This blog suggested last Friday that Labour was increasingly worried about Boris Johnson’s campaign to be mayor of London.

And now the blonde motormouth is ahead: at least, according to the betting odds.

When I spoke to William Hill last night, Boris and Ken Livingstone were both at 5/6.

This morning that had shifted. Boris is now 8/11 and Ken is evens.

My colleague Alex Barker, an amateur bookie, found this chart (above) on Betfair, showing Boris’s odds shortening. 

The latest shift in his favour could have something to do with the Evening Standard’s revelations last night about emails between Lee Jasper, Ken’s race advisor, and the female head of an organisation which received funding from the GLA.

Some of the best lines from the emails were cut out of the FT’s piece this morning, probably for reasons of space. This is my favourite: “I want to wisk (sic) you away to a deserted island beach, honey glase (sic) you, let you cook slowly before a torrid and passionate embrace.”

The recipient of the emails denies any impropriety. 

One of the most curious aspects of the Northern Rock debacle is the government’s insistence that the bank’s loan book is fundamentally solid and that market conditions will soon improve. How can they be so very sure?

Yesterday, Alistair Darling continued to say that: “The Financial Services Authority continue to assure me the bank is solvent. It believes that Northern Rock’s mortgage book is of good quality.” Just now, at the monthly 10 Downing Street press conference, Darling repeated his claim that “these are good assets”.

There is an old cliche in financial markets that you only find out who is wearing no swimming costume when the tide goes out. In the case of Northern Rock, that is the housing market, where prices have teetered slightly in the last few months. If they fall further and faster - as likely a scenario as any other given that banks are now reining in their lending - we may find out whether the assumptions about the Rock mortgage book are realistic or not.

Bear in mind that the group was seizing unprecedented market share just as house prices rushed towards their peak. Furthermore, it specialised in “generous” products including a 130 per cent loan-to-value mortgage which is apparently still on offer.

In the coming months, the nationalised Rock will be expected to run down its mortgage book, probably by upping its interest rates; a move which will encourage customers to shop around for different loans when their current ones expire. Other lenders may be happy to take on some of the Rock’s customers. ie, the more credit-worthy ones. With banks increasingly risk-averse - for obvious reasons - they may not, however, want to take on the Rock’s more questionable borrowers. In other words, the rump of the mortgage book, retained by the government, is likely to contain the more problematic loans.

At today’s presser (it’s still going on as I write) Mr Darling insisted that the Rock’s position would look better “when the housing market comes back”. Most commentators thought that house prices would be on the rise pretty soon, he suggested.

“Every penny is secured against Northern Rock’s assets…We are acquiring its liabilities and also its assets.”

Asked by the FT whether the government still expected to make a “profit” from the deal, Gordon Brown said it was “entirely possible” as the value of the Rock’s mortgage book improved.

Unfortunately for the pair, it’s also easy to envisage a scenario where the housing market does not - as the chancellor puts it - “come back” for several years. If prices fall further, the mortgages in question may look increasingly less attractive.

Last time I spoke to Matthew Oakeshott, the Lib Dem Treasury spokesman, he said he was writing to the Financial Services Authority. (The FSA had just warned that there could be up to 2m high-risk mortgages written in the last year or two).

Lord Oakeshott wanted to know how many of these risky mortgages were provided by Northern Rock. I’d be surprised if the FSA comes back with an answer. But it’s safe to say: a large proportion.

Peter Hain’s resignation was inevitable once the police were called in to look into the shambolic financing of his doomed attempt to become Labour’s deputy leader. After coming fifth in the contest (who came sixth? Can’t remember), he must be wishing he hadn’t bothered.

But the big question at Westminster this afternoon is whether Gordon Brown will use this as a chance to beef up his cabinet, which many Labour MPs believe is lacking in heavyweights: people who can take the fight to the Tories.

One option would be to bring in a promising middle-ranking minister. Liam Byrne, the able immigration minister, would be an obvious choice but he is hardly a household name. Yvette Cooper, highly trusted by Mr Brown, could be promoted from housing.

The bolder choice would be to bring back in one of the big beasts of the Blair government. There a number of contenders biting their tongues on the backbenches, waiting to be brought back into the fold.

They include Charles Clarke, David Blunkett, Alan Milburn or Stephen Byers. Most have been loyally silent (apart from Mr Clarke, who lapsed but appears to have been forgiven). Mr Byers sued for peace over the Christmas period, saying that Tony Blair was "history".

But is Mr Brown ready to bring these arch-modernisers back into the cabinet, perhaps signalling a shift back towards a more Blairite "choice" agenda?

Normally one would expect the PM to make a speedy choice on Mr Hain’s replacement. We’ll probably find out this afternoon. But don’t rule out - as an outside bet - that Mr Brown’s reputation as a ditherer may apply to his first enforced cabinet reshuffle.

Even in the midst of yet another "sleaze" scandal, it almost seems unfair to compare campaign finance in America and Britain. Before a candidate has even been chosen, enough money has been rustled up in the 2008 US presidential campaign to pay for five  UK general elections.  And - so far - no Britons have found themselves behind bars for breaking electoral laws.

Yet there are some striking similarities in the extraordinary misjudgements made by donors and politicians on both sides of the Atlantic. And some differences that certainly do not bolster the Labour party defence.

Take the story of the Paws. In an outstanding investigation, the Wall Street Journal discovered that one of the biggest sources of funding for Hillary Clinton’s campaign came from a family of six living in a modest house under the flight path of San Francisco airport. Here’s a picture of the Paw house:

The Paw household lived on the income of a postman but managed to scrape together enough pennies to donate more than $200,000 to Democratic candidates.

The family were linked to Norman Hsu, who now sits in prison facing charges of grand theft. Before his fall from grace, Mr Hsu become the "Hillraiser", a title awarded to people who "bundle" donations of more than $100,000 for the Clinton campaign. It is worth comparing the Paw dwelling to the house of Ray Ruddick, seen below.

The jobbing builder and bingo enthusiast  found himself at the centre of a British political storm after donating £196,850 to Labour on behalf of David Abrahams, a wealthy landlord from Newcastle. The blue transit van is owned by Mr Ruddick.

Since the Sunday Mail contacted a startled Mr Ruddick it has emerged that Mr Abrahams channelled money through a total of four associates: a builder, a lollipop lady, a lawyer and a secretary. A bishop and a judge are leading an investigation for the prime minister.

Now the Paws and the Ruddicks are not the first households to be used as "straw men" for overenthusiastic donors to political parties.

The Republicans dug up a string of financing scandals through the 1990s that are so farcical they make the Paws and the Ruddicks look rather boring.

(more…)

A trio of polls on Sunday underscored the damage done to the government by last week’s triple whammy of the Northern Rock crisis, data loss debacle and the five former defence chiefs’ attack on the prime minister. The terrible Westminster week endured by Labour appears to have hit home with voters, suggesting the Tories’ attack on Gordon Brown’s competence is resonating across the country.

The Tories are ahead of Labour in terms of the party deemed to have the best policies, for the first time in more than a decade, according to an MSL survey in the News of the World. The poll also gives David Cameron an eight point lead over Mr Brown in terms of who is seen as the best leader - a remarkable reversal of perceptions during the prime minister’s first three months in office.

Nervous Labour MPs in tight marginals who are now missing Tony Blair’s sure electoral touch will find this sense of nostalgia enhanced by a BPIX poll in the Mail on Sunday, suggesting the two parties would be level pegging had there been no change of prime minister. As it is, the survey gives the Tories a five point lead.

Northern Rock and the "debacle" of the lost data files - to quote Jack Straw, the justice secretary - have clearly damaged confidence in Alistair Darling. A survey for the Sunday Telegraph found 50 per cent dissatisfied with his performance as chancellor, with fewer than a third - 32 per cent - declaring themselves satisfied.

Gordon Brown has set a lot of store on giving Britain more time to see his vision for the future before he holds a general election.

This has obviously left him open to mockery from David Cameron, who ridiculed Mr Brown’s suggestion that this vision was so important that even the prospect of a 100-seat Commons majority would not have persuaded him to hold an election next month.

"He is the only prime minister in history to flunk an election because he thought he was going to win it," scoffed Mr Cameron, as Mr Brown squirmed his way through a terrible half an hour at prime ministers’ questions.

Mr Cameron’s attack would strike home even if Mr Brown had a clear vision (everyone knows he aborted the election because his pollsters said he would have a majority as low as 20). But what if Mr Brown doesn’t actually have - or can’t articulate - a vision?

Mr Brown’s first 90 days in office (before the election fiasco) were brilliant in the sense he presented himself as "the change" from Tony Blair: no spin, straightforward, big tent, competent etc. A lot of that good work has now been undone, of course, by the events of the last fortnight.

But what exactly is his strategy for changing Britain? His Labour conference speech, which received positive coverage at the time, has now been reassessed in the media as being rather hollow and lacking a big strategic idea.

The pre-budget report - a chance for the government to map out its economic strategy - saw Alistair Darling, chancellor, rummaging around under the mattress to try to keep health spending going, but most of the best lines were stolen from the Tories.

As Jonathan Freedland in today’s Guardian asks: "You’ve had had long enough to work it out. What is your vision, Gordon?"

The prime minister, having surrendered the political momentum to David Cameron in a dramatic way in the last few days, needs to find the answer soon. The restless body language of Labour MPs behind him in the Commons today suggests their patience is not limitless.

FIrst off, I was wrong. I couldn’t see how Gordon Brown could back out of a November election without inflicting serious self-harm. It would have been a gamble, but in my view the bigger gamble was to wait, especially since a delay would hand the Tories a propaganda victory and deal his own reputation a heavy blow.

But having cranked up the election hype for weeks (make no mistake, this was not a media creation), Mr Brown’s decision to delay a poll - probably until 2009 - has fundamentally changed the terms of political trade.

The prime minister will be labelled "Bottler Brown", the man who failed to run against Tony Blair for the Labour leadership in 1994, was prepared to wound but not strike Mr Blair when he was PM, who backed out of a promise to hold a referendum on a new EU treaty. Now he is walking away from an election which his own aides had spent the last few weeks talking up.

By contrast David Cameron has been transformed from a political dead man walking - the latest in a line of Tory leaders heading for electoral disaster - into somebody who looks like he could be a winner. The Tories are back in the game.

This whole affair gives the Tories that most valuable of political commodities - momentum. But will there be longer term ramifications for Mr Brown, beyond the humiliation he will face next week when the Commons returns after its summer break?

Long term predictions are pretty pointless. The last few weeks have shown how febrile British public opinion is at the moment, with the polls veering widely from Labour domination to a Tory lead in a matter of days. Small political events can trigger extreme responses from the electorate.

But I think the damage to Mr Brown could outlast the firestorm of the next few days. The Tories have an open goal when it comes to tackling the prime minister’s claim to have risen above squalid party politics - to be some kind of father of the nation: they will say he ran away from an election because of poor opinion polls.

They will also use the episode to attack Mr Brown’s claim to have binned spin. What else has been going on for the last few weeks of election hype? And what about the ill-judged trip to Basra during the Tory conference?

Suddenly the master tactician looks vulnerable. He can bounce back - of course - but this has been a searing episode for the prime minister and his closest advisers. Hubris is the word that springs to mind.

Having stuck my neck out and predicted a November election yesterday (while some of my colleagues were saying the opposite), there’s no point backing away now.

I don’t think the headline opinion polls taken in the immediate aftermath of David Cameron’s speech to the Tory conference will make much difference to Gordon Brown as he spends the weekend deciding whether to go to the polls. One of his colleagues tells me he would be "mad" to take much notice of them.

MPs in Labour marginal seats may be getting jumpy after the brilliant Tory move on inheritance tax, but Mr Brown still has several weeks to deconstruct that policy or to come up with some distraction of his own.

The polling still puts Labour within striking distance of a winning 40 per cent share, while the underlying research still gives Mr Brown big leads over Mr Cameron in terms of who the public regards as having the best qualities to be a good prime minister.

Leaving aside the little fact that Mr Brown still has to make up his mind and only he knows what will happen, let me just map out a little "fantasy Gordon" scenario for how the next few days could pan out.

Over the weekend he studies the polls, including the marginal data, and decides that although a November poll is a gamble, things could be much worse for him if he delays.

The economy is slowing down and the Tories will have a huge morale boost if the prime minister looks like he is running away from a fight from David Cameron. Imagine what PM’s questions would sound like next Wednesday. Momentum would be running strongly with the Tories.

So Mr Brown takes the plunge and goes for the election. I would guess the decision will be leaked out over the weekend, possibly to the Sunday newspapers.

On Monday he makes a Commons statement on Iraq. I would imagine that he will give a much broader and longer term guide to Britain’s continued presence in the Basra area than he did on that ill-judged visit to Iraq earlier in the week.

On Tuesday Alistair Darling, chancellor, will deliver his mini-budget. A big splurge on health spending will grab the headlines, along with him pulling some tax rabbit out of the hat. An attack on "non-dom" wealthy foreigners perhaps, to match the Tory proposals? A tax cut elsewhere?

Then Mr Brown heads to the Palace to ask for the dissolution of parliament. Iraq will have been neutralised, the NHS puffed up with cash and the Tories wrong-footed on tax. Game on.

For what it’s worth, the collective wisdom/ignorance of Westminster journalists is (as I write this) that an election is back on. Ben Brogan’s Daily Mail blog, sets out a few reasons why doubts have set in for those who predicted it was off.

The truth is that none of us know. But the pleasure of being a journalist is making these low-cost political guesses. For Mr Brown, the calculation is altogether more serious.

Westminster is buzzing with rumours that Gordon Brown is about to pull the plug on an autumn election. After David Cameron’s notes-free tour de force at the Tory conference in Blackpool, there suddenly seems to be an outbreak of nerves in the prime minister’s camp.

The most detailed explanation I’ve seen of why Mr Brown might "bottle" an election comes in Ben Brogan’s Daily Mail blog. Some of the Labour excuses for abandoning a November poll are so ludicrous and self-serving they could only have been cooked up by somebody in full panic mode.

The idea that Mr Brown wants more time to unpick the details of the Tory inheritance tax plans - apparently a three week election campaign is simply not long enough - is absurd. As for the idea that the PM is too focussed on fighting foot-and-mouth disease….give me a break.

Does that mean the election is off though? I’ve just spoken to a very senior colleague of Mr Brown who gave quite the opposite impression. This person said it would be "mad" to take too much notice of the inevitable bounce Mr Cameron will get in the polls after the party conference.

Indeed at least one poll - in tomorrow’s Guardian - will show the Tories achieving a substantial bounce. But this Brownite says you have to look at the underlying picture.

I took away from our chat that the election was very much on. Downing St officials tell me "no decision has been taken". Journalists in the lobby are split on whether it is on or off. In the end, only one person knows: Gordon Brown.

No doubt I will be proved completely wrong within hours, but I reckon Mr Brown has gone too far down the election path now to turn back. It is not just the prospect of facing Mr Cameron at Prime Minister’s Questions next Wednesday and a load of Tory MPs baying that he is a coward.

It is the fact that through the autumn, Mr Brown will be dogged by his indecision. Every downturn in the housing market, every poor piece of economic news, every "event", will be presented as proof that he cocked it up by failing to go in November. The momentum will be with the Tories. My guess: election on.

Should Gordon Brown call an election now? Have your say here.

It was a most unusual pre-election speech. For the first time I can remember, a party leader addressed his annual conference without even bothering to attack or mock any of his political rivals.

This was Gordon Brown in full "new politics" mode. Since he governs for the whole country, there is no need to even acknowledge the existence of other parties. Neither David Cameron nor the Conservatives (let alone the Liberal Democrats) were mentioned in his Bournemouth speech.

But make no mistake, Mr Brown and his party are ready for an early poll. His discourse on rising aspiration in Britain covered all the ground on which he expects to be fighting an election - health, education, crime.

It was a personal speech, setting out his commitment to public services and "personalising" them for the 21st century. And it was the speech of a politician who looks comfortable in his own skin: the angst of the Brown-Blair feud is now in the past.

His allies say that if there is not an election this autumn, the country will be given their say by the spring of 2008 at the latest. And if you needed any further confirmation, the soundtrack booming out of the Bournemouth PA before Mr Brown’s arrival said it all: Republica’s "Ready to Go".