There are more than personalities at stake in this reshuffle - policies really do matter

It is important that the Chancellor is not pushed aside by those who still have to think through their apparent radicalism

Most cabinet reshuffles seem more significant than they really are. In the media, there is high excitement for a day or two and then the old political rhythms tend to reassert themselves. Tony Blair's latest extraordinary attempts to carry out changes to his ministerial team are different. The stakes are genuinely high, which is why the changes have taken so long to resolve.

Most cabinet reshuffles seem more significant than they really are. In the media, there is high excitement for a day or two and then the old political rhythms tend to reassert themselves. Tony Blair's latest extraordinary attempts to carry out changes to his ministerial team are different. The stakes are genuinely high, which is why the changes have taken so long to resolve.

In effect, the tense prime ministerial negotiations over the reshuffle have been about the nature of Labour's next election manifesto and therefore the direction of a third term. On Tuesday, I suggested that the most important division in British politics was within New Labour rather than between new and old Labour. The earlier divide was deliberately ill-defined, partly a clever device that implied any split in the Labour Party was a chronological one, between the dark past and the glowing future. The current tensions over policy are, in some ways, harder to define, but they are real and not merely the product of conflicting personal ambitions at the top of the Government - although it goes without saying that the soap opera is a factor.

Some ardent Blairites still suggest that the relevant division is between old vote-losing socialists who pretend to be New Labour and those around Tony Blair who are a band of noble true believers. I know of no one who falls into the former category. The more subtle differences over policy relate to the role of the state and how it interacts with markets and the private sector in the provision of public services, and how the Government addresses issues such as poverty and welfare.

At its broadest, Mr Blair seeks to give more power to consumers and to involve the private sector more extensively in the provision of services. As Mr Milburn put it in one of his recent interviews: "I believe in giving power to the people." Again at its broadest, Gordon Brown worries about how such an aspiration can be achieved in a way that establishes high standards of services across the board. Mr Brown evangelises about the need for an innovative private sector and for market solutions in certain circumstances. The Director General of the CBI, Digby Jones, is a great admirer. Mr Jones has never been accused of being an old Labour socialist. But equally, the Chancellor believes there are limits to market solutions and worries about the consequences of applying them too extensively under the guise of boldness.

This is not an infantile debate over whether to reintroduce punitive levels of taxation, or to allow trade unions to regain old powers, or about extensive renationalisation. Instead, it centres on the great, unresolved question in post-Thatcherite British politics, made more complicated by the failure of Wilsonian corporatism in the 1970s: what is the purpose and remit of government? It is a question that, in different ways, is also troubling the Conservatives and Liberal Democrats.

As far as the debate in the Cabinet is concerned, the ardent Blairites portray themselves as the crusading modernisers. But where is the substance behind their heroic crusade? In my view, Mr Blair gets an unfairly rough ride in parts of the media over issues such as "sleaze" and "spin". Conversely, he is given a relatively easy time over his approach to policy.

Most in the media seem to accept his own assessment that he is a bold radical facing down his weak-kneed consolidators. Yet it is Mr Blair who is the great consolidator on some of the biggest issues of the day - tax, Europe, relations with the United States. Some of his broader statements of principle and the policies that have flowed from them are also not quite as bold as they seem. The Prime Minister says his big idea is economic competence and social justice, but no political leader would advocate policies based on economic incompetence and social injustice. It is a big idea devoid of any recognisable values, one that everyone would agree with. Similarly Mr Milburn's desire to give power to the people sounds like a stimulating battle cry, but who would disagree with that? The devil is in the detail.

Welfare reform, a renewed source of tension, illustrates the point. In December 1997, in a headline-making speech in Sedgefield, Mr Blair announced that he was personally to take charge of welfare reform, chairing a new cabinet committee. The committee met a few times, but nothing much happened. Then Mr Blair went on a series of welfare roadshows preaching the need for a revolution in welfare. The only problem with the roadshows was the lack of any policies to accompany them. They were a revolution without a policy. Frank Field was hailed as the great reforming social security minister, but Mr Blair did not seem to realise that Mr Field's proposals were expensive and ran counter to the principles of stealthy targeting that he supported at the time.

While all this was going on, Mr Brown got on with it, outlining the principles behind the reforms (encouraging people to work, rewarding work, offering greater help for those unable to work and more help for poorer pensioners and parents). Now we hear once more that Mr Blair wants to take a revolutionary approach to welfare, but we await the detail to accompany the heroic resolution.

Similarly, Mr Milburn's potentially innovative proposals for foundation hospitals had not been properly thought through. What would have happened to a hospital that ran into financial difficulty? No government could allow hospitals to close, so would one that was short of funds be able to charge patients or would the Government bail it out? During his brief ministerial exile, Mr Milburn has called for a radical manifesto for the next election. Again we await the details.

Mr Blair has to range widely, under intense pressure on several fronts, all the time. The Chancellor is more fortunate in that he can focus on certain issues and surface in public when he is ready to speak about them.

In raising the limitations of the self-proclaimed modernisers, I am not suggesting that Mr Brown has the answers to all these complex issues. No doubt there have also been many times when he has resisted genuinely innovative policies to the understandable fury of those who devised them in Downing Street or elsewhere. In some decisive moments, the Prime Minister got there first, for example in recognising, halfway through the first term, the urgent need for more money to be spent on the NHS. But on the whole, Mr Brown has a record of policy delivery, while the arch Blairites have a record of proclaiming their radical aspirations. That is why it is important for the future direction of the Government that the Chancellor plays a central role and is not pushed aside by those who have still to fully think through the consequences of their apparent radicalism.

The longest lasting reshuffle in recent history will not be the end of the matter. In theory, Mr Blair should be able to do more or less what he wants as the election moves into view. The last few days suggest that, on several different fronts, the situation is a lot more complicated than that.

s.richards@independent.co.uk