Leading article: Labour has one last chance to fulfil its pledges

The state of education, such a crucial issue, is a key pointer. If any area of public life should be showing renewed vigour after the tide of money devoted to its improvement, it should be our schools. Instead, a series of reports over the last few days have revealed one worrying trend after another. Truancy is up, by one third since 1997, fewer state-school children are going to the leading universities, and the expensive Sure Start, a flagship scheme to help deprived children, is failing to make a significant impact. Nor is the state of the health service much happier. New hospitals have been built and old ones improved, but with the NHS now facing financial crisis and two thirds of NHS trusts in deficit, a big question mark hangs over whether improvements to the health service can be maintained.

The pace of reform still seems too slow to effect real change, but too quick for the conservatives in the Labour party. The problem facing Mr Blair and Mr Brown is that, behind these points of failing schools, beleaguered hospitals and widening inequality - to say nothing of the abandoned European dream - bigger icebergs are heaving into view around which Labour's ship will steer with difficulty. One is Iraq; the other is the economy.

Iraq will remain an intractable problem, whoever is in Downing Street. It will forever tarnish Mr Blair's reputation, while Mr Brown will struggle to escape its shadow. As last week's events in Basra revealed, mayhem and disorder, previously confined to the American zone and the Sunni triangle, is now sweeping into the once calmer British zone in the south.

And then there is the economy. This is the Iron Chancellor's strongest suit and he has, undoubtedly, an excellent management record to date which has seen him frequently confound his critics. But here, too, the storm clouds are gathering. His admission that Britain's growth is likely to be 2.5 rather than 3.5 per cent may not sound that momentous, when attention is on the security chaos in Iraq and the meteorological chaos in the US. It remains the fastest-growing economy among the major players in the EU, but the consequences of his generosity towards the public services may be profound.

The truth of this week's conference is that a party that never warmed to Mr Blair is now looking forward to his departure. The silent transfer of power at home, with Blairite loyalists such as Tessa Jowell and Charles Clarke virtually queuing up to anoint Mr Brown, has made it even less likely that controversial reforms will be pushed through with conviction. With two masters at the head of government, ministers are striving to please both at the same time.

None of this bodes well for the radical decisions that Mr Blair and Mr Brown say they are committed to making. For all the difficulties, this curious duopoly remains the pre-eminent force in British politics, with a third election win under their belt and the opposition parties in disarray. They have one last chance to carry out their pledges to reshape Britain and its monolithic public services. We must hope that this week, finally, they rise to the challenges that they have set themselves.