John Rentoul: Come off it, Ruth. You've been in Tony's cabinet for 11 months. What did you expect?

Kelly did not sell the policy well; the backbenchers did not get it

It was reminiscent of the atmosphere in the Chamber 10 years ago, when Tony Blair was landing blows on John Major, and the government benches sat in sullen, awkward silence. This time, Cameron had not even risen to reply to Kelly's statement, but the opposition side of the House was already relishing the new game. It is called the Bear Hug. Cameron says that the Conservatives ought to welcome the "Tory" policies the Prime Minister wants to bring in, and ask: "Who is stopping him?" So the Tory benches were primed to welcome the White Paper as "an historic turning point", in which the Government admits it has wasted the past eight years and now embraces the Conservative policy of setting schools free from local councils.

When Cameron spoke, he won the moment, and the battle of the sound-bites. "State schools, free of local authority control and able to set their own culture and ethos. Does that sound familiar?"

Kelly had some good lines. "There are some similarities," she said, between Tory grant-maintained schools and the trust schools being proposed. "Grant-maintained schools had classrooms, teachers and books." She went on to win the argument, but it was too late. Her side was not with her, and the Tories knew it.

That is partly her fault, and partly that of Labour backbenchers. She did not sell the policy well and they just don't get it.

She was, I am told, not pleased with the way the Prime Minister spun the White Paper in his speech the day before. To which one can only ask, gently, where she has been for the past 11 months. In the Cabinet, is the answer, where she will have seen Blair do exactly the same to Alan Johnson and Charles Clarke before the election, when they unveiled their five-year plans for welfare reform and immigration policy. In each case, the policy was a compromise between what the Prime Minister wanted and what was politically possible.

That is the answer to my esteemed colleague Alan Watkins, who argues on page 41 that last week's compromises on schools and smoking are evidence of a decline in prime ministerial authority. Blair has never been the absolutist president-monarch of caricature, and has always had to settle for less than he wanted, although he has become increasingly impatient in his ambitions.

But he knows how to talk a good game. His purpose in pre-spinning these new policy announcements is to deny the Conservatives political space. He knows, and he is not wrong, that he is better at doing this than anyone else. Departmental ministers always become absorbed in the detail of policy at the expense of the big picture, hence Patricia Hewitt's strange loss of political perspective on the smoking issue.

Kelly seems to have become so enmeshed in the mechanics of balancing the conflicting interests in education policy that she forgot the political context of the Bear Hug.

In Blair's warm-up act for her statement, he did the Bear Hug in reverse. Under the Conservatives, he said, "to be fair, there were genuine attempts at reform. But they only ever touched a small minority and through the incentives given often accentuated inequalities in provision rather than ameliorated them". If Kelly had used those words in the Commons - especially the "inequalities" word, not one that Blair often uses - Labour MPs might have been more cheerful. They might have understood they were still holding the centre ground to pursue broadly egalitarian objectives.

Blair spelt it out only two weeks ago, recognising that under either David Davis or David Cameron the Tories are "trying to reach the centre ground. Good; let them try. But when they arrive they will find us already there, with the ground staked out".

Kelly got there in the end on Tuesday, explaining how her plans for greater school autonomy were the precise opposite of grant-maintained schools. Instead of giving extra money to a few schools that were already advantaged, the academy schools programme has put extra money into schools in deprived areas. Now the plan is, as she said, to "extend academy-style freedoms and opportunities to thousands of schools". Not all of those will be underperforming schools, but it should be obvious that Labour policy is about levelling up rather than deliberate two-tierism.

Yet Labour MPs and Guardian columnists are all too willing to go along with the Tory strategy, and all too eager to defend the existing unequal state school system. The White Paper is deeply flawed, with little to say about many issues that matter. Most secondary schools are too big. The toilets are horrible. Tests and exams are too dominant. Many children do not learn best in large groups at tables. Genuine diversity - with fair funding and fair admissions policies - is what is needed, and this White Paper is only a small step towards it.

The finest irony is that Compass, the anti-capitalist pressure group whose founder, Neal Lawson, called on Labour last week to lurch to the left in response to Cameron's arrival, last month produced a pamphlet, "Proof That a Better World is Possible", extolling Sweden as its model.

Yet, as Blair said in his foreword to the White Paper, in Sweden "parents can choose an alternative school to their local one, including a diverse range of state-funded independent ones. Studies have found schools in areas where there is more choice have improved most rapidly."

Unfortunately, the White Paper holds out scant prospect of such radical change. The giveaway is the appendix on the "legislative implications". It is a thin list, mostly imposing new duties on local education authorities to "consider" this and "respond to" that. Non-profit-making bodies may try to set up new schools in the next few years, but local councils will obstruct and stall them, waiting for Gordon Brown to come along to turn the clock back.

That kind of thinking suffused the silence at Kelly's back in the House of Commons on Tuesday. It is the kind of thinking that will lead Labour to defeat. If the party does not fight for the centre ground, Cameron's troops will be cheering and waving their order papers a lot more over the next few years.