In the name of the Father and the Holy Vote

In the battle for the moral high ground,

Tony Blair has stolen a march on

William Hague with an unspoken alliance

with the Catholic church. If God is siding

with the big battalions of New Labour,

does the Conservative crusade for

family values stand a prayer?

It is not generally known that Tony Blair wrote to Cardinal Hume shortly before the last general election. The Catholic bishops of England and Wales had just published a document entitled "The Common Good", which the newspapers reported with headlines such as "Catholic church says Vote Labour". Officially, the Bishops denied that was their intent. But Blair's letter to the cardinal, which was decidedly warm in tone, acknowledged the common agenda between his vision for New Labour and the social teaching of the Catholic church. The letter has never been published.

If it were to be, it might reveal just how far William Hague still has to go in the attempt he began last night to reclaim Christianity as a weapon in the Conservative armoury. "It's important that the Conservative Party reconnects with the churches and learns from the churches," he told the Conservative Christian Fellowship conference.

By this he did not mean revitalising Tory churchgoing. Indeed Hague has already had his fingers burned on that after saying he felt closer to God going for a walk in the Yorkshire Dales than he did in church; he was subsequently derided by a bishop for self-indulgent escapism. Nor did the Tory leader last night suggest, as some had predicted, a tighter attitude to abortion or a more priggish attitude to pre-marital sex. Hague knows a vote-loser when he sees one.

No, Hague has realised that the Tories lost the last election not because of the economic chaos of Black Wednesday but because Margaret Thatcher lost the moral high ground with a philosophy epitomised by her "no such thing as society" remark. She protested later that she had been misunderstood, but the phrase appeared to encapsulate the creed of selfishness which her two decades of accelerated individualism ushered in. Hague, it seems, wants to tell us that New Toryism is as compassionate and community-minded as anything that Tony Blair might have on offer.

Can Hague ever make up the ground? Once the Church of England was said to be "the Tory Party at prayer". No longer. But, more than that, as the exchange of letters between Blair and the cardinal indicated, the principles of Catholic Social Teaching are already deep within New Labour policy. From stakeholding to the minimum wage, devolution to welfare-to-work, from union recognition in the workplace to action on Third World debt, Tony Blair's agenda runs closely parallel to the social doctrine of the church of which his wife and children are members and which insiders say he may one day join himself.

Ask most members of the public what they know about the teaching of the Catholic church and they will probably reply with something about sex - contraception, abortion or enforced celibacy. But over the past century, under five different popes, Rome has also developed a raft of doctrine known as Catholic Social Teaching which has been so little publicised it has been dubbed "the church's best-kept secret". Tony Blair's much- vaunted search for a Third Way between capitalism and communism is bringing him, and the secular political theorists at the heart of the New Labour project, to venture tentatively onto territory that has already been well- explored by the church over the past 100 years.

The Third Way addresses the central dilemma of our time: how to reconcile rapid technological and economic change with the abiding human need for stability and a sense of common purpose. Secular thinkers have suggested a variety of new models. The American social theorist Amitai Etzioni has formulated the philosophy of "communitarianism"; the head of Tony Blair's policy unit, Geoff Mulgan, has come up with what he calls "connexity"; and, most recently, another Blair favourite, Anthony Giddens, the director of the London School of Economics, has published a volume actually entitled The Third Way. What all these new political theorists share is a new moralism which speaks about individual responsibility and duties coming before rights. Now, it seems, even William Hague wants to tread gingerly on the same turf with his talk of compassion and community.

Yet there is nothing tentative about the work that Catholic Social Teaching has already done here. Of course, the church has always had views on social issues, but such thinking shifted gear when the Industrial Revolution brought a new dimension to the ordering of the world of work and the political economy in which it is sited.

When battle was joined between labour and capital at the turn of the century, the Pope, Leo XIII, afraid that he might lose his flock to the attractions of the new religion which was communism, issued in 1891 a critique of the exploitative excesses of industrial capitalism. Called Rerum Novarum (Of New Things) it was to prove the first of 16 major social encyclicals in which the church went beyond the realm of personal morality and scrutinised the ethical behaviour of institutions and social structures.

None of this constitutes, in the words of the present pope, "a third way between liberal capitalism and Marxist collectivism... The Church does not propose economic and political systems or programs," he wrote in 1987 in the social encyclical, Sollicitudo Rei Socialis. Rather it is a "set of principles for reflection, criteria for judgement and directives for action". If it is not a Third Way, it does provide the moral compass for politicians to plot one.

There are distinct signs that Tony Blair takes all this seriously. Neither Marxism nor laissez-faire capitalism are based in morality: both assert that economic outcomes are decided by scientific laws to which, as both Marx and Margaret Thatcher would have put it, There Is No Alternative. Moral considerations can never over-ride economic forces. By contrast with this determinism, what is so striking about the thinking of those involved in New Labour's policy development is its high moral content.

The irony for Hague is that his attempt to draw bishops, clergy and churchgoers closer to the Conservative Party - and with them the ethical centre of Middle England which so spectacularly defected to Labour at the last election - comes at a time when the Church of England seems far more inwardly focused than during the years of the Runcie/Thatcher confrontation. The agenda at the General Synod, which began in London yesterday - and some of whose members were part of Hague's audience last night - is dominated by internal issues such as church schools, secular funerals, shortage of clergy and women bishops. International debt is the only significant nod toward major social issues.

The synod may be receptive to William Hague's suggestion that political parties need to put the family first. But will a policy of allowing a non-working husband or wife to transfer their tax allowance to their spouse - on which the Tories fought the last election - be enough? Especially when the Government's recent Green Paper on the family had all over it - for those who could recognise them - the fingerprints of Jack Dominian, who has been for decades the English Catholic church's doyen on relationships, marriage and divorce, and whose research is behind the Government's proposal to ask health visitors to identify and help out with relationship problems.

In any case, for Blair it goes far deeper. His policies on devolution, decentralisation and the minimum wage are all directly rooted in Catholic Social Teaching. So is the idea of a "stakeholder economy". So is the New Deal policy of "welfare to work", which brings together two key Catholic ideas - human dignity and subsidiarity - acknowledging the inalienable right of every individual to "everything necessary for leading a truly human life: food, clothing and

shelter..." but also warning against the danger of robbing people of the incentive to work.

Having just edited a book on Catholic Social Teaching, I have been struck by the fact that many of its arcane terms stand for concepts which have renewed resonance in our post-modern, globalised world. They point to important values of which contemporary society has lost a clear view with its relativist insistence that everyone should be allowed to do their own thing. It provides an ethical framework in which to think about commerce and trade - and determines that there may be situations in which social justice takes priority over economic efficiency. The market must be a tool not an ideology, and the state has a role to play in regulating that market.

But if there is inspiration for Tony Blair in all this there are problems too, which is perhaps why that letter to Cardinal Hume has never been published - and why the Prime Minister has been cautious about not publicly referring to Catholic Social Teaching. For it also contains precepts which might be politically inconvenient. The most striking of these is its belief that work is the quintessential human activity. It is the defining act which makes us fully human; work expresses human dignity and also increases it. Because of this - and because work for all is also a social good - it is unethical for governments to use unemployment as a tool to control inflation. Contrary to the adage of Norman Lamont, unemployment can never be "a price worth paying". But talk of an economic strategy which puts employment at the top of the political agenda is not what Gordon Brown currently wants to hear. And presumably William Hague would be no more enthusiastic.

Nor does Tony Blair feel able to go as far as Catholic Social Teaching requires in restoring certain trade union rights, or shifting the relationship between the First and Third Worlds or in curbing the activities of the currency speculators who have turned means of exchange into another commodity, with massively destabilising effect on the world's financial system. In each of these areas Blair has taken some action - in pressing the G8 for action on Third World debt and setting out the case for an overhaul of the world's financial framework to prevent a repetition of the economic collapse in Asia and the Far East. But the church teaching demands more.

What is clear, however, is the extent to which the Prime Minister's policy-making is guided by the tradition of thinking which Catholic Social Teaching embodies - a convergence that both political analysts and pressure groups might usefully explore.

The Third Way, it turns out, may not be a new economic policy, but the moral tool-kit to assist politicians to fix what is wrong in the old one. Catholic Tories such as Chris Patten understood that. Whether William Hague can square it with the Conservative Party of today is another matter.

`The New Politics: Catholic Social Teaching for the 21st Century', edited by Paul Vallely, SCM Press, pounds 14.95