Election Briefing: WHERE BLAIR STANDS: Caution first in drive for minimum standards

Tony Blair wanted to amend the social chapter before signing up to it in government, and considered asking for changes to safeguard "competitiveness".

But the idea was dropped because it became clear that other European countries would not stand for it, and that it would damage relations between them and a new Labour government. The Labour leader is sensitive to business fears about the costs of social legislation and his stance on the social chapter is defensive.

Despite the fact that it would allow Britain to be outvoted on social measures, he told the Confederation of British Industry conference in 1995: "I have no intention whatever of agreeing to anything and everything that emerges from the EU." This was privately described as "loose drafting" by officials in Mr Blair's office, but he has since repeatedly suggested that he could veto the measures which damaged competitiveness.

He accepts much of the case for flexible labour markets, but argues that other EU countries accept it too and do not intend to impose their model of "social protection" on British business through the social chapter.

It is true that, as it stands, signing the chapter would have a negligible effect. He knows that the party is open to the Tory charge of giving up the veto over social legislation, but the symbolism of signing is important to an incoming Labour government. More significant in practice would be the minimum wage, which is not part of the social chapter, but reflects the same belief in setting minimum standards of employment conditions.

This is where the nub of the argument between the parties really lies. Mr Blair and Gordon Brown, his shadow Chancellor, argue that the way to compete in global markets is to raise the skills of the national workforce, rather than bidding down the cost of labour - which includes pension rights, redundancy rights and other protections against dismissal.

Hence the importance of education and training in Labour rhetoric. But this is a long-term programme, and in the meantime, Mr Blair accepts that British workers can price themselves out of world markets. Hence the cautiousness about the social chapter and the signals that the minimum wage will be set low.

As we will no doubt tire of hearing over the next few weeks, minimum wages are, in any case, not incompatible with so-called "flexible" labour markets. And the Conservatives have already found themselves pushed on to the defensive, justifying taxpayer subsidies to cheap employers through social security top-ups to low earners.

All the rest of Labour's old policies of strengthening trade union rights and employee protection have been junked, apart from the right to union recognition which does not add to labour costs - at least initially.