Anthony Seldon, Tony Blair’s biographer, has penned an thoughtful oped arguing that Gordon Brown has a personality better suited to good times. Had he taken over in 1997, rather than 2007, his eccentricities would have proved “less of an obstacle”, Seldon argues. This passage is worth quoting:

Personalities of Brown’s introverted type flourish when things go well, but find it hard to cope in adversity. Many prime ministers, like Churchill, have had their own “psychological flaws” and yet have served with distinction. Blair’s own extrovert and optimistic personality would have been better suited to the adverse conditions that bedevil any long-serving administration. But the combination of his immaturity and Pollyanna mindset was fatal when mixed with the euphoria of those early years in power, when it was inevitable that only flim-flam emerged from No 10.

Brown’s seriousness would have made a much better fist of it. He had the makings of becoming a considerable prime minister, especially if he had then stood down for Blair before 2003, as Blair initially intended to do for Brown. But the dinner discussion at Granita went the other way, so we shall never know how Brown might have fared if he had jinked ahead.

Whatever the merits of this theory, No 10 have clearly recognised that the prime minister has to show some more empathy — cue the furrowed brow, (near) apology over the 10p rate, and hand-wringing over effect of the credit crunch on hard working families. Expect more.

Forget affordability. The toughest problem facing Treasury officials may be finding a way to make timely payments to some of the 5.3m households that are set to lose out from scrapping the 10p rate.

The rub is that if officials choose to keep Gordon Brown happy by using his cherished tax credits system, the lucky losers identified for compensation may be waiting for up to 18 months for their backdated cheque. This would coincide with the much heralded plans to raise the minimum wage, which will not come into force before October 2009.

I’m not convinced voters will be understanding about such a long wait.

Here is why it could take that long. The tax credits system is cumbersome and hard to manage. It works on an annual basis and is fiendishly difficult to adjust mid-year in any significant way. Monthly payments are set at the start of the financial year in April. A process of “reconciliation” then takes place in September, where overpayments and underpayments are calculated. (About 2m families are told at this point to give money back to the government because they have been overpaid. Great politics.)

A best case calendar for extending tax credits to those low-paid workers without children would look like this:

• November 2008: Alistair Darling announces the changes
• Jan/Feb/March 2009: People apply for tax credits for 2008 (effectively backdated payments) and 2009
• April 2009: Monthly payments begin that compensate for both the 2008 and 2009 financial year

A more realistic scenario was outlined to me by Ian Mulheirn of the Social Market Foundation, who wrote an excellent review of the options available to the chancellor.

“Amending the tax-credit system to assist these people would only take effect from April 2009 and any backdating in respect of 2008 would probably take another six months,” he told me. Basically, the backdated payments for 2008 would be calculated when it comes to “reconciling” the tax credit payments in September 2009.

This would effectively mean that even those lucky few chosen to receive compensation would be out of pocket until October 2009.

Is that a message that will win votes on the doorstep?

A far simpler and much quicker alternative, advocated by the Institute for Fiscal Studies, is to increase income tax allowances, a measure Gordon Brown has criticised in the past because it is more regressive than tax credits. Changing the income tax schedule was not mentioned by the Treasury in its letter outlining the 10p rate U-turn.

The question is: will the prime minister swallow his pride and admit that tax credits are not the best solution to his compensation puzzle?

Gordon Brown is losing friends among gamblers.

Punters on Betfair, an online betting exchange that works like a stock market, now think there is just a 23 per cent chance of him winning  a majority at the next election.

That means he has now slipped behind Tony Blair — who had better prospects of winning a majority at the height of his unpopularity.

You can see the “Blair trough” and the “Brown low” in this graph, which shows the trends in betting on Labour winning a majority since the 2005 election.

The lengthening of the odds on Brown has accelerated in recent weeks.

The Conservatives, meanwhile, have moved up to 40 per cent — making a Tory majority the most likely outcome at the next election.

This will not please our elected representatives.

John Ralfe, the former head of corporate finance at Boots and an indefatigable apostle for the cause of trimming MPs’ “outrageous” pensions, has just  launched his latest assault.

In a submission to the Sir John Baker’s review of MPs’ pay, he has analysed the true cost to the taxpayer of the parliamentary pension scheme. His conclusion: for the scheme is to truly represent its stated cost to the public purse, it should be cut in half.

The cost of the MPs scheme is double the official estimate because the government actuary uses aggressive and over-optimistic assumptions about longevity and future returns from the stock market, according to Mr Ralfe. (This is explained in more detail here.)

In his submission, Ralfe tantalisingly outlines what we would need to take away from MPs to rectify the imbalance.

He says we should reduce the annual pension accrual from 1/40th to 1/60th (which basically trim the pension from about £1,500 a year to £1,000), move from final salary to career average, and impose a 2.5 per cent inflation cap. This will bring MPs in line with most other pension schemes in the country.

Can you hear the pips squeaking?

There has been a lot of fuzzy language used to describe those that will be punished by Gordon Brown’s 2007 Budget. News reports have suggested it will hit “low-paid workers” — Labour’s core vote. The implication has been that “middle-England” swing voters will benefit or go unscathed.

The full picture is more complicated. More than a third of middle income households will be worse off, according to this excellent Joseph Rowntree Foundation report on an unrelated subject. Holly Sutherland led a team that calculated the impact of the 2007 Budget. Her analysis largely tallied with the IFS (who own the only other non-governmental model to do this kind of analysis) but she chose a slightly different way of presenting some of the information (see the chart below).

While about a quarter of households will lose out from the budget, this disproportionately hits middle income households. A smaller percentage of rich and poor households will see their incomes fall (although they could lose more).

When journalists describe “low paid workers” they are also describing households that could have a combined income of £36,000 — which puts them right in the middle of the household income distribution curve. These couples, who don’t have kids, will soon feel the pinch in their monthly pay packet.

Some Labour MPs have suggested to me that unrest over the 10p rate is a matter of principle with limited electoral implications. This graph suggests that may be wishful thinking.

There was a bit of a space-crunch in Saturday’s paper, so were were unable to run a piece looking at the impact of the credit crunch on public confidence in the economy. The basis for it was a remarkable Ipsos poll showing that economic optimism had fallen to its lowest level since the early 80s, when Britain was experiencing its most severe post-war recession.

It is hard to imagine that voters really are that pessimistic. After all, 28 years ago inflation was approaching 20 per cent and interest rates were well-clear of 15 per cent. Anyone with doubts should take a look at these charts, which were kindly put together by Jerry Latter at Mori. They really do underline the scale of the political challenge faced by Gordon Brown.

But there is an odd trend illustrated by the graph that may work in Mr Brown’s favour. For the past six years, we appear to have gone through the “gloomy boom”. Even though house prices were rocketing, money was cheap and unemployment was low, people were more pessimistic than the last years of the Major government. Indeed at times they were more pessimistic than during the 1991 recession. How is that possible?

The peculiar gloom during the noughties does somewhat undermine my next question: is economic confidence a leading indicator for confidence in the government? The chart below is inconclusive. While economic optimism came before faith in government during the Thatcher era, the track record is much more mixed during the Major and Brown years. However the sharp fall in recent months will undoubtedly be worrying Mr Brown’s pollsters.

There is a startling statement buried near the end of this NY Times report about Nuri al-Maliki’s ill fated offensive in Basra:

the Iraqis did not trust the British and were not including them in their planning, according to a senior American officer.

From what British officials tell me, the lack of trust is mutual (and that is putting it politely).

Gerry Sutcliffe, minister for licensing, has given a jaw-dropping interview openly opposing Alistair Darling’s Budget. He wants the chancellor to “change his mind” about the alcohol duty increase. Yes, “change his mind”.

We cannot think of the last time a minister, indeed an experienced minister, so brazenly opposed a central Budget measure. This is an extraordinary breach of discipline. It is bound to lead to a deluge of negative commentary on the state of the Brown government. What was he thinking?

Here are the relevant extracts from the Morning Advertiser, the pub industry’s trade mag:

Asked by the Morning Advertiser if lobbying on duty was now a waste of time….Sutcliffe said: “You say that, but we’ve had examples like the fuel levy where the impact on a sector has been massive — and the decision has been deferred.

“I’m not saying that will happen, but that’s where the trade needs to focus the basis of its argument.”

He added: “I think the industry’s right to be upset. We, and I speak as a champion of the pub trade, want the Chancellor to change his mind.

“The next opportunity will be the pre-Budget report in November. But the industry has seriously got to get its act together in working out what its priorities are.”

Sutcliffe said the trade is letting itself down on lobbying: “The industry’s problem is that it’s not united. My message is: sort yourselves out.

“If all that’s said is, ‘Woe is me, everything’s bad, the rise has made it worse, and we’re all going to die,’ that is not the way to do things.

“What the industry’s got to do is say, ‘That wasn’t helpful, but if we do this and this and become more proactive, and more positive, we’ll get where we need to be.”

UPDATE:  We suspect Mr Sutcliffe, pictured second from the left, may well need his hard-hat today.

I’m looking forward to reading the Spectator cover story on the “unexploded subprime timebomb”, which has been trailed on the Coffee House blog. The full political impact of indebtedness is still unclear, although its importance is sinking in across Westminster. The data on which the Spectator piece is based will add some much needed clarity to the debate — in Fraser Nelson’s words: “if you want to know where the unexploded sub-prime bombs are planted in Britain, this is the list you need”.

But we should be careful, because I’m not sure figures tell us what we really want to know. The breakdown of “subprime exposure” provided by Experian is not a based on the number of subprime borrowers, but rather the potential size of the subprime market for lenders. Basically, it shows the number of people in jobs who have patchy credit rating. This means it includes people who have not borrowed. And it includes people who took a mortgage two years ago to buy a house that may have since doubled in value. It reminds me of the cable tv channels that claim they have a potential audience of 500m, but don’t tell you how many people watch the channel.

That said, the map of credit problems is fascinating. Just don’t expect it to represent what Britain’s true credit problems are. Britain’s borrowing binge is much more complicated — and probably even more consequential than this data suggests.

Of all the presidential candidates, John McCain certainly has the biggest differences with Gordon Brown over how to handle Basra. Over at the Spectator Coffee House, James Forsyth has picked up some “straight talk” on British efforts to bring order to Iraq’s second biggest city. McCain says the British failed to counter the Iranians as they “moved into Southern Iraq”. “These are the penalties we continue to pay for the very bad mishandling of the war for nearly four years while they became solidly entrenched,” he added.

This reminded me of some of McCain’s more explicit criticisms of the British withdrawal plans. In February, he told reporters that he “did not think it was a good idea” for the British to draw down troops last year.

He softened the blow at the time with some warm remarks about the British commitment. (”I understand the British domestic situation and I very much appreciate the service and sacrifice the British military made in Iraq…Obviously we’d have liked to see them stay longer but the enormous contribution they made in Iraq and Afghanistan I have to just be grateful for.”)

But I expect this would have given little comfort to British officials wary of his ambitions in Iraq should he be elected president.  Would McCain request that the British take part in a Basra “surge”? And would he embarrass Gordon Brown by sending US troops to Basra if the prime minister said no?