Blair: My vision for the year 2000

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Tony Blair last night committed himself to an ambitious programme to rid Britain of the underclass he inherited in May. In an interview with The Independent he warned of more tough decisions ahead on the Welfare State, and indicated that private companies could be involved in his reforms of it.

Our Political Editor reports on the Prime Minister's new ``test for the millennium'' and his post-election programme, to be unveiled at this month's Labour conference.

An ambitious three-pronged programme to "create a country that can hold its head high as the model of what a 21st-Century developed nation should be," was last night outlined by the Prime Minister.

Speaking from Chequers, Mr Blair said the three key elements, which will be used to focus the Labour conference later this month, were a competitive economy built not on low wages, but high skills, and the creativity of a well-educated workforce; a society "where we are getting rid of this idea of an underclass, a set of people apart from the rest of society"; and an end to the years of Conservative isolationism in world affairs.

Mr Blair said: "All those things are achievable. It is possible for us to create a country of greater opportunity, provided we set aside some of the problems we have had in the past and provided the Labour Party and the Labour Government is concentrated on addressing the real concerns of people, rather than slipping backwards."

But he warned that there were hard choices ahead. The Government had already taken tough action on the economy: giving the Bank of England independence to set interest rates, and by cutting the budget deficit, national debt and public borrowing. No decisions had yet been taken on reform of the Welfare State, but he added: "The basic principle is that the role of government is to organise proper levels of social provision.

"Some may be done directly through the private sector, some through the public sector, some may be done by a combination of public-private sector.

"I don't think anyone seriously believes that pension provision in the future is going to be the preserve solely of the public sector. It isn't. And there are other areas where we've got to make sense of the modern world."

Mr Blair cited the position taken by the Government on student finance - "Another very good example of that which is a difficult and hard decision."

He said: "The only way we are going to get additional resources into the university system and allow larger numbers of students is if we change the system of finance, where the state will provide a fair framework."

The Prime Minister would not be drawn on the application of those principles to other areas of welfare - like the burgeoning bill for disability benefits - but Government sources argue that part of Labour's current popularity is built on the public recognition that a sound foundation is being made for the future.

There is also a strong element of the Prime Minister making use of the unique political scene - a combination of a landslide majority in May, a new deal of co-operation with the Liberal Democrats, who attend their first meeting of the "Lab-Dem" Cabinet committee on constitutional reform tomorrow; and the continuing turmoil in the Tory ranks.

With the defection of former MP Hugh Dykes in yesterday's headlines, leading figures like Lord Tebbit questioning William Hague's experience, and Kenneth Clarke appealing for an end to "carping", the new Conservative leader last night delivered a hastily arranged speech to party activists in an attempt to get a grip on his party.

But Mr Blair told The Independent: "The Conservatives still haven't decided what type of political party they are. But for a large part of the party, however, they see it drifting further and further to the Right, and there will be a lot of One Nation Tories who are dissatisfied.

"They have carried on in a situation where they still will not choose between the wish to carry on with the policies of the 1980s and Thatcherism, or whether they wish to return to the centre-ground, and they have not decided that.

"But most of the direction appears to be moving to the Right, and that is the dominant strain of the Tory party. Well, I think a lot of the One Nation Conservatives will not feel that their place any longer is in the Conservative Party."

A senior Labour Party source suggested earlier that there could be further defections afoot. "Watch this space," he said.

But Mr Blair said that the Tories should not be under-estimated. "I do not write them off in any shape or form," he said. "The difficulty for them is that they don't have clear direction and until they get that clear direction ..." As for his own position, Mr Blair said that considerable strides had been made towards the delivery of Labour's manifesto pledges on education, health, employment, and law and order - "given that we've only been in government, what, five months."

That did not mean that he was resting on his laurels. "I believe we are doing a good job. But I am not complacent about it and I think it's very important that there is a sense of humility in the Government, too. That we recognise that we've been given a huge opportunity, and it is a huge responsibility to make the most of it."