It's prudent, but is it radical?

For too long the lantern jaw of Labour's Shadow Chancellor, Gordon Brown, seemed designed to prevent any morsel of interesting information from escaping his lips. Set to maximum jut, it repelled awkward questions and issued stony sound bites. Friends despaired - when would Gordon speak? He has nothing to say, enemies taunted. But not any more. The jaw turns out to be that of a would-be Iron Chancellor.

Yesterday's speech, the second in a series, addressed the question of "Labour's macroeconomic framework". It represents a fundamental break with Labour's past. The mood music is all about fiscal probity, public audit and the absence of quick fixes. "Brown's law" turns out to be that government will borrow only to invest, public debt will not grow and public spending must be cost-effective. "The war on inflation is a Labour war," he declares.

Ah, you say, he was hardly likely to state a preference for public waste, reckless borrowing and fiscal whimsy. True, but the mechanisms that Mr Brown favours - setting a clear inflation target and maintaining a low, stable ratio of debt to national output - are commitments measurable against achievement.

And there is more, for Mr Brown has turned against the all-embracing economic role of the state. Long gone are the social contract, the alternative economic strategy and the National Economic Assessment . Instead Mr Brown acknowledges the "limits of government". Not so much the command economy as the polite suggestion economy.

All this will be disappointing to those wanting a dash for growth to help with house prices, and to others who hanker after a transforming Labour government like that of 1945. Labour no longer offers an alternative economic vision to that of mainstream Tories - it simply offers to run things better and more strategically.

Kenneth Clarke's slow crawl towards creating a more autonomous Bank of England would thus be accelerated. Mr Clarke's peripatetic monthly meetings with the Governor would become immovable. Interest rate decisions would be announced immediately, not held over until convenient.

But an important question mark still hangs over the Shadow Chancellor - and it is emblematic of that hanging over New Labour. Is a New Labour government really prepared to diminish its own power in the interest of producing better government? Will it act against the excessive powers of the Treasury, which are to blame for much of what has gone wrong in Britain's economic performance since the war?

Most particularly of all, in pursuing a sound monetary policy can Mr Brown envisage a truly independent Bank of England, charged with taking whatever measures it judges necessary to keep inflation low while meeting other targets publicly set by the government? It seems from this speech that he cannot, although he does concede the need for a "debate" on how the bank's autonomy could be further extended. The Bank, he argues, must first be reformed to bring greater diversity of influence upon its governance and its powers of analysis. If its performance improved, it might eventually be given a freer hand.

There is something in a step-by-step approach so long as we are clear about the intended destination. The Bank does indeed need to be reformed. It is too centralised in structure and too confused in its purpose. Those involved in advising and governing it are drawn from too narrow a circle.

But - and here is the warning - there is a serious risk that once in office New Labour will succumb to the same temptations as have corrupted successive Conservative chancellors. If Labour cannot be bold in opposition, what chance is there of it being bolder in office?

What is required of Messrs Blair and Brown is that they identify the locations of power in the British state and set about reinvigorating the relevant institutions with more effective checks and balances, new processes of accountability and greater transparency. It is no longer necessary to doubt whether New Labour is prudent. The question is: is it radical?