I want a meritocracy, not survival of the fittest

The historical mistake of Labour governments - to try to transform without first getting the fundamentals right - has been avoided. The first phase of New Labour was essentially one of reassurance - we weren't going to repeat the economic mistakes of the past. Trade unions would be treated fairly but without favours. There would be no old-style tax-and-spend. Business would be welcomed as a partner.

The historical mistake of Labour governments - to try to transform without first getting the fundamentals right - has been avoided. The first phase of New Labour was essentially one of reassurance - we weren't going to repeat the economic mistakes of the past. Trade unions would be treated fairly but without favours. There would be no old-style tax-and-spend. Business would be welcomed as a partner.

We are not going to fight an election again with the financial markets in a state of fright, with business alarmed, and with people worried about whether the nation would be adequately defended under a Labour government.

But having defined ourselves as a party of competence and modernity, it is time for a second phase of New Labour, defined less by reference to the old Labour Party, than by an agenda for the country, radical but firmly in the centre ground, the ground we have made our own in the past few years, as our opponents have drifted sharply rightwards.

The Thatcherite settlement of the Eighties has elements we have kept. But now we can see more than ever before how clear are its limitations. Thatcherism allowed better rewards for those that did rise to the top. But in fact, social mobility between the classes has barely increased, or even, in some parts, declined. There was no land of opportunity for all.

As a nation, we are wasting too much of the talent of too many of the people. The mission of any second term must be this: to break down the barriers that hold people back, to create real upward mobility, a society that is open and genuinely based on merit and the equal worth of all.

The task of a Labour government is never just to be practical but to pursue ideals. By 2010, I want to achieve a university participation rate of over 50 per cent among the under-30s. At present, whereas nearly three-quarters of the children of professional parents go to university, barely one in six of children of parents in manual occupations do so. Next year, real-term funding per student will rise for the first time in nearly 15 years.

We now aim to do more. By the next academic year, 50 per cent of students' parents will not pay tuition fees. There will be bursaries of £2,000 offered to 25,000 students from poorer backgrounds, and an extra 5 per cent funding for students from less privileged neighbourhoods. We have now agreed with 27 universities a programme whereby, in exchange for government funding, from this April they will make a special effort to recruit from state schools.

There will be no quotas; no lowering of entry standards. It is a strictly meritocratic programme. But its purpose is to say to pupils even in the toughest inner-city schools: your background shouldn't hold you back; if you have the ability, you can get the university place. We will also encourage students to stay on at school or college, with Education Maintenance Allowances paid to students in areas covering 30 per cent of the country.

There will be no dogma of the past, no ideological barriers, no hangovers from either the post-war Labour settlement or the Thatcherism of the Eighties and Nineties, that will stop us from getting the right answers that meet our ideals and help to improve the lives of the vast majority of the British people.

Opening up economy and society to merit and talent is the true radical second-term agenda. It cannot be achieved by the Government standing back and allowing a Darwinian survival of the fittest, and pretending that it is meritocracy. It requires an active government ensuring a fair playing field, and investing in our people and in our public services to release the potential of all. The foundations are laid. The land of opportunity is not yet built. But I am more certain now than in May 1997 that it can and it will be.