KEY POINTS:
Gleeful opposition Conservative whips were having great fun during the British Government's most wretched week to date.
In their private rooms they played a newly enhanced parlour game: Spot the Worst Cabinet Minister - from a list that now includes Chancellor of the Exchequer Alistair Darling and Foreign
Secretary David Miliband.
"No one is in denial about the significance of what happened," one senior Labour figure said after the loss of two CDs containing personal details of half the population. "This kind of event is unforgivable and shocking."
There is a recognition at the highest levels that a run of bad luck, including the near collapse of the Northern Rock bank, followed the self-inflicted wound of Gordon Brown letting expectations rise that there would be an early election before announcing that there would not.
This highlighted a series of weaknesses about Brown - that he restricts major decision-making to a small inner circle and that his performances in the Commons are wooden - which had been overlooked in the excitement of his move into Downing St.
Saturday's Guardian/ICM poll showed Labour has slumped to 31 per cent (down four points), its lowest level since the last days of Tony Blair's premiership, behind the Tories on 37 per cent, down three points. The Liberal Democrats are up three points on 23 per cent.
Yesterday's News of the World newspaper showed Labour and the Conservatives running neck and neck on 38 per cent. The poll gave Conservative leader David Cameron an 8 percentage point lead over the Prime Minister - he was on 46 per cent compared with 38 per cent for Brown.
Two months ago, Labour enjoyed a 12 percentage point lead.
As he flies back to London today from the Commonwealth Heads of Government meeting in Kampala, Brown will put the finishing touches to a fightback. He is insistent that he will not suffer the fate of Conservative Prime Minister John Major, who never recovered after Black Wednesday in 1992 when the pound was forced out of the European exchange rate mechanism.
Downing St believes last week was difficult but did not rival Black Wednesday because nobody lost their job or home.
"The political world is like a tide," one senior figure said. "You ride it for a bit and then you take a hit."
Brown knows he must change his ways. He must heed the advice of ministers to widen his circle of advisers beyond the kitchen cabinet of Ed Balls, the Schools Secretary, Ed Miliband, the Cabinet Office Minister, and Douglas Alexander, the International Development Secretary.
The "greybeards" of Geoff Hoon, the chief whip, and Jack Straw, the Justice Secretary, will be talked up as key members of the expanded Brown inner circle. Even Tory MPs will see the wisdom of this move: Hoon and Straw witnessed the death of the Major Government at first hand, unlike younger members of the circle.
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