Playing With Fire, National Theatre, Olivier, London

Premiered in a forceful production by Michael Attenborough, it emerges as an ambitious state-of-the-nation drama that homes in on a wide range of interconnected conflicts - the clash between central and local government, the tensions between old and New Labour and the dangerous divisions between communities in modern Britain.

Edgar broached the topic of race and politics in Destiny, a key 1970s play about the rise of the National Front. He comes back to the theme in the new piece, evidently prompted by the 2001 riots in Bradford, Oldham and Burnley. The main issue is the effect of central-government policy on community relations in volatile areas.

The play is set in Wyverdale, an imaginary West Yorkshire town, in the early 2000s. Alex Clifton (the redoubtable Emma Fielding), a high-flying New Labour fixer, is sent from London to formulate a robust recovery plan for the district council, which has failed to satisfy a government audit. The Labour-led authority - "a monkey with a red rosette" would get elected - is certainly beset with problems, boasting bottom-of-the-league positions in council-tax collection and GCSE passes. It has an abysmal record of employing people from ethnic minorities. But Alex's patronising approach to these dinosaurs is to inflict upon them management-speak, political correctness, and sessions with an expensive consultant who talks about "performance indicators" as though she were coaching them to be service providers rather than democratic representatives of the people.

The tone of much of the first half is broadly comic in a smart-alec kind of way. Desperate not to have the plug pulled on them by Alex, David Troughton's old-style council leader George and his cronies adopt, with almost satiric thoroughness, Alex's proposed measures. They institute translation services, drop-in centres for people involved in "anti-social public space behaviours" (ie prostitution) and faith festivals. All of these would be admirable, if paying for them didn't mean closing down hospitals and swimming pools, antagonising the white population and stoking up the hatred of the fascist Britannia Party. Resentment boils over during a holocaust commemoration.

The second half jumps forwards to a Tricycle-style inquiry into the race-riot that occurs some months later, and then leaps back to the day it happened. Instead of bringing a little bit of Islington to the place, did Whitehall policy turn it into Beirut? The play recognises the intractability and the complicated history of the problem. For example, can Asians be accused of self-segregation, if it was racist housing policy that created the depth of division in the first place? On the other hand, Edgar shows how, in riding roughshod over the interests of the white community, central government will drive moderates towards belligerent separatism, as we see when Oliver Ford Davies's Labour councillor, Frank, resigns and becomes independent.

Good intentions lead to terrible consequences in this play, and plots backfire. Through a legal loophole, Alex manages to force a mayoral election. But, thanks to the discontent her measures have caused, it's Frank who sweeps to victory, not Alex's preferred candidate - the Blairite Asian Riaz (Paul Bhattacharjee), who pulls out of the race because his community accuses him of betrayal, and because he is compromised by his love affair with Alex.

Edgar can't make us care about their relationship, and he writes in a manner that suggests that his hobby is to sit on committees. But, if this isn't the most nuanced of plays, it provides an enlightening entertainment about an urgent issue.

To 22 Oct (020-7452 3000)