Aged 84, he remains proud of the questions he raised in Oxford two decades ago. “What I wanted was to make my mark on the education policy of the country.” In his speech he raised issues that have dominated educational politics ever since: accountability, effectiveness, the curriculum and, most profoundly of all, the relationship between teachers, government, parents and industry.

With hindsight, the speech can be seen as the bridge between one era and the next: with it we passed from the era of consensus to the era of accountability, making it a major landmark in post-war educational history.

The speech was a landmark in another way, too. Before Callaghan, prime ministers did not get involved in education policy, except insofar as it affected government expenditure. Callaghan knew very well he was breaking a taboo. Early in the speech, he remarked: “The Labour movement has always cherished education. . .There is nothing wrong with non-educationalists, even a prime minister, talking about it now and again.”

Now he smiles: “There was surprise and scepticism because it was not usual for prime ministers to discuss these matters.”

The historical significance of this decision should not be underestimated. Ever since, prime ministerial interest in education has grown steadily. Margaret Thatcher, for example, is said to have read the first draft of the English national curriculum over breakfast. John Major often sets his education minister’s agenda and Tony Blair has promised that, if elected, “education, education and education” will be the passion of his government. So why did Callaghan take this momentous step?

Before I interviewed him, I thought I knew. The iron chronology of 1976 seemed to explain it. On March 16, Harold Wilson announced his decision to step down as prime minister. On April 5, James Callaghan was elected by Labour MPs to succeed him. In July 1976, the Auld Report on the scandalous goings-on at William Tyndale primary school was published, dominating the headlines. At the end of September, Denis Healey announced the deal with the International Monetary Fund which rescued the country from bankruptcy. The Ruskin speech came less than three weeks later.

Set against this background, the speech appears to have been an obvious attempt by the Prime Minister simultaneously to address public concern over Tyndale and shift public attention from the parlous state of the public finances.

I put this to Lord Callaghan and his answer taught me - once again - how easy it is to draw superficial conclusions from an apparently straightforward sequence of events. For him, the explanation of the Ruskin speech lay much further back in his own childhood in Portsmouth.

“My father died when I was nine. . .Because he died as a result of his service in the First War, the Ministry of Pensions agreed to pay six guineas a year for me to attend school, subject to satisfactory progress. . .my report was sent to the ministry every term, where it was solemnly scrutinised and when my progress was not satisfactory. . .they sent a stern letter to my mother threatening to discontinue the six guineas. This caused her great shame and she visited her anxieties upon me, as you can imagine.”

After he had “become rather more sensible” in his mid-teens, he did well at school, but “my formal education was over at the age of 16. . .That would be 1928. It was quite unthinkable that a boy should enter university from that school.”

At that age most of his contemporaries had already been working in the dockyards or the Navy for two or three years. Thanks to the Ministry of Pensions he had been lucky compared to most working-class boys of his time. But compared to others he met later, who had been to university, he had not had a fair deal. “I regretted my own lack of a university education,” he wrote in his autobiography.

“In the ‘30sII felt that I knew I could do things and I saw other people who had had the chance and were doing themIWe, on the other hand, were categorised quite clearlyIit was a form of educational apartheid.”

A determination to open up opportunity was therefore at the heart of his politics from the beginning. “I was reinforced in my view by what I saw in my constituency in the poorest end of CardiffII saw the hidden talent that lay there.”

The importance Callaghan attached to education is confirmed by others. Lord Cledwyn [then Labour MP for Anglesey] noted in his diary that Callaghan’s first remark on realising he had become prime minister was “I and I’ve never even been to university”.

I put this to him and he smiled: “I probably did say that. Cledwyn has a better memory than me!” Yet Callaghan had never been an education minister. Why not, if the subject mattered to him so much? His answer took me by surprise. “When I ceased to be chancellor of the exchequer in 1967, after devaluation, Harold Wilson discussed with me what I should do and I said I should like to become minister of education.”

Why did Wilson not accede? “He thought that to do that would be stepping down, having been Chancellor, and he said ‘you can’t do that’IHe didn’t want to revolve the cabinet roundIHe wanted a straight swap between Roy Jenkins [home secretary] and me.”

Thus, when Callaghan became Prime Minister almost a decade later, he was determined to do something about education. Then an invitation to open a new building came from his old friend Billy Hughes, principal of Ruskin College, Oxford, whom he had met through the Workers Educational Association. “I thought, here is a heaven-sent opportunity. I will make a speech.”

This was before the Auld Report was published. Callaghan was aware of the William Tyndale school. It was not the affair itself that mattered to him, but what it represented. “It was an illustration of the kinds of things that parents were saying to meIAnd I can only think that my speech made the impression it did because it struck a chordIAll these things were there but had not been said.”

The text he delivered on October 18, 1976 was the result of months of shuttle diplomacy between his office and the then Department of Education and Science. In May, as part of a series of meetings with each of his ministers, he had asked Fred Mulley, then secretary of state for education, to come to see him.

“My aim with all my ministers was the sameIthe basic questions: What are you there for? Why haven’t you done it? What help do you need to get it done? It was the new broom, sweeping clean and all that.”

He explained the questions he put to Mulley, “questions which, frankly, I could put again today. Was the teaching of the three Rs satisfactory? Was the curriculum in maths and science sufficiently rigorous? Was the examination system a proper test of achievement? Did he have any plans for the further education of 16 to 19-year-olds?” The contemporary ring of his questions is startling. I wanted to know what Fred Mulley had said in reply. Callaghan laughed. “I don’t remember!” “You obviously felt that the questions had not been answered.”

“That’s right and Bernard did too,” he said, referring to Bernard Donoghue, now Lord Donoghue, who headed up the prime minister’s think-tank and took a central role in following up the meeting.

Shortly afterwards, Callaghan told Fred Mulley he intended to make his big speech. “Fred rather blanched. He went back to his department and got even more upset. I was toldIthat the Inspectorate were particularly worried.”

Callaghan had become convinced that Mulley was not the right person to lead on education. In September, he made him Minister of Defence and promoted Shirley Williams to education. She, he hoped, would have the intellect and presentational skills to follow up his big speech.

By the time he delivered it, it had been widely trailed in the press. That, too, sounds very contemporary. I asked him how word got out. He thought that either his own office or Billy Hughes at Ruskin had let it slip, but: “What I always believed was that the DES so disliked it that they were leaking it to the pressII always felt that the department or the Inspectorate put it outIto create adverse publicity.”

Early in the speech, Callaghan urged people not to get carried away in furious argument. “I did not want to pick quarrelsImy hope was that we would be able to work togetherIthat there should be agreement on the way forward for education. ”

Once again, he referred to his childhood. “I was always thinking about those children at the bottom who were denied the chance before they reached the age of 12Iit might have been me!” This passion is often echoed, I noted silently, in David Blunkett’s speeches. Surely, though, the speech was not merely a combination of his personal beliefs with the compromise reached between the DES and Bernard Donoghue, who had responsibility for drafting it. The text, for example, repeatedly mentioned employers’ concerns, and the economy must have been foremost in Callaghan’s mind.

“We were going through a very hard timeIAnd of course I was, in addition to the TUC, constantly talking to the CBIIThere were occasions when the president of the CBI, Len Murray [general secretary of the TUC] and I went on platforms together at schools.”

The speech made a huge impact at the time, but for Callaghan that was only the start. “This was only going to be the first shotII intended to follow these things up. I raised issues in an interrogative form to indicate that they were on the agenda without scaring the teachersIone of their troubles is that, for an educated group, they behave far too defensively.”

He had high hopes of Shirley Williams. She was to lead “the great debate” and produce a Green Paper. When he saw the draft, Callaghan felt the officials at the DES had done a whitewash on it. “We got a Green Paper but by God we had to fight for it. We sent Shirley away to rewrite it.”

The Green Paper was eventually published the following year and covered the issues raised by Callaghan in his speech. It also called for an agreed “framework for the curriculum” with a “core” or “protected” part. But did Callaghan think that Williams had delivered? He was reluctant to be critical of his former colleague. “I rather blame myselfII was determined not to let the economic thing overshadow everythingIbut in fact we were engulfed by it allII wish I had been able to spend more time on education.”

So would Shirley Williams have been more effective with better support from her civil servants and from himself? “If she had the convictionIyou must ask her about that.”

Callaghan was never able to give the time and priority to education he had intended. In addition to his economic travails, he had problems with his minority government, which depended on Liberal support. Each crucial vote had to be cobbled together separately.

The political fixing demanded hours of prime ministerial time. In 1978, Scottish and Welsh devolution (“this wretched thing”) dominated both the public and parliamentary agenda. Then came the winter of discontent and Callaghan, on his own admission, began to lose his touch. “I really did understand until the last few months, when I had gone to sleep a bit because I was very tired. ”

He regrets that his speech did not lead to the change he so desperately wanted. Like all good leaders, he blames himself, not his colleagues. Who knows what might have happened had he won in 1979?

He comforts himself with the thought that he set an agenda for others to follow. Leading politicians from all parties have acknowledged the Ruskin speech as the landmark it is. Even now Tony Blair and David Blunkett, heirs to the Ruskin tradition, are asking the same questions James Callaghan asked Fred Mulley that long hot summer 20 years ago.

Michael Barber is professor of education at the Institute of Education, London University. His book The Learning Game: Arguments for an Education Revolution will be published by Gollancz later this month. The Rt Hon Lord Callaghan is giving an open lecture, sponsored by The TES, at the Institute of Education, 20 Bedford Way, London WC1H 0AL, on October 15 at 6.30pm. Details from Michael Walker, 0171 612 6404

Extracts from James Callaghan’s Ruskin College speech, 1976:

” Let me answer the question ‘what do we want from the education of our children and young people?’ with Tawney’s words once more. He said: ‘What a wise parent would wish for their children so the state must wish for all its children’.”

” I am concerned on my journeys to find complaints from industry that new recruits from the schools sometimes do not have the basic tools to do the job that is required.

I have been concerned to find that many of our best trained students who have completed the higher levels of education at university or polytechnic have no desire to join industry I Why is it that 30,000 vacancies for students in science and engineering in our universities were not taken up last year while the humanities courses were full? ” ” I there is the unease felt by parents and others about the new informal methods of teaching which seem to produce excellent results when they are in well-qualified hands but are much more dubious when they are not I It is not my intention to become enmeshed in such problems as whether there should be a basic curriculum with universal standards - although I am inclined to think that there should be I What I am saying is that where there is legitimate public concern it will be to the advantage of all involved in the education field if these concerns are aired I” ” To the critics I would say that we must carry the teaching profession with us. They have the expertise and the professional approach. To the teacher, I would say that you must satisfy the parents and industry that what you are doing meets their requirements and the needs of our children. For if the public is not convinced, then the profession will be laying up trouble for itself in the future.”