Leading article: Long live peace, independence and Schubert

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Today is the day of pious hopes after the maudlin reminiscences of the night before. So let us, in optimistic spirit, set out what we would like to see in 1997.

Important things first. We hope everyone decides to listen to all of Schubert's works, as it is his bicentenary this year. A year spent in adoration of Schubert would improve everyone's quality of life, and remind us what can be achieved by someone who died at 31 having written more great songs even than Sir Paul McCartney. We hope Jarvis Cocker brings out a new album, so that at least for a week or two we hear less about Liam Gallagher and the delightful Spice Gals. We hope Princess Diana remarries happily, preferably a fantastically wealthy Latin American salsa dancer, who takes her back to his central American republic, since it is the only way we are going to see an end to that sorry tale. And, towards the more speculative end of the spectrum, we hope England win at least one cricket match before 1997 draws to a close, just to give the Scots, Welsh and Irish a break from English self-pity.

The coming year also contains some more predictable milestones. This is the year we hand over Hong Kong, our last big imperial possession. The real story, though, is not what will happen to Hong Kong, but what will happen in China. Not just in 1997, but over the next decade, it is important that the world's democratised powers recognise that there is one exceedingly important country where the values of liberal democracy do not hold sway. As economic growth and social change transform China, the dangers of friction are high.

The new year also brings a heavy responsibility to maintain the perilous peace of the Middle East. Yesterday's painstaking movement towards agreement on Hebron means that optimism looks like winning out over pessimism on the first day of this year. We hope Benjamin Netanyahu, Yasser Arafat and the new US Secretary of State, Madeleine Albright, continue to devote their energies to sustaining and bedding-in peace over the remaining 364 days.

At home, we know at least one event for sure: 1997 is the year of a general election. All elections are described in advance as the most important since the war, or 1906, or whenever, but this one has a better claim than many to real significance. It could mark the end of 18 years of one-party rule; and it falls just before a great treaty-revision conference to set the future course of the European Union.

As yet, we have not decided which party we want to see win the election. This is not indecision or coyness on our part, but firm adherence to the spirit of independence and impartiality of judgement which founded this newspaper. We keep an open mind in our pursuit of the ideal of objective reporting, but that does not mean we will dodge the decision when it comes. Come the day, we will say who we think should run the country. Between now and then, we will set some very particular yardsticks against which we will judge the parties, and party leaders, when the day comes.

Surprisingly, perhaps, the usual issues of tax and economic policy are not the dominant ones. Though important, we believe that there is a remarkable degree of consensus on how to run a modern liberal economy in Britain. That does not mean we shall let the parties avoid questions about raising revenue and spending public funds. In passing, we must observe that it reflects poorly on Tony Blair that he and Gordon Brown appear to disagree at this late stage on whether there should be a 50p tax rate on incomes over pounds 100,000 a year. Clearly our record over this past year has been intensely critical of John Major's government - but we have reservations about Labour, not least its commitment to the free market. We would feel much happier with Mr Blair and his colleagues if, for example, they signalled clearly their willingness to tackle such vested interests as the Murdoch press.

But the big tests for us are not mainly economic, because the differences between the parties are relatively minor. The big questions are constitutional. And of those, the first is our desire to see a government committed to an active and constructive role in Europe. This requires the combination of a basically pro-European orientation, ruthless defence of the national interest and hard negotiating skill. John Major has shown all three in the past, but he is shackled by the anti-Europeanism of the majority of his party. Our concern about the single currency, and the European "project" generally, is its imperfectly democratic construction. We have not yet heard enough from our politicians about how to bring the elites and the peoples of Europe closer together.

Our undemocratic machinery of power needs reform, and we hope the British people will elect a government committed to that change. It is time to take stock, and give the people of this country a more fundamental say in how they are governed, and in return to ask them to take some responsibility. That is why we favour transferring power away from Westminster and Whitehall to a Scottish parliament and a Welsh assembly. If, and it is a big if, there is genuine popular desire for an assembly in the North-east or the South-west of England, then they should come into being, too.

Only by mobilising genuine local democracy can we break the back of the quangocracy. This does not mean going back to local councils as they were BT (Before Thatcher); it means experimenting with new ideas, such as those propounded by Michael Heseltine and others, for directly-elected mayors, and compact city executives.

Of course, we hope that one of the consequences of this year's election will be the abolition of the rights of hereditary peers. Some of the more recherche arguments now deployed in their defence only make the case the more convincing. This week Simon Heffer, the Thatcherite writer, published a pamphlet which concluded with the clincher that inheriting a fortune allows "much more influence in society" than inheriting a peerage. Now, that's not an argument most Conservatives would want to push too far. One of the advantages of sweeping out the hereditary peers is that it will start a debate about what kind of parliament we want.

Above all, however, we would like to see a national debate about the way we elect the House of Commons. In a sense, the next election will be wasted if it does not produce a clear choice for the electorate about the voting system itself. Indeed, if 1997 is to mark a new direction in Europe, then it may need electoral reform to underpin it - to ensure that the government continues to represent the majority of its citizens. Labour's promise of a referendum on electoral reform is therefore the neglected key to the coming election, and we shall be pressing Mr Blair to tell us more about his reasons for personally opposing change.

The final test is education policy, since the parties' positions on how to improve education tell us almost everything we need to know about their culture. Are they about heading backwards, either to rule by teaching unions, or rule by divisive class systems? Are they about blithe promises of raised standards, or hard commitments to improve discipline and raise aspiration?

Naturally some readers will disagree in some measure with some of the above. One hope, however, we suspect they would all nurture along with us: that the IRA decides, as hinted, to call a pre-election ceasefire, which is then sustained after the election. An end to Northern Ireland violence alone might be enough to make us feel 1997 had been worthwhile.

Inevitably, we hope for a few other things - that all our readers win the lottery and take out full year's subscriptions, for example, or that someone, somewhere, comes up with a good idea for celebrating the millennium. But we only make one resolution: to remember that we are - and so are you.

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