Steve Richards: Gordon Brown is in a surreal leadership contest against himself until 2008 - or later

I have no doubt that Brown is determined to be Prime Minister within the next 18 months in order to begin what he calls the renewal of the party and the country. Blair plans to stay in post for up to three years to entrench more firmly his own values and ideas.

The perimeters of the policy debate are relatively narrow, but those on either side are competing with a quiet intensity that could become much louder. The divide is between two different visions of new Labour. This is not a battle between old and new Labour or between those who seek to march leftwards against others who hug the centre ground. In his speech yesterday, Brown was quite emphatic that the next election under his leadership would not mark a return of old Labour, whatever that ill- defined term means.

It was absurd that Brown had to make such an obvious point. Oddly he remains the most misunderstood figure in British politics. It is a form of genius, I suppose, to be the subject of endless books and ten thousand political columns a week and still be perceived in a way that bears little relation to what he has said and done.

Brown has never been "old" Labour. He was the co-architect of new Labour. In terms of policy development, he was the leading architect. Each year at the conference he delivers more or less the same speech, repeatedly highlighting what are regarded as "new Labour" innovations. Yesterday he stressed the need for economic stability (stability is the new prudence) and restraint from trade union leaders. He has done so every year.

Some contrasted the speech with the one he delivered two years ago, when he implicitly and mistakenly attacked Blair's style of leadership. But the rest of that controversial speech was a clever and necessary attempt to link Labour with the Government's achievements at a time when Blair defined his political position by taking on his party.

The new Labour achievements listed then included Bank of England independence, paying back national debt, and being tough on public spending and public sector pay in the early years of the first term.

But there is a significant divide with the Blairites over the reform of public services. In yesterday's speech Brown hinted at these tensions when he argued that the Government should do more to stress the ethical foundation of public services. This is partly a stylistic split.

Brown fumes at the never- ending Blairite emphasis on reform and the values of the private sector. This does not mean he is against reform or the use of the private sector. How could he be when he introduced the Private Finance Initiative and, disastrously, the Public Private Partnership of the London Underground? But he believes there are limits to the markets in the provision of some public services.

In contrast, some of Blair's closest allies are hungry for further public-sector reforms well beyond foundation hospitals, the more extensive role of the private sector in the NHS and the introduction of city academies. At a packed fringe meeting of the Blairite pressure group Progress, a range of ministers spoke of these reforms as if they were a new crusade. They fear that as a leader, Brown would not be crusading with them. That is why they cling to Blair.

The crusaders' ambitions and Blair's determination to stay on are intimately connected. They are convinced that only another two or three more years of Blair's leadership will change new Labour permanently. This is where the final chapters of the Blair/Brown soap opera shape the ideological debate.

Blair and his close allies are convinced that he must stay on for the sake of their party. Brown and his friends are equally convinced that only a new leader can renew the party. Both Blair and Brown believe that their own undying personal ambitions should be fulfilled for the benefit of the party and the country.

Some argue that Brown is now in a perfect position, the king in waiting with cabinet ministers queuing up to say that he will be anointed as leader. Again this misreads his nightmarishly constrained situation. The key for him is when he becomes Prime Minister and in what context. In his speech yesterday, Brown announced that he would be touring the country over the next year canvassing views on the need for more social, economic and - interestingly - constitutional reforms.

The most important element of this announcement is the timescale. What will he do when the tour comes to an end and Blair is still in place with the intention of continuing for a few more years? He can hardly announce that he will embark on another tour, the equivalent of Bob Dylan popping up in various cities for years to come.

Brown is also desperately limited as to what he can say in public. He does not want to rock the boat, nor can he give more details about his vision for the future while Blair is still in pulling the strings in Downing Street for an unspecified period of time.

In effect this means that Brown is in a surreal leadership contest that could go on until 2008 or 2009. What makes his position more surreal is that he is competing against himself. The other candidates are the economy and Unexpected Events, both of which could turn against him. It makes the current anarchic Conservative leadership contest, which may not be resolved until early next year, seem relatively short and orderly.

Not surprisingly some of Blair's allies are urging him in his speech today to outline his own vision for the next 10 years. This is partly to ensure that his ideas are still shaping their party after his departure, but also to convey the firm message that he is planning to be around for some time to come.

Some senior Blairites argue that this arrangement is sustainable for three more years. Blair will lead and Brown will quietly tour the country once more patiently waiting for his moment to come. I do not believe that will or should happen. The tensions are below the surface now, but not for much longer. Soon the Conservatives will have a leader for the next election. Labour will need one too.

The internal debate between two different versions of new Labour is not fatal. Indeed it is more informed and limited than the wildly incoherent divisions in the Liberal Democrats and the Conservatives. But the ideological tensions can only be calmly resolved once the frenzied speculation over the leadership is ended once and for all.

s.richards@independent.co.uk