Henley By Election. Labour beaten by the BNP

When he called for “British jobs for British workers” in that infamous conference speech, who could have imagined that, within eight months, Labour would be beaten by the British National Party in a by-election. Labour never expected to come anywhere in Henley - one of the safest Tory seats in the land. But never before has Labour come fifth while in government and to end up behind the BNP is Brown’s ultimate humiliation. And on the first anniversary of his entering Number Ten.

It just can’t go on like this. In the last two months, Brown has suffered Labour’s worst local government losses since 1968 in the English local elections. He has lost the London Mayoral elections to the Tories and the safe Labour seat of Crewe and Nantwich. Next up: another stunning by-election defeat in the old Glasgow Shettleston seat, where David Marshall is standing down due to ill health. Then a Scottish parliamentary by-election in Wishaw when the Labour MSP Jack McConnell departs for Malawi.

On the same day as the Henley by-electon disaster, Labour’s Scottish leader, Wendy Alexander, became the first leader ever to be suspended from a British legislature, following her fund-raising imbroglio. Her resignation may seem a side bar to the implosion of the Brown government, but it is not an insignificant one. Labour has always depended on its bedrock of Scottish seats for its security in Westminster. Now, even that is in doubt.

Labour is slipping into the abyss north and south of the border. In the latest YouGov/Telegraph poll on UK opinion, only 3% said they thought Brown an improvement on Tony Blair. Two thirds believe he is an electoral liability for his own party. The Tories are 20% ahead in the opinoin polls, enough to deliver a majority of around 177 were an election to be called soon. The psephalogical oracle, Professor John Curtice, has spoken: no leader has ever recovered from a collapse so dramatic. With an unpopular leader, an economy going down the toilet and a government bereft of ideas or imagination, just muddling through isn’t an option.

Of course, a week is a long time in politics and less than a year ago, Brown was comfortably ahead of the Tories in the polls while David Cameron’s leadership was in difficulties over grammar schools, Europe and the environment. But the past is another country. The significance of Henley is that the Tories gained directly from the Labour slump, rather than via a swing to the Liberal Democrats. Cameron is now being taken seriusly as a possible prime minister, and his party - so demoralised and ideologically confused last year - has regained its confidence, in a way only the UK Tory party can.

Yes, political leaders have suffered disastrous poll slumps before. Think of Bill Clinton in 1994, when he lost Congress and seemed finished. He came back from oblivion, say Labour, and so can Brown. But our system is not a presidential one. In America, presidents can always fall back on the dignity of office and respect accorded to the head of state - think of the West Wing. Here, the prime minister is only primus inter pares - first among equals - and is regarded as inherently fallible, which explains why, when prime ministers lose it, they really lose it.

And Brown has clearly lost the plot. No one knows what he stands for, even members of his own cabineet. Whether it is the election-that-never-was, the Iraq withdrawal-which-never -was; Lisbon Treaty, the Olympic torch, 42 day detention, the 10p tax rate, the independence referendum, Brown has been all over the place. We are told by his aides that the prime minister has been quietly working his way through the undergrowth of British social inequality, stealthily redirecting wealth to single parents and the poor, bolstering child care, promoting green energy, easing the credit crunch... But all we see of this is dodgy deals with the Ulster Unionists, transparent tax bribes that don’t work, patronising lectures about wage restraint while the City enriches itself amid the wreckage of the financial system.

There is an air of split personality about the PM - he is a Jekyll and Hide Prime Minister. There is the social democratic, internationalist Brown, a tolerant and confident leader with great intelligence and a vision for the world. But there is another Brown: an obssessive, manipulative and dithering appeaser, who lacks the courage of his convictions when dealing with the Chinese dictators, Eurocrats and the editor of the Daily Mail. Mr Hide seems to be in the ascendant.

‘Lefty twaddle’ say the prime minister’s apologists. Brown has been playing the right tunes, it’s just that he cannot be heard against the crashing and crunching of the world economy. He can’t help it if American banks start handing home loans to people with out jobs or assets. When the economy turns down, political fortunes fall with it - same as happened with the Tories in 1990-92. It’s the economy, stupid.

No, it’s the excuse that is stupid. The whole point about Brown was that, as ‘the most successful chancellor in 200 years’ was supposed to be the ideal person to have at the helm when the economy enters stormy seas. I recall Labour people telling me that a bit of economic turbulence would be no bad thing and would increase Gordon’s popularity as people respnded to his sober and sensible economic competence. You simply can’t turn around now and blame world market conditions.

Actually, I think that the British voters have been rather kinder to the PM than might have been expected. Look at the prices in the shops and wonder at the remarkable restraint shown so far by trades unions, public sector workers, ordinary families. If this were Italy, the Mammas would be out there banging their pots and pans and threatening insurrection. If this were France, the truckers and farmers would be turning London into grid lock and dumping manure on the steps of Number Ten. The British are very good at adversity - we’ve had a lot of practice - and at this moment we seem to be on our best behaviour.

We express our discontent through the letters columns, blogs and at by-elections, which is why Henley is so important. It has made the Tories credible again. David Cameron has managed to make the Conservatives look not only electable, but almost liberal compared to Labour. People are turning against Labour’s surveillance society - against the intrusive snooping by local authorities, the neurotic vetting of potenital paedophiles; the “equality” legislation which institutionalises discriminaton.

There should be a leadership challenge, but there won’t be. Labour has lost the will to power; it is exhausted, confused, demoralised and financiall and ideologically bankrupt. It is no longer a question of if the Tories will win, but how long Labour will be in opposition.