But the country may never be convinced

HERE IS how it seems from Westminster: the Government is in better shape than it has been since the immediate aftermath of the general election. There were two elephant traps facing John Major's administration - the party conference and the Budget. The party, which had seemed riven with suicidal disloyalty, had to get through both, united and with a renewed sense of purpose, or the game would be up.

It has got through and there is a whiff of revival. Senior ministers don't think there will be any serious rebellions during the rest of this year. For the first time since Maastricht, there is a pretty clear sense of direction and an agenda which unites Tory MPs.

As ministers followed up yesterday with post-Budget speeches in the Commons they were bouncier than I have seen them for ages. Some of this bounce was pretty shameless - Michael Portillo, heckled about broken election promises, said that the Government kept the promise that really mattered, about delivering sound finances. (So promises are now to be ranked by size, and the tiddly ones thrown back? It's official, is it - some promises don't matter?) Despite this you got the sense that Conservatives once again think they can win the credibility battle.

The prospect of an Irish peace deal, however hard to bring to a final conclusion, also hangs over the post- Budget atmosphere as a potential source of political transformation. So is it possible that we will look back to the winter of 1993-94 as the turning point in the Government's fortunes? If so, what does that mean for Labour, widely ridiculed for being unadventurous, lacking in big ideas and complacent?

The problem is the Westminster perspective. The palace of democracy is also the palace of fevers, panics and night-sweats, whose rumours and bar-room wisdom often bear little relation to how voters see things. For instance, Labour MPs and some Tories are unconvinced that the sting has really been taken out of VAT on fuel, despite this being the Commons consensus. The first reports of bad reactions to the Budget from the constituencies were entirely predictable, but they are already coming in.

The Chancellor himself made it clear in radio interviews yesterday that he was not wholly taken in by the flattering press his Budget received. He knows how painful the cumulative tax increases will be for the middle classes. Kenneth Clarke is his usual confident self about the selling job ahead, but it is worth remembering that his triumphantly high standing at Westminster, unparalleled for recent Chancellors, is not yet shared in the country at large. Not yet: perhaps never.

Labour regards the idea that it should be more 'interesting' as a trap to be avoided at all costs - another example of the distorting influence of Westminster and its easily-bored journalists. Shadow ministers believe that on crime, the economy, spending and local government, the Tory strategy is to lure the Opposition back into old kneejerk responses that can then be derided as irresponsible. Establishing trust and a reputation for responsibility is still thought to be a precondition for wooing the seats that failed to fall in 1992 - Bury and Bolton, Basildon and Harlow.

So the Labour strategy is to pin the Conservatives firmly as a high- tax party, thus undermining their income-tax-cutting politics. This will be done as much outside Westminster as in it. One result of the unified tax and spending Budget is that the spring, normally a busy time for the Commons, will be quieter than usual (with the exception of a possible revolt on extra European funding). Ministers are wondering about how to keep backbenchers fully occupied in something other than disloyal bitchery. And Labour is planning to get its shadow ministers out into the country to deliver its 'Tory taxes' message directly.

This battle about credibility will peak first around the beginning of the new financial year. The Opposition has noted that the May local elections will come only a week or so after most employees get their first pay-slips showing the full impact of the Budget measures. The various elements, including National Insurance increases and frozen thresholds, will be spelt out as typical pay-slips are brandished around the country.

Where does this leave us? In a less dramatic, more cautious mood than either the Tory benches or most of the press. Labour is not on the edge of some introspective convulsion and has good, conventional cards to play. The Tories, though in better shape, still face a forest of question marks. Can spending be held as tightly as it must be? Can they really relearn loyalty? Their Westminster revival, though real, is not reflected in the country; and it is too early to pronounce even that revival secure.

It is worth remembering that the pounds 1.5bn cut in the contingency reserve fund means there will be less money to buy off Tory rebellions next year. In the past few years the habit of shelling out whenever the whips warned of trouble ahead has been growing. The Chancellor is determined this should stop. So the Budget that has made it easier to discipline the Tory backbenchers may make it harder to keep them in line later. If the party is getting serious about discipline, it will have to stay serious.

The significance of the previous Tory despair and the post-Budget relief is easy to exaggerate: wild and regular swings of mood are bred in the bone of most politicians and those who report on them. The hothouse mood of the Commons and the need for a regular flow of 'stories' both tend in the same direction. But, as one wise minister put it to me yesterday: 'Things are never as bad as they seem; but things are never as good as they seem.' Which isn't a bad antidote to the post-Budget euphoria sweeping the City and the Conservative Party.