Leading Article: The waning House of Windsor

THE WEEK may have concluded with Tony Blair and the Red Flag, but it commenced with James Hewitt and the Princess of Wales. Which is the more important? Politicians have long prided themselves that they run the country and define its identity. Yet there are grounds for believing that the most important political development of recent years has not been anything to do with the Palace of Westminster. It is all about the House of Windsor.

The latest episode has served to emphasise the endemic character of its present crisis and further to weaken its standing in the country. It is significant that public sympathy, according to the readers' polls conducted by newpapers this week, appears to be overwhelmingly with Princess Diana. Most British people, the surveys suggest, hold Prince Charles responsible for the collapse of the royal marriage and believe he should not become king. It would be wrong to conclude from this that the British now believe that their country should become a republic, but it is clear that the monarchy no longer enjoys unconditional support and esteem. Indeed, its long-term future is impossible to predict with any certainty.

The proximate cause of the crisis has been the behaviour of the younger royals. But the underlying explanation is the increasingly meritocratic nature of our culture. Hierarchy and deference are in decline. Yet the Royal Family depends on them for its status. The significance of the royal trauma, however, extends far beyond an insight into changing cultural mores. For centuries the Royal Family has been the quintessence of Britishness, the defining institution of the nation. In other words, the crisis of the royals represents, and reflects, a crisis of national identity.

In this, the monarchy is not alone. Most of the institutions that have traditionally defined Britain's sense of nationhood are suffering from a similar loss of authority and respect: the House of Lords and the Commons are obvious examples. These falls from grace have had little to do with politics. Indeed, the mainstream political world has had virtually nothing to say about them. The causes are overwhelmingly cultural. There is a growing mismatch between the direction in which British society and culture are moving. A meritocratic, competitive and modern- minded public is puzzled, amused and from time to time angered by the outdated and ossified nature of the national institutions that purport to represent it. Britain increasingly resembles a car with a new engine but an ancient and rusting body. As with the car, the problem can only get worse.

This problem of institutional decline certainly should neither surprise nor throw us into alarm, because it reflects our history rather than our future. When virtually every other institution in society - from companies and trade unions to schools and hospitals - has undergone some kind of transformation, it is only to be expected that those which have refused to ask serious questions of themselves should find their authority waning.

It is useless to look to the world of politics to give expression to such problems since political institutions are part of the problem. For the most part, politicians of all parties have remained embarrassingly silent and deferential towards the Royal Family. While everybody else speaks their mind, they say nothing. The young turks at the Liberal Democrat conference were, in this respect, a breath of fresh air.

But what of Mr Blair, whose week has been dominated by a battle for the future of another institution in the midst of turbulent change? Mr Blair's rise is a product of the same meritocratic trends that now besiege the Royal Family. So far, however, he has had little to say about meritocracy and virtually nothing about national identity and the state of our institutions. The New Labour project, as Mr Blair styled it this week in Blackpool, needs to face these questions if its theme of national renewal is to carry conviction.