That rocks. I'm surprised and greatly pleased. When they withdrew last time, I guessed it was a tactical retreat. Now they failed to concede and apparently lost even more support. Hah.
Update:
Now everyone is asking whether this is the end of Blair's authority. I guess it depends on the causes of the vote. Perhaps, as a premier nearing the end of his shelf life, Blair no longer wields the power to threaten backbenchers. If so, expect more revolts. Can Brown step in to quell the rebels? That probably depends on his perceived chances of winning the next election. Major's experience shows that as a government's time in office draws to a close, discipline crumbles. If that in turn makes the government appear less popular and competent, you get a vicious circle.
(Polisci geek note: I wonder if anyone has written about the game theory of the UK parliamentary system. There's lots about the US and lots about coalitions in proportional representation systems, but I don't know of any stuff for our particular setup, beyond Bagehot's famous analysis in the 19th century.)
The latest initiative - standardised testing for tiny tots - isn't exactly an inspiring big idea. More like a New Labour self-parody. If they can't do better than that I think we can expect trouble for Labour in 2009.
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