Can Clare hold down the best job in the world?

A new gaffe and her front-bench position is on the line. But Clare Short is already waxing egalitarian about overseas aid. Paul Vallely listens

Clare Short was doing her best. Thank goodness, she said as she escorted me from the lift to her Whitehall office, that this isn't going to be one of those Clare "awkward-squad, foot-in-mouth" Short interviews. "I've had enough of those," she sighed, apparently oblivious of the fact that the one she had given to the New Statesman in the immediate aftermath of her demotion by Tony Blair was about to hit the streets.

We had met to discuss her new job - as Labour's front-bench spokesperson on overseas development - to which she was moved, despite coming third in the shadow cabinet elections, after what was seen as a gaffe-prone performance as shadow transport secretary.

But all that was behind her, she thought, when we met on Wednesday. "I'm not interested in talking about that," she said. "It's all done and dusted. I'm doing this overseas development job now."

Even as she spoke, the New Statesman was at the printers containing the interview she had given two weeks ago - the day after she was sacked from transport. In it she spoke of Tony Blair's backroom oppos as "the people of the dark" trying to turn the Labour leader from a "fresh, young, principled and decent" person into "a macho man". Their sinister strategy was to promote "new" Labour by acknowledging that old Labour was "appalling" and "unelectable". Such "dangerous" tactics, she said, could lead Labour to election defeat.

Oh dear. If overseas development was the Labour equivalent of exile to Siberia, what salt mines might follow? Not that this was how Ms Short was now determined to view things. "I never talked about it being a demotion," she insisted. "I was given a series of choices and I chose this; I didn't much like the way I came to it, but I'm honoured and delighted to take on this portfolio. There is no higher cause."

A gaffe-free answer. But she cannot stop there. "Every single person who cares about overseas development knows that in the British pecking order it is not high. It says a lot about Britain and the values of the political system and its political commentators."

So it is a demotion. No it is not. Ms Short is determined to have it both ways. It is the "best job in the world". And whatever the attitudes of the political establishment, it is a job that is dear to the hearts of the British public: "People have a natural generosity. When there's tragedy they want to help. But it can seem like unending pain, rushing around collecting money, and then a few years later there seems to be a famine somewhere else. But they have never had it put in front of them that there are serious steps to be taken that would start to eliminate the problem. If they knew they would all go for it.

"People are fundamentally decent and they know it is morally disgusting that a quarter of the world's people don't have the basic necessities of life in a world that has the money, the technology and the knowledge to eliminate all that if it wanted to."

Her vision of how to achieve that goal would make the despised spin doctors revolve even faster. Her vocabulary is decidedly old Labour, peppered as it is with references to the Socialist International, Hegel and the eastern European model of socialism (even if you're against it, you're not supposed to mention it). And her adulatory references to the post- war settlement, full employment and the welfare state will have the Mandelsonian sons of darkness rushing to close the curtains.

"I've only been doing this job for a few days so any answers I give are just the thoughts of an amateur," she warns at the outset. But asked what the primary purpose of aid is, she brushes aside the usual justifications about promoting British trade or reinforcing foreign policy and goes straight for the moral imperative.

"Aid should be about the elimination of poverty. What we need is an analysis of the values that lead to that inequality between the rich and the poor world, and which has led not to development but to de-development - with some countries actually getting poorer."

Over the past two decades the world has been through an era of market forces, deregulation, monetarism and trickledown. "It's been brutal and it hasn't worked. The Thatcherite/Reaganite thesis was that inequality is more economically efficient. But it didn't create greater investment and greater economic efficiency. It created greater poverty at enormous expense to millions."

By contrast, the really successful economies of the period - the Asian tigers - didn't go in for this free-market deregulation model. "They had a state that intervened, mobilised and organised investment, and most particularly focused on the need for inclusive education for all its people."

So what of aid as a prop for trade? "I don't think it should be the purpose of aid to promote trade." The notion that British goods can only compete with an Aid and Trade Provision subsidy "damages the reputation of British industry".

And what of aid as a way of buying foreign policy influence? Might she envisage coming into conflict with the Foreign Office over influence issues, as the present minister Baroness Chalker did when she threatened to cut off aid to Kenya over human rights, only to have her stance overturned by the Foreign Office? "Such tensions are always there. In any case, withdrawing aid to a dictatorial government can just punish the poorest: in ferociously unequal countries - dictatorships are generally trying to protect inequality - continuing an education programme might be the most effective way of helping an oppressed people resist repression."

Ms Short is trying hard here to remain the model of cabinet responsibility propriety. Ask her about an increase in the aid budget and she produces without apology the Gordon Brown line about the aid budget growing as there is economic growth under a Labour government.

So that means Labour is no different from the Conservatives. Both are pledged, in theory, to move towards the UN target of spending 0.7 per cent of GDP on aid - but only as an undated pious aspiration.

At this point she gets cross. "There are so many lies in this world. The Tories say that and yet they have cut, cut and cut again at the aid budget. Why maintain the pretence? Words must mean what they say, as Alice said. Lynda Chalker is a good minister but she is administering projects that run against the tide of the overall policies her government promotes.

"I'm fed up of hearing that we have a good bilateral aid programme when we don't make proper use of our seat on the board of the IMF or World Bank. We're not exactly a leading influence for reform. We just go along with the ugly values."

There are many in the development world who will be much heartened by her determination to push outside her own department for co-ordinated action, though her loose talk of global taxation - a "tiny charge on the money swashing round in the international markets" - will have the spin doctors searching in their darkened rooms for the paracetamol.

If Labour did form a government, how seriously would Tony Blair take all this? Would Clare Short even make it into the Cabinet? The party has now fudged its earlier commitment to give her job that rank.

"Tony did raise the issue when he offered me the job. I cut the conversation off short. I'm not interested in that kind of patronage - goodies being dolloped out here and there. I'd like to think that if the post is given a cabinet seat it would be on the merits of the policy, not the individual."

The sadness is that unless Clare Short learns to maintain a little more discretion, in public at least, overseas development may never get to the Cabinet table by either route.