No such thing as a Third Way

Podium;From a speech delivered by the shadow Chancellor to the Social Market Foundation in London

TO HEAR some commentators, you would think that the last few years had seen a fundamental realignment of British politics. It used to be all so simple. There were two ways.

There was the First Way - the idea that the state, over time, should do less. That was - and is - our way. Our opponents caricatured it as the way of selfishness and greed - the "me first" culture. It never was that. But we allowed it to be portrayed that light. In its proper light, this is the way that puts a premium on self-reliance; on taking responsibility for yourself and your family; on strengthening society by encouraging people in local communities to take responsibility for the institutions in which they have a common interest, rather than leaving it all to the authorities.

Under the First Way, social responsibility means caring for your neighbour, not just thinking that your obligations to others end when you pay your tax cheque. It is a welfare society, not just a welfare state.

Then there was the Second Way - a perfectly honourable one: the view that the state should do more; that the solution to most problems lay in higher public spending and more state intervention.

It was Labour's way. But it failed. It failed to deliver its own aims. And it was unpopular. Labour's high-spend, high-tax policies condemned them to 18 long years in opposition. So the unpopular and failed Second Way disappeared from the British political scene.

Out of its unpopularity came the quest for a Third Way.

But the Third Way is inchoate. Even its most ardent advocates are at a loss to define it. Asked to set out their case, they fall back on one of two lines of argument. Neither stands up to analysis. Some say the Third Way is the First and Second Ways all rolled into one. For them, it is the "have your cake and eat it" option. They say you can spend more but keep taxes low. That you can embrace the free market, but regulate more. In short, that you can be right-wing and on the left, all at the same time.

Others take a different line. Asked to define the Third Way, they fall back on definitions of what it is not.

Mr Blair has said: "I am talking about a reformed European model: a Third Way of greater adaptability - not laissez-faire capitalism, or old-style corporatism."

Robin Cook says: "The Third Way is a political project as distinct from the individualist politics of neo-liberalism as it is distinct from the corporatist ethos of old-fashioned social democracy."

For the first group, the Third Way is everything. For the second, it is nothing.

The truth is that the Third Way is a principle-free zone - a vacuum. And we know that nature abhors a vacuum. Something will always rush to fill it. In this case, the vacuum has been filled by a policy of tax and spend.

If there is one clear conclusion from the events of the last few weeks - from the Economic and Fiscal Strategy Report, through the Comprehensive Spending Review, to Mr Blair's reshuffle, it is that the Third Way has collapsed in upon its own vacuity.

So, after a period in which the normal rules of politics seemed to be suspended, it turns out that not so much has changed after all. The idea that there is some mystically significant Third Way, a "have your cake and eat it" option, turns out to be null, as we always said it was. The Third Way has collapsed. Mr Blair is an ordinary mortal after all. He has not discovered the secret of perpetual motion.

Politics and government are, as we have always said, about taking difficult decisions about real things - yes, actually making hard choices, not just talking about them. You cannot get away with talking about the state doing less, when the choices you make involve the state doing more.

Welfare reform is not just a radical-sounding slogan; it is a serious policy commitment requiring real resolve and determination. People will begin to see the gap between the rhetoric and the reality. They will see that there are two broad directions in which a country can go. It can opt for the state gradually over time to do less, and for its people to do more, for themselves, for each other and for their communities.

This is the path Britain has followed for most of the past two decades. It is the path most advanced countries are now pursuing. It is the path that builds economic strength, personal independence and responsibility - a stronger society - and leads to lower taxes.

This is what Conservatives stand for. And as the politicians leave Westminster, we know one thing for sure. The great battle of political ideas is just beginning.