Labour soul searching as voters jump ship

By Matt Falloon

LONDON (Reuters) - The Labour Party starts a brain-storming session on Friday to figure out how to win back disillusioned voters, make peace with unions, and lift Prime Minister Gordon Brown's government out of the doldrums.

Labour's National Policy Forum, its main policy-making gathering, convenes at Warwick University over the weekend as the party that has ruled Britain since 1997 trails the Conservative opposition in polls and fears of a recession grow.

Its challenge is to find policies that address concern over a sharp economic slowdown and soaring prices, and packaging it in a way that will outshine the re-energised Conservatives.

"People have some sympathy with the Labour perspective but they are all worrying about what's in their wallet and we'd be very foolish not to recognise that," said Simon Burgess, vice-chairman of the forum.

Many party members fear defeat at the next election, due by May 2010, as party leader David Cameron's slick rebranding of the Conservatives catches the public's imagination. The days of Tony Blair's glitzy New Labour seem a dim and distant past.

One member of Labour's policy forum told Reuters Cameron was "a class act who sounds like Blair did in 1996" -- a year before Labour forced out the long-serving Conservatives.

"Even I found myself applauding him the other day. If I feel like that, how does the rest of the country feel?" she said.

An indication of the depth of disaffection with Brown, 13 months after he replaced Blair as prime minister, could come on Thursday in Glasgow in a parliamentary by-election.