Blair signals further round of reforms in state-run services

Tony Blair will appeal today for the Labour Party to support more public-sector reforms, warning that the Tories would "destroy" state-run services if the Government backed away from change.

In a keynote speech, the Prime Minister will tell a Fabian Society conference that his administration must not repeat the mistake made by the Labour government of Harold Wilson. He will argue that its refusal to implement Barbara Castle's 1969 White Paper to curb trade union power, In Place of Strife, allowed Margaret Thatcher to neuter the unions when she took office 10 years later. Mr Blair will warn that Labour must not fall into the same trap now by defending the status quo as it seeks to turn round public services.

The speech is intended to refocus Mr Blair's attention on core domestic issues in response to concern that his Government is suffering from mid-term "drift".

The Prime Minister is also anxious to signal that radical reform will continue despite last week's surprise resignation by Alan Milburn, one of the Cabinet's leading modernisers. Mr Blair will warn his party that unless it institutes "further and radical change" the Tories will be allowed back into power. They would then pursue "a right-wing, anti-European agenda", which would demolish the public-service ethos, resulting in "more charging, less investment, good services for the well-off and sink services for the rest".

Labour's goal for its second term was to "rebuild the public realm and re-energise public services", he will say.

While admitting the reforms were complex and difficult to achieve, they would define Britain as a country for years to come. "It will decide whether we not only eradicate the progressive deficit we inherited, but also build a lasting progressive settlement."

Mr Blair will tell the Fabians that public services must combine "equity with choice". Tackling head-on the criticism that his reforms would lead to two-tier services, he will claim that the present system is two-tier because it allows the wealthy to make choices denied to others.

Mr Blair will argue: "The centre of gravity shifted to the right in the 1980s but is moving back. The centre-left can be confident our ideas are in tune with the times. We are the party of change and change is the theme of our times."