Leading Article: What Mr Hague should take away from Eddisbury

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EVERYONE CAN claim credit for the by-election at Eddisbury: the Tories for winning it, Labour for not losing it too badly and the Lib Dems for holding their share of the vote.

In reality it is William Hague who has most to ponder on, even if Tony Blair has little to congratulate himself for. The Prime Minister had to pour in everything, including visits by himself and half his Cabinet, as well as dropping hints on delaying the euro referendum beyond the next Parliament, to make sure that his party didn't suffer the humiliation of the European elections only a month and a half ago.

But avoid that humiliation he did. The British parliamentary system may be one in which the winner takes all. But is also one in which the realisation of expectations is as important as the result itself. On that score, the Tories did not do nearly well enough. To have built on their European electoral success they needed to prove that they could have kept up the momentum to extend their vote from their core voters to the middle-class citizens who deserted them in such droves in the last election.

They failed. Why? There are no doubt all sorts of psephological reasons for justifying the Tory performance, from the nature of by-elections to the peculiarities of this constituency, which is so clearly divided between town and country. But the basic point that Mr Hague needs to absorb is that anti-Europeanism is not enough to take him back into the middle ground of British politics. It may do wonders for his core supporters, but it does precious little for average voters who are worried about the education of their children, the care of their old age, their transport to work and their treatment when they get ill.

On these issues the Labour Government continues to score well, far better indeed than any of its predecessors at this stage of the electoral cycle. But it is not invulnerable. Much of the action it has taken on school standards, hospital investment and transport regulation will take years if not decades to take real effect. In the meantime, caught between the rock of fiscal prudence and the hard place of public expectation of promises of improvement, the Government has been forced more and more into short- term gestures and ill-thought-out intervention.

In the last fortnight, proposals for new government regulations have been coming thick and fast. Mr Blair has changed his mind and then apparently changed his mind again on the popular appeal of banning fox-hunting. From talking of an inclusive society, ministers have changed their tone to punishing offenders, be they criminals or people suffering from personality disorders.

Two days ago Stephen Byers, presenting his White Paper on consumer protection, announced that trading standards officers were to be given the power to close down businesses that are simply suspected, not proved, to be rogue traders. But this is taking a very heavy, and potentially deeply illiberal, hammer to crack what is only a small part of the problem of poor service and lack of competition in this country. Only deregulation and more transparent information can do this - not more regulation and state intervention.

Private health care, which is certainly not one of Labour's priorities, is to be regulated. Whether the promised regulatory authority improves the quality of care for private patients as is needed, or regulates the sector out of existence, has yet to be seen. And the new Financial Services Authority is taking the regulation of the financial sector out of the hands of several self-regulatory bodies, and centralising it under a new Government umbrella with extensive powers. Questions have already been raised as to whether this body's ability to act as policeman, judge, jury and executioner contravenes the European Convention on Human Rights.

The weakness in this interventionist approach is that rough and ready legislation will not solve the problems of ripped-off consumers, impoverished investors, and crimes committed by the mentally ill. The real concern for the consumer and investor should be whether telling businesses how to behave will genuinely improve standards of service. A degree of regulation may be necessary in order to structure some markets, but how much is a delicate question. What consumers and investors certainly need, however, is more information and choice.

This is the area of clear blue water opening up in Britain. And it is the water in which the Conservatives can claim the most experience and the readiest skills. Cronyism, tinkering, gesture politics: these are all charges that could find a ready response among British voters as the Government's performance comes under the scrutiny of events and time. But Mr Hague can seize the advantage only if he broadens his own approach to policy - and makes sure that his party, and its finances, are whiter than white.

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