How Labour can win the next election.

To call it rearranging deck chairs on the Titanic is an insult to deck chairs. Tony Blair’s most radical reshuffle since he came to office was supposed to show who was in charge, restore confidence, give the government a new and dynamic face. Instead it made the Prime Minister look faintly ridiculous.

It exposed him as a leader who has lost touch and run out of options. Is this really the best he can do, after nine long years? The unimpressive Margaret Beckett as Foreign Secretary - a politician who has built a career out of just being there - is now all that stands between us and a third gulf war.

The peripatetic John Reid, “Mr stop-gap”, in his eighth ministerial post, takes over as Home Secretary a week after cannabis was found in his Lanarkshire Home. This pugnacious Scot, whose ministerial style has been described as “Glasgow kiss”, will now be in charge of a dysfunctional department which should be in intensive care.

And then there is John Prescott, “two shags” as the Deputy Prime Minister will forever be known, being stripped of everything but his grand titles, his six figure salary and his grace and favour residences. He'll now be free to pursue those extramarital affairs, for which he is so famous, free from the distractions of ministerial responsibility. “ Now Prezza screws us all”, as the Sun put it.

Government is a serious matter, but this is one government that just cannot be taken seriously anymore. Tony Blair scattered ministers around the table like confetti. Moving Jack Straw, Ruth Kelly, Geof Hoon, David Miliband to no obvious purpose’ - random ministers in random posts. This is now a cabinet which is less than the sum of its parts. There was neither new blood, nor recognition of ministerial achievement. It looked as if the PM was simply changing the names for the sake of it.

MPs were asking why didn’t he move John Prescott to the role of Party chairman, where his skills as a political bruiser, with a hotline to the working class soul of the movement, might have been put to good use. Instead, the egregious Hazel Blears, a woman whose loyalty to the Blairite cause is excruciating, will now try to persuade Labour activists that the party is being put back into their hands.

Geof Hoon, the former Leader of the House, may be an insipid politicians without obvious talent, but why make him Europe minister only then to tell him he wasn’t actually in the cabinet any more. Jack Straw may have been a flaky, wittering and vain Foreign Secretary - a “tart” as the PM is said to call him - but he’s been knocking around the diplomatic circuit for some time. You only replace people like that if you have someone better to fill the job. Similarly, John Reid is the ultimate square peg, a man who never stays long enough to pick up the pieces. He replaces Charles Clarke who at least had “bottom”, a ton of it, and was a diligent, thoughtful and thorough minister.

So, this is not a cabinet to restore confidence, it is a ministerial team which will have difficulty having confidence in itself. The PM has had a terrible press and these ministers know he is living on borrowed time. Their main tasks in office will be to avoid doing anything that might antagonise their next boss, Gordon Brown. They will be rightly wary of carrying out Blair’s wishes too assiduously in case they mark themselves out as too Blairite. That’s no recipe for efficient and effective government.

And if this botched and inconsequential reshuffle was intended to silence the growing clamour on the Labour benches for the Prime Minister’s early departure, it manifestly failed. Labour MPs - like ex ministers Andrew Smith and Nick Raynesford - were queuing up outside the BBC’s Westminster studios on Friday waiting to speak out, demanding that Blair should set a time table. Make a date!

And they are right. The only thing that can save this government now is if the Prime Minister comes to terms with his own political mortality. Blair can salvage something from the wreckage of his third term, but only if he listens. Forget the public service reform agenda, Blair’s best bet for a legacy is to effect an orderly transition of power within the Labour government and ensure that he bequeaths an historic fourth election victory.

It is possible; and here’s how: Blair should get up at the Labour conference in September and tell the party that he intends to go in May 2007, by which time he will have served ten years as PM. 'Long enough for anyone.... time to end the speculation... owe it to the country...Cherie and the children etc..' There could then be a leadership contest in the Spring of next year between Brown, Charles Clarke and John Reid. Gordon Brown, assuming he wins, would then be installed as leader at the party conference in autumn 2007.

The new PM could then use the next six months to set out his stall - unveil the policies which will renew Labour and address those issues the Chancellor identified in his “Today” interview on Friday morning: globalisation, the work-life balance, the environment, and restoring trust and confidence in parliamentary democracy. Brown could then go confidently to a general election in May 2008 as a new broom with a good chance of winning a popular mandate and leading a fourth Labour government.

The virtue of this arrangement would be that it allows Labour to effect the kind of power transfer that normally only happens through a general election. Instead, the election would be an affirmation of a change which has already taken place at the top. It would also allow Labour to dominate political coverage for fully two years.

As soon as Blair made his announcement in September, media attention would focus on Brown’s likely alternative government. The leadership election in 2007 would keep the press busy for months of speculation. And after Brown was installed, his new policy agenda would then dominate the Westminster village until the launch of next general election campaign. IN other words, Labour could spin out its renewal over two sessions of parliament. It could marginalise the Liberal Democrats, under Sir Menzies Campbell and eclipse David Cameron.

The alternative is two years of mishap and scandal as Tony Blair’s administration disintegrates into rancour and scandal. The reshuffle has demonstrated just how far the government’s authority has collapsed. The Tories have just had their best election result since 1992, in the English elections, and David Cameron could pose a serious threat in future if Labour’s rot continues and the voters’ dissatisfaction with this government hardens into contempt.

Gordon Brown has the virtue of not being part of the metropolitan elite. He is happily married and doesn’t spend his time soliciting secret loans from rich men. He was largely untainted by the Iraq war, has a genuine record of achievement as Chancellor and is respected, if not exactly loved, by voters grateful for his management of the economy. He is Labour’s best and only hope.

Moreover, Blair’s last-gasp reshuffle is actually quite a good one from a Brown point of view. It means that when takes over he can swiftly remove ‘dead wood’ like Beckett and Reid, and give his first administration a youthful face, by promoting the likes of David Milliband, Douglas Alexander and Ed Balls, with Scots like Des Browne and Alastair Darling lending experience at defence and the treasury. He could even bring back Charles Clarke.

So, all is not lost for Labour. But it could be if it continues to be led by a deluded leader who sits in his bunker, issuing futile orders to imaginary armies in a war everyone knows he has lost. Except him.