Steve Richards: The Chancellor reveals his blueprint to dominate the political terrain

If the Tories elected Basil Fawlty as leader, Mr Brown would devise a policy for hotels in Torquay

First let us deal with the fantasy version of Gordon Brown. A few minutes before he delivered his Budget, the former minister Alan Milburn popped up to insist once more that Mr Brown must prove his credentials in relation to "reform". Immediately after the Budget, the Conservative leader, David Cameron, warned also that Mr Brown was the road-block to reform.

The Chancellor has his faults, but Mr Milburn and Mr Cameron will fail in their attempts to portray Labour's next leader as a backward-looking figure who will vacate the centre ground. Bookshelves creak already with books on how the Chancellor has revolutionised the role of the Treasury. The institution will never be the same again.

When Mr Brown becomes prime minister there will be "reforms" galore. Mr Milburn and Mr Cameron might disagree with some of the changes he plans to implement. They may worry, too, that their joint view of what constitutes "reform" will be subjected to a more forensic analysis. Still I advise them to move on. They will become increasingly marginal if they persist in seeking to project someone in a way that does not conform to the reality.

In between the outdated fantasy versions, we got a glimpse of the real political figure . It was only a glimpse, because Mr Brown is caught in a trap. He is the aspirant leader who has no clear idea when the vacancy for the top job will arise. He is also a Chancellor presiding over a relatively stable economy, determined not to act in a way that would threaten the stability. He was in a position of having to do a lot without doing very much.

In Labour's first term, Mr Brown regularly proclaimed the end of boom and bust as if he was taking part in a music hall act. He does not make the proclamation as often now, although as the years go by he has greater cause to do so. There was no mention of Prudence either. Prudence tends to get a look in only when the Chancellor risks being imprudent. There were no risks yesterday.

This was his 10th Budget. During that time, there have been recessions in the US and stagnation in much of Europe. In spite of the problems that afflict the British economy, still there is no sign of an equivalent decline.

Indeed there is now an annual ritual, a cycle of its own. Mr Brown makes his forecasts for growth. The specialists argue he is being recklessly optimistic. The Conservatives forecast a downturn made in Downing Street. There are sweaty speculations about the need for disastrous tax rises. The CBI's Director General, Sir Digby Jones, warns that businesses are on the verge of collapse. Then Mr Brown declares that matters are more or less as he predicted they would be. Sir Digby resurfaces to hail Mr Brown as one of the great Chancellors, and Conservatives meet to decide on a new strategy.

Although the current state of the economy gives him limited space, there was room enough. This was a political act rather than a detailed economic programme. Mr Brown stated mischievously that nearly everyone had been lobbying him for increased investment in public services. He had only one representation in which cuts were called for. There was no need to specify that he was referring to the Conservatives. The entire speech was a reference to the Conservatives.

In contrast to the prospect of cuts under Mr Cameron, he pledged specifically to match the level of cash spent per pupil at private schools. If he meets this pledge, the increased investment will have a more radical impact on pupils than the wearyingly controversial Schools Bill.

Mr Brown said he would extend the tax credits. Even in their new form, perhaps especially in their new form, the Conservatives are opposed to credits. In response to Mr Cameron's recently acquired passion for the environment, Mr Brown announced higher taxes for the most polluting cars and reinforced his support for the climate change levy, a levy the Conservatives oppose. More precisely, Mr Cameron has fitted a wind turbine on his new house. Mr Brown said he would top that by paying for wind turbines on schools and council houses. We will all have wind turbines soon.

After the dark alliance between Labour and the Conservatives over last week's Schools Bill, Mr Brown's famous dividing lines are back in place. They will be the dividing lines for years to come.

Partly it is a tribute to Mr Cameron that early in his leadership the veteran Chancellor responds so precisely to his agenda, although the new leader should not get carried away. Mr Brown always has his opponents in his sight. If the Conservatives elected Basil Fawlty as their leader, Mr Brown would spend many long nights devising a new and distinctive policy for hotels in Torquay. Still Mr Brown went even further than usual to challenge Mr Cameron, a cathartic cry after months in which Mr Blair had led the charge.

Mr Cameron responded with some good jokes, playing on Mr Milburn's theme that the Chancellor is backward-looking. But he failed to address convincingly the persistent dividing line: investment under the Labour Government versus cuts under the Conservatives.

A brutally tough spending round is under way already. Education will get more cash, but it is becoming clear that Mr Brown referred yesterday to existing spending projections, rather than to additional money. Although not mentioned yesterday, the NHS will do fairly well.

In contrast, other departments will need to find substantial savings. As the cuts are announced, a key political question will become: is the Government planning to spend enough? The thorny question will cause problems for Mr Brown, but will make it harder still for Mr Cameron to argue that the Government is spending too much.

Oddly, Mr Cameron is a victim of the same state of affairs that torments Mr Brown. With a noisy flourish, Mr Cameron declared of Mr Brown yesterday "He is the past," a version of the joke he played on Blair when he said, "You were the future once." But whatever Mr Cameron and the likes of Mr Milburn think of the Chancellor, this assertion is evidently wrong. For the time being, at least, Mr Brown has a future.

Normally, a successful Leader of the Opposition benefits from the aura of being seen widely as the likely next Prime Minister. But Mr Cameron will not be the next Prime Minister. At best he is third in the list, below Mr Blair and almost certainly Mr Brown. The Chancellor is frustrated by the current constraints, but he underestimates the power of being perceived as the next Prime Minister. Only when Mr Brown becomes Prime Minister can Mr Cameron hope to acquire a similar aura and benefit from a similar level of curiosity and media interest.

Has Mr Brown delivered his last Budget? This one looked so far ahead on the political terrain I find it hard to imagine him delivering another.

s.richards@independent.co.uk

* Treasury Budget site

* Chancellor's Statement in full