Enlarge imageBy Katherine Baldwin and Mike Peacock
BRIGHTON (Reuters) - Chancellor Gordon Brown pledged on Monday to press on with free market reforms, risking the wrath of those who want a shift left.
Parts of the Labour Party had hoped Brown would mark a return to more traditional, left-wing values as leader but, instead, he will vow to deepen reforms to schools, hospitals and other public services.
"The next election must and will be New Labour renewed against a Conservative Party today incapable of renewal," Brown will tell Labour’s annual gathering to discuss policy, according to aides.
His repeated reference to "New Labour" -- a tag favoured by Blair but often eschewed by Brown -- signals a truce between the two men and comes as Blair and other ministers smooth the way for Brown’s succession.
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"Tony Blair has said ... he wants to have a smooth and orderly transition," Brown told BBC Television ahead of his speech. "The rest is not actually for me. It is for Tony Blair. It is for the Labour Party."
The apparent peace between two men, whose clashes over the party’s direction and the succession are well documented, opens the way for a united attack on leftists who oppose free market reforms and private sector involvement in public services.
Blair, despite being dogged by the divisive Iraq war, won a third straight election for Labour in May. He has said he will not run for office again.
Insiders do not expect Blair to go until 2007 at the earliest but a number of ministers in past days have openly pointed to Brown as his obvious successor.
In a sign of his widening ambitions, Brown said he would visit the Middle East next month to look at ways to rebuild Palestinian infrastructure in an effort to help the peace process.
SLOWING ECONOMY
Brown could be handicapped if the economy falters after eight years of solid growth under his tenure.
He was forced to signal on Friday that economic growth this year would likely fall well short of his 3.0 to 3.5 percent forecast due mainly to high oil prices.
With government borrowing rising economists say he will be forced eventually to put up taxes or cut public spending.
Brown said anaemic European growth and a doubling of oil prices had forced him to rethink but said the country would not tumble into recession as it would have in the past.
"We have managed to steer a course of stability. We will continue to do that," he said.
In his speech, Brown will set out his vision for a "home-owning, share-owning, asset-owning, wealth-owning democracy" -- an echo of Margaret Thatcher’s free market Conservative policies of the 1980s.
That will enrage trade unions and party traditionalists who thought Brown was far more wedded to historic Labour values of state economic influence and close ties with organised labour.
"If Gordon Brown follows Blair’s modernisation agenda, he will lead the party to defeat at the next election," said Derek Simpson, general secretary of the union Amicus.
But Brown appears undeterred.
"The only future of the Labour Party is as the party of reform," he will tell the conference in Brighton.
