How to be right and romantic: Michael Barber argues that Tony Blair must balance equality with diversity

A FEW years ago, when Thatcherism was at its height, I was talking to a Treasury official. 'With this government,' he said, 'we don't need to wait for an instruction from a minister. We know that, whatever the issue, the question we have to answer is 'How do you create a market?'.' And create markets they did: first in the formerly nationalised industries, then in public services such as health, education, even prisons. 'What I want to know,' the Treasury man continued, 'is what would be the equivalent question if Labour was in power?'

The success of Tony Blair's leadership may depend on his ability to formulate such a question. The traditional Labour question was: 'How do you create a public service?'. This inspired the 1945-51 Labour government, but much has changed since then. Labour has dropped a series of commitments to re-nationalisation, while the public is more likely to ask how a particular service performs rather than who owns it. Anyone who has drunk coffee at a British Rail station since the old catering monopoly was broken up knows that quality is more important than ownership. This is partly because an increasingly educated population expects more. But it is also partly because the Government has insisted on new approaches to management, and has required that information about standards of service should be published.

So any question for the late 1990s needs to take account of this transformation in public expectations - and two further factors.

First, standards of public service, especially in education, need to rise dramatically. In spite of the significant improvement in standards over the past five years, too many people leave schools with little but a bruised sense of self- esteem to show for it. Homelessness, child abuse and excessive dependence on drink or drugs are instances of other failing services. Second, society is far more diverse than it was immediately after the war. The makers of the welfare state recognised differences in wealth, but not in race, culture, religion or lifestyle.

Labour would therefore need to promote quality and diversity as well as its more traditional value of equality. In framing its question, it would face two dilemmas. First, it has traditionally emphasised the worker or 'producer' interest. Where this approach worked, as in the NHS, it was broadly popular. But not always: hence good working conditions but consistently awful coffee at railway stations.

Second, in promoting diversity, Labour would be stealing an idea traditionally associated with Conservatism. The Tory view, to make a ruthless generalisation, has been that diversity is good while inequality is the inevitable downside. The Labour view, to generalise again, was that equality should be the priority and that some uniformity was therefore inevitable.

In 1066 and All That, Sellars and Yeatman described the Cavaliers as 'wrong but romantic' and the Roundheads as 'right but repulsive'. The labels can be adapted to the two main parties. The Conservatives were wrong about equality but romantic about diversity. Labour was right about equality but repulsive about uniformity. Neither is acceptable any longer. After 15 years of Conservative government, many people think that the downside of inequality has become too great, that the creation of an underclass threatens our social and economic future. Likewise, the huge growth in diversity makes the old uniformity that Labour promoted unthinkable - while the greater demand for quality compels the party to give less priority to the producer interest.

The issue is how to be both right and romantic. That brings us to the question Mr Blair could pose for civil servants under a Labour government. I propose: 'What is the maximum amount of diversity consistent with equality?'. It may lack the simplicity of the Thatcherite question, but the last 15 years should have taught us that simplicity is no virtue.

Let us apply it to education. The national curriculum should guarantee that all pupils learn about the essential elements of the country's culture, and acquire the skills which underpin further learning - literacy, numeracy and information technology. Beyond that, let a thousand diverse flowers bloom. Selection by ability should be ruled out; it tends to create hierarchy rather than diversity.

But specialisation, despite Labour's traditional suspicions, might be encouraged. In addition to the national curriculum, schools could emphasise a particular area - technology, music or foreign languages, for example - or a particular philosophy - religious or otherwise. This would surely match equality with diversity rather well. A school might also emphasise a particular approach to learning - the Montessori philosophy, say.

There would still be tests to assess pupils' progress; regular inspections; and performance indicators so that the public were informed about quality. Where a school was clearly failing, state intervention would be necessary. But the aim would be to create as much genuine diversity as possible. The Tories would argue that their approach is already doing so, but it has two weaknesses. First, diversity in who runs schools - parents and governors or the local council - is not the same as diversity between the schools themselves. Second, markets are too much of a lottery to guarantee either equality or diversity. There are free markets in soap powder and sliced white bread, but I defy anyone to spot a significant difference between one brand and another.

We can see, then, that our question makes sense in education - it would probably do so in other areas of policy. But perhaps Mr Blair should keep it close to his chest for now. A Conservative government, slowly beginning to recognise that the market question has run its course, might adopt this new question first.

The writer is professor of education at Keele University.