Lance Price: Rupert Murdoch - the man who would be kingmaker

Can the world's most powerful media baron make or break politicians?

It was a bravura performance, even by Rupert Murdoch's own standards. Not content with having faced down a shareholders' revolt to see his 30-year-old son, James, confirmed at the top of BSkyB, the media tycoon went on to cap a good day's work on Friday by sending shivers down the collective spines of the Prime Minister and his government. And, for good measure, in the process he brought a smile to the already smirking face of the new leader of the Conservative Party with the suggestion that his newspapers, including The Sun, could switch allegiance at the next election.

So far Labour has had little choice but to put a brave face on it all. The election is still 18 months away at least, and Mr Murdoch's comments fell a long way short of announcing that he was returning to the Tory fold. Indeed, for him, they were surprisingly muted.

But before the Tories start to think that Christmas has come early, they should take a good long pause for thought. The gift that Mr Murdoch is dangling so temptingly before them, just out of reach, may not be as appealing as the paper it's wrapped in suggests.

Of course, to an aspiring Prime Minister, Mr Murdoch's support comes wrapped in some very attractive papers indeed. The Sun may not have won it, as it claimed back in 1992, but the backing of the News International stable, including the News of the World and The Times, has been of huge benefit to the Labour Party. Which is why the party, and Tony Blair personally, have invested so much time and effort in keeping on the right side of News International and its powerful boss for the best part of a decade.

When I worked inside No 10, relations with Mr Murdoch were considered such a sensitive matter that they were dealt with by just a handful of Mr Blair's closest advisers. Two of them, Alastair Campbell and Anji Hunter, his former special assistant, have now left. But those who remain know that to lose Mr Murdoch's support would be seen by the Prime Minister as a big blow.

The Prime Minister tells us he's developed a thicker skin over the years. The man who at the beginning enjoyed something approaching adulation from the media has had to get used to life with a daily diet of fierce media criticism. But he won't be ready to give up Mr Murdoch's support without a fight. Not for nothing did he make a 22-hour journey to address Mr Murdoch's executives at their private resort off Australia in 1995, or to keep in regular personal contact ever since.

There was never any discussion that I can remember about whether it was right or wrong to court him so energetically. That his support was a huge bonus was a given. There was certainly never any doubt that that's how Mr Blair saw it.

The trip down under was before my time in Downing Street and I was never privy to the contents of the discussions. There are those, of course, who believe the then Leader of the Opposition was in a mood to do a deal. That the law passed in his first term as Prime Minister to allow foreign ownership in British broadcasting was part of that deal. And Mr Murdoch wouldn't have been in London for the BSkyB board meeting without it.

I don't believe the Prime Minister I got to see at close quarters for several years did such an explicit deal with Mr Murdoch any more than he did one with Gordon Brown over the leadership itself. But I'm happy to accept that Mr Murdoch's much-valued support doesn't come cost free. For that reason alone, Michael Howard should be on his guard.

Yet none of Labour's careful cultivation - the dinners at Downing Street, not all of which were made public at the time - has altered the fact that Mr Murdoch has a problem with the Prime Minister, rooted in the former's own political contradictions. They show that, even now, he hasn't come to terms with what Mr Blair really stands for. And, for what it's worth, it also says a huge amount about where power lies in Britain today.

If the News Corporation boss wants to know what makes Mr Blair tick, he need only read the Labour leader's own rewriting of Clause Four of the party's constitution. The bit that talks about "power, wealth and opportunity ... in the hands of the many not the few".

How does that square with a 74-year-old man, who doesn't even have a vote in Britain, going into a BBC studio and pointing out that he might have the opportunity to use his considerable wealth and power to oppose a government elected with an enormous popular mandate? As ever, the issue Mr Murdoch raised was Europe. In this case, the proposed European constitution. "I don't like the idea of any more abdication of our [sic] sovereignty," he growled.

Fortunately for Mr Blair, Parliament's sovereignty comes from the will of the people, the many not the few. Labour would have won in 1997 and again in 2001 without the support of Mr Murdoch or any of his illustrious titles. And Labour can win again in 2005 or 2006, too, whatever Mr Murdoch decides.

As for Mr Howard, the real reason he should look at what Mr Murdoch says with foreboding rather than glee is because the politics the media mogul stands for are exactly the politics the Tories must reject if they are to regain public support. At the heart of that politics is the kind of strident anti-Europeanism that finally did for Margaret Thatcher. The adulation of Mr Murdoch and The Sun couldn't save her in the end, and they offer no salvation to Mr Howard now.

The truth is that Mr Blair would be delighted if the Tories decided to fashion their policies to suit Mr Murdoch. As it happens, Mr Howard shares Mr Murdoch's anti-European instincts, so he may be happy to pay the price. But if he does, he'll pay a heavy price for some good headlines. If the Conservative high command still thinks New Labour robbed them of their innate right to rule through good media relations, then they've learnt nothing at all.

The success of New Labour depended on building and maintaining a much broader coalition of support than any party, let alone the Labour Party, had managed in recent political history. Some of that support has fallen away, as it was bound to do, but an awful lot remains.

Mr Murdoch knows that, which is why his words this week were so uncharacteristically hesitant and conditional. "Let's see how Mr Howard performs, let's see how the Government performs," he said. In other words, if the public don't warm to a Howard-led Tory party then neither will he, no matter what policies they pursue.

The Sun never won it, they just backed a winner. So, if the News International titles do abandon Labour, it will be because they see that the British people have shown themselves ready to do so. The Sun that has shone with such warmth on Mr Blair may yet go in, but until then we are entitled to ask if Mr Murdoch is a weather vane - or just plain vain.

Lance Price is a former director of communications for the Labour Party