The overnight rise of David Cameron to become the favourite in the Tory race worries the two other parties. Although they hope his lack of experience would make him William Hague Mark Two, they fear privately that he would connect with the voters and transform the Tories in the way Tony Blair revived Labour. The two parties also fear Kenneth Clarke. Although Labour would portray him as a throwback to the bad old Tory years, it knows that the voters don't really see him like that.
There is no doubt that the Labour and the Liberal Democrat leaderships would prefer to see the Tories led by David Davis or Liam Fox. Although both men pay lip service to the party's need to change, they would probably not change very much. The Tories would remain a right of centre party, while a Cameron or Clarke regime would pitch the Tory tent firmly on the centre ground.
Mr Blair told Labour MPs at their weekly meeting that the party should regard it as a compliment that the Tories were trying to move on to their territory. He added that Labour should not retreat but "raise the bar higher". Some of his MPs saw this as a signal that he would push Labour to the right to keep the Tories off the cherished centre ground. He has repeatedly pushed the Tories rightwards by colonising their natural turf. It has been so successful for Labour that Mr Cameron has decided not to fall into any such traps if he becomes Tory leader. If Labour steals yet more Tory clothes, he will welcome it - and not lurch to the right to find some new ones.
Blair aides insist that what the Prime Minister meant was that Labour should not shift to the left if the Tories join battle in the centre. Since the May election, there has been a debate inside Labour about whether the party should give priority to wooing back the progressive voters who deserted Labour or focus on the old Tory foe. Mr Blair thinks that veering left to win back voters from the Liberal Democrats would be electoral suicide, allowing the Tories to occupy the vacant middle ground. Although some allies of Gordon Brown hope his plan to build a "progressive consensus" would allow a little tacking to the left, the Chancellor is making it increasingly clear that, as Prime Minister, he would seek to dominate the centre ground just as much as Mr Blair has.
Interestingly, some of the younger generation of Blairite and Brownites take a different view. They are less haunted than their masters by the wilderness years in opposition and believe it would be healthy for politics for the two big parties to slug it out in the middle, which might create space for Labour to be more radical in tackling poverty and inequality. "It would be good for progressive politics if the Tories move to the centre," one young Labour turk told me. So while the Labour high command prays for an unlikely "Davis-Fox" dream ticket, othersquietly wish Mr Cameron and Mr Clarke well.
The Tory contest also overshadowed proceedings when Liberal Democrat MPs held a two-day strategy session in the Hertfordshire countryside. They discussed how to sharpen up their act and, with the help of two experts from Shell, did some "scenario planning" for the next four years.
However, the nightmare scenario in most minds was that the third party would find little space if the big two camp on the centre ground. So Charles Kennedy's party is looking for a gap in a crowded market and senses an opening over what they regard as the Government's illiberal anti-terrorist laws.
Sir Menzies Campbell, the party's deputy leader, told me yesterday: "What we need is to be open-minded and receptive to new ideas - not daft ideas - and a restatement of liberal values. If the divide between the Conservatives and Labour is about who is the best manager, there will undoubtedly be room for us to make the 'values' case."
The problem is that some fresh ideas, such as selling off the Royal Mail and taking a less slavishly pro-European line, were shot down in flames by last month's party conference. So the Liberal Democrat leadership now wants to give MPs more influence over policy, which will anger some party activists.
To what extent the Liberal Democrats and Labour have to fear the Tories will be determined by Tory MPs next week when they chose two names for the ballot of the party members.
Fittingly, as the Prime Minister attended Baroness Thatcher's 80th birthday party on Thursday, one Blair aide told me: "Margaret Thatcher forced Labour to change. Now, perhaps, we are forcing the Tories to change at long last." Might Mr Blair's legacy turn out not to be Iraq, public services or Europe, but a reformed Tory party? We will soon find out.Reuse content