A Week in Politics: Iraq's clouds may have a silver lining for Blair

"If it were not for Iraq, we would be in a fantastic position," three ministers have said to me in the past 10 days. So have several Labour advisers. Iraq is the haze that will not lift and is clouding the Government's achievements.

"If it were not for Iraq, we would be in a fantastic position," three ministers have said to me in the past 10 days. So have several Labour advisers. Iraq is the haze that will not lift and is clouding the Government's achievements.

The deep frustration about it in the Government is tangible. Ministers know Tony Blair is going to get a "bloody nose" at the 10 June European and local elections and expect another flurry of speculation about whether he will resign. Without Iraq, he might only have got the gentle kick up the backside given to all governments in mid-term.

The message from Labour's remaining frontline troops in the constituencies is that the revelations about prisoner abuse in Iraq had a terrible effect on public opinion. The Daily Mirror's photographs may have been fake but ensured that British troops - and Mr Blair - were tarnished by the torrent of mistreatment allegations in the United States.

But if - and it is a very big "if"- a genuine handover of power to the Iraqis can be completed successfully on 30 June, the British people might just begin to notice other things. When the Cabinet discussed public services on Thursday, the mood was quietly, surprisingly, upbeat. Mr Blair said there was growing evidence that people are noticing improvements. The green shoots of delivery were finally visible. But he acknowledged that people were not yet connecting them to the Government's actions, which ministers agreed was a key challenge for the months ahead.

One Blair aide said: "We have gone full circle. In the first term, there were lots of claims about delivery but no one noticed it. Now it is happening, people are experiencing it but it is largely unreported by the national media."

Partly because of Iraq, the good news is being overshadowed. Sir Nigel Crisp, the NHS chief executive, said in his annual report this month that "something big" is happening as the extra money delivers "sustained and accelerating" improvements. The take-up rate for the Government's tax credits hit a record 90 per cent, helping six million families. Unemployment fell to its lowest level for 29 years. But all that barely registered in the media.

Other policies beneath the Westminster radar may pay dividends in the real world. Five million carers who look after sick or elderly relatives will get special rights to request to work part-time and six million working adults without five GCSEs will be offered free tuition to help them move up the employment ladder. Measures to help millions of people suffering from chronic diseases such as asthma will follow shortly. Those ideas grew out of Labour's much-mocked "Big Conversation" with the voters. It is clever politics. So is Mr Blair's intense focus on anti-social behaviour, which wins few headlines but, as new powers take effect, is starting to make a difference. The economic stability delivered since 1997 is taken for granted. But perhaps it explains a remarkable ICM opinion poll this week that showed, for all Mr Blair's problems, when people are asked how they would vote in a general election, Labour enjoys a four-point lead over the Tories. "Without Iraq, we would be 15 points ahead", one Labour strategist told me.

If I were a Tory strategist, I would be asking why my party is not 10 points in front. Remember that Labour under Neil Kinnock enjoyed big poll leads over the Tories which melted away at election time. At this stage of the 1987-1992 parliament, the Labour opposition was 11 points ahead; the Tories won the next election by an eight-point margin.

This week's ICM survey will matter more in the long run than a YouGov poll which asked people how they would vote in next month's European elections. Among those "very likely" to vote, the Tories were on 31 per cent, Labour 23 per cent, the anti-EU United Kingdom Independence Party (UKIP) 18 per cent and the Liberal Democrats 15 per cent.

The Tories and Labour suspect UKIP's apparent surge is real. With perhaps only one in four voters likely to turn out, both main parties are fighting a pretty negative campaign designed mainly to get their core vote out. Labour says that "Britain is working" but screams loudest about the threat of "Tory cuts" while the Tories attack Labour's failure to delivery under the theme "let down by Labour".

Both campaigns are hardly likely to "reconnect" ordinary people with politics. At the same time, Labour folk complain politics is seen as "abstract" and say that explains why the Government does not get the credit for its hard-won economic prize or investment in public services.

"We realise that we have got to grow up a bit," said one Blair adviser. "People are not going to thank us or love us. We've just got to let the changes work through and hope people realise that things have improved."

Ministers now recognise there is little point in them trumpeting their achievements from the rooftops. The new strategy is to secure "third-party endorsements". People are more inclined to believe professionals than politicians, a legacy of the rows about "spin" and Mr Blair's huge "trust problem".

All roads lead back to Iraq: the biggest dent in Mr Blair's trust ratings was surely made by him taking the country to war on a false prospectus.

An improvement on the ground in Iraq will not restore Mr Blair's personal standing. But it might keep Iraq off the front pages and allow domestic issues to the fore. The Prime Minister is not counting his chickens. The current problems in Iraq are much worse than he ever imagined. But if he can find a way through, he could be in a remarkably strong position for next year's general election. The dark cloud that has eclipsed his second term may yet have a silver lining.