Politics: Blair offers rebels stick and carrot

The Prime Minister appealed to backbench MPs for unity yesterday as anger persisted over planned benefit cuts. Mr Blair promised to listen to their concerns but both he and Gordon Brown spent the day warning of `hard choices' ahead. Fran Abrams and Colin Brown report on Labour's tough pre-Christmas messages.

Tony Blair's speech to the Parliamentary Labour Party did not calm all the 47 rebels who voted against the Government on lone-parent benefits last week, but it did provoke both laughter and applause.

Afterwards party officials promised new efforts to ensure backbenchers' concerns were heard in future: the protesters said their attempts to voice their feelings privately had brought no concessions. In future, a spokesman said, there could be an "early-warning system" to try to avert clashes, and perhaps more discussion of issues at a regional level.

But although Mr Blair said he would listen, his message was far from contrite. The party must focus on the "big picture" and not be distracted from fulfilling electoral promises, including modernisation of the welfare state. "I have listened to criticism in recent days. There has to be room in any party for criticism, for conscience, for dissent," he said.

But he hit at his strongest critics within the party. "Constructive criticism is one thing. But it should never be made in such a way that it merely provides gifts to our political enemies, or repeats their propaganda about broken promises when we have broken none, or accuses us of dismantling the welfare state when it is this party that built the welfare state and this government that will save the welfare state."

MPs had been told not to comment on what happened at the meeting but some said they had been neither mollified nor angered by Mr Blair's speech. One who voted against the Government said the party leadership was "far from out of the woods.... It must be very plain to everybody, and if it is not plain to the leadership, by Christ, they are in for a shock."

Some veteran MPs said they felt resentful that younger and newer members had seen fit to lecture them on loyalty to the party.

Many of those who have defended the leadership, such as Patricia Hewitt, MP for Leicester East, and Jim Murphy, MP for Eastwood, were elected for the first time in May.

Cabinet ministers have received protest letters from Labour members resigning from the party in protest at cuts in lone-parent benefits.

The resignation of members across the country has led to concern among some senior members of Mr Blair's Cabinet.

The Chancellor, Gordon Brown, yesterday faced allegations from a Labour MP that the cut in child benefit "looks a bit like a dangerous piece of social engineering with a touch of Frankenstein's monster to it".

Mr Brown was challenged by Brian Sedgemore, MP for Hackney South and Shoreditch, at the Commons Treasury select committee but the Chancellor told the MPs there would be no let-up in the strategy.

"We are determined in a comprehensive spending review as well as in the welfare-to-work reforms to give people opportunities they have never enjoyed. It is possible to give lone parents child care, training and employment opportunities. It is not a cuts-driven review at all," said Mr Brown.

The Chancellor also denied suggestions that he was preparing a "pot of gold" for the general election by being too pessimistic in assumptions about revenues, including VAT, privatisations and the scrapping of advanced corporation tax.