visit the elite Carlton Club stall, along with limited edition portraits of icon Margaret Thatcher.

At Labour, union stands tend to dominate — reflecting their influence over the movement and the party’s reliance on their funding. The closest you can get to a Harvey Nichols cocktail by the main hall is a pint of tepid bitter from the hatch.

Beans on jacket potatoes, stewed tea and bacon buns with butter and brown sauce on sale in Brighton; fairtrade white chocolate muffins, herbal tea and organic, homemade sandwiches in Manchester.

And it doesn’t stop there. Outside the Labour party conference, radical socialists march past crying “Revolution!”, pro-Palestinian supporters picket. In Manchester, the anti-European UK Independence Party rally against the European Union and a few protest against hunting.

Of course there is some overlap but, at grassroots level, these two parties appeal to two opposite walks of British life.

While winning the middle ground will be crucial, the result of next year’s election will also rest on how successful both parties are at mobilising these very, very different breeds of voters.

When Prime Minister Gordon Brown reshuffled his cabinet last week, fending off a challenge to his authority, a significant outcome was the creation of one of the most powerful ministerial jobs Britain has seen in years.

Peter Mandelson, a former European commissioner who has twice served in British governments in the past and twice been forced to resign, was reconfirmed as secretary of state for business, but also given greatly expanded authorities that make him a powerful if unofficial number two to Brown.

Much fun has been made of Mandelson’s new title, which because he has been elevated to the House of Lords in order to serve in the cabinet now officially reads as:

“Baron Mandelson of Foy in the county of Herefordshire and Hartlepool in the county of Durham, Lord President of the Council, First Secretary of State, and Secretary of State for Business, Innovation and Skills.”

But the length of the introduction aside, Mandelson’s new post puts him at the heart of tackling Britain’s worst recession in 60 years and planning for how the Labour government is going to rebound from a 20-point deficit in opinion polls to mount a challenge at the next election, due by June 2010.

Almost immediately it has also put pundits on watch about the possibility of Britain joining the European single currency, however unlikely that may be in the near term, since Mandelson is a committed European and euro-phile.

In comments in Germany last week, he described adopting the currency as “obviously” still an objective for the government.

“It is perfectly clear that the euro has been a great success in anchoring its eurozone members during this financial crisis,” Mandelson said after a speech in Berlin.

“Does it remain an important objective for Britain to find itself in the same currency as that single market in which it interacts? Obviously yes,” he said, adding: “That has to be a decision taken on the right terms, in the right circumstances and conditions, and therefore at a future time than we have now.”

Despite his hedging, bookmakers responded quickly to his comments, shortening the odds on Britain joining the euro before the end of the next parliament to 10/1.

“Europe and the single currency is always a divisive issue,” odds-maker Ladbrokes said. “But Lord Mandelson’s increasing power base means that it may again rise to the top of the political agenda.”

Surveys show that most of the British public does not favour giving up the pound for the euro, but many exporters and importers are keener on its adoption, which would neutralise exchange rate risks, even if it would also get rid of the comparative advantages sterling fluctuations can create. Almost 60 percent of Britain’s trade is with the European Union.

Brown and his predecessor Tony Blair always sidestepped the euro issue, but Mandelson’s newly influential role may allow him to nudge it back onto the agenda.

The expenses scandal has claimed two more victims – one from each side of the House.

Labour MP for Luton South Margaret Moran has announced that she will stand down at the next election, while Conservative MP Julie Kirkbride will no longer represent her Bromsgrove constituency after the likely 2010 poll.

Both MPs have defended the expenses they have claimed, arguing they have taken the decision to step down as a way of ensuring their respective political parties’ chances are not damaged at the next general election.

But Moran has claimed the stress and “health problems” the furore has caused her, while Kirkbride is worried about the effect the intense media spotlight has had on her family.

Which begs two questions.  Have Moran and Kirkbride been given rougher treatment by the media because there are women? And will Parliament struggle to find candidates of a suitable calibre to stand as MPs in the future?

President Barack Obama had barely settled into in the White House before he was happy to admit he had “screwed up” over one of his choices for a cabinet job after Tom Daschle withdraw his nomination as health secretary over an income tax controversy.

Even Britain’s leading bankers were moved to apologise to parliament last month over the sector’s indiscretions in the boom years.

But sorry is clearly not a word in Prime Minister Gordon Brown’s political lexicon, even though he was Chancellor for 10 years and arguably his “light touch” approach to the economy created the environment for  the current economic mess we are in.

Brown is happy to talk of the need for humility, but that’s as far as he will go. He reminds you of a cyclist caught doping, endlessly pleading their innocence, despite all the evidence to the contrary.

Whether Brown believes an act of contrition is simply unnecessary as he has done nothing wrong or that to say the word “sorry” would provide the opposition Conservatives with a stick to beat him mercilessly ahead of a general election is unclear.

Commentator Jonathan Freedland in Wednesday’s Guardian makes the case that until Brown admits some degree of culpability for Britain’s economic woes the Labour Party will not get a hearing at the next election.

Why are politicians so loath to say sorry? And could Brown revive his electoral hopes if he does accept fault for Britain’s economic crisis?

If the message on the streets up here in northern England is anything to go by, Labour will be sent packing at the next election.

Yes, it was just a by-election. Yes, Labour is suffering from severe mid-term blues. But the swing was a massive 17.6 percent and it wasn’t the Liberal Democrats who gained from Labour’s troubles, as is traditional in by-elections.

From speaking to people on the ground, the Labour vote has collapsed and the Tories are out in force. When pensioners who’ve voted Labour all their lives switch to the Conservatives, it’s time for Labour to worry.

Rising living costs and the perception that Labour has encouraged a benefits culture that is bleeding taxpayers dry were high on voters’ grudge list. Then there was the 10 pence tax ”fiasco” as one called it, or Labour’s “cynical, condescending” campaign against Tory toffs, as another said. 

Overwhelmingly, though, there was a sense that people had just had enough. That Labour had had 11 years and what had they done with it?

On top of that, there was a whiff of victory that pervaded the Conservatives’ campaign and got many apathetic Tories or people who had never voted before out in support for Edward Timpson.

David Cameron just needs to maintain the sense that the Conservatives are on track to win and he could see thousands more floating voters jumping on his bandwagon.

Margarete Cernigliaro, 55, said it was the impression that her vote actually counted that prompted her to go to the polling station on Thursday. She is a self-confessed ”lazy voter” who supports the Conservatives but didn’t think it was worth bothering in the last general election.

She told how her six-year-old grandson had met his six-year-old friend on Thursday on route to the polling station with his family. “Let’s vote for the winners,” said one six-year-old to another, referring to Timpson & co.

Even diehard Labour voters think their party has lost the next election. Jeremy Vernon, a 45-year-old teacher, voted Labour as always on Thursday, but rather reluctantly.

“I think it is a national problem. It’s the Gordon Brown problem,” he said and went on to accuse the government of “cooking the books” over inflation, given the huge rises in petrol and basic food items. Asked if Labour could win the next election, he said: ”I think they’ll lose it, definitely.” 

David Cameron may find that looking like a winner between now and the next election will be enough to turn him into one. 

As much as stunned Labour MPs wander around like Corporal Jones telling each other not to panic after the dreadful result for them in Crewe, many of the newspapers believe Gordon Brown’s days are now numbered.

The Guardian, under the headline “Brown faces meltdown,” says he is facing the gravest crisis of his premiership in the run-up to the Autumn party conference. Like many other newspapers it says the decision to dress Labour activists in top hats and deride the Conservative candidate as a “toff” was a fundamental mistake, albeit one endorsed by Brown.

“Deciding who was responsible for the approach will be a central part of any Labour inquest,” the paper said.

The Daily Express says Brown is now likely to face a “stalking horse” leadership challenge in the Autumn, possibly from a former minister like Charles Clarke or Alan Milburn, with a view to getting rid of him well before the next general election.

Any attempts to unseat Brown will not be forgiven, the Daily Mirror says potential rebels have been told. The paper says Downing Street fears Blairite supporters will be giving interviews this weekend trying to undermine the leader.

Several papers believe Brown will have difficulty coming up with a raft of new policy announcemenets to rejuvenate Labour, having already unveiled many plans in last week’s draft Queen’s speech and moved to defuse the 10p income tax row.

A snap cabinet reshuffle looks unlikely for fear of appearing a panic measure, comments the Independent.

The Daily Mail says some estimates suggest 70 to 90 Labour MPs have given up on Brown altogether with another 120 wavering. But it notes that with the week-long Whitsun recess now having bugun, there is unlikely to be any immediate move to unseat him.

The Mail is among several papers to point to John Major as an example of how difficult it actually is to get rid of a sitting Prime Minister, however unpopular.

“Mr Brown’s fate will ultimately be decided by the Parliamentary Labour Party which meets on Monday week to mull over the result,” it declares.

The Sun calls the result a “Crewe cut” for Brown and says voters punished Labour for soaring household bills and uncontrolled immigration.

The Daily Telegraph likens Labour to the Titanic: “with Gordon Brown at the helm, it is heading staright towards the iceberg that is the next general election,” its political editor Andrew Porter writes, noting that Brown’s best hope — an upturn in the economy — looks increasingly unlikely.

Crewe was a protest “on an epic scale” for the Financial Times

“There will be no shortage of advice for the prime minister, much of it conflicting,” writes Philip Stephens. “He should give definition to his premiership, show purpose for his government; he should swing back onto Blairite reformist ground; or perhaps he should lurch to the left to win back the core vote. He should smile more; or perhaps he should just be himself.”

The paper finds one glimmer of hope for Labour — that those knocking on the doors in Crewe and Nantwich found little evidence of a groundswell for the Conservatives, it says. The voters were more concerned to bash Labour than embrace the Tories.

But Stephens adds: “The comparison that will haunt him this weekend, though, is with the Eastbourne by-election in the autumn of 1990. Margaret Thatcher lost the seat to the Liberal Democrats on a 20 percent swing - and within a month she was gone.”

Hearing Gordon Brown say he’d made mistakes yesterday almost made me jump. Could the Great Clunking Fist really be admitting he’d got something wrong?

I’ve been covering Brown for more than ten years — both at the Treasury and now at No 10. And in all the interviews, international trips and news conferences I have never heard him say sorry.

He’ll usually quotes a blizzard of figures or just repeat what he said, just more emphatically. He certainly would never concede anyone else could be right.

That was much the case when the whole row over the 10 pence tax row started. Brown wouldn’t accept that his abolition of the lowest tax rate could hit millions of poor people.

Fairly or unfairly he maintained that people losing out from scrapping the 10p rate would benefit from other allowances or tax credits. People would come to understand this was a major tax reform — he also cut the basic rate of tax to 20 pence from 22 pence in the pound. Nor were there too many rebels in his own Labour Party.

That changed last week though when nearly 50 Labour MPs looked ready to vote against the government. The Treasury quickly said it would make some concessions in the form of handouts to anyone losing out.

And then on Wednesday, Brown admitted he had made not just one, but two mistakes. He had not thought about the low-paid who didn’t get a tax credit and there was no help for some of the elderly who don’t get pensioners’ tax allowances.

This appears to be the new listening Gordon. His new strategists — former PR guru Stephen Carter and ad man David Muir — must be telling him he has to emote more.

Labour is taking a pounding in the polls and his own personal ratings have dropped sharply over the last six months.

We saw a bit of this a couple of weeks ago. Instead of crying his usual refrain that no country can insulate itself from the ups and downs of the global economy, Brown said he understood people’s concerns, their worries about their well-being.

On top of that, Brown is probably genuinely wounded by people thinking he was robbing the poor to pay the middle classes. One of his lasting legacies running the Treasury for a decade has been a more redistributive focus to tax policy.

He does care about helping the poor, he is never more passionate than when talking about ending poverty in Africa.

The problem is that he doesn’t do touchy-feely very well. Perhaps the great irony is that Conservative leader David Cameron — a child of privilege, educated at Eton and Oxford — does the bloke-next-door so much better than Brown, son of a stern Scottish clergyman.

Cameron often peppers his conversation with everyday slang and talks about “stuff”. Brown finds it hard to stop himself from talking about economic stability, fiscal rectitude and the long-term challenges facing Britain.

Brown may think he is building a better, fairer Britain. He needs to say it better.

Gordon Brown on Wednesday made what the British media and opposition parties widely judged to be the most humiliating and embarrassing policy change of his short career as Prime Minister: a climbdown over concessions to those made worse off by his scrapping of the lowest, 10 pence income tax rate.

Conservative leader David Cameron, hoping to oust Brown and Labour in the next election, branded Brown a “pathetic” figure. Liberal Democrat leader Nick Clegg called him “increasingly pointless”.

Brown, they crowed, was an isolated figure, forced into what the Daily Mail said was a “humiliating U-turn” over tax policies he introduced last year in his final Budget as Finance Minister. Cameron said it was a “massive loss of authority”.

So, is he — and was it?

Undoubtedly, Brown has courted a lot of very bad press over the 10 pence issue. Claims the Labour government have done more than any other this century to help people out of poverty sounded hollow when it became clear that by abolishing a tax band he introduced, Brown was making five million households worse off. The subsequent open rebellion from
Labour backbenchers over the issue just made matters worse.

In the end, however, Brown did — although not admitting a mistake — make changes, stressing he had listened to people’s concerns and acted.

And if Brown can play it right, he may be able to convince voters increasingly turned off Brown and the Labour party that this is the mark of a good leader. “On 10p tax, he listened and acted. That is a sign of strength, not weakness,” the influential Sun newspaper said in an editorial.

Others echoed the line of rebel politician Frank Field, who led the 10p tax revolt, in urging Brown to listen on other unpopular policies. “He can start by scrapping plans to extend
detention without trial to 42 days, a proposal wrong both in principle and practice,” the Daily Mirror said.

If Brown, whom voters view as aloof compared to his populist predecessor Tony Blair, does start to show more of an ability to listen, learn and communicate, however, that may not be enough to silence the low-level chatter that has started to surface about his ability to lead the party into the next election.

Foreign Secretary David Miliband warned Labour at the weekend to stop fighting or it could damage its election chances — a move that raised eyebrows given Miliband is viewed as a possible Brown successor.

Brown has room to reassert his authority. He does not need to hold a general election for another two years, employment remains strong, moves are being made to kick-start the housing market, and the economy is still expected to grow this year.

But first he must weather some major political storms: the biggest work stoppages in a decade, unpopular changes to terror detention laws and local elections on May 1 that will be pored over for evidence of his ability to lead Labour into a fourth successive term in office. No number of visits from George Clooney can help with that.

Here is a round-up of Tuesday’s headlines:

DAILY MAIL: Father of Four Taken to Court and Fined…Because he Overfilled his Wheelie-Bin by Just Four Inches

Bus driver Gareth Corkhill collected a conviction and a 210 pound fine after he declined to pay a council on-the-spot fine for leaving the lid of his wheelie bin ajar four inches. Story here.

THE TIMES: Judges Set to Deliver Fresh Blow on Terror

Gordon Brown was facing a new battle over key anti-terrorism laws this week with the High Court set to rule against powers to freeze suspects’ bank accounts, the paper said. Story here.

The Sun: Harry Meets His Hero

Prince Harry, who served in Afghanistan, is pictured smiling and relaxing with wounded soldiers recovering in the Forces rehab centre in Surrey. Story here.

The Independent: Can the Bank’s 50bn Pounds Save the Economy?

The newspaper’s Hamish McRae explains in a typical Independent comment-style front page that the Treasury and Bank of England’s line of credit may not be enough to keep the supply of mortgages flowing. Story here.

Daily Express: Miracle Surgery Lets the Blind See

The paper looks at how British doctors carried out pioneering surgery to restore the eyesight of two blind patients. Story here.

The Guardian: You’re Dragging Us to the Edge, Labour Rebels Warned

Gordon Brown moved to stop a potentially damaging backbench budget rebellion with a contrite address to Labour MPs and a promise to hold a review before the autumn on the impact of the abolition of the 10p tax rate. Story here.

The Financial Times: King Rules Out Return to Risky Mortgages

The paper quoted Bank of England governor Mervyn King insisting that the housing market will not see a return to the profligate mortgage lending practices of the past few years while he announced a massive operation to support liquidity in British banks. Story here.

Daily Mirror: Show Some Heart

Chancellor Alistair Darling was going to tell bank chiefs to go easy on families who fall behind with their mortgages, the paper said. Story here.