Peter Oborne

Brown lurks as Blair and Duncan Smith sink together

Brown lurks as Blair and Duncan Smith sink together

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There has been no more abject moment in the Blair premiership than last Tuesday afternoon's capitulation to the trade unions. The grandees of the movement, led by the new TUC general secretary Brendan Barber, were ushered with some deference into Downing Street. The ambitious Trade Secretary Patricia Hewitt, who has spent the past two years sucking up to the unions – or, as her allies prefer to put it, 'undoing the damage' caused by her predecessor Stephen Byers – viewed proceedings with pleasure. Finally, there was John Prescott, the Deputy Prime Minister, looking smug.

Under discussion was a new settlement between the unions and government. For the past six years Tony Blair has viewed the brothers with a certain hauteur. He has treated them like any other special-interest group – for instance, the CBI or the Green lobby – but has granted no special favours. Last Tuesday that changed. The unions have been incorporated into the formal machinery of government. They will have representation on a standing body, chaired by a minister, on public-service reform. Downing Street privately indicated that this is just part of a series of moves that will bring the unions closer to the Blair government.

Last Tuesday was a triumph for Brendan Barber, for Dave Prentis of the public-service union Unison, for John Prescott and for Old Labour at large. It was a humiliation for Tony Blair, who built his political reputation as the man who could stand up to the unions. It made a nonsense of the pledge he made in 1997 to 'govern as New Labour', and is just the first of a series of bitter pills that he will have to swallow in the coming months. As Tony Blair knows better than anybody else, the presence of the unions at the heart of policy-making hands public services over to the producer interest. Tuesday night's surrender makes reform quite impossible.

Only twice since the end of the second world war has the reputation of a serving prime minister sunk as fast and as far as Tony Blair's over the summer. One case was Anthony Eden, shot to pieces after the Suez campaign of 1956. The other was John Major after the Black Wednesday calamity of September 1992. The consequent loss of authority rendered both men powerless, even though John Major lingered on for years. The same catastrophe has now struck Tony Blair.

His key allies in government – Byers, Mandelson, Milburn, Campbell, Hoon – have either been disgraced or quit in despair. Just three Blairites remain in the Cabinet – the unelected Charlie Falconer, Tessa Jowell, by no means a heavyweight, and doomed, wretched Geoff Hoon. When Blair started out in power six years ago, Cabinet ministers sought advancement by ingratiating themselves with No. 10. Jowell is the only one still pursuing this undignified tactic. Hoon's political identity was as a pliable instrument of Downing Street, but he has been destroyed as a result and is now in the exit chamber. Other Cabinet ministers, now wide awake to the dangers of close association with No. 10, have begun to realise that the way forward is to build up a distinctive position of their own. In practice that means forging links with the unions and the activists, the two power blocs that will determine Tony Blair's successor as Labour leader. The presidential strategy self-consciously pursued by Downing Street for six years has collapsed, and with it the chance that Tony Blair can control the agenda of his own government.

The months ahead are a nightmarish obstacle course for the Prime Minister. Next month's Labour party conference will be the most interesting by far since he became leader of the Labour party nine years ago. It is likely to have more in common with the unruly conferences of the Kinnock years than with the bland ceremonies of the Blairite ascendancy. Blair is now so weak that the only way that he can calm rebellion is by caving in, as he did on Tuesday. At the moment he is apparently intent on pushing through his policy of tuition fees. He would be well advised to get out of this foolhardy commitment while he still can. It is hard to see how he will win the vote in the House of Commons. Plans for a referendum on a single currency – business leaders were being assured even early this summer that this was still on course – have been abandoned. Tony Blair is in danger of becoming a purely ceremonial prime minister, powerless to impose his own will on the government, incapable of influencing the trajectory of events. It has become very hard to see what is the point of Tony Blair. A meeting this week at Chequers, reportedly attended by Peter Mandelson, made a heroic endeavour to come up with an answer to this question, but failed to do so.

It has historically been the case that when one party leader has been down, the other has been up. A weak Major was balanced by a strong Blair, a weak Kinnock by a strong Thatcher, etc. A weak Blair is not, however, balanced by a strong Duncan Smith. Blair and Duncan Smith are linked like two drowning men. If Blair were an effective prime minister, Duncan Smith would quite likely be out. If Duncan Smith were an effective opposition leader, Blair's survival would be in grave doubt. Instead, they are sinking together. The best that can be said, from Duncan Smith's point of view, is that the catastrophic collapse in the standing of the Prime Minister has removed any likelihood of a Tory leadership challenge. Duncan Smith has failed to lead a dominant opposition. He has even failed to use the summer to deal with his own severe structural problems, of which the collapse in the relationship between party chairman and party leader is the most disabling. The LibDem leader Charles Kennedy possesses neither the energy nor the moral courage nor the vision to take advantage of the weakness of the two main party leaders.

Every government as despised as New Labour is today has lagged by a large margin in the polls. The singularity of the current political predicament is that it is the main opposition party, not the government, that lags. This is because the real threat to Tony Blair is not the Tory party; it is the Labour party. Labour has never liked Tony Blair, but for years it granted him respect. This summer it lost that respect. For years it tolerated him for naked political advantage. This summer, in a development of great danger for Tony Blair, he has for the first time started to record lower ratings than his own party. Gordon Brown lurks. He has been largely silent during the summer, save for a statesmanlike intervention on Third World debt. He is uncontaminated by the Hutton inquiry, or the dirty aftermath to the Iraq war. But he has stayed in touch. The man who negotiated the terms of Tuesday night's surrender was Douglas Alexander, minister of state at the Cabinet Office. Alexander is Gordon Brown's organiser and close ally. The really interesting political question this autumn is how many more humiliations like last Tuesday's can Tony Blair endure, and still retain his self-respect. There will be plenty.