Leading Article: The message from Dudley? Mr Blair still doesn't know what happens next

As is so often the case, it was Paddy Ashdown who "won" this week's three-way tussle at Prime Minister's Question Time in the House of Commons. He commented that listening to Tony Blair and William Hague's exchanges on welfare reform was "rather like watching a lost edition of Call My Bluff". This was a strikingly apt analogy, because much of the confusion engendered by the fuss over welfare reform is to do with definitions. The late Frank Muir might have defined welfare as a medieval payment for drawing water. Today's contestants have two other, rival, definitions lurking at the back of their minds. There is welfare as in state, cradle to grave, British and a Good Thing, albeit somewhat old-fashioned. And there is welfare as in dependency, scroungers, American and a thoroughly Bad Thing.

It is too late to bemoan the Americanisation of this part of our language. Labour won the election on a platform which relied heavily on using the word welfare in this newer, transatlantic sense. One central promise was to get people "off welfare and into work", a costed programme giving four specific options to a defined group of the unemployed. Another central promise was to "reform the welfare state", the objectives of which were, by contrast, entirely hazy. The only thing that was certain about this pledge was that it would not add to public spending - indeed, it would provide the framework within which spending on social security benefits would decline, as public investment in education increased.

Polly Toynbee pointed out in our pages yesterday that this was a dangerous promise, because it raised expectations on the right and fears on the left of big cuts in the social security budget which were unlikely to materialise. She is right: it is dangerous. That is why Mr Blair was back on the road again last night, in Dudley town hall, unfashionable heart of the real Britain which elected him. But we should applaud rather than criticise him for taking this particular risk. The welfare state does indeed need a radical overhaul. It may be that this will not have a dramatic effect on the total budget, but the assumptions underlying state benefits and people's perceptions of them do desperately need to be shaken up and tested.

What is worrying is the half-baked and piecemeal way in which the Prime Minister has drifted into the "national debate" which he sought to launch last night. He gives every impression of having only the vaguest idea of the desirable end point of welfare reform. And the truth is that the debate launched itself without waiting for the synchronised spinners, and was launched by high-pitched controversy over precisely the wrong issues. Cutting lone parent benefit might conceivably have been a logical part of the later stages of reform, but it was only counter-productive and limiting to allow that furore to dominate the start of the process.

Likewise, it was misguided to try to introduce the concept of an "affluence test" last weekend - a test which, incidentally, the cut in lone parent benefit would fail, and which confuses rather than clarifies the issues. It is well known that Frank Field, the John the Baptist of Blairite welfare reform, has always opposed means testing. His words were predictably thrown by the Conservatives at the Prime Minister on Wednesday: "Means tests penalise work, tax savings, and place a penalty on honesty."

To which the right response would have been: Yes they do, but there will always be a tension in the system between help for those in need and incentives for people to help themselves. The trick is to get the balance right, and at the moment the system is too much tilted towards putting people on benefit and keeping them there. Hence Mr Blair's sharp distinction last night between those who can work, who should, and those who cannot, who should be treated compassionately - within existing resources of course.

That is right; and if there is a pot of gold in welfare reform it must lie within the pounds 20bn paid each year in disability benefits. Sure, some categories of people who should have been getting help in 1979 were not getting help and now are. But a sixfold increase in sickness and disability? It does not inspire confidence that Labour has only just discovered this statistic.

The big question, though, is: which Mr Blair was speaking in Dudley last night? Was it the breaker of the trade union block vote who knew precisely what he wanted but did not to spell it out for fear of provoking opposition? Or was it the Clause IV seat-of-pants-flier, who tore up the old socialist creed without the slightest idea of the form of words which would replace it?

The last time he was in Dudley he was a salesman without a product, selling a new Clause IV that had not been written. That came right in the end, but this is bigger, more complicated and affects people's lives directly. We applaud Mr Blair's decision, at last, to lead. But we are not at all clear where he is heading.