Steve Richards: Blair might save the world. But the 8.32am to Skegness will still be late

The international crisis and Tony Blair's own assured response have largely obscured the Government's tottering performance at home. Even so, the contrast is becoming increasingly marked. Mr Blair is breathtakingly self-confident in handling a dangerously complicated foreign policy while being nervy and hesitant on the more straightforward domestic front.

Thursday's 10 o'clock news bulletin on the BBC highlighted the conundrum in the space of a few minutes. The lead item showed Mr Blair in Egypt breathing fresh life into the tortuous Middle East peace process. The experience seemed to have breathed fresh life into Mr Blair. He looked 10 years younger. Shortly afterwards the bulletin moved to Mr Blair's domestic agenda with a long report on the chaos of his Government's latest plans for Railtrack. If he had seen it Mr Blair would have aged ten years.

When it came to the seemingly intractable problems in the Middle East Mr Blair answered questions at a news conference with President Mubarak nodding admiringly by his side. At around about the same time his Transport Secretary, Stephen Byers, was holed up in his department, refusing to answer any questions at all. Mr Blair is a world leader with a soaring reputation whose government still has no idea how to make the 8.32am to Skegness run on time.

From the moment the twin towers collapsed in New York Mr Blair seemed to know instinctively what to do. Within minutes he was telling the TUC conference in Brighton that the world needed to "eradicate" terrorism. Already he was forming ambitious goals in his mind and seeing himself playing a pivotal role in achieving the goals. In a revealing interview broadcast on Sky last weekend he not only mentioned the experiences of Kosovo as a precedent for his current hyperactivity, but also the threat of a world recession in 1999 which, he suggested, was averted only by international co-operation partly instigated by his energetic initiatives.

Take Mr Blair out of the current international equation and the world would seem more dangerous. Even if his style has echoes of Margaret Thatcher's delusionary grandeur, the substance is distinct and nuanced. It is impossible to imagine Lady Thatcher, a copy of the Koran in her hand, penning a series of empathic articles to Arabic newspapers. More to the point, it is impossible to imagine President Bush doing so in quite the same way now. In a fraught, multilayered international crisis, Mr Blair is playing a unique and increasingly important diplomatic role.

Yet Mr Blair tiptoes around his domestic agenda, blowing hot and cold on the euro, equivocating over what to do with public services, changing his attitude to tax-and-spend when the focus groups permit.

One explanation is that Mr Blair feels liberated from the attentions of his Chancellor when he steps on to international terrain, while he is constrained by Mr Brown at home. This may be a factor, but like most Blair/Brown stories, it is overplayed.

I suspect the reason has more to do with the fact that in any policy area Mr Blair acts most decisively and confidently only when there is a coalition of support behind him. In Britain there is nearly always a ready-made coalition in times of "war". All the forces he normally worries about leap on board. The Sun becomes a New Labour hymn-sheet. The Telegraph can hardly contain its patriotic pride. Middle England nods approvingly, noting that a Labour government can now be trusted on the issue of defence. Once a coalition is formed Mr Blair can move it forward, taking it to places it might not have otherwise gone. But an essential pre-condition is a large reservoir of support and approval.

On the domestic agenda, even when Mr Blair knows what his instincts are, the coalition has to be worked at, nurtured, and is sometimes impossible to assemble. As a result, this nervy government sometimes makes John Major's administration seem smooth and competent.

The handling of Railtrack highlights all the wretched faultlines. The Government, wishing to please everyone, could not decide whether the take-over was a "good news" or "bad news" story. Ministers wanted to get credit for taking over the despised Railtrack. But they are supposed to be pro-business, so they were worried about alienating shareholders and deterring the private sector from doing more deals with them in the future. They want to compensate small shareholders, but the Treasury has no desire to dig even deeper to find the money. The Treasury devised the original scheme, but has left it to Stephen Byers to explain. He has not been able to do so, partly because he has been reluctant to give interviews about his spin doctor's notorious memo, but also because the finer details of the policy do not seem to have been fully resolved.

Note the familiar ingredients: a government wishing to please everyone, the ambiguous role of the Treasury, a docile departmental minister and spin, made bizarrely worse by the fact that the departmental minister was forced into silence because he did not want to be interviewed about his own spin doctor.

What makes all this perverse is that the seizure of the hapless Railtrack should be a cause for celebration. The right-wing newspapers are on the rampage, shedding tears for Railtrack shareholders in a way they never normally do when workers lose their jobs as a result of a company collapsing. Only when the Government finds a way of winding up a privatised monopoly without having to fork out billions to shareholders does all hell break loose.

But the problem is compounded because this is a government that tends to panic when the newspapers rage. A decision that it hoped would be popular gets attacked, so it starts to worry about the decision. Mr Byers prevaricates, giving the impression – perhaps accurate – that he has not grasped the full details of the policy. Shareholders queue up to meet him. He cannot say very much because he knows the key decisions will be made by the Treasury. The Chancellor disappears from view. Railtrack, a company that could not provide the facilities to make the trains run on time, is running the Government all over the place now. Bizarrely it is managing its demise with the sort of shrewd focus it seemed conspicuously to lack when it managed the railways.

But then again, it faces a government that is less sure of itself on the domestic front than in the foggy nightmare of the current international situation. Hopeless old Railtrack seems to have unnerved ministers more than Osama bin Laden and his deadly deeds.