Leading Article: What Blair has got right

NO ONE could accuse this newspaper of being uncritical of the government of Tony Blair. We have found it wanting on many fronts, from the shallowness of its "ethical" foreign policy as currently exposed in Indonesia to the shabby pseudo-Tory panderings of its attitude to refugees and asylum-seekers - not to mention its over-hasty recourse to war in Kosovo when non-violent diplomatic and economic alternatives had not been adequately explored. But let us today, indeed, not mention any of that and speak of one of the raft of fundamental things which it has got right. Two forthcoming events point the way on that: the poverty report which the Government is due to publish in a few days and, perhaps more intriguingly, an ideological debate to which the charity Oxfam has been challenged.

In advance of the report which Alistair Darling, the Secretary of State for Social Security, is to make public this week, the Independent on Sunday decided to commission its own poverty audit from the distinguished commentator on social policy, Professor David Piachaud, a former adviser to a previous Labour government in the days before Old gave way to New. His verdict is interesting. The number of people who live in poverty have been reduced by nearly two million since Blair came to power, and the number of children being brought up in such circumstances has dropped by around 800,000. There is no room for complacency. At the end of this parliament, poverty in Britain will still be at levels double those when Margaret Thatcher came to power. But progress is being made. A crucial breakthrough in all this has been Tony Blair's instinctive understanding that poverty is not just about the amount of money a family has. It's about education, health, housing and poverty of opportunity. And just as the problems are interconnected so, in the fraying New Labour phrase, the solutions must be "joined-up". The phrase may be tired but the insight remains pivotal. Reducing poverty is not simply an economic task; it's about creating a different culture. Blair is on his way to this with his promotion of work as the solution - through the Working Families Tax Credit, through the New Deal training opportunities for youth, through the removal of benefits from those who won't work. There is more to be done - from policies to promote full employment to greater support for families. But the approach is correctly focused.

Which brings us to an organisation whose approach is exactly the opposite. Not Oxfam, but the multilateral institution which, as we report today, has challenged the British development agency to a debate next week. That body is the International Monetary Fund which has, for two decades, been appointed by the leaders of the industrialised nations as the world's financial policeman, most particularly in dealing with the troubled economies of the world's poorest nations. It has studiously ignored the criticisms of pressure groups such as Oxfam, and the fact that it has decided that, at its annual meeting in Washington next week, it has to confront its critics head-on is rather revealing. The key criticism of the IMF is that it is like a doctor with one bottle of medicine - whose recipe is control of inflation, cuts to public spending and the opening of Third World economies to the mixed blessing of Western multinationals and finance. This unpleasant- tasting remedy has been forced down the throats of one and all, whatever the nature of their ailments. It is supposed to work equally well on Third World debt, on the East Asian financial crisis, and on poverty alleviation in Africa where education and health budgets are being cut as disease and illiteracy rise. Wrong diagnosis, wrong medicine, says Oxfam, in a criticism which has over the years become so pointed that the IMF's partner, the World Bank, has begun to take it on board and now even the IMF has been forced to abandon its stance of arrogant aloofness and masonic secrecy and agree to address the criticism in a major document it has prepared for next week's meeting.

What links all this is that the IMF is clinging on to the outmoded Thatcherite ideology which Tony Blair has abandoned. The old view was: "Let's get the macroeconomic picture right and the social benefits will trickle down". What the Blair administration has understood, with its mantras such as "education, education, education", is that investing in the well-being of people - in human capital as the jargon has it - is an economic imperative as much as a moral one. That insight needs to be assimilated at the international level by the IMF which at present subordinates poverty reduction to monetary targets. What is needed is the inverse. Poverty reduction has to be at the heart of economic policy, rather than being an add-on extra. The IMF at present is the tail that wags the dog. Instead, its skills have to be harnessed to ensure that monetary policy and poverty reduction are part of the same agenda. Perhaps Gordon Brown, who last week was appointed chair of one of the IMF's key committees, can now press for that to be as true abroad as it is at home.