The British & Irish Lions have suffered worse defeats than this in Auckland and a provincial loss or two will not define their tour. Even so, before they return to this stadium to face the All Blacks on 24 June some fundamental issues need addressing. Without sharper backline execution, better lineout execution and tighter discipline, they will not win the matches that really matter.

To suggest this was a contest they would have won if they had conceded fewer penalties also obscures the abiding lesson of a damp, showery evening. Ultimately the Blues emerged victorious courtesy of two vivid flashes of creative skill the Lions simply could not match; unless Warren Gatland’s squad conjures up some similar game-changing magicians, all their undoubted forward power is going to be insufficient.

Gatland had spoken before the game about X-factor contributors and his point was perfectly underlined by the home side’s match-winning 74th-minute try from the replacement fly-half Ihaia West, set up by Sonny Bill Williams. Williams is set to be named in the All Blacks squad to face the Lions and the sweet offload which sent the rapid West on a 40-metre slaloming run to score under the posts contrasted sharply with their visitors’ more pedestrian midfield efforts.

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Nor could any Lion match the brilliance of the long pass from the 20-year-old Stephen Perofeta which put his similarly youthful team-mate Rieko Ioane away for the Blues’ opening try. If there was a hint of fortune about the Blues’ other try just before half-time, when it seemed to the naked eye as if the ball went forward off TJ Faiane’s hand, a try count of three tries to one reflected the home team’s ruthless finishing. The Lions are averaging one try per game and it is not nearly enough.

It should help to have Owen Farrell lined up at 10 as they transfer to Christchurch to tackle the unbeaten Crusaders; with Dan Biggar failing a head injury assessment and Jonathan Sexton still nowhere near his best, the Lions’ creative heart needs to start pumping with more ideas and energy. Then again, simply chucking the ball around and hoping for the best against New Zealand sides is never a great idea either. The tour itinerary remains brutal and, unless a sharp improvement materialises, the below-par success against the Provincial Barbarians last Saturday could conceivably be the first and last weekend fixture the Lions win.

Facebook Twitter Pinterest Lions players leave the field after being beaten by the Auckland Blues. Photograph: David Rogers/Getty Images

The alternative is to bottle the frustration of this outcome and look to uncork it in the Tests. Courtney Lawes, Maro Itoje, CJ Stander, Rhys Webb and Leigh Halfpenny all had their moments and there was enough scrummaging success to suggest the Lions should be more than competitive in that key area. As Gatland rightly observed, however, no team conceding 13 penalties, several of them soft ones, is giving themselves much chance at the highest level.

Liam Williams being sent to the sin‑bin in the 57th minute, after a second mistimed aerial challenge on Matt Duffie, was merely the most obvious example of players not thinking straight. Stander’s high tackle shortly before half-time also allowed Perofeta the penalty shot at goal that ended up shaping the game profoundly. The ball struck the upright, the rebound – knocked on or not – went over the Lions line and Sonny Bill Williams was in the right place at the right time to score. The Blues were suddenly walking back to the sheds 12-10 up and the Lions could never muster quite the same authority again.

Injury-wise it also proved a wince-inducing night for the Lions. The centre Jared Payne limped off having apparently aggravated the calf problem that ruled him out of the opening fixture and Biggar never reappeared after departing for a head injury assessment. It was a particularly bittersweet occasion for Payne, who used to play for the Blues and has a brother living in Auckland. Before his evening ending prematurely he could have had a couple of first-quarter tries, once just failing to reach a rolling ball in the in-goal area and then being denied a try when his left knee grazed the touchline as he went to touch down in the left corner.

Facebook Twitter Pinterest Liam Williams was sinbinned following a second aerial challenge on Matt Duffie Photograph: Hannah Peters/Getty Images

With Webb also being collared just short of the line when a try looked certain, the Lions were overdue a score when Stander finally finished off a rolling maul. Halfpenny’s conversion and penalty gave the visitors a 10-5 lead which their improved tempo and sense of purpose fully deserved. The ever-dangerous Ioane came close to bagging another score, having touched down for the Blues’ first try, within three minutes of the restart as the Lions made a sluggish start to the second half. Even before Liam Williams was handed a yellow card, the touring team were tightly marshalled in midfield, only for Halfpenny’s boot to put them back in front with nine minutes remaining.

It was to prove a false dawn, with the Lions over-throwing a last-minute lineout which could have transformed the mood. Rory Best will not recall the moment with much affection but he and his team-mates know it is what happens next that really counts. Can the Lions iron out such teething problems in less than three weeks? Do they have anything like enough in their attacking locker? And, most pertinent of all, if they are losing against New Zealand’s sixth-best non-Test side, how on earth are they going to beat the All Blacks? Slow and steady is not going to win this particular race.

Blues Collins; Duffie, Moala (Faiane, 66), Williams, R Ioane; Perofeta (West, 52), Pulu (Nock, 72); Tu’ungafasi (Hodgman, 58), Parsons (capt; Faiva, 72), Faumuina (Mafileo, 58), Cowley-Tuioti (Tupou, 58), Scrafton, A Ioane, Gibson (Pryor, 66), Luatua.

Tries R Ioane, Williams, West. Cons Perofeta, West. Pen West.

British & Irish Lions Halfpenny; Nowell, Payne (L Williams, 48), Henshaw, Daly; Biggar (Sexton, 36), Webb (Laidlaw, 76); McGrath (Marler, 54), Owens (capt; Best, 69), Cole (Sinckler, 55), Lawes (Henderson, 76), Itoje, Haskell (O’Mahony, 54), Tipuric, Stander.

Try Stander. Con Halfpenny. Pens Halfpenny 3.

Sin-bin L Williams 57.

Referee P Gaüzère (Fr). Attendance 40,639.