The Week in Politics: Blair still haunted by Iraq as he tries to reconnect with party

The Prime Minister's advisers have come up with a new "unique selling point" as they try to repackage the Blair brand for another party conference, another general election and even another full term. It is to present Mr Blair as the man with the experience and the courage to address the big challenges facing Britain.

The Prime Minister's advisers have come up with a new "unique selling point" as they try to repackage the Blair brand for another party conference, another general election and even another full term. It is to present Mr Blair as the man with the experience and the courage to address the big challenges facing Britain.

He will identify some of these big themes for a third Labour term in his speech to the party's annual conference in Brighton next Tuesday. The options being kicked around this weekend, as he writes his speech, include the looming pensions crisis and Labour's unfinished business on welfare reform and education. With growing evidence that people's educational prospects are decided by the age of seven, we can expect a major push on help for the under-fives. Another possible goal is to do more for the 50 per cent of youngsters who will not go to university, even if Labour achieves its target of ensuring that the other half does.

Mr Blair wants the Labour conference to be dominated by policies to improve the lives of Britain's "hard-working families". One big idea to be trumpeted next week will be universal but flexible child care, for which the better off would pay but which the poor would get free. More help for first-time buyers struggling to enter the housing market is also on the cards.

As this newspaper revealed this week, many middle-class people feel they have "lost" Mr Blair to Iraq in his second term. The danger for the Prime Minister is that his best-laid plans to address their concerns could be scuppered by the terrible events unfolding in Iraq. The security problems would have been a bad enough backdrop to the conference. But Ken Bigley's harrowing plea to Mr Blair to save his life has ensured that Iraq will dominate next week, even if Labour Party managers suppress grassroot demands for British troops to be withdrawn.

While trying to devote most of his speech to domestic policy, Mr Blair will have to address Iraq. To warm the cockles of his own party, he will promise action to tackle Africa's problems when Britain holds the G8 presidency next year. But it will be a very tricky balancing act.

I have lost count of the number of times I have written that the cloud of Iraq has returned to haunt Mr Blair. But it happened again this week: the Prime Minister had that haunted look in his watery eyes. His advisers are nervous and uncertain about the impact of the hostage crisis. They believe the British people will understand the Government cannot give in to terrorist demands. They hope people will be persuaded that the crisis spotlights the enemy in the global war Mr Blair has been banging on about, and is not a consequence of the Iraq war. But they fear some people will blame Mr Blair for getting us into the Iraq mess in the first place.

The conference was meant to provide the stage to show that the New Labour project, and Mr Blair personally, have not run out of steam for a third term. There is much talk of the Prime Minister getting a "second wind". He now apparently wants to go "on and on" and is ready to tell the voters he intends to serve a full third term if he wins another election. If he is to do so, Mr Blair needs to reconnect with his own party. The Brighton conference may not be representative of the party in the country. Mr Blair's critics fear it will be a pre-election rally. But even his friends accept Mr Blair needs to get his party behind his project.

Patrick Diamond, a Downing Street special adviser and editor of a new book called New Labour's Old Roots, warns: "A party of blind obedience and mindless loyalty has no long-term future." He says New Labour must "furnish the party with a stronger, more confident social democratic doctrine". After seven years in power, Labour has not matched Margaret Thatcher's "offer" to individual voters, who understood how her "less state, more individual" philosophy translated into council house sales, a share-owning democracy and lower taxes. Labour hopes new "radical" policies such as universal child care will provide its missing anchor.

The Blair camp says the Prime Minister is his own master after his dramatic reshuffle two weeks ago. His decision to install Alan Milburn in the pivotal election role previously held by Gordon Brown will, I suspect, prove a defining moment of his premiership.

It seems odd Mr Blair wants to sideline Mr Brown, who has built the rock of economic stability without which Labour would surely be 10 points behind in the opinion polls. The Blairites claim the Prime Minister's patience with an obstructive Mr Brown has finally snapped, and that he is determined to be his own man for the rest of his time in Downing Street.

The Blair camp is anxious about how Mr Brown will play it when he makes his conference speech on Monday. Some Blairites calculate that Mr Brown cannot make another "real Labour" speech which distances himself from Mr Blair, because he did that last year. But there are dark warnings from the Brown camp to expect an explosion at some point; the only issue is when.

The Prime Minister needs to find a new modus operandi with his Chancellor. But their once-strong relationship can never be the same again.