Blair turns challenge into opportunity: Donald Macintyre watches the labour leader set his own agenda over the signal-workers' dispute

TONY BLAIR put down another important marker as Labour leader this week simply by refusing to join in the ritual support of the signal workers at the TUC. As that other political vanguardist, Mrs Thatcher, would have done, he also turned a politically tight corner into an opportunity.

The idea of arbitration in the rail dispute had been discussed by Mr Blair with colleagues before the summer break. But as long as there seemed an imminent prospect of a negotiated settlement it lay dormant.

With the end of the summer break, however, the strike showed every sign of dragging through the conference season. They also had reason to believe that the signalmen themsleves - as opposed to representatives of other sections on the executive of the RMT rail union - favoured arbitration. The RMT, it was argued, would be better able to sustain public support if it had the confidence to put its case to a third party.

However, Jimmy Knapp, the RMT leader, rejected the proposal and Mr Blair came under direct, if discreet, pressure from the TUC on the eve of his arrival in Blackpool not to say in public what he thought in private. We have learnt this week that this simply is not his style. He resolved without much difficulty that if asked about it he would indeed mention arbitration. There is a lesson for journalists here: in a television interview he was not asked and he did not mention it. But on BBC Radio's World at One he was asked the question, and did. In doing so he reinforced in the most concrete possible terms a messsage that he had already been provoked to delivered by, among others, John Edmonds of the GMB union: that the TUC should not expect special favours. What was perhaps especially infuriating was Mr Edmonds' insistence that Labour politicians should listen more to 'ordinary trade unionists'. But it is precisely those 'ordinary trade unionists' who have given the modernising Mr Blair such a resounding mandate and who Mr Blair wanted to see join the party in ever greater numbers. That point was delivered with brutal clarity by Mr Blair to both Mr Edmonds and Bill Morris, the TGWU general secretary, in separate, private meetings.

At a stroke, Mr Blair banished most of the potential embarrassment in the link with the unions. Nor is he embarrassed: he would like to see Tom Sawyer, the deputy general secretary of Unison, the public workers' union, as a replacement for Larry Whitty as party general secretary.

Mr Sawyer is a moderniser who understood faster than his union colleagues the lessons of the 1983 and 1987 elections. He has courage, demonstrated by his staunch support for Neil Kinnock against Militant; and he is a nice guy.

Mr Blair's choices for his private office are also instructive. These mainly youngish people know something of life outside the narrow confines of internal Labour politics. Alastair Campbell, whose appointment as press secretary last week completes the senior appointments for the moment, is a successful journalist and broadcaster and a close enough friend of Mr Blair's to be a candid one. Likewise Anji Hunter, who runs the office day to day, has known Mr Blair since he was at Oxford and combines personal warmth and political tact with relentless efficiency.

Murray Elder, responsible for liaison with the party nationally, is the most experienced of the operators from John Smith's office; and David Miliband, head of policy, has a restless, open mind and an outstanding academic record. Two of Mr Blair's bright young researchers, Tim Allan and Peter Hyman, will also deal with the press, as will Hilary Coffman, who was there under John Smith. There has certainly been rivalry within the Shadow Cabinet; for example between John Prescott, who will press for some influence over economic policy, and Gordon Brown, the shadow Chancellor. Yet the two of them have something important in common: They are, along with Peter Mandelson, MP for Hartlepool and the party's former director of communications, the politicians to whom Mr Blair listens most at present. Mr Brown's strong bond with Mr Blair may have been bruised, but it has endured. Mr Brown will certainly be Chancellor if Labour wins.

Mr Prescott could scarcely have proved truer to his promise of loyalty. He not only handled the transfer of Mr Whitty to another post with toughness and skill; he also went up to Blackpool before Mr Blair and resisted all attempts to lure him into direct support for the strikers.

Last week proved something important about Mr Blair. Neil Kinnock was a staunch moderniser with often tougher odds against him. But there was always a tension between what he wanted to do, the policies the party remained saddled with and some of the personal stances he had taken during the 1970s. The result was a fudge which damaged his electoral standing.

Mr Blair carries much less of this baggage in party terms - and shows no compunction in getting rid of what he does - and in personal terms virtually none. This gives him a chance to build a reputation for clarity, consistency and conviction which Mr Kinnock inevitably lacked. We saw a little last week of just how formidable that can make him.

(Photograph omitted)