Blair's future assured but Hague's is in doubt

Happy anniversary, Mr Blair

Happy anniversary, Mr Blair. Incredibly it is two years since Tony, Cherie and their three children swept into Downing Street on a tidal wave of hope and expectation - and against a backdrop of near-universal relief that the Major government had finally been put out of its misery.

From the moment of arrival it was clear that Prime Minister Blair was fixed on that which had eluded all his predecessors - the achievement of a full second term. And as he surveys the British political landscape this morning, he could be forgiven for thinking the next election already in the bag.

Next Thursday - with the elections for the Scottish Parliament and the Welsh Assembly, and for thousands of council seats across the country - comes the Labour government's big mid-term test. But all the mid-term blues are to be found in Conservative Central Office.

The next general election campaign will almost certainly be under way in two years. Yet, as Prof Anthony King observed in yesterday's Daily Telegraph, "far from breathing down Labour's necks, the Tories are in danger of being lapped". It was never going to be easy, given the scale of the May 1997 massacre, not to mention the enduring nature of Mr Blair's personal appeal. His star indeed has risen as lesser ministers have stumbled or fallen. And the departure of Mr Mandelson and the end (at least for the present) of the war of the spin doctors has enhanced the overall impression of government competence.

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Far from squandering the Tory legacy, Chancellor Brown's early decision to delegate control of monetary policy to the Bank of England underpinned his commitment to sound finances and low inflation. And for all the unanswered questions still about the future direction of the war in Yugoslavia - and the if, how and when of a commitment of ground forces - Mr Blair is proving at least as popular a war leader as the Iron Lady, from whom he still seeks advice.

That is not to say it has all been plain sailing. There have been personal embarrassments, serious questions of "sleaze", and policy failures, most notably in the area of welfare reform. And despite the gloom now enveloping them and their masters, a few plucky souls at Conservative Central Office were yesterday detailing Labour's "broken promises".

The most serious Tory charge is over Mr Brown's tendency to tax by "stealth". They claim the government is raising some £40.4 billion in extra taxes over the lifetime of this parliament, an extra £1,500 for every worker in Britain. With waiting times to get on to hospital waiting lists up, three out of four children in larger classes, and police numbers actually down by about 1,000, some officials at least believe they have the makings of a credible assault on the government.

And, of course, in this of all weeks, they would have expected the Tory leadership to be successfully feeding and exploiting widespread concern about devolution, and "the slippery slope" to eventual Scottish separation.

But to their despair the Tory party has spent the run-up to the mid-term elections fighting an altogether absurd internal battle over its attitude to the public financing of education and the National Health Service.

There was nothing wrong with the deputy leader, Mr Peter Lilley, declaring 11 days ago that the party does not regard privatisation as the cure for all the ills of health and education. What was wrong, and what set the party alight, was "the spin" - that this marked a decisive break with the Thatcher era, and an end to the party's belief in market forces.

Anybody who knows anything of the period can testify that Mrs Thatcher habitually took flight when any right-wing guru or think-tank suggested she do anything much about the NHS. Nobody seriously disputes that Mr Major poured money into it as if there were no tomorrow.

For all that, Mr Hague is saddled with the reality that the perception of Tory hostility to a free NHS took root, and persists to this day. Not hard to understand, then, that Mr Lilley should want to try and slay the dragon.

But to the disbelief of many Tories he did so with language implying an apology for Thatcherism - and a willingness to place total reliance on the public purse, at a time when private/public funding initiatives are an increasing characteristic of Labour's own attempt to meet the health demands of a society in which people can expect to live longer.

One party source yesterday described it as "all a problem of language and of process". But for all the soothing words, the reality is that Mr Lilley is now fighting to save his job. And even if he becomes the "scapegoat", it is not certain that will be enough ultimately to save Mr Hague.

Well placed sources confirm that, while nobody has a clue with whom they would replace him, Mr Hague's future is being seriously and darkly discussed.

It could hardly be otherwise. According to yesterday's Gallup poll for the Daily Telegraph, two-thirds of voters see the Conservatives as divided, and the party faces voters in next Thursday's contests with apparently less support than at the general election.

While the number of voters thinking Mr Blair "would make the best prime minister" has risen in the past four weeks to 56.4 per cent - the number holding that view of Mr Hague remains doggedly fixed at 12/13 per cent.

Beyond next Thursday, the clincher for Mr Hague could come with the European elections in June, should the party fail to make a breakthrough even with an electoral system that might have been designed to aid its recovery.

Against that, MPs and activists wring their hands in anguish when asked to pick a successor capable of engaging the electorate while straddling the party's Euro faultline. And if they come to believe failure is inevitable, they may very well decide that Mr Hague's remaining service to the party will be to "do a Kinnock" - lose the next election, and then depart the scene.

"Things can only get better" was Labour's pre-election anthem. Mr Blair could hardly have imagined they would go on getting better for so long after it.