We can all sleep more easily now. John Prescott is back on the job. Double entendres aside, the Deputy Prime Minister said yesterday that he has given up Dorneywood because the controversy generated by his hanging on to it “gets in the way of the job”.

Phew. Since Mr Prescott has more talent in his fist than in the rest of his body put together, it is a relief to know that he is now able to concentrate full time on doing what he is best able to do: nothing much.

Criticism of Mr Prescott’s non-job misses the point. Mr Prescott is deputy leader of the Labour Party. Under the party’s rules, that entitles him to a place in the Cabinet. So we are stuck with him until he deigns to resign or the Labour Party conference votes to replace him.

No one — not Tony Blair, not Gordon Brown, not the assembled ranks of the commentariat or Uncle Tom Cobley — can sack him as deputy leader. It might have taken the Prime Minister nine years to realise, but paying Mr Prescott £133,997 a year not to run a department is, in such circumstances, money well spent.

Mr Prescott has long been seen as a sort of warped variation on Bagehot’s notion of the “dignified” part of our constitution — a symbolic figure albeit entirely undignified and, until last month, wielding real power disastrously. That is a misunderstanding. The Deputy Prime Minister may be a thug, he may lack any detectable talent and he may lack a sufficient code of personal morality, but he is not an aberration. He is not a boil on the otherwise smooth skin of Labour’s backside. He is, rather, the epitome of Labour in government. At the head of a department he was at best incompetent, at worst dangerous. And he now does nothing except occupy office for the sake of occupying office. Mr Prescott’s story is that of the Government writ small.

Take any one of the past month’s cock-ups, from letting foreign criminals roam the streets to handing over £1.8 billion of tax credit overpayments. Add to that the almost daily examples of further ineptitude and the legion of other mistakes over the past nine years and a pattern emerges.

New Labour’s selling point was that it was Not The Tories. Above all, that meant being competent. In the years after the 1992 election, I co-authored a series of pamphlets based on the theme “Southern Discomfort”, which used focus groups to explore the reasons for Labour’s ingrained unpopularity and the resilience of the Conservatives in the South. One of the initial key findings was that voters’ memories of the 1976 IMF crisis and the 1978-79 Winter of Discontent were long, and they regarded Labour as incompetent. They didn’t much like the Conservatives, but put up with them as they knew how to run things.

Black Wednesday transformed the political landscape. At a stroke the Conservatives’ reputation was shattered. John Smith reacted as if all he had to do was look like a dependable bank manager and Labour could sleepwalk to victory. Tony Blair’s critical insight was to see that winning necessitated a wholesale change in the image of the party, relentlessly emphasising the sheer competence that Labour would demonstrate in office, in contrast with the discredited Government. Labour’s 1997 pledge card was not simply about delivering on promises — it was intended as a symbol that Labour would get things done.

Sex scandals, financial scandals and ministers caught out lying have all destabilised Labour. But none has had as much power to wound Labour as demonstrations of incompetence. Not even “sleaze”, which is now regarded almost as par for the course. If Labour can’t even run a competent government, what else is it for?

Almost every negative issue can be linked with incompetence. Shovelling record sums into the NHS, only to see the money frittered away into a financial black hole, is as much about incompetence as it is about ideology. Neutering the Education Bill in order to secure the support of Labour backbenchers, then failing even to manage that and being dependent on Conservative MPs’ votes (which would have supported the original, bold Bill) is again at root about incompetence.

No wonder David Cameron is flying so high. Those of us who supported Mr Blair in the hope — no, the expectation — that new Labour would indeed “do” things, such as reforming health, education and welfare, are now left staring at a Prime Minister who has spent nine years promising to be bold next year. Now it is next year and Mr Blair cannot even reform his Cabinet properly. Norman Lamont’s “in office, not in power” gibe against John Major fits the Prime Minister like a glove.

Mr Blair himself may well have been the real deal, but we will never know. Even had his Government not been brought to near-collapse by serial incompetence, he has been stymied by his party from his first day in government. Yet the reform ideas, which many of us once looked to Tony Blair to implement, are more important than ever. So we have to turn instead to the only other possible champion: David Cameron. Call him the centre, call him the radical centre, call him right of centre; call him whatever you want. All that matters is that we must have a government both committed to and capable of implementing reforms.

The difference this time would be that the champion of reform leads a party that instinctively backs change, rather than viewing reform as the work of the devil. It was Mr Cameron who championed the education White Paper, while Mr Blair ran for cover with his tail between his legs.

The only thing that now separates Blairites from the Conservative Party is a label.