Alan Watkins: Our scowling Chancellor's legacy may prove to be the bankrupting of the NHS

Cameron has shown no desire to outflank Blair over Iraq

The late James Callaghan will, I suppose, be remembered for three sayings. This is about par for the course, though other Prime Ministers, such as Disraeli, have done better. One of Jim's sayings was: "Crisis? What crisis?" The trouble was that he never said it. It was The Sun's paraphrase of his remarks at a press conference following his return from the Guadalupe summit in January 1979.

Earlier, in 1976, he had told the party conference that it was now impossible for any Labour government to spend its way out of difficulties. But the trouble here was that the words had been composed earlier by his son-in-law, Mr Peter Jay. We do, however, possess a genuine Callaghan, not a School-of-Callaghan or Studio-of-Jim. It is what he said to his young adviser, Bernard (later Lord) Donoughue, towards the close of the 1979 election campaign:

"You know there are times, perhaps once every 30 years, when there is a sea change in politics. It then does not matter what you say or what you do. There is a shift in what the public wants and what it approves of. I suspect there is now such a sea change - and it is for Mrs Thatcher."

The last such change occurred in 1997 with the return of a Labour government. With the election of Mr David Cameron as leader of the Conservative Party, are we now in the process of going through another one? It is a question which genuinely divides politicians, though admittedly the division reflects their interests and aspirations.

Thus the Tories want to believe that the sunrise is breaking over the hills, though some of them can be heard muttering that the dawn is a false one, and there will be storms and waves before the day is over. There are numerous Labour politicians who share the more optimistic Conservative view of the future. They tend to be on the left of the party - or, at any rate, to be suspicious of Mr Tony Blair and to want him to take his leave as soon as he decently can.

However, as I have pointed out several times in this space, if Mr Blair's pledge to serve a full term means anything at all (in Labour argot, a pledge being more solemn than a mere promise), it means he will hang on until the election or, at least, to within a few weeks of it, as Winston Churchill did in 1955.

In the past few weeks, there have been stories to the effect that there has been a new concordat between Mr Blair and Mr Gordon Brown, with Mr Blair promising to go sooner rather than later, the "full term" conveniently forgotten. This is supposed to account for a newly cheerful aspect to Mr Brown's countenance. I am unable to say that I had noticed it myself. The Chancellor seems to be scowling away as purposefully as ever, though to what purpose precisely, who can tell? Who indeed! To be truthful, I am growing increasingly tired of reports of new accords between Mr Brown and Mr Blair. Manifestly, they are not worth the paper they are not written on.

Even so, the arrival of Mr Cameron has changed the terms of the argument. We can all write the Brownite script: Of course Blair is jaded ... 12 years as leader ... Brown ... trusted ... new face...breath of fresh air ... This analysis contains several faults, of which the chief is that Mr Brown has been around for as long as Mr Blair and sometimes, it seems, even longer. There is also the assumption, occasionally stated but more usually regarded as so obvious as not to need stating, that Mr Brown, though he may not be old Labour, is real or authentic Labour.

And yet his great achievement is to have restored the means test. In the 1950s, there was a debate on this conducted at a higher level than anything going on today. It was about what was called selectivity in the social services. It was carried on between the Conservatives Enoch Powell and Iain Macleod, who were for selectivity, and the Labour theoretician Anthony Crosland, who favoured universality. Mr Brown has now settled matters by coming down on the side of the Tories.

His other achievement is the adoption of the private finance initiative, as much over railway lines as over hospitals. This means that, say, Hewitt Investments of Lombard Street is guaranteed large instalments of taxpayers' money in return for building a hospital which eventually becomes the property of the shareholders of the enterprise in question. No wonder the NHS is going bankrupt. That, indeed, may turn out to be Mr Brown's enduring legacy. What a grand old socialist he is!

Between him and Mr Cameron there is a certain symmetry. For the impression they produce, both of them depend on illusion rather than reality. In shorthand, both give the impression of being further to the left than they really are. As a friend of mine remarked recently of Mr Cameron: once a PR man, always a PR man. And he did, after all, write or partly write Mr Michael Howard's manifesto for the last election.

Mr Howard, like Mr William Hague and even, to a lesser extent, Mr Iain Duncan Smith, started life as leader by proclaiming a hopeful ecumenicism. They then turned in on themselves, with disastrous consequences electorally. Mr Cameron has started off as they did, but in more dramatic form. He realises, I think, that Mr Blair can always outflank him on the right. He can accordingly move inside Mr Blair and, for that matter, Mr Brown as well: all the more easily as the Liberal Democrats are imploding, though they may yet recover before an election which could be over four years away.

In one area, however, Mr Cameron has shown no desire to outflank Mr Blair. That is over his support for Mr George Bush and his policy in Iraq.

The odd thing is that, though there are four years to go before the sea change to which Callaghan referred can come about (if it does come about), it nevertheless feels like the end of a Parliament rather than the beginning of one. Where will all those Labour women MPs go? The higher reaches of the social services bureaucracy cannot possibly accommodate them.

I have always believed that it is the function of the Commons to defeat the government and that the government should accept the defeat - as Mr Charles Clarke has sportingly accepted the rejection of the oppressive measures on religious hatred: no reason why the government should always have its way. At the same time, people expect it to have its way. When it does not, it seems to be on the slide, as this one now seems to be.