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 Gordon Brown's ultimate humiliation. And all on the first anniversary of his entering Number 10.

It can't go on like this. In the past two months, Brown has suffered Labour's worst local government losses since 1968 in the English local elections. He has lost the London mayoral election to the Conservatives, as well as 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 there is a Scottish parliamentary by-election in Wishaw when Labour MSP Jack McConnell departs for his role as British high commissioner to 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 sidebar 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 opinion poll, only 3% of those asked said they thought Brown was an improvement on Tony Blair. Two-thirds believe he is an electoral liability for his own party. The Tories are 20% ahead in the opinion polls, enough to deliver a majority of about 177 were an election to be called soon. The psephological oracle, Professor John Curtice of the University of Strathclyde, 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, just muddling through isn't an option.

The significance of Henley is that the Tories gained directly from the Labour slump, rather than via a swing to the Liberal Democrats. David Cameron is now being taken seriously as a possible prime minister, and his party, so demoralised and ideologically confused last year, has regained its confidence.

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. Here, the prime minister is primus inter pares - first among equals - and 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 Cabinet. Whether it is the election that never was, the Iraq withdrawal that never was; the Lisbon Treaty; the Olympic torch; 42-day detention; the 10p tax rate or 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 and 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 Hyde 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 obsessive, 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 Hyde/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 of the world economy. He can't help it if American banks start handing home loans to people without jobs or assets. When the economy turns down, political fortunes fall with it.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", he was supposed to be the ideal person to have at the helm when the economy entered stormy seas. I recall Labour people telling me that a bit of economic turbulence would be no bad thing and would increase Brown's popularity as people responded 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 - 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 gridlock and dumping manure on the steps of Number 10. We British seem to be on our best behaviour.

We express our discontent through the newspaper letters columns, blogs, and at by-elections - which is why Henley is so important. 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 potential paedophiles; the "equality" legislation that institutionalises discrimination.

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