`The third way has lost its way'

GOVERNMENT FAILURE to stem the rising welfare bill is proof of the collapse of Tony Blair's "third way," the shadow chancellor, Francis Maude, said last night.

He suggested in a speech to the Social Market Foundation that ministers were shunning the Tories' tax reduction "first way" and reverting to Labour's traditional "second way" - "tax and spend".

"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," he said.

Mr Maude said the resignation of Frank Field, the welfare reform minister, proved Labour was finding difficulty with taking tough spending decisions, particularly on social security.

Even with a strong economy, public finances moving into surplus and a new government with a large majority, Labour was unable to seize the opportunity to make "historic changes", he complained.

"The about-turn that led to Frank Field's departure suggests that welfare might turn out to be Labour's Cuba - one quick skirmish at the Bay of Pigs and it was all over. 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; between the headline and the fine print," he said.

It was not possible to be "right wing and on the left," he said. "The truth is that the third way is a principle-free zone. A vacuum."