Leadership doubts dog UK's Labour in runup to polls

LLANDUDNO, Wales, Feb 23 (Reuters) Uncertainty over exactly when British Prime Minister Tony Blair will step down and who will succeed him will dog his Labour Party at local elections in May, party activists said today.

Blair has said he will resign this year and many in Labour expect him to go by July to make way for his presumed successor finance minister Gordon Brown.

Before that, Labour faces a tough fight in May 3 elections for the Welsh Assembly, Scottish parliament and English councils where the opposition Conservatives and nationalist parties could make strong gains.

Blair warned Welsh Labour on Friday that defeat in the polls would put economic stability, jobs and services at risk but some activists said his leadership itself jeopardised the party's chances.

''He's having a detrimental effect on the party with all this uncertainty about when he is going and who is going to be the new leader,'' said Peter Hughes, 37, a member of the Transport and General Workers' Union.

''We're really worried. This has got to be sorted out before the elections,'' he added after Blair addressed the Labour meeting in the seaside town of Llandudno, North Wales.

Blair has won three straight elections for Labour but anger over the Iraq war, a series of party mismanagement and funding scandals and disillusionment with the state of Britain's public services has eroded his popularity.

Some in Labour fear he has become an electoral liability after nearly 10 years in office.

''I think he should go. I think he is past his sell-by date,'' said Labour activist Syliva Jones, 73. ''It is a problem for the elections,'' she said of the leadership uncertainty.

ELECTION OR CORONATION? Nevertheless, Blair's final speech to a Welsh Labour conference was rewarded with hearty applause, reminding many delegates of their articulate leader's ability to woo a crowd.

''I think we can be proud of what we've achieved,'' he said.

Blair said Wales could be left with a ''rag bag'' coalition of Conservatives, Liberal Democrats and Welsh nationalists that could not be trusted to run the economy if Labour loses its majority in the Welsh Assembly.

Britain's next general election is not expected until 2009 but the Conservatives -- revived under new leader David Cameron -- are ahead in opinion polls. Delays in Labour's handover can only work in the Conservatives' favour.

Even Blair loyalists expressed anxiety over the handover.

''I would like him to stay on,'' said Judith Morgan, 56. But she added she wanted to be able to elect Blair's successor, rather than see Brown crowned. ''I would like to see (Interior Minister) John Reid standing,'' she said.

Reid has yet to rule himself out of the race although he has been damaged by a series of crises at his department.

Left-leaning former minister Michael Meacher said on Thursday he would challenge Brown and parliamentarian John McDonnell also wants to run but Brown's experience and profile makes him a near certainty for the job, many activists said.

Labour members of parliament, party members and members of trade unions affiliated to the party all have a say in the choice of a new party leader.

REUTERS SAM RK2045