Blair girds up for battles with nurses and teachers

THERE WAS a new proof-reader backstage at last week's Labour Party conference. Stephen Byers, the Chief Secretary to the Treasury, checked every Cabinet member's speech for accidental spending commitments. It all added up.

Blackpool '98 was very much "on message". It was glossy, stage-managed and the showdown with the grass roots never quite materialised.

The purple backdrop, twitchy secret-service personnel and teams of visiting businessmen (who were paying thousands of pounds in sponsorship to be there) lent the impression that "New Britain" was confident, in charge and successful; after less than 18 months in office, Labour had really made a difference.

Even the expected row over proportional representation was deflated by last-minute deals with the dissenting unions. And the election to the NEC of a group of left-wing candidates such as the young Tribune editor, Mark Seddon, was dismissed as little more than a blip by Mr Blair's spin doctors.

On the podium it was Tony, Tony, Tony. The Prime Minister was leading the party from the front. He had "vision" and "cared". It all looked wonderful on television. But on the fringes and at the receptions, the new intake of Blairite loyalists were beginning to appear a little jaded.

First there was the question of numbered NEC ballot papers - and the rumour that their votes were being tracked. Then came the hints in Cabinet speeches that there could be uncomfortable times to come and that MPs might have some explaining to do to their constituents.

When Mr Blair referred to 1999 as a "year of challenge", he may not have meant the prospect of a pasting in the next local government elections. Tuition fees for students and cuts to single-mothers' benefits were just the beginning of a programme of modernisation that could mean transfers for below-par headteachers and tougher tests for the disabled seeking benefit.

Mr Blair said there would be "no backing down" from tough decisions on inflation, interest rates and public spending while "the only salvation" of the welfare state would be reform. The key question is how Labour can modernise benefits and keep public-sector pay under control without a full-scale row with teachers, nurses, pensioners and disabled activists.

"Backbone, not back down, is what Britain needs," Mr Blair said. The coming session of parliament will be a test of just how far Labour plans to take its reforms. New laws on disabled benefits, trade-union recognition and teachers' pay, and internal debates on EMU and whether to keep the Liberal Democrats on side with a referendum on PR, all threaten to create a rocky ride for the Blair machine. Meanwhile, consumer groups, no strangers to complaining about shoddy service, are wondering just what happened to the much-vaunted Food Standards Agency which was supposed to make sure our food is safe; the environmentalists are preparing to feel betrayed about too few curbs on cars; and in the Lords, the old Tory peers are unlikely to surrender their hereditary rights without a final joust.

Mr Blair predicted in his speech that he would be attacked from the left and the right. As hereditary peers prepare to defend their shaky claim to a role in law-making, the unions are launching a battle for their place at the heart of Labour. Though the final split with the party may come from the unions themselves, an impending Bill on fairness at work will signal a new and rather uncomfortable truth that business is as important as workers' rights in New Britain. The appointment of Peter Mandelson to head the Department of Trade and Industry, replacing the unions' champion, Margaret Beckett, signals a green light for enterprise. The unions may find that the deal they won from Labour earlier this year after months of hard bargaining will be watered down.

The teachers are already spoiling for a confrontation. They want to see what the Government's plans to cut out "mediocrity" and improve state schools really mean. A Green Paper on teachers' conditions and salary structure is to recommend performance-related pay for teachers so that second-rate teachers are weeded out and excellence is rewarded. Performance- related pay is not a popular concept with many in the teaching profession. They wonder if performance can ever be measured accurately without taking full account of the demographics of the school and the calibre of children being taught. They are also wary of plans to change the structure of school terms and cut the summer holiday. They think this could create "unnecessary upheavals" in the exam system and longer working hours.

The Education Secretary, David Blunkett, charmed teachers last week by referring to them as "our most precious asset". But Mr Blair's message, although it contained the hint that "super-teachers'' brought in to turn sink schools around should earn big salaries - was much tougher. "There are too few good state schools, too much tolerance of mediocrity, too little pursuit of excellence," the Prime Minister said in his address.

His words have been seen as confrontational by many in the teaching world. "Tony Blair didn't have a single word of praise," said a National Union of Teachers spokeswoman. "He sounded more Tory than the Tories, like Margaret Thatcher rather than John Major. If they introduce performance- related pay they will encounter a great deal of anger."

The Government-appointed pay review body, which sets public sector workers' increases after consulting the profession and ministers, is considering how much to grant teachers in 1999. The NUT, pointing out that 66 per cent of teachers earn less than pounds 23,000 a year, wants 10 per cent across the board. The Treasury has signalled that it will not sanction such rises. A showdown is likely at the start of next year, when the review body reports.

Nurses threaten to shake Labour's credentials as the caring political party. With starting salary barely pounds 13,000, they too are looking for a big pay rise. They want to be paid as much as local authority home helps or social workers. The hints are that Frank Dobson, the Health Secretary, has persuaded the Treasury to yield more than inflation. But, with a recruitment crisis in nursing, their unions are unlikely to let Labour off if it finds money for doctors and consultants but not them.

With a big Bill on reform of the NHS due this session - and critical eyes on whether Labour is really meeting its manifesto commitment to get waiting lists down - the spotlight will be on health. If Labour can't deliver on nurses' pay, the public may not quickly forgive them.

There are already nerves on the back-benches about pension and disability reforms proposed for the next session of parliament. The prospect of people in wheelchairs undergoing strict tests to see if they should go to work, having their disability allowance means-tested or their benefits taxed, has unsettled even the most loyal Blairites.

At Blackpool, Labour's most active and loyal disabled members gathered in an art gallery, amid pictures of ploughed fields and boating scenes, to debate rumoured plans for reform of the disability-benefit system. Speakers viewed with horror the prospect of further humiliating tests such as "lifting a bag of potatoes", "walking 300 yards" or "cooking a meal". The Government has assured them that the vulnerable among Britain's 8.6 million disabled people will not suffer as a result of the changes. But the prospect of wheelchair-bound campaigners chaining themselves to the gates of Downing Street must un-nerve even the most steely of spin doctors.