Despite getting a bloody nose, PM can afford to be sanguine

Tony Blair got his bloody nose and it will hurt. But many people in his party will judge that he deserved his punishment because of Iraq. The question now is whether he is the right person to lead Labour into the general election.

Tony Blair got his bloody nose and it will hurt. But many people in his party will judge that he deserved his punishment because of Iraq. The question now is whether he is the right person to lead Labour into the general election.

The local government election results cannot be dismissed as just another mid-term protest. The Prime Minister may have lost people's trust over Iraq but it could have a corrosive spill over - will they trust what he says about the economy or public services? There is no magic formula for winning trust back.

In some respects, it rather suits Labour to blame its disastrous third place in the town hall polls on Iraq. I suspect that Mr Blair's problems go deeper. Something fundamental has changed, perhaps for good. People are tiring of Mr Blair: the "new" bit in New Labour was a brilliant piece of marketing but no party, project or Prime Minister can be "new" forever.

This weekend, Labour backbenchers and ministers will be weighing up the results. They will wonder whether Mr Blair, who appeared to have the Midas touch with the middle classes, now has the opposite effect.

The landscape for Labour is pretty gloomy. But it is not as bleak as it seems at first glance. The Tories should have done better and some important underlying trends still look good for Labour. An ICM poll for the BBC this week paints a very different picture from the council results. The number of people who believe the Government has delivered on the economy, education, health and crime has risen in the past year. Labour is trusted more than the two other main parties to run the economy and the NHS.

Of course, Iraq has taken its toll: the number of people who believe the war was right has dropped from 58 per cent to 38 per cent in the past year. But people will be more likely to think about the economy and public services at the general election.

That is why Mr Blair's fightback centres on five-year plans on health, education, crime and transport which we will be hearing a lot about. The strategy has been in place for months, and was based on the expectation of bad results on Super Thursday.

If Iraq overshadows the domestic front when Labour's annual conference gathers in Brighton in late September, yesterday's calls by the usual suspects for Mr Blair to stand down may be echoed by a wider group. That would be dangerous.

While the Tories and Liberal Democrats can celebrate Thursday's results, they do not guarantee them success at the general election. Charles Kennedy rightly claims we have a three-party system at local level but it will be hard to translate his council gains in Labour's northern heartlands into large numbers of Parliamentary seats.

The Tories should have scooped up more than 40 per cent of the town hall votes to be on course for victory next year. The challenge for Michael Howard over the next few months will be to win people's trust for his party's rather sketchy policies on public services. But there is no sense that the country desires a sea change, as there was a year before the 1997 general election.