So . . . how was it for you?

Trouble with the firefighters and trade unions, trouble over Iraq and Cherie: Tony Blair has not had

Last March, Tony Blair began a speech by quoting, of all people, Mario Cuomo, the former mayor of New York: "You campaign in poetry; you govern in prose." The fifth full year of Blair's reign, 2002, will be regarded as prosaic. It need not have been. But it will. This has been a year when the contradictions at the heart of the Blair project - for it is his project - have been exposed.

Here is a government that enjoys powers without parallel in modern times and yet often sees itself as a victim; here is a government that has done some radical things over the past 12 months and yet feels unappreciated; here is an electorate that has never been so wealthy and yet feels angry and frustrated.

The Prime Minister and his people encourage us to look at the glass and think it half-full. On the economic front, Gordon Brown's Budget and the comprehensive spending review that followed were clever and popular. They presaged the injection of billions of extra money into health and education and a rise in national insurance contributions to finance this. They blew away Labour's fear that the people wouldn't pay more to get more.

For a government regarded as nannying, it was a remarkable year for social policy. David Blunkett, the supposed hard man at the Home Office, overhauled drugs strategy. Cannabis was in effect decriminalised. Heroin will be made available on prescription. After years of delay, pub-licensing hours will be swept away. Gay and unmarried heterosexual partners will be given the same rights of adoption as the rest. In December, plans were unveiled for civil partnerships for gay men and lesbians, giving them equality in law. Not bad, eh?

As Blair put it himself at the Labour conference: "We are at our best when at our boldest." Yet his more telling line was the next one: "So far, we've made a good start, but we've not been bold enough." Therein lies the perennial problem, giving rise to the perennial complaint: "Is that it?"

One senior member of the government, no left-winger he, described it to me as "a wasted year". Blair, he said, had given up trying to inspire or to explain. I pointed out that he is the first prime minister to subject himself to a monthly press conference: every question is entertained, every follow-up is allowed.

No, the official responded, it comes down to the "narrative". Blair has failed to explain what he is in power for, what his sense of progressive politics is. For this past year will not be defined by my checklist above. Instead, it will be remembered for a new "crackdown" on criminals and young delinquents, by a new squeeze on university students and by plans to give our best hospitals independence to run themselves.

Downing Street still seeks to define itself by identifying enemies within. In the year when Winston Churchill was "voted" the Greatest Briton, Blair seems at his boldest when taking on the Labour movement, whether it be the ritualistic attacks on the TUC or the Labour left at the two party conferences, or facing down Andy Gilchrist and the firefighters.

Blair brushed off the misgivings of people like John Monks, the ever-reasonable TUC general secretary. He seemed thrilled to have pleased the Daily Mail, albeit only for a couple of days, and shored up the conditional backing of the Sun. If it meant comparing Gilchrist to Arthur Scargill, so be it; if it meant him being likened to Margaret Thatcher, then that goes with the territory.

When the Prime Minister is up, the Chancellor is portrayed as down. It is a pendulum. Blair's "victory" over the Fire Brigades Union coincided with Brown having to admit in his pre-Budget report that he had got his growth and borrowing figures for 2002-2003 badly wrong. The International Monetary Fund has since argued that even his revised forecasts may be too optimistic. Having presided over historically low unemployment, inflation and interest rates, Brown is watching anxiously to see that the prosperity based on a fragile consumer boom and overblown housing market does not come tumbling down.

In his battles with Brown during the past year over the future of our public services, Blair has stressed the notion of diversity over equity. While slapping down the firefighters' 40 per cent pay claim, he did nothing to rein in boardroom excess. At one point, he caused a sensation by daring to use the "r" word (redistribution). But that was a one-day wonder for a man whose notions of social justice seem not far removed from trickle-down economics.

Still, who's complaining? The Conservatives dug themselves deeper in a hole. The opinion polls, for want of an alternative, remained remarkably robust after all these years.

Then, just as the Blairites were beginning to relax, Cheriegate came along. As each attempt at "closing down" the story foundered, the consternation within Downing Street increased. It was directed partly at Cherie Blair's choice of friends and her refusal to disclose information when they needed it. But it was more a realisation that Blair's entire "second term" media strategy was being undermined. It had been going well. Alastair Campbell had retreated from the semi-public glare of lobby briefings. Information was more honest, less selective.

The revelations about Cherie, her eccentric lifestyle guru and her guru's dodgy partner allowed those who had always seen mendacity and venality in the Blairs, notably the Daily Mail and its sister papers, to feel vindicated. Those who didn't see it quite that way felt let down by a government press machine that they were beginning to trust. Downing Street will draw its own conclusions. It will try to play it straight. But it won't do what the party wants it to do: stop trying to impress people on the right who are beyond impressing. These people believe that the Blairs are impostors, ingenus who, despite two landslide victories, have no legitimate claim to be in No 10.

However, 2003 may see a generation moving on. For Campbell, the prospect of life outside the state machine is becoming increasingly enticing. Others have been mulling a return to the real world, following the likes of Anji Hunter, the PM's former gatekeeper - for example, his chief of staff Jonathan Powell, another who has been with Blair virtually from the start. And Ed Balls, Brown's right-hand man and the chief economic adviser at the Treasury, is considering a parliamentary seat next to the constituency represented by his wife, Yvette Cooper,who is a minister.

And what of the biggest question of all - Blair and Brown? The staying power of the Prime Minister is only the most intriguing of many imponderables for 2003. The year will begin with the long-awaited review of higher education, a review that is much broader in scope than simply funding. On that score, a hybrid of up-front fees, retrospective tax and grants for the poorest-off is likely to be the solution to a difficult problem. It is one of those areas where the government is courting short-term popularity for a greater long-term need. On health, the first foundation hospitals will be announced. Meanwhile, the bigger challenge - to show that investment is paying off in people's day-to-day lives - is largely out of ministers' hands. So, to a degree, is transport, where the mayor Ken Livingstone's congestion-charging scheme for London kicks off in February. Failure will deter the government from intervening elsewhere to engineer less congestion and greater environmental protection.

In legislative terms, 2003 will be dominated by law and order. The Queen's Speech was an uninspiring document. The House of Lords and the civil liberties lobby will vote against the planned changes to criminal justice. But Blair is convinced this is where the people's priorities lie. Yet, popular though these measures may prove, should they define what this most powerful of governments is about?

As was the case this year, the spectre of conflict with Iraq will continue to dog Blair. He has trodden a tightrope, trying to use his close links with the Bush administration as a moderating influence. So far he has succeeded, on one level. The UN inspectors have started their work. But the hawks around the president are spoiling for war and the odds seem weighted in their favour. And for all his supposed influence, Blair has failed to persuade Bush to begin final status talks between Israel and the Palestinians.

Moreover, no matter how many dossiers appear detailing Saddam Hussein's biological and chemical arsenal, no matter how often his human rights record is held up, British public opinion has refused to line up behind war. Blair will try to stop the Rumsfelds and Cheneys from making a mockery of the weapons inspections, but if he fails, he will choose the "special relationship" with Washington over his more fractious relationship with the Labour heartlands. As for al-Qaeda, this time a year ago, we were told it had been routed. Bali and Mombasa have exposed that optimism.

Europe, that other great international challenge, reaches its denouement in the first half of 2003. Back in June, when a member of Brown's team likened the decision on joining the euro to a jury trial, suggesting that the merits of British membership had to be proven "beyond all reasonable doubt", it seemed cut and dried. All the political and economic mood music since then has drifted only in one direction. And yet every time it seems settled, Blair drops hints that both the results of the economic tests, and Brown's intentions, might still surprise us.

The element of surprise will be Blair's greatest weapon in 2003, to revive enthusiasm in a government that is actually doing more than it dares admit. Somewhere along the way, it has forgotten to tell people what it is about. Back in March, Blair cited another line from Mario Cuomo: "There is a danger in the day-to-day business of government . . . that we lose sight of the destination."