The gentle art of compromise: Rupert Murdoch features in three challeng es to Blair

Rupert Murdoch - even since the spectacular defection of the Sun to its cause - still haunts the collective psyche of much of the Labour Party. Three unresolved issues, currently exercising the government's best minds, all have features in common, of which Mr Murdoch's looming presence, real or perceived, is only one. The newspaper industry has a direct commercial interest in the outcome the outcome of each. The public is less interested in them than the newspapers would like them to be. And finally, Tony Blair has directly focussed his lawyer's mind on all of them.

The first concerns the trade unions and how to put into practice the manifesto promise to give statutory recognition rights to unions that have the support of "51 per cent of the relevant workforce". It's well known that the meaning of that innocuous-sounding phrase is now a matter of direct dispute between the TUC, who argue that it means 51 per cent of those voting in any ballot, and the CBI, who insist that it means 51 percent of those eligible to vote. This sets a very high hurdle. There are modernisers within the Government who sympathise quite strongly with the CBI view, who worry about the risk to inward investment of too effective a measure on union recognition, who might not be too unhappy about a public break with the TUC and who believe, bluntly, that union organisation is the unions' business, not the government's. There are also those, including some quite prominent cabinet members, who believe that the CBI demand is unreasonable and that the White Paper this spring will have to find a compromise. It's likely for example, that David Blunkett, who played some part in the drafting of the manifesto wording, would prefer a minimum level of turnout in a recognition ballot - say 30 per cent. As it happens, Rupert Murdoch's desire - entirely matched by that of his rivals - not to see the old print unions return to the newspaper industry hasn't been mentioned in the internal discussions so far about the issue. And it is much less relevant than many in the party think. But there are Labour MPs who persist in believing it is uppermost in some ministers' minds. It will probably take weeks rather than days for the discussions to reach a conclusion.

The second is the issue of privacy and the press. This is of obsessive interest to other newspaper groups beside Mr Murdoch's and arises because the Human Rights Bill which goes to the Commons on Monday, incorporates, among the other articles of the European Convention of Human Rights, a right to privacy as well as a balancing right to free expression. Fearing that the Press Complaints Commission as a public authority could now be judged by the British courts not to be adequately protective of citizens against the intrusion of the press, the PCC's chairman is now seeking its exemption from the terms of the Bill. In particular he wishes to guard against judgments which rule that that the PCC should have restrained newspapers in advance from publication. Last Monday at a meeting between the Prime Minister, Lord Irvine (the justly proud author of the Bill in its present form ), Jack Straw and Chris Smith, it was agreed that Charles Falconer, the Solicitor General, should apply his forensic mind to examine ways of amending the Bill to accommodate some of the PCC's concerns. This will not abolish the right to privacy in the Bill, and it will not preclude the possibility of future privacy legislation. But it will still look to the Government's critics like tampering with the Bill in order to satisfy the owners of tabloid newspapers.

The last, of course, is predatory pricing. And here Mr Murdoch, and the cut-price Times, is indisputably the protagonist. This week's decision by the Lords to amend the Competition Bill to outlaw the use of below cost pricing to hurt competitors, including The Independent, was a considerable embarrassment to the Government. The standard reaction to a Lords defeat, namely that it demonstrates the need to reform the Upper House, was simply not available. It was Labour life peers who rebelled, and Liberal Democrats, as a matter of policy, who led the charge against the government, and presumably would have done whatever the composition of the House. It also frankly strains credulity to say, as one junior member of the Government unblinkingly told me this week, that the Labour rebellion consisted of luvvies and trendy middle-class intellectuals. It's true that two new Labour working peers, Lord (Richard) Rodgers and Lord Puttnam, just about fall into that category. But Lord (Jack) Ashley? or that redoubtable Brummie Lord (Dennis) Howell? Clever men, yes. Middle-class intellectuals? Hardly. Again there are strong feelings within the Labour Party in the Commons. The former Director General of the Office of Fair Trading Lord Borrie, Mirror Group Newspapers Director, and Labour peer is convinced that just as the Fair Trading Act contained special provisions for newspaper mergers because of the need for diversity, so should the Competition Bill provisions on predatory pricing. The Labour MP Chris Mullin is thinking of joining his colleague Giles Radice (both are highly influential MPs) in backing the Lords amendment with a similar one in the Commons, though he will probably not finally decide whether to do so until he has fully examined the Government's case.

There are possible compromises of varying effectiveness in all three cases. On privacy, if the Government does produce the exemption that the PCC - unnecessarily in the view of some lawyers - is seeking, it will surely (at long last) have to come up with a system of compensation for individuals who have been wronged by newspapers invading their privacy. On predatory pricing, the Government is quite likely to reword the Bill, though that does not necessarily mean the full scale enquiry into the predatory pricing Mr Murdoch's critics most want. On unions the participation threshold - though one probably significantly higher than 30 per cent - offers a possible compromise. The eventual outcome will probably not dramatically or immediately affect the level of union recognition in industry. It will probably not satisfy either the CBI or the TUC. But there is a good chance that it will also not lead to a full-scale confrontation with either. Some habits die hard. Like it or not, of all three issues, it is union recognition that in the long run will matter most in the Parliamentary Labour Party.