LEADING ARTICLE:Grey water between Labour and Tories

Grey water is starting to appear between the Labour and Conservative parties, just as the battle for the general election starts to hot up. Both parties have stepped up their activity this week with advertisements in national newspapers. We could be in for 17 months of fierce campaigning on the hustings and hoardings across the country. With an adroit sense of timing, Mr Blair today imparted to Labour's position a new sense of clarity and distinctiveness in a speech in Tokyo.

The starting point for the two parties remains the same. Both now recognise the centrality of globalisation to the future of our economy and society. And both now accept that many of the changes in Britain in the Eighties were desirable.

But Mr Blair is seeking to define two clear areas of difference between Labour and the Conservatives. First, Labour has a distinctive approach to the labour market. Addressing an audience of Japanese businessmen, Mr Blair spoke of "a nation constantly investing ... in the flexibility and aptitude of its people", where the engine of economic success is investment in human capital. In contrast, for the Conservatives the key is further deregulation of the labour market, together with cuts in taxation.

Neither case is entirely convincing as a recipe for economic growth. Labour has still to demonstrate why their proposals on training and lifelong learning will be any more successful than the Government's education policies in delivering improvements in productivity. And the Conservatives must explain why deregulation is the answer when companies cannot hope to undercut the wages of developing countries.

Mr Blair argues that his second clear difference from Mr Major is his concern for social cohesion. Globalisation of markets is having damaging and divisive effects on British society. As low-skill jobs are increasingly displaced by workers in developing countries, a growing underclass could find themselves choosing between unemployment, abysmally low wages or crime. Labour has demonstrated considerably more concern for the welfare of those who are ill-equipped to deal with global change than the Conservatives. Whether or not Mr Blair can deliver policies on education or the welfare state that significantly ameliorate the problem remains to be seen.

Arguably, an interest in social cohesion is not distinctive to the Labour party. There are countless One Nation Tories who would surely agree with him. However, Mr Blair can claim the major credit for driving the one- nation agenda. First, he is trying to make the one-nation philosophy relevant to the problems and challenge of globalisation. And second, the one-nation voices in the Tory party are at continual risk of being drowned out by their more raucous right-wing colleagues.

Of course, there is still much common ground and overlap. The recent defections from the Conservatives by Emma Nicholson to the Liberal Democrats and Alan Howarth to Labour demonstrate just how fuzzy the boundaries have become. But in a general election, voters deserve a clear choice between distinctive, alternative prospective governments. And at last Mr Blair is starting to deliver.