Labour Conference: No public spending spree, says PM

TONY BLAIR will vow not to bend to demands for a public service spending spree in a blunt message this week to his party's centenary conference.

The Prime Minister knows his tough stance on spending is putting him at odds with trade unions, grassroots activists, MPs and, privately, some members of his Cabinet. But he fears that a loss of grip on the economy will cheat Labour of a second term of office. It is Mr Blair's personal ambition to lead Labour through a full second term and head the party as it fights for a third period in office.

At the Bournemouth conference the Prime Minister will tell delegates that the "ultimate political prize for New Labour is the mantle of the party of economic competence". He will make clear that he believes a strong, steady economic policy is the foundation stone for a radical reform and the modernisation of Britain.

"The Prime Minister said ... he could only do the job if he was allowed to modernise from top to bottom. He feels the same way about Britain," said Mr Blair's official spokesman.

But Mr Blair will also insist that he is "dependent on our laying economic foundations and doing nothing to threaten stability". He is expected to say: "The stable foundations have been laid, the determination to ensure stability for the long-term and defeat boom and bust for good is absolute. We will stick to the tough rules on spending. We will not spend money we have not earned."

The Prime Minister, whose Tuesday speech is always a highlight of the Labour conference, will outline his vision of a Labour century, at the turn of the millennium. Driven by the notion that the last century has been dominated by Conservatives because "progressive" governments allowed failing economic policies to prevent their completing reform, he will say: "The next century has got to be a century of progressives. The foundations we build have got to be strong - above all the economic foundations."

The shared determination of the Prime Minister and the Chancellor, Gordon Brown, to stay wedded to prudence will anger delegates who want the estimated pounds 10bn "war chest" to be ploughed into improving public services. Mr Blair told his Cabinet last week at Chequers, in a meeting to finalise plans for the conference, that talk of a war chest was "nonsense".

Some ministers are keen, after two years of tight controls on public spending, to be more radical. One said that it was time for the Government to "take risks, be bold".

But Mr Blair made it clear at the time there would be "no risk to the economy, no risks with inflation and no irresponsible spending sprees". This week he is also expected this week to set out two other goals central to the aims of New Labour. He will tell his party that they are now the "one nation" party, the only one capable of representing people from all walks of life. And he will voice his ambition to make Labour the "party of the future", getting Britain ready to take on the challenges of the "knowledge economy".

He is likely to dub the Conservatives a "threat to modern Britain", insisting they have "learned nothing, are extreme, on the side of the privileged few and stuck in the past". As for the Liberal Democrats, this week he will say, "you simply can't trust them on the economy".

A debate on devolution and the UK, will be held by the Independent/IOS with the Home Secretary, David Marquand and Wendy Alexander, at the Dorchester suite, Highcliff Hotel, Bournemouth, on Monday, at 6.15pm.