We have a government that still thinks it is in opposition and an opposition that thinks it deserves, by right, to be the government

Amid the staged triumphalism and warm self-congratulation of the Labour party conference, a chill wind whipped around delegates in Brighton. At times it was hard to believe this was the party's ninth such event in government, given the atmosphere of introspection that hung over proceedings. The fringe debates provided the dominant theme: "What now? How does Labour win next time?", "Has Blair changed Britain for good?", "Does democracy need a make-over?".

The reasons for this carnival of self-doubt are clear: a far from convincing election result, speculation over the timetable for the leadership handover and always, snorting and snuffling away, that great elephant in the living room, Iraq.

Tony Blair doesn't do self-doubt and his speech was an exercise in manufactured confidence. It will become known as the "change-makers" speech, when the party's leader set out his stall for a "full" third term, promising further public sector reform, increased individual choice and a new approach to crime based on the rights of the victim. But a Blair speech is a bit like a Chinese takeaway: you feel satiated as soon as it's finished, but half an hour later you find you are hungry again. His argument with his party has always revolved around his belief that the left feels more comfortable in opposition. His merciless programme of internal reform has never quite disabused the faithful of the idea that there is something dirty about the everyday work of running the country.

Try as he might, Blair himself does not remain untouched by this mindset of permanent opposition. One passage of the speech explains this. Defining good healthcare as "quick access, committed care, clean, comfortable surroundings", he asked but what happens if you can't get them? "If you've the money, you buy better." This was an affront to every progressive value Labour believed in. Blair added: "It isn't fair when parents have no option but to send their child to a poor local school, or a patient can't get diagnostic tests done in six months when the technology and the capacity exist to deliver it in days."

Delegates enjoyed this section because it made them feel part of a great progressive crusade again. But who do they think has been responsible for our schools and hospitals for the past eight years? When Blair talks like this about public service reform, he reminds one of those supermarkets that promise to "price check" their products - as if they are not the very people responsible for those prices in the first place.

Tony Blair was a great opposition leader and, for all the years of power, in some ways he still is. Indeed, it is one of the defining aspects of the Blairite era that we have a government which thinks it is still in opposition and an opposition that thinks it deserves, by right, to be the government.

In Blairite circles the line was: "One of the greatest speeches Tony has ever made". Said one loyalist: "The man is a god, he should go on for ever and forget this idea of standing down." He was not alone in believing that Blair should renege on this promise. Downing Street briefed that it was a high-water mark in new Labour ideology, with individual choice placed firmly and irreplaceably at the heart of the progressive agenda, where redistribution and equality might once have been.

If self-doubt has been the theme of the fringes, then the Blair-Brown succession has dominated all discussion elsewhere. The two are umbilically linked. The Labour Party is still haunted by the failure of the Wilson-Callaghan handover and many draw lessons, too, from the Conservatives' bloody switch from Margaret Thatcher to John Major. A smooth succession is in everyone's interest, but the signs from Brighton are that this is by no means guaranteed.

One Brownite MP who has the ear of the Chancellor said of Blair's address: "It was a good speech, there is no denying that. But there are still significant parts of the third-term agenda that give cause for concern." Asked to expand, he pointed to the "respect" agenda on crime and anti-social behaviour, designed as a bridge between the party and the "hard-working families" of Britain.

The people around Gordon Brown know that if the Labour leadership moves any further into the ideological territory represented by "choice" and "respect", they will lose the party altogether. And not just disillusioned grass-roots members, who are deserting Labour in significant numbers, but those who are still fully signed up to the new Labour project.

It has been assumed that the big ideas of Blair's final term in office have been fully signed off by the Chancellor. But what if they haven't? In his speech, the Prime Minister thanked those who had run the general election campaign, save for the man who propped him up throughout - his Chancellor. As Brown gathers his forces in the aftermath of the conference, where he once more offered the Prime Minister an olive branch, relations are now grim. Brown has the ability to torpedo Blair's legacy and he could yet push the doomsday button.

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