Leading Article: Blair passes the 1963 test, but what about 1945 and 1979?

For many cynical folk the earth moved this week. Casting around for an alternative to the moribund bunch of politicians who currently govern the country, many will have seen Tony Blair's triumphant "young Britain" speech - and his final rout of old Labour - as providing the answer. If the electorate can be said to have anything as vulgar as a G-spot, then the Sedgefield Sizzler can be relied upon to find it. New Labour is on course for victory at the next election.

Which is where the problems start. In power two things will become rapidly clear to Mr Blair and his colleagues. The first is the limitations on what central government can achieve. For all the wonderful words about ending insecurity and instilling new moral purpose, new Labour will find that the levers marked "change" are not connected to anything. The causes of the new insecurity lie, above all, in the remorseless process of globalisation, over which government enjoys precious little power. Morality has never been something over which governments and politicians have enjoyed - fortunately - much control.

The second, more obvious, problem is that where government can act, easy popularity is rarely available. At Labour's conference the air was thick with zero-sum promises - clever sleights of hand which produced tax revenue or major capital projects out of thin air. Windfall taxes fund unemployment programmes, capital receipts pay for new houses and - most famously - allowing BT into the cable market means all public institutions connect to the information superhighway - gratis, for free! Even if these wheezes were as cost-free as Labour has suggested (and some of them are not) the rest of the business of government will be far more messy. Most choices will see one priority chosen over another; one set of people advantaged and another losing out.

It follows that any modernising government seeking to take Britain into the new century will find its way littered with pitfalls and diversions. To negotiate these will require a compass that at all times points up the direction which has to be travelled. So, in 1945, a new Labour government set itself the task of creating a social infrastructure appropriate to the post-war world - and largely succeeded. After 1979 Margaret Thatcher recognised the historical exhaustion of the social-democratic state and embarked on the brutal business of clearing the obstacles to British competitiveness. Both administrations were characterised by a ruthlessness in pursuit of their main purposes; a sense of direction that set them apart from the muddling stop-go of other post-war governments.

But what exactly is new Labour's purpose? The key theme of Mr Blair's first year was to modernise the party. This conference ushered in the aim of modernising Britain. In his speech Blair dazzled with some fine phrases and some inspiring themes. The most telling passage was when he conjured up his vision of Britain as "a young country." But it was a fleeting moment rather than an organising principle of his argument. Is this nit- picking in the context of a speech which enthused delegates and journalists alike? Not if the yardstick is whether Blair has a serious programme for modernising the country. Not if the measures are the governments of 1945 and1979. The "white heat of technology" speech that Harold Wilson made to the 1963 Labour conference is part of political folklore; the modernising project of his government most certainly is not. Mr Blair needs a distinctive analysis of what is wrong and an overriding sense of direction. He does not yet have either.

We need look no further than the BT deal for an example of new Labour's confusion. In Mr Blair's speech it sounded great and it has subsequently badly wrong-footed the Tories. All of a sudden one of Britain's premier companies was doing good business with Labour - and being endorsed by Lord Tebbit.

But it isn't great; it's a mistake. Even Mr Blair must have read enough Marx to know that capital tends towards monopoly. Sir Iain Vallance and Lord Tebbit aren't altruists interested in a deal because they love competition. Their mission is to throttle their competitors, not help our schools. What keeps them honest is a regulatory system that preserves competition. But Labour could not resist the temptation of the big, national gesture. Now, only a few days after the speech, it is becoming clear that there would be a real price to be paid for cosying up to BT.

Contrast all this with Gordon Brown's speech on competition policy, delivered last May. In that address the Shadow Chancellor sought to bury once and for all Labour's attachment to intervention. There would be no more picking winners, no more second-guessing the market, he said. Labour conceived government's primary role as setting the rules for a competitive framework. This was good for everyone, he said, because "if a company receives excessive protection from competitive pressures in the domestic market, it is unlikely to succeed in the global environment". It was a brave speech and a clear departure from previous Labour policy. But now we don't know which is the real new Labour - the one doing big deals with would-be monopolists, or the one adhering strictly to a strategy for maximising competition. It cannot be both.

But this same contradiction, played out in different ways, appeared time and again throughout the Labour conference and peppers the party's policy statements. At one moment Labour embraces the idea of a diversity of schools and the next denies any mechanism by which parents could effectively make use of such diversity. It promises a referendum on reforming the electoral system, yet gives no clue as to whether it thinks that the system should be reformed. The word "pluralism" trips off the lips of party leaders, at the same time as they endorse a blatantly sectarian by-election campaign.

Labour is not alone in this. Political leaders of all stamps are finding it hard to deal with the challenge of the moment - whether to embrace the world of competition, diversity, devolution and localism, or to try to hold on to the vestiges of central power.

It is not too late. Tony Blair's track record suggests a visceral understanding of this dichotomy. But one looks in vain for his Keith Joseph figure - the diamond-hard intellectual who will force the more transient politicians around him to confront the big picture, who will constantly apply the test of rigour and coherence to policy making. The one for whom winning is not all.