His triumph has been to transform politics. His tragedy is nobody cares

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If Tony Blair could "move on", what would he move on to? He decided last week that the press would not allow him to put the Iraq war behind him, so he had to make a stand and assert - yet again - what he believes. But before he delivered his speech in Sedgefield on Friday, there was a lot of debate in No 10, not about its content but about whether he should give it at all. In the end, the decisive factor was that the issue would not go away if he ignored it. He knows that the fuss about the legality of the war is far from being the end of the matter.

Sometimes in his speeches - especially those he writes himself, such as this one - he is straightforward about his calculations. As he said: "Once this row dies down, another will take its place and then another and then another." He knew he had nothing to gain by trying to interest journalists in the success of NHS Direct. He decided to at least try to gain credit for tackling the issue head on. That way, he could attempt to get his arguments back in the headlines, instead of allowing the news to be dominated by conspiracy theories about the Attorney General.

In this respect, the speech was a success. But it could not conceal the fact that his performance was essentially a defensive operation. And it has not achieved the seemingly unattainable goal of allowing Blair to put the war behind him. Which is a pity. Because if the fog of war did clear, it would reveal a domestic political landscape that has changed in important ways.

We are now only 14 months from the likely date of the next election; that election will not be fought on the rights and wrongs of the Iraq war for the simple reason that the two largest parties supported military action - however much Michael Howard and Malcolm Rifkind may now be trying to wriggle out of this fact. The Liberal Democrats may do very well out of their anti-war stance, but that is hardly a programme for government.

So what will the election be about? This is where domestic politics would be interesting again were they not obscured by the war. On 17 March, Gordon Brown presents his eighth Budget, and over the past three weeks the Conservatives and Liberal Democrats have been trying to pre-empt him by setting out, in unusual detail, where they stand on the central issues of taxing and spending. What is striking is the similarity of the three parties' plans. All are committed to substantial increases in public spending on health and education for the foreseeable future. (No one has to worry too much about having to raise taxes to pay for this because the economy is proving more buoyant than many expected - which is fortunate, since only the Liberal Democrats, in the case of high earners, are willing to increase tax rates.) The Conservatives' main area of difference with the Government is their intention to freeze public spending on everything except health and education.

Yet this is going to be a difficult line for Oliver Letwin, the shadow chancellor, to hold, because spending increases have to be paid for by cuts elsewhere. Thus, we have the implausible mathematics of 5,000 extra police officers - on top of the record numbers already delivered by Labour - paid for by savings on the asylum system, although there is no reason why a tougher policy towards asylum-seekers should be any cheaper. And there is the even more implausible calculation of a rise in the state pension, paid for by "floating pensioners off" means-tested benefits. Meanwhile, Nicholas Soames, the Tory defence spokesman, has advertised his outrage at the idea of freezing his budget.

But the problems that Letwin has with the frozen part of his spending plans have distracted attention from the really surprising element, which is the increases planned for health and education. In this, the Tories have been forced to copy Labour's ploy at the 1997 election, which was to accept their opponents' spending plans for two years after the election. Where Brown promised before 1997 to keep spending down for two years and then increase it only as prudence allowed, Letwin is promising to keep the rate of increase in spending up, and then possibly offer tax cuts in the future. Except that Letwin has gone even further than Brown did. Should he move into No 11 in May next year (as Brown takes over at the International Monetary Fund in Washington), he intends to continue Labour's spending plans for three years instead of two. His pledge of big increases in health and education covers the period up to 2008. This means that the Labour experiment of pumping huge amounts of money into the big public services, while trying to reform them, will continue for most of the next Parliament, whoever wins the election.

There has been a lot of commentary about Conservative opportunism over the past week. But opportunism is just another word for democratic accountability. Howard's shameless chasing after public opinion provides a valuable service in holding a mirror up to the nation. And in that mirror we can see the scale of the New Labour achievement, a monument jointly constructed by Blair and Brown. They have changed the balance of political trade so that a Conservative Party ideologically committed to lower taxes and a small state has had to accept that spending on health and education will go on growing 4 per cent faster than the economy as a whole for several years to come.

Blair's critics in the Labour Party, when they are not denouncing him as a war criminal, as Tam Dalyell did on Friday, complain endlessly that he has failed to roll back the Thatcherite settlement. This is a remarkable testament to the party's ability to win a victory and call it defeat. Not only have Blair and Brown won the argument with the Tories over the public services, but they have made huge inroads into child and pensioner poverty. The day after the Budget next week is the fifth anniversary of Blair's promise to abolish child poverty within 20 years. We ought to be a quarter of the way to achieving that goal, and the extraordinary thing is we are. The Joseph Rowntree Foundation says the Blair government has lifted one million children, and 1.2 million pensioners, above the official poverty line. And the most extraordinary thing of all is that hardly anyone knows.

Blair's achievement is to have transformed the political landscape in Britain such that the next election will be fought entirely on Labour's terms. His tragedy is that, because of the war, he may not get any credit for it.