Blair, trust and his most dangerous moment yet

A dangerous moment has arrived in the life of Tony Blair's government. The stories of sleaze and spin, of ill-judged emails and dodgy donors, threaten to merge into a permanent stain on its reputation.

Alastair Campbell may well be able to furnish a detailed dossier that proves each allegation to be false. Public opinion is almost beyond caring. It has all but made up its mind. With a few exceptions, ministers are deemed to be guilty, and that's that.

This raises a question that goes beyond the debate about the probity of Downing Street, Black Rod and sections of the media. If most voters acquire the firm conviction that the Government cannot be trusted, what consequences flow for British politics over the next few years? Here are three predictions.

First, Mr Blair would have to banish all thoughts of joining the euro before the next election. History shows that referendums are slippery things. Yes, voters have a chance to take a specific decision on a matter of national importance. But they also have a golden opportunity to pass a wider verdict on the government of the day without actually throwing it out of office.

Mr Blair should view this power with foreboding at a time when the official opposition still looks groggy. Asked whether they want him or Iain Duncan Smith to run Britain, most voters may well choose the status quo. But invited to send a message to 10 Downing Street without going as far as evicting its tenant, the electorate is likely to deliver a mammoth raspberry. That is the risk the Prime Minister would run with a euro-referendum next year unless he can regain voters' trust. The public is less than enthusiastic about the single currency. Even a popular government would have to work hard to win a Yes majority. An unpopular government would stand no chance.

Prediction number two: Labour will have to rethink its strategy for fighting the next general election. It will still hope that the economy will be up and the Tories down. However, the third plank of Labour's platform (the story the party intended to tell about our public services) looks like collapsing with dry rot.

The chances are that, by 2005, most parents will feel that state schools are improving. But beyond that the picture is bleaker. NHS patients will not yet be convinced that our hospitals are up to scratch, and few of us will be sure by then that our streets are significantly safer. As for commuters, not even ministers expect our journeys to be faster, safer and more comfortable much before the end of the decade.

In these circumstances, the message that Labour wants to convey is: "We have made a start in reversing decades of deterioration. We know that taxes are up, but the right policies are in place. Our investment will soon start to yield big benefits. Trust us." The way things are going, that final injunction will not work. Without it, the rest of the message crumbles to dust.

Prediction three: the balance of power within Downing Street will shift from No10 to No11. Gordon Brown has succeeded in keeping well clear of all the recent upsets. The Prime Minister stands accused, rightly or wrongly, of everything from buttering up Richard Desmond and protecting Stephen Byers to putting spin before substance and pride before principle. In contrast, the Chancellor embodies the virtues of decency and clear progressive purpose. He is seen to have managed the economy well. His latest Budget remains popular because it sets a clear political agenda. According to a recent YouGov poll for the Mail on Sunday, far more voters trust him than Mr Blair.

All this means that the Prime Minister needs his Chancellor more than ever. Mr Brown can reach sections of the electorate that are now beyond Mr Blair's grasp. This is bound to alter the terms of trade between the two men. Some Blairite ministers suspect that, behind the scenes, the Chancellor is already stoking the fires of discontent. I have seen no evidence to support this. The point, however, is that such suspicions exist. The relations between the Blair and Brown camps have never been good. Unless both men are careful, they could get a lot worse.