The rude boy could be the shrewd choice

LABOUR's uncrowned prince has been conducting his media relations with rather more subtlety than the country's crowned one. He has stuck to his agenda, avoided being put on the spot over the rail strike and kept away from the pointless taunting of prime minister's questions until he is in a position to answer back. So far, so good: but the hard questions about Labour's modernisation are going to be waiting for him. And they are being vividly dramatised by the extraordinary campaign of John Prescott.

The man is starting to look like Tony Blair's mirror image. Where Blair is pacing himself, Prescott is conducting his campaign at full hurtle; where Blair radiates reassurance, Prescott reeks with jovial danger; and where Blair is cautious about the sensitive stuff, Prescott blurts out all the naughty words - tax the rich, full employment, scrap competitive tendering. C'est magnifique, as even his Labour critics confess. But, they wonder, is it politics?

A few years ago the Prescott candidacy would have been brushed aside by the party establishment - indeed, it was. But this is a man whose time seems to have come, whose deficiencies as well as his qualities are somehow needed by his party. He has become a big politician in every way - a George Brown of the left, though without the petulance or the drink problem of that extraordinarily gifted and self-destructive man.

He is now being tipped as running ahead of Margaret Beckett, who launches her personal manifesto today. We'll see: great swathes of the party electorate, including that unknown proportion of politically interested trade union levy payers who will actually vote, are beyond the reach of pollsters and pundits. But even if Prescott loses, it is impossible to imagine him as anything other than one of Labour's main players. The modernisers are worried, some of them very worried. How can they pursue the strategy of caution and reassurance with Thumper on the rampage?

On this, I think, the modernisers are wrong. But to see why, we need to look more closely at the Blair agenda. If you fillet his manifesto, it is perfectly possible to come up with quotes on industrial policy which sound like Michael Heseltine in his wilderness years. Indeed, his enthusiasm for parental choice at the weekend would not have sounded odd from John Patten. (Were I the Labour education spokeswoman, Ann Taylor, I'd be looking for other interests.)

But the reason Blair is not a pale conservative is that his central agenda of 'community' implies stronger collective action to help the ill-trained, the jobless and the prisoners of poverty traps. That, in turn, must mean higher taxes for top earners and fewer middle-class tax breaks all round. Even if the transfer of wealth is in the form of enabling measures - child care, higher funding for education, even housing vouchers - rather than Giro cheques, this is a long way from Tory tax-cutting politics.

At the core of Prescott's campaign, which will be laid out in more detail next week, is bolder language and some extra ideas about job creation. He is more open about the acceptability of a degree of economic 'inefficiency' in the service sector, for instance, if it brings social benefits. Big school classes may be more cost-efficient, but the poorer education involved makes them less socially efficient, etc. You may agree or disagree with his analysis, but it is a long way from the neo-Keynesianism and devaluation advocated by the true economic dissidents such as Bryan Gould. In strict policy terms, the Prescott campaign is not incompatible with Labour modernising, as his enthusiasm for public-private infrastructure initiatives shows.

No, the real difference is the style, the cheek and the blatancy of the Prescott campaign. It is notable that he sounds most irate talking about the 'warm words committee' - those Labour gurus who advocate saying 'fair taxation' rather than 'progressive taxes'. Margaret Beckett sounds much cooler and more controlled, but she is actually advocating policies, particularly on union rights, that would cause more problems for a Blair leadership. So the question is this: do the style differences matter more, or the policy ones? It is beginning to look as if the obviously dangerous choice, Prescott's rude-boy modernism, is the shrewd one.

This goes to the heart of Labour's future. The party is still deeply schizoid, recognising the success of the free-market revolution and the placable prejudices of the middle classes on the one hand, while yearning for its political ancestry of solidarity and statism on the other. Blair's response to the problem is simple: he will modernise and put up with the taunts.

But that, by itself, will not fully resolve the Labour dilemma. However much metropolitan opinion recoils from the thought, there are parts of the country where working-class heroes are still sought. Whatever happens at Monklands today, the truth is that Scotland, and much of the impoverished North of England, is littered with what we can call 'Potemkin' Labour parties. Like the fake Russian vlllages put up by that nobleman to impress Catherine the Great, they are nothing but facades. There are the local Labour MP, the councillors, the councillors' families, the councillors' friends - and hardly anyone else.

Labour politics no longer appeals to the angry unemployed, because the promise of jobs and wealth via the state has crumbled. The party now speaks in alien voices, and the few who turn to politics are evaluating other doctrines, whether nationalism or Militant rebellion. Labour cannot afford to be happy about this, because sooner or later unpopulated facades fall down, so Prescott's mix of relative economic orthodoxy, combined with a passion for job creation, may be just what the party needs in its heartland. As Blair wooed the middle classes, Prescott would be behind, winking at the old faithful.

There are obvious dangers in all this: a Blair-Prescott combination would be rough-edged, unpredictable and entertaining. We would all derive huge delight from watching the Labour leader wincing on television programmes as his deputy's words were read back to him by a Dimbleby or Paxperson. There would be policy splits, though of a modest nature, and not pursued by Prescott to the point of mutiny. The rivalry (I use a polite word) between Prescott and Gordon Brown would fizz, at times alarmingly. But for all that, Prescott is proving a wonderful, exuberant salesman. Perhaps Labour has reached the stage when the greatest risk is not to dare to take one.