TONY BLAIR should be treated more favourably by historians than he has been by many Labour MPs this week. He remains one of the most significant British Prime Ministers of the past century. It is not just his longevity in office, or leading Labour to three election victories in a row.

These successes are at the heart of the Blair paradox. Why, given all the opportunities of a very favourable political and economic background, is there now such a sense of disappointment, of achievements not living up to expectations? Iraq and foreign policy failures — the “hug them close” approach to President Bush and a still ambiguous relationship with the EU — are obviously a large part of the story. So are often exaggerated complaints about sleaze and spin.

However, the central question about the Blair premiership, and his legacy, is about his attempt to reinvent Labour. This was never just marketing flim-flam, smiles and spin. Tony, now Lord, Giddens, new Labour’s ideologist (akin to Suslov in the late Soviet era) has emphasised Mr Blair’s — and Gordon Brown’s — insights into how British society has changed with the decline of the manual working class, globalisation and the growth of a knowledge-based economy. In Mr Blair’s view these undermined the key assumptions of post-1945 social democracy.

The relative size of the manual working class has halved from three quarters of the population in the late 1940s to well under 40 per cent now. This dilemma is highlighted by Professor Peter Hennessy in his absorbing new book on the 1950s, Having It So Good, out next month. Discussing what he calls the postwar New Deal, he quotes Sir Michael Barber, former head of the Delivery Unit in Downing Street, about how the choices on public services for centre-left government have changed.

The aim should be that the better-off will want to use them too, and will be willing to pay taxes for them. According to Sir Michael: “We have to avoid poor services for poor people. The crucial element of the deal is quality public services in return for 40 per cent of national income, rather than 30 per cent. You also want new public services not just for the middle classes but to promote equity and social cohesion.”

So for Mr Blair the extension of parental and patient choice, and increased diversity of schools, are meant both to help children in deprived areas (where most academies are being set up) and to persuade the middle class to use the state system.

This strategy is now producing results and has the backing of the Conservatives, as shown by their support for the Education Bill and David Cameron’s involvement in opening a new academy soon. But is it all too little, too late?

The charge is that the Blair Government spent its first term undoing many of the sensible market-orientated reforms inherited from the Major Government, such as the internal NHS market, fund-holding GPs and grant-maintained schools. From 2000 onwards, the rate of spending growth accelerated sharply, but services remained largely unreformed. Then, after 2001-02, the NHS and schools began to be reformed, picking up some of the threads abandoned in 1997. But several years and lots of money was wasted.

Desirable reforms are now coming through just as the rate of spending growth is about to slow sharply: from the recent rate of 5 per cent a year in real terms to under 2 per cent from 2008 onwards. Even if spending on schools and health rises by a faster rate, it will still be slower than recently. So a squeeze will start just when money is needed to ease the process of reform and often painful efficiency gains.

When I put this point to Mr Blair at Chequers during his interview with The Times last week, he argued that reform began earlier, in 2000-01, though changes have developed on a large scale only recently. Moreover, “You wouldn’t have got the same ability to open up the health service unless we had put the money in. I think the resistance to change is far lower now than it ever was. Ditto with trust schools. If we had not had the experience of specialist schools, we would not have got the consent for trust schools and academies.”

Yet Mr Blair cannot yet be sure that these reforms are fully embedded. Hence his talk of achieving a “critical mass” of academies and trust schools. That is one of the main reasons why the Blairites want longer in office. Many are also suspicious of what the Brownites might do.

Mr Blair has made Labour a party of government again. There is no going back to the 1980s. However, as his premiership has continued, he has become more and more distant from his party. A new YouGov poll shows that while only a minority of Labour members oppose Mr Blair’s reforms, a third think they have now gone far enough. That is the real threat to the Blair legacy.

The ambiguities of his record since 1997, as much as the bitterness of his departure, explain why his premiership is, and is likely to remain, unfulfilled.

An updated paperback edition of Peter Riddell’s The Unfulfilled Prime Minister: Tony Blair’s quest for a legacy has just been published

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