Slowly, covertly, John Smith draws a new map

THE STORY now unfolding deep in the undergrowth of the Labour Party at Westminster is complex and obscure. So far, it has been virtually ignored by the world beyond a small circle of senior Labour politicians and their advisers. But it is momentous. One day, it will answer the important question in British party politics today - can Labour win again?

Members of the Cabinet and members of the public have a radically different perspective about current politics. The public is hostile to what it sees as a failing government, even vengeful about it. Many people who voted Conservative last year now feel betrayed. They won't forget, they think. None of which worries ministers in the slightest. Their conviction that they will win the next election is clear, logical and hard to shake. The recovery will come; the public will forget.

Thoughtful ministers also argue that Labour has an inescapable structural problem. In the first half of the century, parliamentary democracy legitimised the passing-over of wealth and power from the small, privileged elite to the masses. Now (as one minister put it), the country is made up of a relatively OK two-thirds - with jobs, houses and pensions - and an impoverished one-third. Fearful of crime and higher taxes, the two-thirds will increasingly play safe and stick with the Tories. Ergo, the impoverished third, along with the party that exists to serve them, have already become excluded from the political system. The same parliamentary democracy that once gave the poor such power now denies them any leverage.

Bleak? Yes - but it depends crucially upon Labour playing its allotted role. The deep government complacency that persists under the surface of day-to-day crises depends on a stolid and unenterprising Labour opposition. So far, there has been a general belief that John Smith was playing his part to perfection: quiet, unadventurous, even inert.

So the most important aspect of a new Labour strategy is that it is there at all. Mr Smith has been busy. There is a strategy, there is a plan. What has confused everybody so far is that, quite deliberately, Mr Smith has ensured that the early stages of the new strategy were developed covertly and slowly.

The reason is that under Neil Kinnock's leadership, Labour developed a whole raft of new policies speedily and semi-publicly. One consequence, however, was that by the time the election came around, some of the new thinking had been stolen by the Tories - and the rest looked stale. So, instead, Mr Smith plans a rolling programme of steady, but increasingly radical, policy changes. For instance, a shift from direct taxation to expenditure taxes and green taxes has been discussed and seems to provoke little disagreement. But the details of a new tax plan are unlikely to be ready until the 1995 conference.

To cope with this, the party has a new policy-making system, including various policy commissions. The leader is also farming work out to selected colleagues. But Mr Smith intends to provide the party's route-map himself - and to show that Labour's policies are coherent and relate to core values. He has radical views about tax, growth and employment: there is a limit to the amount of thinking he is prepared to devolve.

All of this is good news for Labour, and for the political debate generally. His quiet, personal approach has, however, fuelled suspicion among his competing and hyperactive lieutenants: on issues such as voting reform, party structure and the constitution, MPs have been plotting and struggling for the leader's ear. This may yet overwhelm the leadership's longer-term thinking.

At the centre of this new thinking is the view that a long period of Tory rule has produced a new corporatism, just as stultifying and dangerous as the old. It consists of an unhealthily close tangle of relationships between government, big business and the privatised sector, that has grown up during the Tories' long years in power. It has produced, runs the analysis, a culture that has become blind to mundane realities, complacent, and sometimes corrupt. Labour's job is to break it down, by being vigorously anti- bureaucratic and campaigning against vested interests, from the big banks to the Common Agricultural Policy - rather as Margaret Thatcher rode and shaped a popular revolt against the corporate state of the Seventies.

This is the alternative to the two-thirds/one-third analysis of Tory ministers. It binds together Mr Smith's attacks on Norman Lamont and last night's speech questioning why ministers never resign, with attacks by Gordon Brown on profiteering by the banks. It links the constitutional reform agenda with economic populism. A 'little person' agenda would also allow Labour to explain why it was entering the next election committed to cutting income tax and imposing new taxes on petrol companies and privatised utilities.

If that is the attacking side to the new Labour thinking, the positive, more passive side remains its insistence on the inadequacies of economic liberalism; the need for a reassertion of group and community values. How these themes intertwine is only one of a whole series of unresolved questions. But the important thing at this stage is the crackle of mental electricity. As the Scottish poet Hugh MacDiarmid once put it: 'Wrang-heided? Mmm. But heided - that's the thing.'