Nineteen-ninety-seven has been a dramatic year. In May the new model Labour party swept to power in the general election with an even larger majority than expected. A surge of euphoria greeted its victory, not least in further and ÖйúAƬ. Things could only get better.

Have they? Not yet. Will they? Too soon to tell.

The new government has a neat strategy: all public spending is being reviewed: that review will not be complete until next summer: meanwhile the previous government's spending plans stay in place. The government has the perfect excuse to refuse requests for more money and the perfect opportunity to accumulate a war chest to spend nearer the next election. For the one thing that is clear so far about the new government's project is that winning a second term has top priority.

This overarching electoral priority moderates at every turn any radical agenda the government may have. Initiatives are checked not with backbenchers but with focus groups and private polls. Arguably this is healthy in a democracy; governments should be servants of the people. But it is also manipulative; the party's real project (if there is one beyond retaining power) is obscured.

Determination to be re-elected seems to have made Labour over-careful of rich friends who fill its electoral coffers. Concessions have been made to Formula One racing: more are feared to developers who prefer to build on green fields rather than derelict urban sites and food retailers who would rather the Food Standards Agency did not have nutrition in its remit. The Confederation of British Industry seems to have secured agreement that the Teaching and ÖйúAƬ bill will be amended to let employers count workplace training against their obligation to release young workers, a device which, with canny accounting, should cut the estimated Pounds 60 to Pounds 130 million cost.

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It has made them careful of affluent voters: income tax will not be raised: threats to private schools have been withdrawn: plans to remove child benefit for 16 to 19-year-olds still in education seem to be being shelved: extra loans are being provided for those rich enough to have to pay tuition fees. There are tougher measures down the track - loss of tax breaks for big savers in PEPs and TESSAs, possible taxing of state pensions and child benefit - but their impact is some way off.

Meanwhile the poor are being treated toughly. Single parents are to be "helped" into work by counselling and benefit cuts. The poorest students are to lose maintenance grants. There has been no denial that savings are sought from the fast rising bill for sickness and disability benefits to free up cash for investment in health and education - services the well-off value as much as the poor. And attention has been drawn to the numbers taking early retirement on health grounds in the public services - police, fire, teaching - thereby taking money for services.

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This way of proceeding, though not the programme, is reminiscent of Mrs Thatcher's first term (Messrs Blair and Mandelson are overt admirers). She had a clear project - to sweep socialism from British politics for ever. She knew it would take more than a single term. In her first term she proceeded with circumspection. Council housing was privatised and labour laws were altered bit by bit. A steel strike and an early miners' strike were avoided while the groundwork was laid, coal accumulated and power stations switched to gas. Only as she consolidated her power in her second term did the full individualistic, privatising project come into view.

What is Labour's real project? There are plenty of warm words - inclusion, fairness, opportunity. A mass of reports and reviews are in progress - of government spending, the welfare state, the minimum wage, constitutional reform. But there is little detail. It is hard to perceive the purpose behind the pain. Ministers (Harriet Harman, David Blunkett) are left to defend unpopular policies alone. Prime minister Blair is largely invisible beyond the occasional platitudinous speech at some suitable photo-opportunity.

What has been happening to further and ÖйúAƬ is part of the pattern. Education was to be at the forefront of the grand projet. The reports flood in. In July, Helena Kennedy's Learning Works with its glowing vision of further education as the mechanism for pulling back into society those now excluded and its implied threat to ÖйúAƬ's preferential funding. Also in July the Dearing inquiry's report, ÖйúAƬ in the Learning Society, published with the plea that it be accepted as a package, and then promptly disregarded: maintenance grants are to be abolished as well as fees introduced. In November Bob Fryer's Learning for the 21st Century made a raft of suggestions for gearing further and ÖйúAƬ to lifelong learning, opening doors to a population cajoled into work but beset by job insecurity (which, it turns out, may be a myth, page 11).

But not in October, November nor December did the government produce its own promised blueprint. The lifelong learning white paper, including details of learning accounts and the University for Industry, remains stuck in Whitehall.

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Instead, legislation has been introduced which strengthens the government's power to ensure further and ÖйúAƬ deliver whatever may be required of them. The bill's infamous clause 18 gives ministers power to control who pays how much for what in universities and colleges. Legislation before a white paper is an unusual way of proceeding.

The irony is that, unlike the Thatcher period, further and ÖйúAƬ are broadly supportive of the government. Enthusiastic cooperation would be more likely than resistance for a programme of increased access, regional collaboration, greater use of information technology and so on. Coercion was not needed. Yet the government appears unwilling to trust universities and colleges to deliver, preferring to control them. The fear must be that the government knows it will not be providing the money universities and colleges will demand to do what they will be asked to do. Lacking carrots, sticks will be needed.

Nineteen-ninety-seven was unpromising on the money front. Some extra cash was found for further and ÖйúAƬ this autumn but ÖйúAƬ's Pounds 125 million will depend on its ability to collect student fees. Even if they are 100 per cent successful they will still face real cuts. There is still no extra for science or for infrastructural repairs. And there are warnings that grants will be reduced if institutions raise pay by more than inflation. Further education's Pounds 83 million extra is risible. Colleges still face higher per capita cuts than universities.

Assurances that money raised from fees will stay in ÖйúAƬ have been vague - is further education to share? Is any extra calculated in terms of gross revenue or can the department set off all kinds of costs first? The education department put the gross yield of fees in 1998/99 at Pounds 150 million. Lord Baker, speaking in the House of Lords, estimated the annual yield by 2000/01 at Pounds 400 million. But the education department told the select committee it expects net savings from tuition charges to reach only Pounds 100 million a year by 2000.

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As 1997 ends then, further and ÖйúAƬ are caught in a vice. They do not yet know precisely what will be expected of them. They do not know what resources will be available to do the job. And they stand to lose much of their ability to make their own decisions and fight their own corner.