Blair hands olive branch to old guard

Labour leader Tony Blair last night offered his party's old guard a firm reassurance that there was no question of democratic socialism being dumped as part of his New Labour modernisation project.

After more than a week of change, including the threat of a shift in relations with the unions, the suggestion that the word socialism could be dropped raised the hackles of many party supporters; a reaction shared by deputy leader John Prescott.

Mr Blair said last night, however, in a bid for reconciliation, that he was as comfortable with the term "democratic socialist" as he was with "social democrat." He said last night: "I describe myself as a social democrat and a democratic socialist and I said these terms are interchangeable and I think they are."

He said he believed the closer politics got to common sense, the better it was. This meant him admiring Liberals such as Lloyd George as well socialists.

In another move to show unity with Mr Prescott, he praised the deputy leader's coining of the term "traditional values in a modern setting" as a description of New Labour.

He rejected suggestions that Labour's facade was cracking, saying: "The vast bulk of the party is with me."

Mr Blair, launching his book, entitled New Britain - My View of a Young Country, also denied that he wanted to throw people from the hard left out of the party. He said: "I do want a different choice. I don't think that means shoving people out of the Labour party. Some like Arthur Scargill obviously left and there it is. But I think for the vast majority, certainly my generation in the Labour Party, we see this as not about waging war on parts of our of our history, but attempting rather to see the values of the Labour Party are essentially good values.

"It's not about pushing people out of the Labour Party but it is about building a new coalition of support."

He said he was proud of the legacy of Labour prime ministers Clement Attlee, Harold Wilson, and James Callaghan, but he said: "That is not to say I believe I will do it in the same way ... the world of '96 is not the world of 1945 or 1964 or 1974."

The Labour leader also made it plain that he would not rule out signing up to a single European currency. "In my view the test is of national economic interest. So I don't agree with people who say we should rule it out altogether. I think if we were to take the step of saying under no set of circumstances do we ever join, that would be a mistake for Britain and its future."

Asked what would be his first action in government, Mr Blair said, that his absolute ruling passion was the education system. "There was all the fuss obviously over my own child's schooling and people may have their own views about that, but I just think for children the most important thing they can get is a decent start in life."

The Labour leader also touched on John Major's suggestion on Wednesday that it was "moral" to cut taxes and public spending.

The Prime Minister set a target of bringing spending below 40 per cent of national income."39 per cent and we can all rest easy in our beds and 41 per cent and we don sackcloth and ashes seems to be a very odd description of reality."