AFTER a week of internal party warfare, Mr Tony Blair last night sought to refocus Britain's political debate - ambitiously declaring Labour the party of high quality public services and lower taxes.
Promising "an education and skills revolution" to boost productivity and lift people out of low rates of pay, Mr Blair rejected charges that Labour opposed tax cuts and increased living standards.
"Nothing could be further from the truth," he insisted: "We want people to consume more. We want high quality public services. We want people to pay lower taxes. But we want this for all our people, not simply a few at the top. And we want it on a sustainable basis." Labour, he said wanted "to make the good times that we can deliver last".
But the Labour leader's high profile speech to the City of London - trailed to spell out the "millennium challenges" - was dogged by continuing internal debate and disagreement about the future of British socialism.
And Mr Blair yesterday risked further alienating the trade unions and the party left by appearing to endorse the weekend call by Mr Kim Howells MP for the "s-word" to be "humanely phased out".
While warning his party spokesmen to be careful about their public utterances in the run up to the general election Mr Blair said the kernel of Mr Howells' argument "was entirely correct".
On BBC radio, Mr Blair said: "Well, I agree absolutely that what we have got to be about is the best practical means to deliver a different type of society in Britain today that faces that modern world, that is based absolutely on our values but isn't tied to some outdated form of ideology. Kim expressed this in his own inimitable style but I think the kernel of his, argument was perfectly correct.
Mr Blair denied he would be "relaxed" if the party manifesto contained no reference to socialism, and observed that he had used the term himself. However, he continued: "What Kim Howells was saying, entirely rightly was that if socialism is about state control, or nationalisation, old tax and spend, then that's not for him - but that's not for the modern Labour Party either."
Asked about last week's controversy, triggered by his employment spokesman's speculation on the ending of the trade union link, Mr Blair said: "There are no proposals that end up ending the institutional link. I don't have a plan in my back pocket. I am not going to speculate about what happens in the future. I don't have any proposals to do that." But he added that the relationship with the unions had already evolved "tremendously".
In his Guildhall speech last night, Mr Blair again denied having a "secret plan" to dump the trades unions. But he fell far short of assuring trade union leaders and party activists that the umbilical link could never be severed - referring again to a process of "evolution" which was not about disowning our past but about refusing to live in it".
Setting out his stall to the Corporation of London, Mr Blair said New Labour was born to meet the key challenges of the new millennium - the need to compete in a global market to create a modern welfare state and a decent cohesive society, in a world that had seen massive social change; to make politics more in touch with people and to decentralise power; and to regain Britain's influence abroad "after the disasters of the Tory years".
An understanding of these, said Mr Blair, was the back cloth against which detailed policy could be laid. "They are the true context in which the forthcoming election should be set."
Mr Blair went on: "It is a different world out there. We have reformed Clause 4 (Labour's once historic commitment to public ownership) and committed ourselves to a market economy as well as the goal of social justice. Our MPs are all selected and accountable to the ordinary membership of the Labour Party, not special small committees. The membership itself has virtually doubled ...
"The trade union relationship is being re cast for the modern day. There was and is no secret plan to dump the unions. But many more trade unionists are joining us as ordinary members and ordinary party delegates now have the majority of votes at party conference. Business people as well as employees are joining us. There is a process of evolution under way that is not about disowning our past but refusing to live in it."