Repeat after Bill: 'It's the economy, stupid]'

JOHN MAJOR could learn something from Bill Clinton (in fact, Bill Clinton could learn something from Bill Clinton, but that's for another day). The Clinton lesson consists of his famous four-word aide-memoire: 'It's the economy, stupid.' Whenever Candidate Clinton found himself in danger of being sidetracked into law and order or foreign policy or morality or whatever, he would kick himself and repeat the mantra.

What Mr Clinton understood was that political leadership requires an ability to focus intensely on what matters most. In electoral politics, what invariably does matter most, other than in time of war, is the economy. Mr Major's sudden enthusiasm for reactionary social policies is a blurring of focus which he will come to regret.

Of course, it is easier for candidates to be focused than for prime ministers and presidents. In government, the pressure from the daily pile of papers urgently requiring attention and decision is unremitting.

A further problem for Mr Major is the length of time the Tories have been in office. Maintaining focus for the months or weeks of a campaign is one thing, holding it unblinkingly for year after year demands resolution of another order. Margaret Thatcher's long run of success was in large measure due to her single-minded, Clinton-style concentration on tackling the causes of Britain's economic decline.

A little story illustrates just how concentrated she was. On the day after Argentina invaded the Falklands I had lunch with her economics adviser, Alan Walters. I was full of the crisis and what might happen next. Alan was gloomy. His weekend visit to Chequers had been cancelled by the Prime Minister that morning. Mrs Thatcher had rung, he said, to apologise and had described the Falklands - I will always remember the words - as 'a boring nuisance', a distraction which would take her away from the economy. Alan thought it was a disaster - 'just as we were really getting somewhere'. (I must admit to feeling slightly bad about telling this tale in print, but recently standards of discretion in public life have somewhat slipped . . .)

In due course, the Falklands war became inseparable in the Thatcher legend from the economic battles being fought at home. But that was not how the Prime Minister saw it at the time. It is precisely because Mrs Thatcher lost that fierce sense of focus after her third victory that she also became an electoral liability to her party. If she hadn't insisted on the brilliant necessity of the poll tax and if she hadn't fought debilitating battles over Europe, if she hadn't convinced herself that the battle was won on the economic front - in other words, if she had just stuck to her economic knitting - she might still be Prime Minister.

And so we return to Mr Major's leaked memo on social policy to his cabinet colleagues. The purpose of this missive, we are led to believe, is to try to switch the focus of political debate from the economy to social issues.

The thinking, if that is not too grand a word, goes like this. In the Eighties, the Tories under Mrs Thatcher made the economic agenda their own, but social policy was neglected, in the sense that progressives and liberals continued to make the running unchallenged. In the Nineties, the Tories under John Major will reclaim the social agenda through a combination of 'back-to-basics' policies, a robust common sense, and a new determination to protect and promote the morally virtuous.

It is hard to know whether to laugh or to cry. What seems to have happened is that Mr Major's speech about 'traditional values', having played quite well at the party conference, is now to form the basis of a new post- Thatcherite 'strategy'.

While relatively little is known about what is intended, there is not much to discuss other than to say that the law and order measures which are giving Michael Howard so many gratifying headlines will not make any of us feel safer on the streets or more secure in our homes. Nor do I believe that the Government will find that there are many votes from attempting to interfere in the way in which we conduct our personal relationships.

Good, well-run schools which get children through their exams are another matter. As I wrote last week, there is an electoral reward for any government which can deliver more of them, but it will be difficult to speed that process up. It may be that all Mr Major really thinks he is doing is articulating a mood and giving definition to social changes which are already under way. No great harm in that, but no great agenda for the Nineties either.

The real danger for the Government is not just that it will make a fool of itself by pretending to influence things which are none of its business, but that the hunt for a social strategy will divert it from what really matters: the economy, stupid.

What is most worrying about the No 10 memo is that it seems to presuppose, as Mrs Thatcher did when she fatally lost the plot, that the economy, barring a few ticklish questions for fiscal policy, is essentially a job well done. If Mr Major really believes that all he has to do is keep half an eye on inflation and let the economic cycle carry the Government on to a fifth term of office, he is living in a fool's paradise. Although the underlying performance of the British economy undoubtedly improved during the Eighties (though not by as much as Mrs Thatcher's admirers like to believe), there are still severe structural problems which the Government has barely begun to address.

It is not difficult to reel them off: a yawning structural balance of payments deficit; far too great a dependence upon consumption rather than investment to drive growth (in a well-balanced economy consumption should form about 60 per cent of GDP, as opposed to Britain's current 73 per cent); an ageing and stagnant labour force; the profound absence of a training culture; an acute shortage of science and technology graduates which even the headlong expansion of higher education is failing to remedy; a welfare system out of control; a deplorable transport infrastructure, and so on and so on.

There is an enormous amount of work to be done before it will be possible to talk of having halted Britain's relative economic decline. The trouble with wanting to be a world-class economy is that the rest of the world does not stand still. The task of making Britain's economy work better requires unceasing graft and high political courage. In short, focus.