What's the point of Tony Blair?

Even Downing Street trusties now talk of new leaders. But while MPs debate whether he is expendable,

The Westminster village may be posing the wrong questions. It is not: Can he survive? It is not: At what point will he stand down? It is not: Has Iraq found him out? It is: What's the point of Tony Blair? Why is he there?

As the most fractious parliamentary session of the Blair era draws to a close, increasing numbers of MPs are wondering whether he has served his purpose. They look at the battles ahead over public service reform. They look at controversy over the road to war in Iraq and the elusive weapons of mass destruction. They look at the issue of trust. They look at opinion polls which show for the first time that the Prime Minister's personal ratings have dropped below those of his party, and they wonder whether he is now expendable.

For all the talk of crisis, Downing Street is intrigued that over at the BBC - the organisation they now love to hate - one of the scenarios that staff are seriously preparing for in their coverage of the next general election is that Blair might achieve a landslide even greater than those of 1997 and 2001. Fanciful? Blair himself sees the Conservative threat as growing, but still negligible. He talks to his entourage about three phases of opposition - the first "job shock" phase, when everyone is retrenching (Labour vintage 1983), the second phase where oppositional politics is developed (Labour under John Smith), to the final phase of a credible alternative government. He assesses the current Tories under Iain Duncan Smith as being somewhere between phases one and two - in other words, a long way away from power.

In Blair's mind, it comes down to power. The reason he does not see things the way so many in his party do is that he expects so little from them. He believes his activists should celebrate the very fact that he is still there, in Downing Street. Everything he is doing is unprecedented. "You have to realise that all discussion of second-term politics was, until now, an academic exercise for Labour," says one of Blair's advisers. Another says: "When people say the project has gone wrong, what is it exactly that they're complaining about? What exactly has gone wrong? After all, we would rather be where we are than in opposition."

Labour, in the minds of many Blairites, is still house-sitting. And yet, on 2 August, Blair will set a new record for his party for a continuous period in office. Next year, he will mark a decade as party leader.

The Prime Minister is more firmly ensconced than his opponents would care to admit. His sanguine nature derives from a fundamentally different interpretation of the public mood. He disputes the four conventional wisdoms of the London media-political world: that the people have stopped trusting him; that he will not be able to deliver tangible improvements in public services; that weapons of mass destruction are more important than ridding Iraq of Saddam Hussein; and that, in domestic policy, he needs a big idea. When, his people wonder, was the last time the Swedes or the Germans asked their leaders for radical vision?

Blair was happy to oblige his old friend Peter Mandelson by spending a long, hot weekend listening to speeches about "progressive governance". But for him, the real attraction of the event was to see so many representatives of the centre left in London - to reassure him that, whatever happened with Iraq, he still counts.

For all his attempts to paper over the cracks, Iraq mattered to the international delegates. Laurent Fabius, the French Socialist former prime minister, captured the mood when he declared that "everyone can see the difference between Bill Clinton and George Bush". Anyone who professed to be on the centre left, he suggested, had to know which side they were on. Blair did not appreciate that. At the end of the gathering, his attempts to lure social democrat heads of government to approve a policy document endorsing the doctrine of humanitarian intervention was blocked because they saw in it an attempt to draw them into backing his war against Saddam.

Nobody around Blair still believes that Iraq has produced any political benefit for him. Their best hope is that the issue disappears. The public expressions of vindication are now a defence mechanism to offset the attacks, nothing more. One of the more intriguing by-products of the fiasco, especially over the past few days, is a desire among some to recalibrate the relationship with Washington.

"Tony needs to create a separate identity for Britain," says a cabinet member staunchly loyal to Blair. "He needs to show that we are allies of the US - under particular circumstances - but that, ultimately, we have little in common with a right-wing American government. It is with Europe that we identify ourselves." That opinion is still the minority view among the inner circle. It will take much more for Blair himself to subscribe to it, but the more the Bush administration shows it is happy to land him in trouble over weapons of mass destruction or the dodgy "Niger nuclear" connection, the more he might begin to wonder.

Some supporters also hope Blair will conclude that he should cease to portray himself as a global diplomat. "Tony is damaged goods over Iraq," says one minister. He suggests that the latest grand tour of the United States (for Blair's congressional medal), China, Hong Kong and Japan should be his last. "He might repair the damage eventually, but it is time to retrench, to focus on the domestics." Blair alluded to the limits of foreign affairs in a dinner speech to the great and the good of the "progressives" world on 12 July. He recalled canvassing in Hackney, in the East End of London, in the late 1970s, knocking on the door of one elderly woman, handing her a CND leaflet and promising her that the borough would become a nuclear-free zone. Blair told his audience that the woman replied: "I haven't got nuclear weapons. I've got rats."

The domestic agenda is - as ever with Blair - one of piecemeal reform wrapped up in radical language. Behind the scenes, away from the overheated arguments about foundation hospitals and tuition fees, the government is discreetly pushing through its agenda of the marketisation of public services. Overall "delivery" may be happening, but at a far slower pace than Blair wanted, and disproportionate to the investment. Downing Street was alarmed at a recent Audit Commission report that pointed to a 40 per cent increase in resources for the National Health Service against only 14 per cent improvement in output. That is now largely out of his hands. Measuring improvements, in any case, is extremely difficult. Voters are more likely to rely on subjective personal experience than discredited national targets and performance indicators.

Some around Downing Street now acknowledge that, from the start of the 2001 election, they got the tone of the public services debate wrong. Zealots around Blair allowed it to be set purely in terms of private versus public. "Our arguments were framed in an unnecessarily confrontational way against the public sector," says one minister. Will Blair now see radicalism in terms more imaginative than simply teaching his party a few home truths? There is little evidence so far that he will. Where are the big new ideas that could actually galvanise Labour supporters? There is some new thinking going on around the idea of "life chances", of producing more facilities and opportunities for parents with small children, to focus more on the education needs of the very young. There is some thinking around "pay as you go" for certain services, especially in transport, where Blair is increasingly attracted to the experiment of congestion charging, launched by Ken Livingstone, the Mayor of London, and to road tolls. But it is still at an early stage. "Tony is impatient with ideas. He is not sure they matter that much," says one supporter.

Party headquarters, meanwhile, is hoping to instil greater enthusiasm and discipline by defining the whole of the next two years in terms of the general election. The real battle, however, will take place beyond that. Even among trusties in Downing Street, it is no longer taboo to think of life after Blair. (When it comes to Alastair Campbell's future, ministers do not talk of if he will go, but when, with the shortest odds on some time between the end of the party conference in October and Christmas.) Alliances are being carefully formed. Positions are being taken. With the departure of Alan Milburn, the prospects for the ultra-Blairites (for that now read "Kinnockites") have never been so slim. Charles Clarke has always been seen as the likely fall-back, but Patricia Hewitt is receiving some support. David Blunkett could offer himself up as a candidate, but he has been seen assiduously courting the Chancellor recently.

The most intriguing alliance is between Robin Cook and Peter Hain. The two were long-time allies, with Hain urging Cook to stand for the leadership after John Smith's death. Cook tried to have Hain installed as minister for Europe in May 1997, only for the Prime Minister to veto the idea. Relations between the two cooled for a while, but they are now closer again. Hain is working himself into a position to stand as the candidate of the "inside left", with the previous roles being reversed and Cook backing him from the outside. His recent spat with Blair over tax will not have done him harm.

And yet, for all the talk of alternatives, Gordon Brown's position appears stronger than it has been for some time. The Blairites' talk of elbowing him out of the Treasury and into the Foreign Office now seems as far-fetched as their assertions that the threat from Iraq was "real and growing". Brown will stay just on the right side of the fence as the battles over tuition fees and foundation hospitals reach their peak. But everyone knows where he stands.

Brown will not be the one chastised over Iraq at the TUC and Labour conferences. He will retain his veto on the euro, but might be open to persuasion if Blair names his date for moving on. He will put himself in a pivotal position in all election planning. In the meantime, he will attempt to recast the public services debate more in the terms of his "fairness" agenda. All around him ministers and party officials are watching carefully.

Fast-forward to September, away from the febrile talk of July, and Blair will re-emerge rejuvenated, ready to take on all comers. The problems of Iraq will not go away, but he is assuming that the public's interest will. He might even lose the odd vote in the Commons or at the conference, but that is the stuff of normal politics. Blair's attention is already turning to the general election and to his third victory. Look no further, people around him say, for the answer to the question of what he is for.

Additional research by Dan Rosenheck

Past problems

29 January 2002 George W Bush calls Iran, Iraq and North Korea an "axis of evil" in his State of the Union address

7 September 2002 Blair, at Camp David, supports Bush's war plans, but urges him to go down the UN route

24 September 2002 Downing Street releases dossier on Iraq's chemical and biological capability, and nuclear potential

8 November 2002 UN Security Council passes Resolution 1441 declaring Iraq in "material breach" of its disarmament obligations. High point of Blair diplomacy

January-March 2003 Blair fails to secure a second UN resolution, and cites Iraq's weapons of mass destruction as a real and growing danger

3 February 2003 "Dodgy dossier" released

19 March 2003 War begins

9 April 2003 Statue of Saddam toppled; the war in effect over

April to the present day Iraq strategy unravels. WMDs not found. Blair accused of exaggerating intelligence to justify war. Violence intensifies against occupying troops and chaotic US-led "reconstruction"

Future Problems

8-11 September 2003 TUC conference. A new generation of union leaders is set to attack Blair over public services and Iraq

September 2003 Parliamentary intelligence and security committee, which has carried out its inquiry in private, is due to deliver its findings on Iraq and intelligence. A highly critical report would increase pressure on Blair

28 September to 2 October 2003 Labour Party conference. Will Blair be given a rough ride, or will (as on previous occasions) delegates rally round him?

15 October 2003 Parliament returns. Fractious autumn beckons with rebellion in the Commons over tuition fees and resistance in the Lords to plans for foundation hospitals

November 2003 Queen's Speech. Will the next parliamentary session see a repeat of the now-traditional mix of tough criminal justice measures and legislation to reform public services, or will there be more to enthuse Labour MPs?

Autumn/winter 2003 Bush re-election campaign gets going. Democrats likely to increase attacks on him over Iraq. Will that rebound on Blair?

The line-up for the leadership

Gordon Brown The Chancellor relies on an even smaller and closer-knit group of confidants than does Blair. A government under him would be no more collegiate. More emphasis would be laid on poverty reduction and social fairness, although redistributive measures would still be concealed. The macroeconomic framework would be unchanged. On foreign policy, he has little experience. He would not recalibrate Britain's alliance away from the US and more towards Europe, but he would focus less on personal relationships and idealistic notions of intervention, and more on national interest. Euro policy would be somewhere between cool and hostile - that is, unless he had already given it the go-ahead as part of a deal for Blair to stand down.

Peter Hain The present Leader of the Commons, who has sought to introduce more candid debate about taxation, would have a better chance of winning over trade unions and constituency parties than he would of convincing "Middle Britain" to continue to vote Labour. For that reason, he would be the underdog in any leadership contest. A strong performance, however, would enhance his power base and that of the "soft left" in any future Labour administration.

Charles Clarke Someone would be required to keep the torch of Blairism alight . . .

David Blunkett An intriguing option, but an unlikely one. His law and order policies might strike a chord with some core Labour voters, but they appear to have the reverse effect on those in the movement who would determine the next leadership contest. Still, his increasing alliance with Brown is something to watch. Chancellor, perhaps?

David Miliband The 38-year-old, baby-faced schools minister is many people's choice for the next leader but one. He established his reputation by running the Downing Street Policy Unit for four years. Since then, he has been careful not to be labelled in any camp.