Watch the trailer for The Queen

Stephen Frears can probably kiss goodbye to a knighthood. The Queen is his compelling and controversial account of the Royal Family’s abject failure to react to the news of the death of Diana, Princess of Wales, after a car crash in a Paris underpass on August 31, 1997. Helen Mirren is a sensation as the frozen monarch: a prim, mannered matron who wears her regrets like tea stains. Her unique and daring portrayal of the Queen won Mirren the Best Actress award at the Venice Festival last weekend.

It’s not easy to forget the public anger at the time about the royal inertia, or the pin-drop grief of the funeral. What’s strange is how pure those feelings still are. The nervous new Prime Minister, Tony Blair (a dithery Michael Sheen), is confronted by a constitutional disaster. What on earth are the royals doing up at Balmoral? Why the hell don’t they fly the flag at half-mast over Buckingham Palace? Peter Morgan’s brilliant script throws the three People’s Champions — Blair, the Princess and the Queen — into the melting pot, and watches them squirm.

A guilty press is quick to point the withering finger of contempt. Behind the headlines, Mark Bazeley’s dastardly Alistair Campbell spins googlies for Labour rather than Empire. Mirren doesn’t know whether to listen to her anxious PM or slap him.

Blair’s bemused wife, Cherie (a delicious cameo by Helen McCrory), acidly wonders why her smitten husband is so keen to defend the reputation of an institution at wild odds with the ideals of his own party. Is it something to do with his mother?

The Queen is by no means the best feature of Frears’s career but his portrait of power is as sharp and addictive as Desperate Housewives. It’s an absorbing account of how wounds and history congeal; and of how the media turn their own sins into weapons. Frears’s subtle craft is the way he splices yards of television reportage into this gripping fiction.

Like Alan Bennett’s National Theatre play, A Question of Attribution, the eerie pleasure lies in how closely the speculation is modelled on the lives of these breakfast-table stars. The Prince of Wales (Alex Jennings), a Blair supporter, wrings his hands and fumbles around in his kilt, willing his stubborn mother to do the decent thing. Scenes of the Queen and the Duke of Edinburgh (James Cromwell) in the royal boudoir are fascinating, as is the director’s point-blank refusal to cast an actress to play Diana, who appears only as a documentary ghost.

The real strength of the film lies in how skilfully it avoids parody, despite moments of pure whimsy, notably a handsome stag on the Balmoral estate that bonds with the Queen while the Duke tramps up and down hills trying to blow holes through it. The value of this portrait is that it is both critical and sympathetic at the same time.

There is, too, a sweet nostalgia for the golden age of Labour landslides. We forget how close the Royal Firm was to polar isolation and total collapse, and the fascinating part Blair might have played in the saving of these privileged skins. Ironically, this might be the only popular legacy he is destined to leave behind.

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