Andrew Grice: The Week In Politics

When the Tories embarked on what promised to be a divisive leadership contest after the May election, Labour ministers gleefully declared that they could get on with governing the country with few interruptions. The reality has been very different.

Far from dividing the Tories, their leadership election has shown that they are finally getting their act together. It could well provide the platform for a recovery.

Yesterday, a YouGov survey showed that 58 per cent of people think the Tories are divided, while 70 per cent think Labour is. That will worry Tony Blair: one of his greatest achievements has been to unite a party often riven by faction-fighting in its past.

The same poll showed that 64 per cent of people think that "the wheels are starting to fall off the coach" of the Blair Government. Although a pretty loaded question, the answer probably reflects the public mood. Mr Blair has lost a Commons vote on terrorism, lost David Blunkett (again), is struggling to sell his public service reforms to his own MPs and the Cabinet appears in disarray over smoking in public places and pensions. In the past seven days, the competence of the Government has been questioned over flu jabs, power supplies this winter and licensing laws.

In part, it is the price of being in power for several years. As Mr Blair told the liaison committee of senior MPs on Tuesday: "You do not set out as a Prime Minister or a government to be deeply unpopular, it is just the way of things that that is often where it ends up."

Mr Blair is at a dangerous moment. He is on a slow-motion collision course with Labour MPs on his plans to give schools independence from local authority control. The rebellion is potentially so huge that ministerial wagons are being circled around Mr Blair. Junior ministers were summoned to Downing Street this week for briefings, so they can spread the gospel among backbenchers.

There is no guarantee that the unprecedented selling operation will work. Mr Blair's critics, who accuse him of not listening to their concerns, are in no mood to listen to him. Many Labour MPs regard the Bill as a stick with which to prod Mr Blair out of No 10. "Things are beginning to move," one senior MP said. "The Education Bill is part of a process."

The most immediate item in Mr Blair's in-tray is next Wednesday's Turner commission report on pensions. The issue itself is complicated enough. But it also goes to the heart of his biggest problem of all: how to ensure his promised "stable and orderly transition" to Gordon Brown when he stands down before the next election.

Although Mr Brown's criticisms of Lord Turner of Ecchinswell's report have probably been overblown by the media, he does have serious reservations about the cost of linking the basic state pension to earnings instead of prices, which rise more slowly. This shouldn't come as a great surprise. Refusing to restore the earnings link, broken by Margaret Thatcher in 1980, has been an article of faith for New Labour. It has caused Mr Blair and Mr Brown much grief with their own party, notably when the state pension rose by a paltry 75p a week in 2000 as a result.

As Mr Blair has pre-announced his departure, we can hardly blame Mr Brown for wanting to put his imprint on the Government's decision. It would be pretty crazy for the Government to accept the Turner report next spring, only for Mr Brown to rip up the policy on becoming Prime Minister a year later. That would cause even more confusion among the public; if any issue requires a long-term settlement, it is pensions.

Mr Brown is in no hurry, saying the pensions crisis is still many years away, and that it is more important to get the solution right than to rush it. He wants to delay legislation until after the next election.

Mr Blair is a prime minister in a hurry and pensions is high on his list of unfinished business. He knows he is open to the charge of talking big and acting small on welfare, so he wants to produce a road map on pensions. "The public won't tolerate it if we fudge the issue," said one Blair aide.

The affair illustrates just how closely the fates of Mr Blair and Mr Brown are intertwined because, as John Prescott noted, one man's legacy is the other's inheritance. The circle can be squared only by thrashing out a common policy. The tensions over pensions should serve as a warning shot. Labour will look even more divided in the public's eyes if the two men fall out over other issues on the legacy/inheritance agenda, such as reforms to education, health and incapacity benefit, to be announced next week and Britain's payments to the European Union, on which Blairites fear Mr Brown will play to the gallery of Eurosceptic newspapers.

For the Brown camp, reaching agreement on such issues is more important than squeezing a retirement date out of Mr Blair. "We need a common plan," said one Brownite minister.

Six months after the election, the two men find themselves in a similar position to the one they were in just before the campaign. They needed to come together again. When they did so for the election, they were a formidable partnership. "There was a convergence of interests then and the same thing needs to happen now," one Blair ally said yesterday. It needs to happen fast.

a.grice@independent.co.uk