Leading Article: When it comes to ideas, the best party is

For a few, dangerous days this week, some of the old extremism, polarisation and passion of British politics looked as if might just make a comeback, had John Redwood or Michael Portillo seized Mr Major's crown.

But it was not to be. With Michael Heseltine's backing, John Major has tilted the balance of power in his cabinet towards the Tory centre-left, naming a team that is the least Thatcherite since he entered No 10. The result is that Messrs Major, Blair and Ashdown look very much like variants of the same political species, different mainly in personality, temperament and style.

The level of agreement between the main parties is extraordinary. They are virtually as one on macroeconomic policy, the need to keep inflation low and in their opposition to high taxation. Each seems committed to providing better public services for the same or a lower level of spending. In practice, the parties are probably closer together even on Europe than they would wish to admit.

So how are we to distinguish between them? What would make Blair and Brown preferable to Major and Clarke or Ashdown and Bruce? In such a blurred situation, you might expect the Opposition to seize the initiative with bold, fresh policies designed to make the Government look tired out. In that respect, the last few weeks have been interesting: they suggest that the tired Tories may still be a sharper ideas-generating machine than sprightly New Labour.

Certainly Labour's long-gestated health and education policies do little more than reconcile the party to institutional changes that it vehemently opposed throughout the last General Election. The party has made its peace with the essential features of the NHS reforms: the purchaser/provider split, GP control of buying treatments and autonomy for hospitals. Meanwhile, Tony Blair has hit on a compromise that would preserve opted-out schools in all but name. Nothing much here to stretch the intellect or shock anyone other than diehard Labour left-wingers. The party's "charter for anglers", a shameless bid to catch 3 million fishing enthusiasts, is more innovative.

Compare and contrast two announcements over the past week by Mr Major's government. First there was Peter Lilley's Green Paper, proposing a new in-work benefit for people without children. It is an ambitious idea: supporting the childless in work rather than paying them not to take a job. If successful, the scheme could both reduce unemployment and save money. It is a powerful rejoinder to Labour's campaign for a minimum wage.

The next day came plans to grant parents of four-year-olds vouchers worth pounds 1,100 to pay for nursery schooling. This is a good idea, imperfectly framed in that it fails to target limited resources towards the children of the low-paid and as such is wasteful of public funds. A better solution would be to provide means-tested vouchers. But whatever the flaws, the proposal shows that, even after 16 years in power, the Tories can still think afresh. It is also worthy of note that the policy was driven from Downing Street, against the initial opposition of the Education Secretary, Gillian Shephard. The Opposition's reaction was typical. Labour dismissed the policy as a "con". It can surely be only a matter of time before the front bench, as on health and education, eats its words and advocates an adapted form of vouchers.

Against that, there are many areas in which the Tories, too, have failed to develop new ideas. Their Housing White paper published last month took few steps forward. It was merely another hymn to home-ownership, doing little to tackle the shortage of rented accommodation, and was tainted with a touch of crudely illiberal thinking about the role of housing departments in evaluating the lifestyles of their clients. Likewise, the Tories are unwilling to offer voters the democratic powers that Thatcherism gave consumers. Despite their scepticism about Brussels rule, they will not support devolution to a local level. Even reformers such as Kenneth Clarke, ruthless against professional groups, remains a fierce defender of centralised government. Here, the Liberal Democrats have the strongest hand and the most credible commitment.

So the battle for new ideas remains wide open. Mr Blair continues to make gestures which encourage us to think that he is readying himself for a spate of more imaginative policy-making to match the radicalism he has shown in casting off internal party shibboleths. This week, in his speech to the Fabian Society, he focused on the 1945 Labour government. Its strength lay, he said, not only in pursuing the socialism of Attlee and Bevan, but in valuing the contribution of Lloyd George, Beveridge and Keynes.

This looks like a signal that a Labour government might turn to some ideas more closely associated with the Liberal Democrats. Closer to home, rare and radical Labour politicians such as Frank Field toil away, tolerated but not yet accepted within the mainstream of party thinking. Mr Field has developed a framework for social security reform, involving compulsory insurance, policed but not funded by the state. It is a big idea on a scale worthy of the 1945 government and it is conceivable that New Labour might one day adopt it. Optimists say that if Mr Blair won office, he would vault over outdated positions to a more radical agenda.

The fear is, however, that the main parties will abandon new thinking in favour of buttering up their natural supporters and those whose votes hold the contested centre ground. Mr Major could content himself with income tax cuts, the abolition of inheritance tax and doling out subsidies and grants to home-owners. Likewise, Mr Blair's party, allied to unions and producer interests, may pull its punches on reforming the public sector.

It may well be, in any case, that the country's political temperature will be determined by the non-ideological chasm that has divided the big parties in the last year: Mr Blair's freshness at the head of a self-disciplined party against an exhausted Mr Major in the midst of a rabble. Perhaps at present neither party is capable of staking out the ground as the dynamic innovator in British politics. The incentive for making the attempt is that such a party can, as Margaret Thatcher proved, dominate politics for a generation.